28
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 28, 1997
Commission File Number 1-6560
HE FAIRCHILD CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 34-0728587
State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
Washington Dulles International Airport
300 West Service Road, PO Box 10803
Chantilly, VA 20153
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 478-5800
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past ninety (90) days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Title of Class December 28, 1997
Class A Common Stock, $0.10 Par Value 17,047,167
Class B Common Stock, $0.10 Par Value 2,624,716
THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
Page
PART 1. FINANCIAL INFORMATION
Item 1 Condensed Consolidated Balance Sheets as of December 28, 1997
(Unaudited) and Jue 30, 1997................................... 3
Consolidated Statements of Earnings for the Three and
Six Months ended December 28, 1997 and December 29, 1996
(Unaudited).................................................... 5
Condensed Consolidated Statements of Cash Flows for
the Six Months ended December 28, 1997 and December 29, 1996
(Unaudited).................................................... 6
Notes to Condensed Consolidated Financial Statements
(Unaudited).................................................... 7
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition...................................... 13
PART II. OTHER INFORMATION
Item 1. Legal Information........................................... 19
Item 4. Submission of Matters to Vote of Security Holders........... 19
Item 5. Other Information........................................... 19
Item 6. Exhibits and Reports on Form 8-K............................ 20
* For purposes of Part 1 and this Form 10-Q, the term "Company"
means The Fairchild Corporation, and its subsidiaries, unless
otherwise indicated. For purposes of Part II, the term "Company"
means The Fairchild Corporation, unless otherwise indicated.
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
<TABLE>
THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 28, 1997 (Unaudited) and June 30, 1997
(In thousands)
<CAPTION>
ASSETS
December 28, June 30,
1997 1997 (*)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents, $30,687 $ 38,907 $ 19,420
and $4,830 restricted
Short-term investments 8,487 25,647
Accounts receivable-trade, less
allowances of $9,921 and $8,103 181,576 168,163
Inventories:
Finished goods 335,015 297,223
Work-in-process 33,677 26,887
Raw materials 24,438 18,626
--------- ---------
393,130 342,736
Prepaid expenses and other current
assets 53,450 33,631
--------- ---------
Total Current Assets 675,550 589,597
Property, plant and equipment, net
of accumulated depreciation of
$130,744 and $134,032 132,917 128,712
Net assets held for sale 26,447 26,147
Cost in excess of net assets
acquired (Goodwill), less
accumulated amortization
of $39,287 and $36,672 160,819 154,808
Investments and advances, affiliated
companies 22,282 55,678
Prepaid pension assets 59,282 59,742
Deferred loan costs 11,742 9,252
Long-term investments 6,843 4,120
Other assets 50,283 39,277
--------- ---------
TOTAL ASSETS $1,146,165 $1,067,333
========= =========
=
*Condensed from audited financial statements
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</TABLE>
<TABLE>
THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 28, 1997 (Unaudited) and June 30, 1997
(In thousands)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
December 28, June 30,
1997 1997 (*)
----------- ----------
<S> <C> <C>
CURRENT LIABILITIES:
Bank notes payable and current
maturities of long-term debt $ 92,443 $ 47,422
Accounts payable 83,685 84,953
Other accrued liabilities 87,799 105,199
Income taxes 16,297 5,881
---------- ---------
Total Current Liabilities 280,224 243,455
LONG-TERMLIABILITES:
Long-term debt, less current
maturities 371,610 416,922
Other long-term liabilities 29,050 23,622
Retiree health care liabilities 42,402 43,387
Noncurrent income taxes 47,388 42,013
Minority interest in subsidiaries 70,327 68,309
-------- --------
TOTAL LIABILITIES 841,001 837,708
STOCKHOLDERS' EQUITY:
Class A common stock, 10 cents par
value; authorized 40,000 shares,
23,289 and 20,234 shares issued and
17,047 and 13,992 shares
outstanding 2,329 2,023
Class B common stock, 10 cents par
value; authorized 20,000 shares, 2,625
and 2,632 shares shares issued and
outstanding 263 263
Paid-in capital 124,575 71,015
Retained earnings 230,841 209,949
Cumulative translation adjustment (1,398) (1,860)
Net unrealized holding gain (loss)
on available-for-sale securities 273 (46)
Treasury Stock, at cost, 6,242
shares of Class Common Stock (51,719) (51,719)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 305,164 229,625
--------- ---------
TOTAL LIABILITIES AND STICKHOLDERS'
EQUITY $1,146,165 $1,067,333
*Condensed from audited financial statements
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</TABLE>
<TABLE>
THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF EARNINGS (Unaudited)
For The Three (3) and Six (6) Months Ended December 28, 1997 and
December 29, 1996
(In thousands, except per share data)
<CAPTION>
For the Three For the Six
Months Ended Months Ended
12/28/97 12/29/96 12/28/97 12/29/96
------------------- -------------------
<S> <C> <C> <C> <C>
REVENUE:
Net sales $236,686 $159,912 $450,447 $306,002
Other income (expense), net (2,737) 425 2,620 648
------- ------- ------- -------
233,949 160,337 453,067 306,650
COSTS AND EXPENSES:
Cost of goods sold 171,637 121,137 333,336 227,417
Selling, general &
administrative 51,433 36,406 96,912 72,252
Research and development 245 22 850 45
Amortization of goodwill 1,392 1,113 2,615 2,229
------- ------- ------- -------
224,707 158,678 433,713 301,943
OPERATING INCOME 9,242 1,659 19,354 4,707
Interest expense 15,695 11,468 28,683 26,140
Interest income (529) (1,579) (927) (3,771)
------- ------- ------- -------
Net interest expense 15,166 9,889 27,756 22,369
Investment income (loss), net (7,077) 1,836 (5,180) 1,461
Equity in earnings (loss) of
affiliates 429 (263) 2,121 1,614
Minority interest (1,087) (776) (1,875) (1,561)
------- ------- ------- -------
Loss from continuing
operations before taxes (13,659) (7,433) (13,336) (16,148)
Income tax benefit (6,546) (3,795) (6,656) (7,458)
------- ------- ------- -------
Loss from continuing
operations (7,113) (3,638) (6,680) (8,690)
Earnings from discontinued
operations, net 563 661 622 1,095
Gain on disposal of
discontinued operations, net 29,974 - 29,974 -
Extraordinary items, net (3,024) - (3,024) -
------- ------- ------- -------
NET EARNINGS (LOSS) $ 20,400 $ (2,977) $ 20,892 $ (7,595)
Basic and Diluted Earnings Per Share:
Loss from continuing
operations $ (0.42) $ (0.22) $ (0.40) $ (0.53)
Earnings from discontinued
operations, net 0.03 0.04 0.04 0.07
Gain on disposal of
discontinued operations, net 1.76 - 1.78 -
Extraordinary items, net (0.18) - (0.18) -
------- ------- ------- -------
Net earnings (loss) $ 1.19 $ (0.18) $ 1.24 $ (0.46)
======= ======= ======= =======
Weighted average shares
outstanding 17,088 16,551 16,864 16,489
======= ======= ======= =======
The accompanying notes to summarized financial information are an
integral part of these statements.
</TABLE>
<TABLE>
THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For The Six (6) Months Ended December 28, 1997 and December 29,
1996
(In thousands)
<CAPTION>
For the Six Months Ended
------------------------
12/28/97 12/29/96
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 20,892 $ (7,595)
Depreciation and amortization 13,157 10,304
Accretion of discount on long-term
liabilities 1,686 2,235
Net gain on the sale of discontinued
operations (29,974) --
Extraordinary items, net of cash
payments 3,024 --
Distributed earnings of affiliates,
net 344 1,906
Minority interest 1,875 1,561
Changes in assets and liabilities (104,883) (62,313)
------- -------
Net cash used for operating
activities (93,879) (53,902)
Cash flows from investing activities:
Purchase of property, plant and
equipment (19,083) (5,233)
Net proceeds received from (used for)
investments 5,786 (2,361)
Acquisition of subsidiaries, net of
cash acquired (11,774) --
Net proceeds from the sale of
discontinued operations 84,733 173,719
Changes in net assets held for sale (324) (936)
Other, net 179 21
------- -------
Net cash provided by investing
activities 59,517 165,210
Cash flows from financing activities:
Proceeds from issuance of debt 143,712 40,627
Debt repayments and repurchase of
debemtires, net (145,130) (94,394)
Issuance of Class A common stock 53,921 859
------- -------
Net cash provided by (used for)
financing activities 52,503 (52,908)
Effect of exchange rate changes on
cash 1,346 274
Net increase in cash and cash
equivalents 19,487 58,674
Cash and cash equivalents, beginning
of the year 19,420 39,649
------- -------
Cash and cash equivalents, end of the
period $ 38,907 $ 98,323
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</TABLE>
THE FAIRCHILD CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except per share data)
1. FINANCIAL STATMENTS
The consolidated balance sheet as of December 28, 1997 and
the consolidated statements of earnings and cash flows for the
three months ended December 28, 1997 and December 29, 1996 have
been prepared by the Company, without audit. In the opinion of
management, all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at December 28, 1997, and
for all periods presented, have been made. The balance sheet at
June 30, 1997 was condensed from the audited financial statements
as of that date.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. These consolidated financial statements should be read
in conjunction with the financial statements and notes thereto
included in the Company's June 30, 1997 Form 10-K and Banner
Aerospace, Inc.'s March 31, 1997 Form 10-K. The results of
operations for the period ended December 28, 1997 are not
necessarily indicative of the operating results for the full
year. Certain amounts in prior years' quarterly financial
statements have been reclassified to conform to the current
presentation.
2. BUSINESS COMBINATIONS
The Company's acquisitions described in this section have
been accounted for using the purchase method. The respective
purchase price is assigned to the net assets acquired based on
the fair value of such assets and liabilities at the respective
acquisition dates.
In December 1997, the Company acquired AS+C GmbH, Aviation
Supply + Consulting ("AS&C") in a business combination accounted
for as a purchase. The total cost of the acquisition was $13,245,
which exceeded the fair value of the net assets of AS&C by
approximately $7,350, which is preliminarily being allocated as
goodwill and amortized using the straight-line method over 40
years. The Company purchased AS&C with cash borrowed. AS&C is an
aerospace parts, logistics, and distribution company primarily
servicing the European OEM market.
In February 1997, the Company completed a transaction (the
"Simmonds Acquisition") pursuant to which the Company acquired
common shares and convertible debt representing an 84.2%
interest, on a fully diluted basis, of Simmonds S.A.
("Simmonds"). The Company initiated a tender offer to purchase
the remaining shares and convertible debt held by the public. By
June 30, 1997, the Company had purchased, or placed sufficient
cash in escrow to purchase, all the remaining shares and
convertible debt of Simmonds. The total purchase price of
Simmonds, including the assumption of debt, was approximately
$62,000, which the Company funded with available cash and
borrowings. The Company recorded approximately $14,150 in
goodwill as a result of this acquisition, which will be amortized
using the straight-line method over 40 years. Simmonds is one of
Europe's leading manufacturers and distributors of aerospace and
automotive fasteners.
In January 1997, Banner Aerospace, Inc. ("Banner"), a
majority-owned subsidiary of the Company, acquired PB Herndon
Company ("PB Herndon") in a business combination accounted for as
a purchase. The total cost of the acquisition was $16,000,
including the assumption of $1,300 in debt, which exceeded the
fair value of the net assets of PB Herndon by approximately
$3,500, which is being amortized using the straight-line method
over 40 years. The Company purchased PB Herndon with available
cash. PB Herndon is a distributor of specialty fastener lines and
similar aerospace related components.
On June 30, 1997, the Company sold all the patents of
Fairchild Scandinavian Bellyloading Company ("SBC") to Teleflex
Incorporated ("Teleflex") for $5,000, and immediately thereafter
sold all the stock of SBC to a wholly owned subsidiary of
Teleflex for $2,000. The Company may also receive additional
proceeds of up to $7,000 based on future net sales of SBC's
patented products and services.
3. DISCONTINUED OPERATIONS
On November 20, 1997, Shared Technologies Fairchild Inc.
("STFI"), a corporation in which the Company owned approximately
42% of the outstanding common stock, entered into a merger
agreement with Intermedia Communications Inc. ("Intermedia")
pursuant to which holders of STFI common stock will receive
$15.00 per share in cash (the "STFI Merger"). The Company was
paid approximately $85,000 in cash (before tax and selling
expenses) in exchange for preferred stock of STFI owned by the
Company, and expects to receive an additional $93,000 in cash
(before tax and selling expenses) in the first three months of
1998 in exchange for the 6,225,000 shares of common stock of STFI
owned by the Company. In the quarter ended December 28, 1997, the
Company recorded a $29,974 gain, net of tax, on disposal of
discontinued operations, from the proceeds received for the
preferred stock of STFI. The results of STFI have been accounted
for as discontinued operations.
Earnings from discontinued operations includes the Company's
equity in earnings of $622 and $1,095 from the STFI investments
during the six months ended December 28, 1997 and December 29,
1996, respectively.
4. EQUITY SECURITIES
On December 19, 1997, the Company completed a secondary
offering of public securities. The offering consisted of an
issuance of 3,000,000 shares of the Company's Class A Common
Stock at $20.00 per share (the "Offering").
The Company had 17,047,167 shares of Class A common stock
and 2,624,716 shares of Class B common stock outstanding at
December 28, 1997. Class A common stock is traded on both the
New York and Pacific Stock Exchanges. There is no public market
for the Class B common stock. Shares of Class A common stock are
entitled to one vote per share and cannot be exchanged for shares
of Class B common stock. Shares of Class B common stock are
entitled to ten votes per share and can be exchanged, at any
time, for shares of Class A common stock on a share-for-share
basis. For the six months ended December 28, 1997, 47,084 shares
of Class A Common Stock were issued as a result of the exercise
of stock options, and shareholders converted 7,800 shares of
Class B common stock into Class A common stock.
5. CREDIT AGREEMENT
On December 19, 1997, immediately following the Offering,
the Company restructured its FHC and RHI Credit Agreements by
entering into a new credit facility to provide the Company with a
$300,000 senior secured credit facility (the "Facility")
consisting of (i) a $75,000 revolving loan with a letter of
credit sub-facility of $30,000 and a $10,000 swing loan sub-
facility, and (ii) a $225,000 term loan. Advances made under the
Facility will generally bear interest at a rate of, at the
Company's option, either (i) 2% over the Citibank N.A. base rate,
or (ii) 3% over the Eurodollar Rate ("LIBOR") for the first nine
months following closing, and is subject to change based upon the
Company's financial performance thereafter. The Facility is
subject to a non-use commitment fee of 1/2% of the aggregate unused
availability for the first nine months post-closing and is
subject to change based upon the Company's financial performance
thereafter. Outstanding letters of credit are subject to fees
equivalent to the LIBOR margin rate. A borrowing base is
calculated monthly to determine the amounts available under the
Facility. The borrowing base is determined monthly based upon
(i) the EBITDA of the Company's Aerospace Fastener business, as
adjusted, and (ii) specified percentages of various marketable
securities and cash equivalents. The Facility will mature on June
18, 2004. The term loan is subject to mandatory prepayment
requirements and optional prepayments. The revolving loan is
subject to mandatory prepayment requirements and optional
commitment reductions. On December 28, 1997, the Company was in
compliance with all the covenants under its credit agreements.
The Company recognized an extraordinary loss of $3,024, net
of tax, to write-off the remaining deferred loan fees associated
with early extinguishment of FHC and RHI Credit Agreements.
In August 1997, the Company entered into a delayed-start
swap interest rate lock hedge agreement (the "FHC Hedge
Agreement") to reduce its exposure to increases in interest rates
on variable rate debt. In December 1997, the Company amended the
FHC Hedge Agreement. Beginning on February 17, 1998, the FHC
Hedge Agreement will provide interest rate protection on $100,000
of variable rate debt for ten years, with interest being
calculated based on a fixed LIBOR rate of 6.715%. On January 14,
1998, the FHC Hedge Agreement was further amended to provide
interest rate protection with interest being calculated based on
a fixed LIBOR rate of 6.24% from February 17, 1998 to February
17, 2003. On February 17, 2003, the bank will have a one-time
option to either (i) elect to cancel the ten-year agreement; or
(ii) do nothing and proceed with the transaction, using a fixed
LIBOR rate of 6.715% for the period February 17, 2003 to February
19, 2008. No costs were incurred as a result of these
transactions.
On November 25, 1997, Banner amended its credit agreement to
increase its revolving credit facility by $50,000.
6. RESTRICTED CASH
The Company had restricted cash of approximately $30,687 and
$4,839 on December 28, 1997 and June 30, 1997, respectively, all
of which is maintained as collateral for certain debt facilities.
7. SUMMARIZED STATEMENT OF EARNINGS INFORMATION
The following table presents summarized historical financial
information, on a combined 100% basis, of the Company's principal
investments, which are accounted for using the equity method.
<TABLE>
<CAPTION>
Six Months Ended
December 28, December 29,
1997 1996
------------ ------------
<S> <C> <C>
Net sales $ 48,841 $ 52,239
Gross profit 18,191 20,096
Earnings from continuing operations 8,132 5,036
Net earnings 8,132 5,036
</TABLE>
The Company owns approximately 31.9% of Nacanco Paketleme
common stock. The Company recorded equity earnings of $2,584 and
$1,571 from this investment for the six months ended December 28,
1997 and December 29, 1996, respectively.
8. MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES
On December 28, 1997, the Company had $70,327 of minority
interest, of which $69,700 represents Banner. Minority
shareholders hold approximately 36% of Banner's outstanding
common stock.
9. EARNINGS PER SHARE
Effective December 28, 1997, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128). This statement replaces the previously reported
primary and fully diluted earnings (loss) per share with basic
and diluted earnings (loss) per share. Unlike primary earnings
(loss) per share, basic earnings (loss) per share excludes any
diluted effects of options. Diluted earnings (loss) per share is
very similar to the previously reported fully diluted earnings
(loss) per share. All earnings (loss) per share have been
restated to conform to the requirements of SFAS 128.
The following table illustrates the computation of basic and
diluted earnings (loss) per share:
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
12/28/97 12/29/96 12/28/97 12/29/96
<S> <C> <C> <C> <C>
Numerator:
Loss from continuing
operations $ (7,113) $(3,638) $(6,680) $(8,690)
======== ====== ====== ======
Denominator:
Weighted average shares
outstanding 17,088 16,551 16,864 16,489
======= ======= ======= =======
Earnings (Loss) Per Share:
Loss from continuing
operations $ (0.42) $ (0.22) $ (0.40) $ (0.53)
======= ====== ====== ======
</TABLE>
The computation of diluted loss per share for the three-
month and six-month periods ended December 28, 1997 and December
29, 1996 excluded the effect of incremental common shares
attributable to the potential exercise of outstanding common
stock options and outstanding warrants, because their effect was
antidilutive. These shares could potentially dilute basic
earnings (loss) per share in the future. The Company entered into
an agreement subsequent to December 28, 1997, which upon
consummation, would increase the number of shares outstanding
(see Note 11).
10. CONTINGENCIES
Government Claims
The Corporate Administrative Contracting Officer (the
"ACO"), based upon the advice of the United States Defense
Contract Audit Agency, has made a determination that Fairchild
Industries, Inc. ("FII"), a former subsidiary of the Company, did
not comply with Federal Acquisition Regulations and Cost
Accounting Standards in accounting for (i) the 1985 reversion to
FII of certain assets of terminated defined benefit pension
plans, and (ii) pension costs upon the closing of segments of
FII's business. The ACO has directed FII to prepare cost impact
proposals relating to such plan terminations and segment closings
and, following receipt of such cost impact proposals, may seek
adjustments to contract prices. The ACO alleges that substantial
amounts will be due if such adjustments are made, however, an
estimate of the possible loss or range of loss from the ACO's
assertion cannot be made. The Company believes it has properly
accounted for the asset reversions in accordance with applicable
accounting standards. The Company has held discussions with the
government to attempt to resolve these pension accounting issues.
Environmental Matters
The Company's operations are subject to stringent Government
imposed environmental laws and regulations concerning, among
other things, the discharge of materials into the environment and
the generation, handling, storage, transportation and disposal of
waste and hazardous materials. To date, such laws and
regulations have not had a material effect on the financial
condition, results of operations, or net cash flows of the
Company, although the Company has expended, and can be expected
to expend in the future, significant amounts for investigation of
environmental conditions and installation of environmental
control facilities, remediation of environmental conditions and
other similar matters, particularly in the Aerospace Fasteners
segment.
In connection with its plans to dispose of certain real
estate, the Company must investigate environmental conditions and
may be required to take certain corrective action prior or
pursuant to any such disposition. In addition, management has
identified several areas of potential contamination at or from
other facilities owned, or previously owned, by the Company, that
may require the Company either to take corrective action or to
contribute to a clean-up. The Company is also a defendant in
certain lawsuits and proceedings seeking to require the Company
to pay for investigation or remediation of environmental matters
and has been alleged to be a potentially responsible party at
various "Superfund" sites. Management of the Company believes
that it has recorded adequate reserves in its financial
statements to complete such investigation and take any necessary
corrective actions or make any necessary contributions. No
amounts have been recorded as due from third parties, including
insurers, or set off against, any liability of the Company,
unless such parties are contractually obligated to contribute and
are not disputing such liability.
As of December 28, 1997, the consolidated total recorded
liabilities of the Company for environmental matters approximated
$7,500, which represented the estimated probable exposures for
these matters. It is reasonably possible that the Company's
total exposure for these matters could be approximately $12,300
on an undiscounted basis.
Other Matters
The Company is involved in various other claims and lawsuits
incidental to its business, some of which involve substantial
amounts. The Company, either on its own or through its insurance
carriers, is contesting these matters. In the opinion of
management, the ultimate resolution of the legal proceedings,
including those aforementioned, will not have a material adverse
effect on the financial condition, or future results of
operations or net cash flows of the Company.
11. SUBSEQUENT EVENTS
On January 13, 1998, certain subsidiaries (the "Selling
Subsidiaries"), of Banner Aerospace, Inc. ("Banner", a majority-
owned subsidiary of the Registrant), completed the disposition of
substantially all of the assets and certain liabilities of the
Selling Subsidiaries to two wholly-owned subsidiaries of
AlliedSignal Inc. (the "Buyers"), in exchange for unregistered
shares of AlliedSignal Inc. common stock with an aggregate value
equal to $345,000 (the "Banner Hardware Group Disposition"). The
purchase price received by the Selling Subsidiaries ($345,000)
was based on the consolidated net worth as reflected on an
estimated closing date balance sheet for the assets (and
liabilities) conveyed by the Selling Subsidiaries to the Buyers.
Such estimated closing date balance sheet is subject to review by
the parties, and the purchase price will be adjusted (up or down)
based on the net worth as reflected on the final closing date
balance sheet. The assets transferred to the Buyers consists
primarily of Banner's hardware group, which includes the
distribution of bearings, nuts, bolts, screws, rivets and other
type of fasteners, and its PacAero unit. Approximately $170,000
of the common stock received from the Buyers was used to repay
outstanding term loans of Banner's subsidiaries and related fees.
Banner effected the Banner Hardware Group Disposition to
concentrate its efforts on the rotables and jet engine businesses
and because the Banner Hardware Group Disposition presented a
unique opportunity to realize a significant return on the
disposition of the hardware group.
On January 28, 1998, the Company entered into a merger
agreement to acquire Edwards and Lock Management Corporation,
doing business as Special-T Fasteners ("Special-T"), in a
business combination to be accounted for as a purchase. The total
cost of the acquisition will be approximately $46,500, and will
be funded with approximately $23,000 of available cash and
$23,500 of unregistered shares of the Company's Class A common
stock. The acquisition is subject to usual regulatory approvals.
Special-T distributes precision fasteners worldwide, utilized
primarily in the aerospace industry, to both government and
commercial manufacturers.
On February 3, 1998, with the proceeds of the Offering, term
loan borrowings under the Facility, and the after tax proceeds
the Company has already received from the STFI Merger
(collectively, the "Refinancing"), the Company refinanced
substantially all of its existing indebtedness (other than
indebtedness of Banner), consisting of (i) $63,000 to redeem the
11 7/8% Senior Debentures due 1999; (ii) $117,600 to redeem the
12% Intermediate Debentures due 2001; (iii) $35,856 to redeem the
13 1/8% Subordinated Debentures due 2006; (iv) $25,063 to redeem
the 13% Junior Subordinated Debentures due 2007; and (v) accrued
interest of $10,562.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Fairchild Corporation (the "Company") was incorporated
in October 1969, under the laws of the State of Delaware. On
November 15, 1990, the Company changed its name from Banner
Industries, Inc. to The Fairchild Corporation. RHI Holdings,
Inc. ("RHI") is a direct subsidiary of the Company. RHI is the
100% owner of Fairchild Holding Corp. ("FHC") and the majority
owner of Banner Aerospace, Inc. ("Banner"). The Company's
principal operations are conducted through RHI and FHC. The
Company also holds significant equity interests in Shared
Technologies Fairchild Inc. ("STFI") and Nacanco Paketleme
("Nacanco").
The following discussion and analysis provide information
which management believes is relevant to assessment and
understanding of the Company's consolidated results of operations
and financial condition. The discussion should be read in
conjunction with the consolidated financial statements and notes
thereto.
CAUTIONARY STATEMENT
Certain statements in the financial discussion and analysis
by management contain forward-looking information that involves
risk and uncertainty, including current trend information,
projections for deliveries, backlog, and other trend projections.
Actual future results may differ materially depending on a
variety of factors, including product demand; performance issues
with key suppliers; customer satisfaction and qualification
issues; labor disputes; governmental export and import policies;
worldwide political stability and economic growth; legal
proceedings; business combinations; investment risks; and acts of
nature.
RECENT DEVELOPMENTS
The Company has effected a series of transactions designed
to: (i) reduce its total indebtedness and annual interest
expense; (ii) increase the number of publicly held shares of
Class A Common Stock; and (iii) increase the Company's operating
and financial flexibility.
On November 20, 1997, STFI, a corporation of which the
Company owns approximately 42% of the outstanding common stock,
entered into a merger agreement with Intermedia Communications,
Inc. ("Intermedia") pursuant to which holders of STFI common
stock will receive $15.00 per share in cash. The Company was paid
approximately $85 million in cash (before tax and selling
expenses) in exchange for preferred stock of STFI owned by the
Company, and expects to receive an additional $93 million in cash
(before tax and selling expenses) in the first three months of
1998 in exchange for the 6,225,000 shares of common stock of STFI
owned by the Company. The Intermedia transaction replaces an
earlier merger agreement with the Tel-Save Holdings, Inc. under
which the Company would have received consideration primarily in
common stock of Tel-Save Holdings, Inc. Consummation of the STFI
Merger is subject to certain conditions.
On December 19, 1997, the Company completed a secondary
offering of public securities. The offering consisted of an
issuance of 3,000,000 shares of the Company's Class A Common
Stock at $20.00 per share (the "Offering").
On December 19, 1997, immediately following the Offering,
the Company restructured its FHC and RHI Credit Agreements by
entering into a new six-and-a-half-year credit facility to
provide the Company with a $300 million senior secured credit
facility (the "Facility") consisting of (i) a $75 million
revolving loan with a letter of credit sub-facility of $30
million and a $10 million swing loan sub-facility, and (ii) a
$225 million term loan.
On January 13, 1998, certain subsidiaries (the "Selling
Subsidiaries"), of Banner Aerospace, Inc. ("Banner", a majority-
owned subsidiary of the Registrant), completed the disposition of
substantially all of the assets and certain liabilities of the
Selling Subsidiaries to two wholly-owned subsidiaries of
AlliedSignal Inc. (the "Buyers"), in exchange for unregistered
shares of AlliedSignal Inc. common stock with an aggregate value
equal to $345 million (the "Banner Hardware Group Disposition").
The purchase price received by the Selling Subsidiaries ($345
million) was based on the consolidated net worth as reflected on
an estimated closing date balance sheet for the assets (and
liabilities) conveyed by the Selling Subsidiaries to the Buyers.
Such estimated closing date balance sheet is subject to review by
the parties, and the purchase price will be adjusted (up or down)
based on the net worth as reflected on the final Closing Date
Balance Sheet. The assets transferred to the Buyers consists
primarily of Banner's hardware group, which includes the
distribution of bearings, nuts, bolts, screws, rivets and other
type of fasteners, and its PacAero Unit. Approximately $170
million of the common stock received from the Buyers was used to
repay outstanding term loans of Banner's subsidiaries and related
fees. Banner effected the Banner Hardware Group Disposition to
concentrate its efforts on the rotables and jet engine businesses
and because the Banner Hardware Group Disposition presented a
unique opportunity to realize a significant return on the
disposition of the hardware group.
On February 3, 1998, with the proceeds of the Offering, term
loan borrowings under the Facility, and the after tax proceeds
the Company has already received from the STFI Merger
(collectively, the "Refinancing"), the Company refinanced
substantially all of its existing indebtedness (other than
indebtedness of Banner), consisting of (i) $63.0 million to
redeem the 11 7/8% Senior Debentures due 1999; (ii) $117.6
million to redeem the 12% Intermediate Debentures due 2001; (iii)
$35.9 million to redeem the 13 1/8% Subordinated Debentures due
2006; (iv) $25.1 million to redeem the 13% Junior Subordinated
Debentures due 2007; and (vi) accrued interest of $10.6 million.
In December 1997, the Company acquired AS+C GmbH, Aviation
Supply + Consulting ("AS&C") in a business combination accounted
for as a purchase. The total cost of the acquisition was $13,245,
which exceeded the fair value of the net assets of AS&C by
approximately $7,350, which is preliminarily being allocated as
goodwill and amortized using the straight-line method over 40
years. The Company purchased AS&C with cash borrowed. AS&C is an
aerospace parts, logistics, and distribution company primarily
servicing the European OEM market.
RESULTS OF OPERATIONS
The Company currently reports in two principal business
segments: Aerospace Fasteners and Aerospace Distribution. The
results of Fairchild Technologies, together with the results of
Gas Springs and SBC (for the prior year period) are included in
the Corporate and Other classification. The following table
illustrates the historical sales and operating income of the
Company's operations for the three months and six ended December
28, 1997 and December 29, 1996, respectively.
<TABLE>
<CAPTION>
(In thousands)
Three Months Ended Six Months Ended
------------------ ----------------
December December December December
28, 28, 28, 28,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales by Segment:
Aerospace Fasteners $ 91,014 $ 56,494 $167,861 $111,541
Aerospace
Distribution 119,614 96,985 242,528 181,092
Corporate and Other 31,346 10,290 50,193 19,944
Eliminations (a) (5,288) (3,857) (10,135) (6,575)
------- ------- ------- -------
Total Sales $236,686 $159,912 $450,447 $306,002
Operating Income
(Loss) by Segment:
Aerospace Fasteners $ 6,382 $ 2,156 $ 8,892 $ 4,264
Aerospace
Distribution 7,714 6,072 17,085 12,053
Corporate and Other (4,854) (6,569) (6,623) (11,610)
------- ------- ------- -------
Total Operating
Income $ 9,242 $ 1,659 $ 19,354 $ 4,707
(a) Represents intersegment sales from the Aerospace Fasteners
segment to the Aerospace Distribution segment.
</TABLE>
CONSOLIDATED RESULTS
Net sales of $236.7 million in the second quarter of Fiscal
1998 improved significantly by $76.8 million, or 48%, compared to
sales of $159.9 million in the second quarter of Fiscal 1997. Net
Sales of $450.4 million in the Fiscal 1998 six-month period
improved by $137.8 million, or 46%, compared to sales of $306.0
million in the first six months of Fiscal 1997. Sales growth was
stimulated by the resurgent commercial aerospace industry,
together with the effects that recent acquisitions contributed in
the current periods, and increased sales at Fairchild
Technologies.
Gross Margin as a percentage of sales was 27.5% and 24.2% in
the second quarter of Fiscal 1998 and 1997, respectively, and
26.0% and 25.7% in the six-month period of Fiscal 1998 and 1997,
respectively. The increased margin in the Fiscal 1998 periods is
attributable to improving efficiencies associated with increased
production performances contributed by an improving skills base
in the work force, and a reduction in the payment of overtime
within the Aerospace Fasteners segment, and a change in product
mix and decreased price competition in the Aerospace Distribution
segment.
Selling, General & Administrative expense as a percentage of
sales was 21.7% and 22.8% in the second quarter of Fiscal 1998
and 1997, respectively, and 21.5% and 23.6% in the six-month
period of Fiscal 1998 and 1997, respectively. The improvement in
the Fiscal 1998 periods is attributable primarily to
administrative efficiencies relative to increasing sales.
Research and Development expense increased in the Fiscal
1998 periods, compared to the prior year periods, as a result of
product development within Fairchild Technologies. Additional
research and development expenses will be incurred in the future.
Other income increased $2.0 million in the current six-month
period, compared to the prior year six-month period, due
primarily to the sale of air rights over a portion of the
property the Company owns and is developing in Farmingdale, New
York.
Operating income of $9.2 million in the second quarter of
Fiscal 1998 increased $7.6 million, compared to operating income
of $1.7 million in the second quarter of Fiscal 1997. Operating
income of $19.4 million in the six months period ended December
28, 1997, improved by $14.7 million, compared to the six month
period ended December 29, 1996. The increase in operating income
was due to the improved results provided by the Company's
aerospace operations.
Investment income (loss), net, decreased by $8.9 million in
the second quarter and $6.6 million in the first six months of
Fiscal 1998, due to recognizing unrealized losses on the fair
market adjustments of trading securities in the Fiscal 1998
periods while recording unrealized gains from trading securities
in the Fiscal 1997 periods. The Company's portfolio of trading
securities is small, varied, and subject to fluctuations in
market value. Trading securities are marked to market value in
the statement of earnings.
Equity in earnings of affiliates increased slightly in the
second quarter and six months of Fiscal 1998, compared to the
first quarter of Fiscal 1997, due to improved earnings by
Nacanco.
Income taxes included a $6.7 million tax benefit in the
first six months of Fiscal 1998, on pre-tax losses of $13.7
million. The tax benefit was higher than the statutory rate due
primarily to larger losses generated by domestic operations.
Included in earnings from discontinued operations is the
Company's equity in earnings of STFI, which was slightly lower in
the Fiscal 1998 periods.
The $30.0 million after-tax gain on disposal of discontinued
operations in the Fiscal 1998 periods, includes the Company's
disposition of its preferred stock positions as a result of the
STFI Merger.
The extraordinary loss, net, in the Fiscal 1998 periods
includes the write-off of deferred loan fees associated with the
early extinguishment of the FHC and RHI credit facilities which
were replaced as part of the Refinancing.
Net earnings of $20.4 million in the first six months ended
December 28, 1997, improved by $28.5 million compared to the $7.6
million net loss recorded in the six months ended December 29,
1996. This improvement is attributable to a $14.6 million
increase in operating income; and the $30.0 million gain on the
disposition of discontinued operations, offset partially by a
$6.6 million decrease in investment income and the $3.0 million
extraordinary loss.
SEGMENT RESULTS:
AEROSPACE FASTENERS SEGMENT
Sales in the Aerospace Fasteners segment increased by $34.5
million in the second quarter and $56.3 million for the Fiscal
1998 six-month period, reflecting significant growth in the
commercial aerospace industry combined with the effect of the
Simmonds acquisition. New orders have continued to exceed
reported sales, resulting in a backlog of $207 million at
December 28, 1997, up from $196 million at June 30, 1997.
Excluding sales contributed by acquisitions, sales increased 22%
and 19% for the three and six months ended December 28, 1997,
respectively, compared to the same periods in the prior year.
Operating income improved by $4.2 million, or 196%, in the
second quarter and $4.6 million, or 109%, in the Fiscal 1998 six-
month period, compared to the Fiscal 1997 periods. Acquisitions
and marketing changes were contributors to this improvement.
Excluding the results provided by acquisitions, operating income
increased by 116% in the second quarter and 11% for the six
months of Fiscal 1998, compared to the same periods in the prior
year. The Company anticipates that productivity efficiencies will
further improve operating income in the coming months.
AEROSPACE DISTRIBUTION SEGMENT
Aerospace Distribution sales were up $22.6 million, or 23%
in the second quarter and $61.4 million, or 34%, in the first six
months of Fiscal 1998, compared to the corresponding periods of
the prior year. The improvement in the Fiscal 1998 periods is due
to increased sales to commercial airlines, original equipment
manufacturers, and other distributors as well as increased sales
of turbine parts and engine management services. In addition,
incremental sales provided by PB Herndon also contributed to the
increase.
Operating income was up $1.6 million, or 27%, in the second
quarter and $5.0 million, or 42% for the first six months of
Fiscal 1998, compared to the same period of the prior year, due
primarily to the increase in sales and the related economies of
scale. This segment has benefited from the extended service lives
of existing aircraft, growth from acquisitions and internal
growth, which has increased its overall market share.
CORPORATE AND OTHER
The Corporate and Other classification includes Fairchild
Technologies, Gas Springs Division and corporate activities. The
results of SBC, which was sold at Fiscal 1997 year-end, are
included in the prior period results. The group reported an
increase in sales of $21.1 million, or 205%, in the second
quarter and $30.2 million, or 155%, in the first six months of
Fiscal 1998, as compared to the same periods in Fiscal 1997, due
primarily to an improvement in sales of Fairchild Technologies
advanced semiconductor manufacturing equipment products. The
operating loss decreased by $1.7 million, or 26%, in the second
quarter and $5.0, or 43%, in the first six months of Fiscal 1998,
compared to the Fiscal 1997 periods, as a result of an increase
in other income and a decline in legal expenses, partially offset
by increased losses at Fairchild Technologies. The operating
results classified under Corporate and Other are affected by the
operations of Fairchild Technologies Division ("The Division"),
which may fluctuate because of industry cyclicality, the volume
and timing of orders, the timing of new product shipments,
customer's capital spending, and pricing changes by The Division
and its competition. The Division has experienced a reduction of
its backlog, and margin compression during the past six months,
which combined with the existing cost base, may impact future
earnings from the Division.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $19.5 million from
$19.4 million at June 30, 1997 to $38.9 million at December 28,
1997. Cash received form the STFI Merger and the Offering was
partially offset by cash used for operations of $93.9 million,
net capital expenditures, including acquisitions of $30.9
million. The Company's principal cash requirements include debt
service, capital expenditures, acquisitions, and payment of other
liabilities. Other liabilities that require the use of cash
include post-employment benefits for retirees, environmental
investigation and remediation obligations, and litigation
settlements and related costs. The Company maintains credit
agreements with a consortium of banks, which provide a term loan
and revolving credit facilities to the Company, and a separate
revolving credit facility and term loans to Banner. The Company
anticipates that existing capital resources, cash generated from
operations, and cash from borrowings and asset sales will be
adequate to maintain the Company's current level of operations.
With the proceeds of the Offering, borrowings under the
Facility and the after tax proceeds the Company has already
received from the STFI Merger, the Company refinanced
substantially all of its existing indebtedness (other than
indebtedness at Banner), consisting of the 11 7/8% Senior
Debentures due 1999, the 12% Intermediate Debentures due 2001,
the 13 1/8% Subordinated Debentures due 2006, the 13% Junior
Subordinated debentures due 2007 and its existing bank
indebtedness. The Refinancing reduced the Company's total net
indebtedness by approximately $132 million and reduced the
Company's annual interest expense, on a pro forma basis, by
approximately $21 million. The completion of the STFI Merger will
reduce the Company's annual interest expense by approximately $3
million. In addition, a portion of the proceeds from the Banner
Hardware Group Disposition were used to repay all of Banner's
outstanding bank indebtedness, which will further reduce the
Company's annual interest expense by an additional $14 million.
The increase in the Company's shareholders' equity is
expected to be approximately $40 million resulting a projected
gain of $103 million to be recorded at the closing of the Banner
Hardware Group Disposition, and an estimated tax provision of $43
million and a minority interest effect of $20 million. The
operating income of the subsidiaries included in the Banner
Hardware Group Disposition was $6.1 million and $14.1 million for
the three and six months ended December 28, 1997, respectively.
Whereas the Company will no longer benefit from the operations of
the disposed Banner subsidiaries it expects to benefit from lower
interest expense and dividends paid on the AlliedSignal stock.
In order to focus its operations on the aerospace industry,
the Company is considering distributing (the "Spin-Off") to its
shareholders all of the stock of a subsidiary to be formed ("Spin-
Co"), which would own substantially all of the Company's non-
aerospace assets. Although the Company's ability to effect the
Spin-Off is uncertain, the Company may effect a spin-off of
certain non-aerospace assets as soon as it is reasonably
practicable following receipt of a solvency opinion relating to
Spin-Co and all necessary governmental and third party approvals.
In order to effect the Spin-Off, approval is required from the
board of directors of the Company, however, shareholder approval
is not required. In addition, the Company may encounter
unexpected delays in effecting the Spin-Off, and the Company can
make no assurance as to the timing thereof. In addition, prior to
the consummation of the Spin-Off, the Company may sell,
restructure or otherwise change the assets and liabilities that
will be in Spin-Co, or for other reasons elect not to consummate
the Spin-Off. Consequently, there can be no assurance that the
Spin-Off will occur.
In connection with the Spin-Off, it is anticipated that the
Company will enter into an indemnification agreement pursuant to
which Spin-Co will assume and be solely responsible for all known
and unknown past, present and future claims and liabilities of
any nature relating to the pension matter described under
"Business--Legal Proceedings"; certain environmental liabilities
currently recorded as $7.5 million, but for which it is
reasonably possible the total expense could be $12.3 million on
an undiscounted basis; certain retiree medical cost and
liabilities related to discontinued operations for which the
Company has accrued approximately $31.3 million as of December
28, 1997 (see Note 11 to the Company's Consolidated Financial
Statements); and certain tax liabilities. In addition, the Spin-
Co would also be responsible for all liabilities relating to the
Technologies business and an allocation of corporate expenses.
Responsibility for such liabilities would require significant
commitments.
Should the Spin-Off, as presently contemplated, occur prior
to June of 1999, the Spin-Off will be a taxable transaction to
shareholders of the Company and could result in a material tax
liability to the Company and its shareholders. The amount of the
tax to the Company and its shareholders is uncertain, and if the
tax is material to the Company, the Company may elect not to
consummate the Spin-Off. Because circumstances may change and
because provisions of the Internal Revenue Code of 1986, as
amended, may be further amended from time to time, the Company
may, depending on various factors, restructure or delay the
timing of the Spin-Off to minimize the tax consequences thereof
to the Company and its shareholders.
With the year 2000 approaching, the Company is preparing all
of its computer systems to be Year 2000 compliant. Substantially
all of the systems within the Aerospace Fasteners segment are
currently Year 2000 compliant. The Company expects to replace and
upgrade some systems, which are not Year 2000 compliant, within
the Aerospace Distribution segment and at Fairchild Technologies.
The Company expects all of its systems will be Year 2000
compliant on a timely basis. However, there can be no assurance
that the systems of other companies, on which the Company's
systems rely, will also be timely converted. Management is
currently evaluating the cost of ensuring that all of its systems
are Year 2000 compliant.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, FASB issued two pronouncements, Statement of
Financial Accounting Standards No. 130 ("SFAS 130") "Reporting
Comprehensive Income", and Statement of Financial Accounting
Standards No. 131 ("SFAS 131") "Disclosures about Segments of an
Enterprise and Related Information". SFAS 130 establishes
standards for reporting and display of comprehensive income and
its components in the financial statements. SFAS 131 supersedes
Statement of Financial Accounting Standards No. 14 "Financial
Reporting for Segments of a Business Enterprise" and requires
that a public company report certain information about its
operating segments in annual and interim financial reports. The
Company will adopt SFAS 130 and SFAS 131 in Fiscal 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Note 10 of Notes to Consolidated
Financial Statements.
Item 4. Submission of Matters to a vote of Security Holders.
The Annual Meeting of Stockholders of the Company was held
on November 20, 1997. Four matters of business were held to vote
for the following purposes: (1) the election of thirteen
directors of the Company for the ensuing year ("Proposal 1"); (2)
the amendments to the 1986 Non-Qualified and Incentive Stock
Option Plan ("Proposal 2"); (3) the approval of grants of stock
options to certain executive officers and employees under the
1986 Non-Qualified and Incentive Stock Option Plan ("Proposal
3"); and (4) the approval of the material terms of performance
goals for Fiscal 1998 Incentive Compensation award for the
Company's Chief Executive Officer ("Proposal 4"). The following
tables provides the shareholder election results in number of
shares:
Proposal 1
<TABLE>
<CAPTION>
Directors Votes For Votes Withheld
- ------------------ ------------- -----------------
<S> <C> <C>
Michael T. Alcox 38,456,208 539,985
Melville R. Barlow 38,456,084 540,109
Mortimer M. Caplin 38,425,786 570,407
Colin M. Cohen 38,456,961 539,232
Philip David 38,456,284 539,909
Harold J. Harris 38,456,584 539,609
Daniel Lebard 38,455,584 540,609
Jacques S. Moskovic 38,455,581 540,612
Herbert S. Richey 38,428,284 657,909
Moshe Sanbar 38,462,496 533,697
Robert A. Sharpe 38,456,984 539,209
Eric I. Steiner 38,455,275 540,918
Jeffrey J. Steiner 38,456,661 539,532
</TABLE>
<TABLE>
<CAPTION>
Votes For Votes Against Abstain Non-Vote
---------- ------------- ------- ---------
<S> <C> <C> <C> <C>
Proposal 2 37,857,321 898,573 35,597 204,702
Proposal 3 37,884,760 859,277 47,454 204,702
Proposal 4 38,442,527 319,400 29,564 204,702
</TABLE>
Item 5. Other Information
Articles have appeared in the French press reporting an
inquiry by a French magistrate into certain allegedly improper
business transactions involving Elf Acquitaine, a French
petroleum company, its former chairman and various third parties,
including Maurice Bidermann. In connection with this inquiry,
the magistrate has made inquiry into allegedly improper
transactions between Mr. Steiner and that petroleum company. In
response to the magistrate's request that Mr. Steiner appear in
France as a witness, Mr. Steiner submitted statements concerning
the transactions and has offered to appear in person if certain
arrangements were made. According to the French press, the
magistrate also requested permission to commence an inquiry into
transactions involving another French petroleum company, but her
request was not granted. If the magistrate were to renew her
request, and if it were granted, inquiry into transactions
between such company and Mr. Steiner, could ensue.
Mr. Steiner has recently been cited by a French prosecutor
to appear on May 18, 1998, before the Tribunal de Grande Instance
de Paris, to answer a charge of knowingly benefiting in 1990,
from a misuse by Mr. Bidermann of corporate assets of Societe
Generale Mobiliere et Immobiliere, a French corporation in which
Mr. Bidermann is believed to have been the sole shareholder.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
* 10(y)(iv) Amendment No. 3 dated as of December 19,
1997, to the Credit Agreement dated as of May 27, 1996.
* 10(ag)(ii) Amendment No. 2 dated as of December 23,
1997, to the Interest Rate Hedge Agreement between
Registrant and Citibank, N.A. dated as of August 19, 1997.
* 27 Financial Data Schedules.
* 99 (a)(i) Financial statements, related notes
thereto, including exhibits, of Banner Aerospace, Inc. for the
nine months ended December 31, 1997 (incorporated by reference
to the Banner Aerospace Inc. Form 10-Q for the nine months ended December 31,
1997).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter
ended December 28, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to the signed on
its behalf by the undersigned hereunto duly authorized.
For THE FAIRCHILD CORPORATION
(Registrant) and as its Chief
Financial Officer:
By: Colin M. Cohen
Senior Vice President and
Chief Financial Officer
Date: February 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-28-1997
<CASH> 38,907
<SECURITIES> 8,487
<RECEIVABLES> 191,497
<ALLOWANCES> 9,921
<INVENTORY> 393,130
<CURRENT-ASSETS> 675,550
<PP&E> 263,661
<DEPRECIATION> 130,744
<TOTAL-ASSETS> 1,146,165
<CURRENT-LIABILITIES> 280,224
<BONDS> 371,610
0
0
<COMMON> 2,592
<OTHER-SE> 302,572
<TOTAL-LIABILITY-AND-EQUITY> 1,146,165
<SALES> 450,447
<TOTAL-REVENUES> 453,067
<CGS> 333,336
<TOTAL-COSTS> 433,713
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,756
<INCOME-PRETAX> (13,336)
<INCOME-TAX> (6,656)
<INCOME-CONTINUING> (6,680)
<DISCONTINUED> 30,596
<EXTRAORDINARY> (3,024)
<CHANGES> 0
<NET-INCOME> 20,892
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
REVISED CONFIRMATION
--------------------
Date: December 23, 1997
To: Fairchild Holding Corporation
Attention: Colin Cohen
From: Citibank, N.A. New York
399 Park Avenue
New York, NY 10043
Deal No. 50970148
The purpose of this letter agreement is to set forth the terms
and conditions of the Transaction entered into between us on the
Trade Date referred to below. This letter constitutes a
"Confirmation" as referred to in the Master Agreement specified
below. This Confirmation amends, restates and supersedes any
prior Confirmation for this Transaction.
This confirmation evidences a complete binding agreement between
you and us as to the terms of the Transaction to which this
Confirmation relates. In addition, you and we agree to use our
best efforts promptly to negotiate, execute and deliver a Master
Agreement (Multicurrency-Cross Border) in the form published by
the International Swaps and Derivatives Association, Inc.
("ISDA"), with such modifications as you and we shall in good
faith agree. Upon the execution by you and us of such Master
Agreement (the "Agreement"), this Confirmation will supplement,
form a part of, and be subject to the Agreement. A copy of the
Agreement has been, or promptly after the date hereof will be,
delivered to you.
If Fairchild Holding Corporation fails to execute and deliver or
to negotiate in good faith the Agreement within 180 days of the
Trade Date, Citibank may give Fairchild Holding Corporation
notice that an Additional Termination Event has occurred and is
continuing with respect to Fairchild Holding Corporation, in
which event Fairchild Holding Corporation will be the only
Affected Party.
Prior to execution of the Agreement the provision of the Master
Agreement (Multicurrency-Cross Border), in the form published by
ISDA, are incorporated by reference herein and form a part of
this Confirmation and, further, this Confirmation (together with
all other Confirmations of Transactions previously entered into
between us, notwithstanding anything to the contrary therein)
shall be deemed to be subject to the terms of the Agreement, as
if, on the Trade Date of the first such Transaction between us,
you and we have executed the Agreement (without any Schedule
thereto).
The definitions and provisions contained in the 1991 ISDA
Definitions (as published by ISDA) are incorporated by reference
into this Confirmation.
This Confirmation and ISDA Agreement will be governed by the laws
of the State of New York.
1. In the event of any inconsistency between this Confirmation
and 1991 ISDA Definitions or the ISDA Agreement, this
Confirmation will control for the purpose of the Transaction to
which this Confirmation relates.
2. Each party will make each payment specified in this
confirmation as being payable by it, not later than the due date
for value on that date in the place of the account specified
below or otherwise specified in writing, in freely transferable
funds and in a manner customary for payments in the required
currency.
3. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Notional Amount: USD 100,000,000.00
Trade Date: August 6, 1997
Effective Date: February 17, 1998
Termination Date: February 19, 2008
Fixed Amounts:
Fixed Rate payer: Party B (Fairchild Holding Corporation)
Fixed Rate Payer
Payment Dates: The 17th day of February, May, August and
November,
in each year, commencing May 18, 1998, and
to and
including the Termination Date, subject to
adjustment
in accordance with the Modified Following
Business
Day Convention.
Fixed Rate: 6.715000 % per annum
Fixed Rate Day
Count Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Party A (Citibank N.A. New York)
Floating Rate Payer
Payment Dates: The 17th day of February, May, August and
November,
each year, commencing May 18, 1998, and to
and
including the Termination Date, subject to
adjustment in accordance with the Modified
Following
Business Day Convention.
Floating Rate Option: USD-LIBOR-BBA
Designated
Maturity: 3 months
Floating Rate Day
Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Business Days: New York and London
Calculation Agent: Citibank, N.A. New York
4. Cash Settlement Provision:
Party B may, provided that no Early Termination Date has occurred
or been designated with respect to Party B, require this
Transaction to be terminated and the remaining payment
obligations under this Transaction to be settled and discharged
on any Business Day prior to February 17, 1998 (a "Cash
Settlement Date") by written or telephonic notice to Citibank at
approximately 11:00 am, New York time, two Business days prior to
such Cash Settlement Date. If Party B has not selected a date
prior to February 17, 1998 then the February 17, 1998 shall be
deemed the Cash Settlement Date. An amount (the "Cash Settlement
Amount") shall be calculated as provided below on the day that is
two Business Days prior to the Cash Settlement Date (the "Cash
Settlement Determination Date"), and the remaining Payment
obligations of each party under this Transaction shall be settled
and discharged by payment of the Cash Settlement Amount on the
Cash Settlement Date.
The Cash Settlement Amount, as determined by Citibank in good
faith on the Cash Settlement Determination Date, will be an
amount equal to the amount which Citibank would be required to
pay to the Counterparty or the Counterparty would be required to
pay to Citibank in consideration for the Termination as of the
Cash Settlement Date of the outstanding rights and obligations of
the parties under this Transaction.
Upon payment of the Cash Settlement Amount and settlement of the
Fixed Amount and Floating Amount (if any) payable on the Cash
Settlement Date, this Transaction shall terminate and neither
party shall have any further rights or obligations hereunder.
5. Account Details:
Payments to Fixed Rate payer Fairchild Holding Corporation:
As directed in writing by Fixed Rate Payer
Payments to Floating Rate Payer Citibank, N.A. New York:
Citibank, N.A. New York
Fairchild Holding Corporation hereby agrees (a) to check this
Confirmation (Reference No: 50970148) carefully and immediately
upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing
correctly sets forth the terms of the agreement between Citibank,
N.A. New York and Fairchild Holding Corporation with respect to
the particular Transaction to which this Confirmation relates, by
manually signing this Confirmation and providing the other
information requested herein and immediately returning an
executed copy to facsimile No. (416) 941-7432. Please contact us
immediately should the particulars of this Confirmation not be in
accordance with your understanding (416) 947-4105/5665.
Citibank, N.A. New York
By: Nancy Ling
Title: Asst. Mgr.
Global Markets
Accepted and confirmed as of the date first written:
Fairchild Holding Corporation
By: Karen L. Schneckenburger
Title: Vice President & Treasurer
==========================================================
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 19, 1997
among
FAIRCHILD HOLDING CORP.
as a Borrower
RHI HOLDINGS, INC.
as a Borrower
THE FAIRCHILD CORPORATION
as a Borrower
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
CITICORP USA, INC.
as an Administrative Agent
and Collateral Agent
and
NATIONSBANK, N.A.
as an Administrative Agent
=================================================================
<PAGE>
ARTICLE IDEFINITIONS
1.01. Certain Defined 2
1.02. Computation of Time Periods 40
1.03. Accounting Terms; Financial
Term Definitions 41
1.04. Other Terms 41
1.05. Dollar Equivalents 41
ARTICLE II AMOUNTS AND TERMS OF LOANS
2.01. Revolving Credit, Term Loan and Swing
Loan Facilities 42
2.02. General Terms 45
2.03. Authorized Officers and Collateral Agent 48
2.04. Use of Proceeds of Loans 48
ARTICLE III LETTERS OF CREDIT
3.01. Letters of Credit 49
3.02. Transitional Provisions 56
3.03. Obligations Several 56
ARTICLE IV PAYMENTS AND PREPAYMENTS
4.01. Prepayments; Reductions in Commitments 57
4.02. Payments 60
4.03. Promise to Repay; Evidence of Indebtedness 64
4.04. Proceeds of Collateral;
Concentration Account Arrangements 65
4.05. Cash Collateral Account 66
4.06. Post-Default Withdrawals from the
Concentration Account and Cash Collateral
Account 67
ARTICLE V INTEREST AND FEES
5.01. Interest on the Loans and other
Obligations 69
5.02. Special Provisions Governing Eurodollar
Rate Loans 71
5.03. Fees 73
ARTICLE VI CONDITIONS TO LOANS AND LETTERS OF CREDIT
6.01. Conditions Precedent to the Initial
LoansandLettersofCredit 76
6.02. Conditions Precedent to All Loans
and Letters of Credit 78
ARTICLE VII REPRESENTATIONS AND WARRANTIES
7.01. Representations and Warranties of
the Borrowers 80
ARTICLE VIII REPORTING COVENANTS
8.01. Financial Statements; Communications
with Accountants 90
8.02. Events of Default 93
8.03. Lawsuits 93
8.04. Schedules of Spin-Off Transfers 94
8.05. Intentionally omitted 94
8.06. Environmental Notices 94
8.07. Other Reports 95
8.08. Other Information 95
8.09. Borrowing Base Certificates 95
ARTICLE IX AFFIRMATIVE COVENANTS
9.01. Corporate Existence, Etc 96
9.02. Corporate Powers; Conduct of Business 96
9.03. Compliance with Laws, Etc 96
9.04. Payment of Taxes and Claims; Tax
Consolidation 96
9.05. Insurance 97
9.06. Inspection of Property; Books and Records;
Discussions 97
9.07. Insurance and Condemnation Proceeds 98
9.08. ERISA Compliance 98
9.09. Foreign Employee Benefit Plan Compliance 99
9.10. Expense Sharing Agreement 99
9.11. Maintenance of Property 99
9.12. Condemnation 99
9.13. Subsidiaries Acquired or Formed after
the Effective Date 99
9.14. Performance of Material Contracts 100
9.15. Further Assurances 100
9.16. Use of Proceeds of the Term Loans
and the Offering 100
9.17. Required Hedge Agreements 100
ARTICLE X NEGATIVE COVENANTS
10.01. Indebtedness 102
10.02. Sales of Assets 104
10.03. Liens 106
10.04. Investments 106
10.05. Accommodation Obligations 109
10.06. Restricted Junior Payments 110
10.07. Conduct of Business; Accounting and
Reporting Practices 110
10.08. Transactions with Shareholders and
Affiliates 111
10.09. Restriction on Fundamental Changes 111
10.10. Sales and Leasebacks 112
10.11. Margin Regulations; Securities Laws 112
10.12. ERISA 112
10.13. Issuance of Equity Securities 113
10.14. Organizational Documents; Material
Contractual Obligations 113
10.15. Bank Accounts 114
10.16. Fiscal Year; Fiscal Quarters;
Fiscal Months 114
10.17. Transactions with the Technologies
Companies 114
ARTICLE XI FINANCIAL COVENANTS
11.01. Interest Coverage Ratio 115
11.02. Capital Expenditures 115
11.03. Minimum Net Worth 116
11.04. Consolidated Indebtedness for Borrowed
Money to EBITDA Ratio 117
11.05. Minimum EBITDA 118
11.06. Minimum Consolidated Fixed Charge
Coverage Ratio 119
11.07. EBITDA Calculations 119
ARTICLE XII EVENTS OF DEFAULT; RIGHTS AND REMEDIES
12.01. Events of Default 120
12.02. Rights and Remedies 123
ARTICLE XIII THE ADMINISTRATIVE AGENTS AND COLLATERAL AGENT
13.01. Appointment 125
13.02. Nature of Duties 125
13.03. Rights, Exculpation, Etc. 126
13.04. Reliance 127
13.05. Indemnification 127
13.06. Citicorp Individually 128
13.07. Successor Collateral Agents 128
13.08. Relations Among Lenders 129
13.09. Concerning the Collateral and the
Loan Documents 129
ARTICLE XIV YIELD PROTECTION
14.01. Taxes 132
14.02. Increased Capital 134
14.03. Changes; Legal Restrictions 135
14.04. Illegality 136
14.05. Compensation 136
14.06. Limitation on Additional Amounts
Payable by the Borrowers. 137
14.07. Change in Lending Office 137
14.08. Judgment Currency 137
ARTICLE XV MISCELLANEOUS
15.01. Assignments and Participations 139
15.02. Expenses 141
15.03. Indemnity 141
15.04. Change in Accounting Principles 144
15.05. Setoff 144
15.06. Ratable Sharing 145
15.07. Amendments and Waivers 146
15.08. Notices 148
15.09. Survival of Warranties and Agreements 148
15.10. Failure or Indulgence Not Waiver;
Remedies Cumulative 148
15.11. Marshalling; Payments Set Aside 148
15.12. Severability 149
15.13. Headings 149
15.14. Governing Law 149
15.15. Limitation of Liability 149
15.16. Successors and Assigns 149
15.17. Certain Consents and Waivers of the
Borrowers 149
15.18. Counterparts; Effectiveness;
Inconsistencies 151
15.19. Limitation on Agreements 151
15.20. Confidentiality 151
15.21. Obligations of Borrowers Joint
and Several 152
15.22. Entire Agreement 154
15.23. Advice of Counsel 154
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This Third Amended and Restated Credit Agreement dated as of
December 19, 1997 (as amended, supplemented or modified from time
to time, the "Agreement") is entered into among Fairchild Holding
Corp., a Delaware corporation ("FHC"), RHI Holdings, Inc., a
Delaware corporation ("RHI"), The Fairchild Corporation, a Delaware
corporation ("TFC"), the institutions from time to time a party
hereto as Lenders, whether by execution of this Agreement or an
Assignment and Acceptance, the institutions from time to time a
party hereto as Issuing Banks, whether by execution of this
Agreement or an Assignment and Acceptance or by appointment as
provided in this Agreement, Citicorp USA, Inc., a Delaware
corporation ("Citicorp"), in its capacity as an administrative
agent for the Lenders and the Issuing Banks hereunder (in such
capacity, an "Administrative Agent") and as the collateral agent
for the Lenders and the Issuing Banks hereunder (in such capacity,
the "Collateral Agent"), and NationsBank, N.A., a national banking
association, in its capacity as an administrative agent for the
Lenders and the Issuing Banks hereunder (in such capacity, an
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, FHC entered into that certain Credit Agreement dated as of
March 13, 1996 with certain financial institutions as "Lenders" and
"Issuing Banks" and Citicorp in the capacity as administrative
agent for such "Lenders" and "Issuing Banks" (the "Original Credit
Agreement"), which Original Credit Agreement was amended and
restated in its entirety as evidenced by that certain Amended and
Restated Credit Agreement dated as of July 26, 1996 among FHC,
certain financial institutions as "Lenders" and "Issuing Banks" and
Citicorp as administrative agent for such "Lenders" and "Issuing
Banks" (the "First Amended Credit Agreement") and which First
Amended Credit Agreement was amended and restated in its entirety
as evidenced by that certain Second Amended and Restated Credit
Agreement dated as of July 18, 1997 among FHC, RHI, certain
financial institutions as "Lenders" and "Issuing Banks" and
Citicorp as administrative Agent for such "Lenders" and "Issuing
Banks" (the "Second Amended Credit Agreement") pursuant to which
Original Credit Agreement, First Amended Credit Agreement, and
Second Amended Credit Agreement certain loans have heretofore been
made to FHC and certain letters of credit have heretofore been
issued for the account of FHC and certain of its Subsidiaries;
WHEREAS, RHI entered into that certain Restated and Amended Credit
Agreement dated as of May 27, 1996, as amended (the "RHI Credit
Agreement") between RHI and Citicorp, in the capacity of lender and
administrative agent, pursuant to which certain loans have been
made to RHI and a certain letter of credit has heretofore been
issued for the account of RHI;
WHEREAS, FHC has requested that the Second Amended Credit Agreement
be amended to, among other things, increase the financial
accommodations afforded FHC thereunder to facilitate the repayment
of certain indebtedness of RHI and TFC as more particularly
described in Exhibit A attached hereto and made a part hereof, and
RHI and TFC have agreed to become a party to this Agreement as
borrowers; provided that the RHI Credit Agreement is amended and
restated by the terms of this Agreement and the letter of credit
issued under the RHI Credit Agreement continues outstanding and is
governed by the terms of this Agreement; and
WHEREAS, in view of the foregoing, FHC, certain of the "Lenders",
and the "Issuing Banks" under the Second Amended Credit Agreement,
TFC, and RHI and Citibank, N.A. as parties to the RHI Credit
Agreement, have agreed to enter into this Agreement in order to,
among other things, (i) restate and amend the terms and provisions
of the Second Amended Credit Agreement and RHI Credit Agreement in
their entirety and (ii) set forth the terms and conditions under
which the Lenders will hereafter extend Loans and the Issuing Bank
will continue letters of credit issued under the Original Credit
Agreement, First Amended Credit Agreement, Second Amended Credit
Agreement, and RHI Agreement and hereafter issue Letters of Credit
to or for the benefit of TFC, RHI and FHC;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings, applicable both to the
singular and the plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation,
contingent or otherwise, of one Person with respect to any
Indebtedness, obligation or liability of another, if the primary
purpose or intent thereof by the Person incurring the Accommodation
Obligation is to provide assurance to the obligee of such
Indebtedness, obligation or liability of another that such
Indebtedness, obligation or liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or
that the holders thereof will be protected (in whole or in part)
against loss in respect thereof including, without limitation,
direct and indirect guarantees, endorsements (except for collection
or deposit in the ordinary course of business), notes co-made or
discounted, recourse agreements, take-or-pay agreements, keep well
agreements, put options, agreements to purchase or repurchase such
Indebtedness, obligation or liability or any security therefor or
to provide funds for the payment or discharge thereof, agreements
to maintain solvency, assets, level of income, or other financial
condition, and agreements to make payment other than for value
received. The amount of any Accommodation Obligation shall be
equal to the amount of the Indebtedness, obligation or liability so
guaranteed or otherwise supported; provided, that (i) if the
liability of the Person extending such guaranty or support is
limited with respect thereto to an amount less than the
Indebtedness, obligation or liability guaranteed or supported, or
is limited to recourse against a particular asset or assets of such
Person, the amount of the corresponding Accommodation Obligation
shall be limited (in the case of a guaranty or other support
limited by amount) to such lesser amount or (in the case of a
guaranty or other support limited by recourse to a particular asset
or assets) to the higher of the Fair Market Value of such asset or
assets at the date for determination of the amount of the
Accommodation Obligation or the value at which such asset or assets
would, in conformity with GAAP, be reflected on or valued for the
purposes of preparing a consolidated balance sheet of such Person
as at such determination date; and (ii) if any obligation or
liability is guaranteed or otherwise supported jointly and
severally by a Person and others, then the amount of the obligation
or liability of such Person with respect to such guaranty or other
support to be included in the amount of such Person's Accommodation
Obligation shall be the whole principal amount so guaranteed or
otherwise supported.
"Administrative Agent" means each of Citicorp and NationsBank and
"Administrative Agents" means Citicorp and NationsBank,
collectively.
"Affiliate", as applied to any Person, means any other Person that
directly or indirectly controls, is controlled by, or is under
common control with, that Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or
indirectly, of the power to vote ten percent (10.0%) or more of the
Securities having voting power for the election of directors of
such Person or otherwise to direct or cause the direction of the
management and policies of that Person, whether through the
ownership of voting Securities or by contract or otherwise.
"Agreement" is defined in the preamble hereto.
"Applicable Lending Office" means, with respect to a particular
Lender, its Eurodollar Lending Office in respect of provisions
relating to Eurodollar Rate Loans and its Domestic Lending Office
in respect of provisions relating to Base Rate Loans.
"Assignment and Acceptance" means an Assignment and Acceptance in
substantially the form of Exhibit B attached hereto and made a part
hereof (with blanks appropriately completed) delivered to the
Collateral Agent in connection with an assignment of a Lender's or
Issuing Bank's interest under this Agreement in accordance with the
provisions of Section 15.01.
"Availability" means, at any time of determination thereof, the
lesser of:
(i) the amount by which the Revolving Credit Commitments at such
time exceeds the sum of (a) the Revolving Credit Obligations at
such time plus (b) the outstanding balance of Protective Advances
at such time plus (c) the Swing Loan Reserve, or
(ii) the amount by which the Borrowing Base at such time exceeds
the sum of (a) the Revolving Credit Obligations at such time plus
(b) the outstanding balance of Protective Advances at such time
plus (c) the outstanding balance of the Term Loans at such time
plus (d) the Swing Loan Reserve.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. '' 101 et seq.), as amended from time to time, and any
successor statute.
"Banner" means Banner Aerospace, Inc., a Delaware corporation.
"Banner Preferred" means Series A Convertible Paid-in-Kind
Preferred Stock of Banner, par value $.01 per share, and having a
liquidation value of $9.20 per share.
"Banner Stock" means all of the Capital Stock of Banner which
comprises part of the Collateral, including, without limitation,
common Capital Stock of Banner and Banner Preferred.
"Base Eurodollar Rate" means, with respect to any Eurodollar
Interest Period applicable to a Borrowing of Eurodollar Rate Loans,
an interest rate per annum determined by the Collateral Agent to be
the average (rounded upward to the nearest whole multiple of one
sixteenth of one percent (0.0625%) per annum if such average is not
such a multiple) of the rates per annum specified by notice to the
Collateral Agent by Citibank as the rate per annum at which
deposits in Dollars are offered by the principal office of Citibank
in London, England to major banks in the London interbank market at
approximately 11:00 a.m. (London time) on the Eurodollar Interest
Rate Determination Date for such Eurodollar Interest Period for a
period equal to such Eurodollar Interest Period and in an amount
substantially equal to the amount of the Eurodollar Rate Loan to be
outstanding from Citicorp for such Eurodollar Interest Period.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum
shall at all times be equal to the higher of:
(i)the rate of interest announced publicly by Citibank in New
York, New York from time to time, as Citibank's base rate; and
(ii) the sum of (a) one-half of one percent (0.50%) per
annum plus (b) the Federal Funds Rate in effect from time
to time during such period.
"Base Rate Loans" means all Loans which bear interest at a rate
determined by reference to the Base Rate and Base Rate Margin as
provided in Section 5.01(a).
"Base Rate Margin" means, as of any date of determination, a per
annum rate equal to the rate set forth below opposite the then
applicable Interest Performance Level set forth below:
Interest Base
Performance LevelRate Margin
Level 11.00%
Level 21.25%
Level 31.50%
Level 41.75%
Level 52.25%
provided, however, that, notwithstanding the foregoing, the Base
Rate Margin during the period commencing on the Effective Date and
ending on September 18, 1998 shall be equal to two percent (2.00%)
per annum.
"Benefit Plan" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan or Foreign Employee
Benefit Plan) in respect of which a Borrower or any ERISA Affiliate
is, or within the immediately preceding five (5) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Borrowers" means, collectively, FHC, TFC and RHI, and "Borrower"
means, any of FHC, TFC or RHI, individually.
"Borrowing" means a borrowing consisting of Loans of the same type
made, continued or converted on the same day and, in the case of
Eurodollar Rate Loans, having the same Eurodollar Interest Period.
"Borrowing Base" means, as of any date of determination, an amount
designated on a Borrowing Base Certificate dated as of such date of
determination, equal to the lesser of (i) the amount of the
Facility as in effect as of such date and (ii) the sum of:
(a) the amount equal to 4.5 times the amount equal to
(1) EBITDA of the Fastener Business for the four (4) Fiscal
Quarters then most recently ended as determined based on the
financial reports delivered as required under Section 8.01
minus
(2) the amount of the corporate overhead of TFC and RHI for the
four (4) Fiscal Quarters then most recently ended, to the extent it
is not reflected in the determination of EBITDA of the Fastener
Business for such four (4) Fiscal Quarters
plus
(b) forty percent (40%) of the Market Value of the Banner Stock
plus
(c) seventy-five percent (75%) of the Market Value of the STFI
Stock if such determination is made prior to March 31, 1998 and
forty percent (40%) of the Market Value of the STFI Stock if such
determination is made on or after March 31, 1998
plus
(d) a percentage of the Market Value of individual Eligible
Marketable Securities
plus
(e) 100% of the amount of Cash Equivalents of the Borrowers in the
possession of the Collateral Agent;
provided that,
(iii) in the event the Spin-Off shall have occurred as of any time
of determination of the Borrowing Base, EBITDA of the Fastener
Business shall be increased, for purposes of determination of the
amount set forth in clause (a) above, by the amount of (A) TFC
corporate overhead (before giving effect to the allocation of a
portion thereof to SpinCo pursuant to the Expense Sharing
Agreement) paid, in cash, by SpinCo to TFC in respect of the
Expense Sharing Agreement or (B) if the Spin-Off occurred less than
twelve (12) months prior to the date of determination, the lesser
of (1) the annualized equivalent of the amount paid, in cash, by
SpinCo to TFC in respect of the Expense Sharing Agreement since the
consummation of the Spin-Off or (2) $7,000,000;
(iv) in the event an acquisition permitted by this Agreement or
under the Second Amended Credit Agreement is consummated with
respect to the Fasteners Business within the four (4) Fiscal
Quarter period ending on the date of determination, for purposes of
determination of the amount set forth in clause (a) above, EBITDA
of the Fastener Business shall be determined giving effect to such
acquisition for the applicable period as though such acquisition
were consummated on the first day of such period;
(v) clauses (b) through (e) above shall be included in the
calculation of the Borrowing Base only if the issuer of the Capital
Stock described therein has not filed, or had filed against it, any
proceeding in bankruptcy or is otherwise being liquidated or
dissolved and only if such Capital Stock is part of the Collateral
as of the time of a Borrowing is to be made; and
(vi) for purposes of this definition, the Borrowing Base with
respect to Eligible Marketable Securities and other Capital Stock
components thereof shall be determined after deduction of all
Eligibility Reserves then in effect and the percentage to be
applied under clause (d) shall be determined by the Collateral
Agent, in its sole discretion.
"Borrowing Base Certificate" means a certificate, in substantially
the form of Exhibit C attached hereto and made a part hereof,
setting forth, as of the end of each Fiscal Month, the EBITDA of
the Fastener Business for the period of determination, the amount
of the corporate overhead of TFC and RHI for the period of
determination and the amount thereof not reflected in the
determination of EBITDA of the Fastener Business, the Market Value
of Banner Stock, the Market Value of STFI Stock, and the Market
Value of the Eligible Marketable Securities, the respective advance
percentages with respect to each of the foregoing, the amount of
Cash Equivalents of the Borrowers in the possession of the
Collateral Agent, and the calculation of the resultant Borrowing
Base as of the date of such certificate. In the event any Capital
Stock component of the Borrowing Base ceases to be part of the
Collateral, or becomes a part of the Collateral, as of the time any
Notice of Borrowing is delivered, an adjustment to Availability
shall be made accordingly with respect to the requested Borrowing.
"Business Activity Report" means (A) a Notice of Business
Activities Report from the State of New Jersey Division of Taxation
or (B) a Minnesota Business Activity Report from the Minnesota
Department of Revenue.
"Business Day" means a day, in the applicable local time, which is
not a Saturday or Sunday or a legal holiday and on which banks are
not required or permitted by law or other governmental action to
close (i) in New York, New York, (ii) in the case of Eurodollar
Rate Loans, in London, England and (iii) in the case of Letter of
Credit transactions for a particular Issuing Bank, in the place
where its office for issuance or administration of the pertinent
Letter of Credit is located.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash or other Property or accrued as
a liability (but without duplication)) during such period that, in
conformity with GAAP, are required to be included in or reflected
in the fixed asset accounts of the consolidated balance sheet of
TFC and its Subsidiaries; provided, however, (i) Capital
Expenditures shall include, whether or not such a designation would
be in conformity with GAAP, that portion of Capital Leases which is
capitalized on the consolidated balance sheet of TFC and its
Subsidiaries and (ii) Capital Expenditures shall exclude, whether
or not such a designation would be in conformity with GAAP,
expenditures made in connection with the replacement or restoration
of Property, to the extent reimbursed or financed from insurance or
other recoveries received on account of the loss of or damage to
the Property being replaced or restored or from condemnation awards
arising from the taking by condemnation or eminent domain of such
Property being replaced.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) by a Person as lessee which, in conformity with
GAAP, is accounted for as a capital lease on the balance sheet of
that Person.
"Capital Stock" means, with respect to any Person, any capital
stock of such Person, regardless of class or designation, and all
warrants, options, purchase rights, conversion or exchange rights,
voting rights, calls or claims of any character with respect
thereto.
"Cash" means money, currency, or a credit balance in a Deposit
Account.
"Cash Collateral" means cash or Cash Equivalents held by the
Collateral Agent, any of the Issuing Banks, or any of the Lenders
as security for the Obligations.
"Cash Collateral Account" means an interest bearing account at
Citibank's offices in New York, New York designated by the
Collateral Agent into which Cash Collateral shall be deposited.
The Cash Collateral Account shall be under the sole dominion and
control of the Collateral Agent, provided that all amounts
deposited therein shall be held by the Collateral Agent for the
benefit of the Holders and shall be subject to the terms of
Sections 4.05 and 4.06.
"Cash Equivalents" means (i) marketable direct obligations issued
or unconditionally guaranteed by the United States government and
backed by the full faith and credit of the United States
government; (ii) marketable direct obligations issued by any state
of the United States or any political subdivision of any such state
or any public instrumentality thereof which, at the time of
acquisition thereof, are rated either A-1 (or better) by Standard
& Poor's Rating Group, a division of McGraw-Hill, Inc. ("S&P") or
P-1 (or better) by Moody's Investors Service, Inc. (or if not then
rating such obligations, the highest rating obtainable from such
other nationally recognized rating services as are reasonably
acceptable to the Collateral Agent); (iii) commercial paper which,
at the time of acquisition thereof, is rated either A-1 (or better)
by S&P or P-1 (or better) by Moody's Investors Service, Inc. (or if
not then rating such obligations, the highest rating obtainable
from such other nationally recognized rating services as are
reasonably acceptable to the Collateral Agent); (iv) domestic
certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any Lender or any
commercial bank organized under the laws of the United States, any
state thereof, or the District of Columbia and having a combined
capital and surplus in excess of $250,000,000, which, at the time
of acquisition, are rated A-1 (or better) by S&P or P-1 (or better)
by Moody's Investors Service, Inc.; and (v) any agreement involving
U.S. Government securities, certificates of deposit or "eligible"
bankers' acceptances which provides for the transfer of such
securities against payment in funds and which contains an agreement
by the seller to repurchase the securities at a specified date not
more than ninety (90) days after the date of such agreement;
provided, that the maturities of such Cash Equivalents shall not
exceed ninety (90) days.
"Cash Flow Period" means (i) the period commencing with December
29, 1997 through June 30, 1998 and (ii) each Fiscal Year ending
after June 30, 1998.
"Cash Interest Expense" means, for any Person for any period, total
interest expense of such Person and its Subsidiaries, which is
payable in cash, whether paid or accrued, but without duplication,
net of (i) the difference between payments received by such Person
on all Hedge Agreements and payments made by such Person on all
Hedge Agreements, (ii) interest income received in cash and (iii)
dividends received in cash by any of the Borrowers from Persons
other than (a) Banner, (b) STFI, and (c) Nacanco; (including,
without limitation, the interest component of Capital Leases, all
commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers' acceptance financing and
excluding, interest expense not payable in cash (including
amortization of discount and fees) and interest expense with
respect to liabilities which are not Indebtedness for Borrowed
Money), all as determined in conformity with GAAP except to the
extent adjustments with respect to Hedge Agreements would not be in
conformity with GAAP.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. '' 9601 et seq.,
any amendments thereto, any successor statutes, and any regulations
promulgated thereunder.
"Change of Control" means either of (i) Jeffrey J. Steiner and his
"associates" (as defined in the Securities Exchange Act) ceasing to
control the voting power attendant to at least forty percent (40%)
(on a fully diluted basis) of the voting Capital Stock of TFC at
any time when any other Person controls the voting power attendant
to ten percent (10%) or more (on a fully diluted basis) of the
voting Capital Stock of TFC or (ii) TFC ceasing to control the
voting power attendant to at least fifty percent (50%) of the
Capital Stock of FHC, RHI and the other Guarantors.
"Citibank" means Citibank, N.A., a national banking association.
"Citicorp" is defined in the preamble hereto.
"Claim" means any claim or demand, by any Person, of whatsoever
kind or nature for any alleged Liabilities and Costs, whether based
in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, Permit, ordinance or regulation, common
law or otherwise.
"Collateral" means all property and interests in property now owned
or hereafter acquired by any Borrower or any Subsidiary of a
Borrower upon which a Lien is granted under any of the Loan
Documents.
"Collateral Agent" means Citicorp and each successor Collateral
Agent appointed pursuant to the terms of Article XIII.
"Collection Account" means each lockbox and blocked depository
account maintained by a Borrower or any Guarantor subject to a
Collection Account Agreement for the collection of Receivables and
other proceeds of Collateral.
"Collection Account Agreement" means a written agreement,
substantially in the form attached hereto as Exhibit D with such
modifications as the Collateral Agent, from time to time, deems
acceptable, among a Borrower or a Guarantor, the Collateral Agent,
and the respective bank at which such Borrower or Guarantor
maintains a Collection Account.
"Commercial Letter of Credit" means any documentary letter of
credit issued by an Issuing Bank pursuant to Section 3.01 for the
account of a Borrower or for the account of any Guarantor or any of
the Domestic Subsidiaries if the Borrowers are jointly and
severally liable for reimbursement of amounts drawn under such
letter of credit, which is drawable upon presentation of documents
evidencing the sale or shipment of goods purchased by a Borrower,
a Guarantor, or such Domestic Subsidiary in the ordinary course of
its business.
"Commission" means the Securities and Exchange Commission and any
Person succeeding to the functions thereof.
"Commitment Fee" is defined in Section 5.03(c).
"Commitment Fee Rate" means (i) one-half of one percent (0.5%) per
annum during the period commencing on the Effective Date and ending
on September 18, 1998 and (ii) as of any date of determination
thereafter, a per annum rate equal to the rate set forth below
opposite the then applicable Commitment Fee Performance Level set
forth below:
Commitment Fee
Performance LevelCommitment Fee Rate
Level 10.300%
Level 20.375%
Level 30.500%
"Commitment Fee Performance Level" means a level of financial
performance of TFC and its Subsidiaries, on a consolidated basis,
measured as of the end of each Fiscal Quarter, commencing with the
Fiscal Quarter ending September 27, 1998, at which the Consolidated
Indebtedness to EBITDA Ratio for the then most recently ended four
(4) Fiscal Quarter period is determined; and the aforesaid level of
financial performance required for each of the following
Performance Levels is set forth opposite such Performance Level set
forth below:
Performance LevelRatio
Level 1Less than 3.50 to 1.00
Level 2Less than 5.00 to 1.00 and equal to or greater than 3.50 to
1.00
Level 3Equal to or greater than 5.00 to 1.00
"Commitment Letter" means that certain letter addressed to FHC, RHI
and TFC from Citicorp Securities, Inc., NationsBanc Montgomery
Securities, Inc., and NationsBank, N.A. dated December 8, 1997 and
accepted by the Borrowers on December 9, 1997.
"Compliance Certificate" is defined in Section 8.01(d)(ii).
"Concentration Account" means the depository account maintained at
Citibank in New York, New York, or such other financial institution
designated for such purpose by the Collateral Agent into which
collections of Receivables of the Borrowers and the Domestic
Subsidiaries, other proceeds of Collateral and other amounts are
transferred pursuant to the terms of the Collection Account
Agreements or otherwise as described in Section 4.04.
"Consolidated Fixed Charge Coverage Ratio" means, for any period,
the ratio of (i) EBITDA of TFC for such period minus income taxes
paid by TFC and its Subsidiaries on a consolidated basis in cash in
such period minus Capital Expenditures made by TFC and its
Subsidiaries in such period to (ii) the sum of (a) Cash Interest
Expense of TFC for such period plus (b) the amount paid by TFC in
dividends in such period plus (c) the amount of all scheduled
principal payments paid in such period.
"Consolidated Indebtedness to EBITDA Ratio" means, for any period,
the ratio of (i) Indebtedness for Borrowed Money to (ii) EBITDA of
TFC.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, radioactive materials,
asbestos (in any form or condition), polychlorinated biphenyls
(PCBs), lead paint, or any constituent of any such substance or
waste, and includes, but is not limited to, these terms as defined
in federal, state or local laws or regulations.
"Contractual Obligation", as applied to any Person, means any
provision of any Securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement,
guaranty, contract, undertaking, agreement or instrument to which
that Person is a party or by which it or any of its properties is
bound, or to which it or any of its properties is subject.
"Cure Loans" is defined in Section 4.02(f)(iii).
"Customary Permitted Liens" means
(i) Liens (other than Environmental Liens and Liens in favor of
the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which
are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance
with GAAP;
(iii) Liens (other than any Lien in favor of the PBGC) incurred or
deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of
social security benefits or to secure the performance of bids,
tenders, sales, contracts (other than for the repayment of borrowed
money), surety, appeal and performance bonds; provided that (A) all
such Liens do not in the aggregate materially detract from the
value of the Borrowers' or any of their Subsidiaries' assets or
Property or materially impair the use thereof in the operation of
their respective businesses, and (B) all Liens of attachment or
judgment and Liens securing bonds to stay judgments or in
connection with appeals do not secure at any time an aggregate
amount exceeding $1,000,000; and
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of Real Property which do not interfere
with the ordinary conduct of the business of the Borrowers or any
of their Subsidiaries.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union,
brokerage house, or like organization, other than an account
evidenced by a negotiable certificate of deposit.
"Designated Prepayment" means each mandatory prepayment required
by clauses (i), (ii), (iii), and (iv) of Section 4.01(b).
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Lending Office" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the
"Domestic Lending Office" under its name on the signature pages
hereof or on the Assignment and Acceptance by which it became a
Lender or such other United States office of such Lender as it may
from time to time specify by written notice to the Borrowers and
the Collateral Agent.
"Domestic Subsidiaries" means those Subsidiaries of the Guarantors
or the Borrowers domiciled within the United States of America, its
states, districts and possessions.
"EBITDA" means, for any Person for any period, the amount
calculated, without duplication, for such period as (i) the sum of
amounts for such period of such Person's (a) Net Income plus (b)
depreciation, amortization expense and other noncash charges plus
(c) all interest expense determined in accordance with GAAP plus
(d) federal, state, local and foreign income taxes deducted from
Net Income in accordance with GAAP plus (e) minority interest in
earnings of Subsidiaries of such Person deducted from Net Income in
accordance with GAAP and minus (ii) extraordinary gains (or plus
extraordinary losses) from asset sales calculated pursuant to GAAP
for such period to the extent such gains or losses were included in
the calculation of Net Income minus (iii) interest or investment
income (or plus investment losses) determined in accordance with
GAAP minus (iv) the amount of equity in earnings of affiliates
minus (v) the amount allocated to SpinCo by TFC in such period in
respect of the Expense Sharing Agreement plus (vi) the amount
received by TFC in cash from SpinCo during such period in respect
of the Expense Sharing Agreement plus (vii) the amount of dividends
received in cash by any Borrower from (a) Banner, (b) STFI, and (c)
Nacanco. For purposes of calculating EBITDA, in addition to the
determination of Net Income as set forth in the definition of such
term, where applicable, Banner and STFI shall be accounted for
using the equity method of accounting and excluding the equity in
earnings of Banner and STFI as provided in Section 1.03.
"Effective Date" means December 19, 1997.
"11 7/8% Senior Subordinated Debenture Indenture" means the
Indenture between Rexnord Acquisition Corp. and Irving Trust
Company, as trustee, dated as of March 2, 1987, pursuant to which
Senior Subordinated Debentures in the aggregate original principal
amount of $126,000,000 were issued, as supplemented by the First
Supplemental Indenture dated as of July 1, 1987 between Rexnord
Corporation and Irving Trust Company, as trustee, and the Second
Supplemental Indenture dated as of August 16, 1988, between RHI and
Irving Trust Company, as trustee.
"Eligible Assignee" means (i) a Lender or any Affiliate thereof;
(ii) a commercial bank having total assets in excess of
$2,500,000,000; (iii) the central bank of any country which is a
member of the Organization for Economic Cooperation and
Development; or (iv) a finance company, insurance company, other
financial institution or fund, acceptable to the Collateral Agent,
which is regularly engaged in making, purchasing or investing in
loans and having total assets in excess of $300,000,000.
"Eligible Marketable Securities" means (i) equity Securities of a
corporation the Securities of which are included in the S&P 500
Index, (ii) debt Securities which have an investment grade rating,
and (iii) a mutual fund which invests exclusively in such equity
Securities and/or debt Securities.
"Eligibility Reserves" means such amounts as the Collateral Agent,
in the exercise of its reasonable credit judgment, may from time to
time establish against the gross amounts of Eligible Marketable
Securities and other Capital Stock comprising part of the Borrowing
Base to reflect material changes in risks or contingencies arising
after the Effective Date which may affect the value of such
Securities.
"Environmental, Health or Safety Requirements of Law" means all
Requirements of Law derived from or relating to any federal, state
or local law, ordinance, rule, regulation, Permit, license or other
binding determination of any Governmental Authority relating to,
imposing liability or standards concerning, or otherwise
addressing, the environment, health and/or safety, including, but
not limited to the Clean Air Act, the Clean Water Act, CERCLA,
RCRA, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act, OSHA, and public health codes, each as from
time to time in effect.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (i) liabilities under any Environmental, Health
or Safety Requirement of Law, or (ii) damages arising from, or
costs incurred by such Governmental Authority in response to, a
Release or threatened Release of a Contaminant into the
environment.
"Equipment" means, with respect to any Person, all of such Person's
present and future (i) equipment, including, without limitation,
machinery, manufacturing, distribution, selling, data processing
and office equipment, assembly systems, tools, molds, dies,
fixtures, appliances, furniture, furnishings, vehicles, vessels,
aircraft, aircraft engines, and trade fixtures, (ii) other tangible
personal property (other than such Person's Inventory), and (iii)
any and all accessions, parts and appurtenances attached to any of
the foregoing or used in connection therewith, and any
substitutions therefor and replacements, products and proceeds
thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
29 U.S.C. '' 1000 et seq., any amendments thereto, any successor
statutes, and any regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of
the same controlled group of corporations (within the meaning of
Section 414(b) of the Internal Revenue Code) as FHC; (ii) a
partnership or other trade or business (whether or not
incorporated) which is under common control (within the meaning of
Section 414(c) of the Internal Revenue Code) with FHC; and (iii) a
member of the same affiliated service group (within the meaning of
Section 414(m) of the Internal Revenue Code) as FHC, any
corporation described in clause (i) above or any partnership or
trade or business described in clause (ii) above.
"ERISA Event" means (i) the occurrence with respect to a Plan of a
Reportable Event, (ii) the provision by the administrator of any
Plan of a notice of intent to terminate such Plan, pursuant to
Section 4041(a)(2) of ERISA (including any such notice with respect
to a plan amendment referred to in Section 4041(e) of ERISA), (iii)
the cessation of operations at a facility of any Borrower or any
ERISA Affiliate in the circumstances described in Section 4062(e)
of ERISA, (iv) the withdrawal by a Borrower or an ERISA Affiliate
from a Multiemployer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA,
(v) the conditions set forth in Section 302(f)(1)(A) and (B) of
ERISA to the creation of a Lien upon Property or rights to Property
of any Borrower or any ERISA Affiliate for failure to make a
required payment to a Plan are satisfied, (vi) the adoption of an
amendment to a Plan requiring the provision of security to such
Plan, pursuant to Section 307 of ERISA, or (vii) the institution by
the PBGC of proceedings to terminate a Plan, pursuant to Section
4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the
termination of, or the appointment of a trustee to administer, a
Plan.
"Eurodollar Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's
name under the heading "Eurodollar Affiliate" on the signature
pages hereof or on the signature pages of the Assignment and
Acceptance by which it became a Lender or such Affiliate of a
Lender as it may from time to time specify by written notice to the
Borrowers and the Collateral Agent.
"Eurodollar Interest Payment Date" means, with respect to any
Eurodollar Rate Loan, the last day of each Eurodollar Interest
Period applicable to such Loan and, if such applicable Eurodollar
Interest Period is longer than three (3) months in duration, on the
first Business Day of each successive three (3) month period
commencing with the first such day following the day on which such
Eurodollar Rate Loan was made, continued or converted and ending
with the first Business Day of the three (3) month period ending on
the last day of the applicable Eurodollar Interest Period.
"Eurodollar Interest Period" is defined in Section 5.02(b).
"Eurodollar Interest Rate Determination Date" is defined in Section
5.02(c).
"Eurodollar Lending Office" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such
Lender's name under the heading "Eurodollar Lending Office" on the
signature pages hereof or on the signature pages of the Assignment
and Acceptance by which it became a Lender (or, if no such office
is specified, its Domestic Lending Office), or such office or
offices of such Lender as it may from time to time specify by
written notice to the Borrowers and the Collateral Agent.
"Eurodollar Rate" means, with respect to any Eurodollar Interest
Period applicable to a Eurodollar Rate Loan, an interest rate per
annum obtained by dividing (i) the Base Eurodollar Rate applicable
to that Eurodollar Interest Period by (ii) a percentage equal to
100% minus the Eurodollar Rate Reserve Percentage in effect on the
relevant Eurodollar Interest Rate Determination Date.
"Eurodollar Rate Loans" means those Loans outstanding which bear
interest at a rate determined by reference to a Eurodollar Rate and
the Eurodollar Rate Margin as provided in Section 5.01(a).
"Eurodollar Rate Margin" means, as of any date of determination, a
per annum rate equal to the rate set forth below opposite the then
applicable Interest Performance Level set forth below:
InterestEurodollar
Performance LevelRate Margin
Level 12.00%
Level 22.25%
Level 32.50%
Level 42.75%
Level 53.25%
provided, however, that, notwithstanding the foregoing, the
Eurodollar Rate Margin during the period commencing on the
Effective Date and ending on September 18, 1998 shall be equal to
three percent (3.00%) per annum.
"Eurodollar Rate Reserve Percentage" means, for any Lender for the
Eurodollar Interest Period for any Eurodollar Rate, the reserve
percentage which is applicable three (3) Business Days before the
first day of such Eurodollar Interest Period under the regulations
issued from time to time by the Federal Reserve Board for
determining the actual reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New
York, New York with deposits exceeding Five Billion Dollars
($5,000,000,000) with respect to liabilities or assets consisting
of or including "Eurodollar Liabilities" (or with respect to any
other category of liabilities which includes deposits by reference
to which the interest rate on Eurodollar Rate Loans is determined)
having a term equal to such Eurodollar Interest Period.
"Eurosim" means Eurosim Componentes Mecanicos de Seguranca, Lda.
"Event of Default" means any of the occurrences set forth in
Section 12.01 after the expiration of any applicable grace period,
as expressly provided in Section 12.01.
"Excess Cash Flow" means, without duplication, for any Cash Flow
Period, an amount equal to TFC and its Subsidiaries' consolidated
(i) EBITDA plus, (ii) proceeds of sales of Equipment not in the
ordinary course of business for such period which are not otherwise
required to be applied to the repayment of the Obligations
hereunder minus gains (and plus losses) on sales of all Equipment
for such period to the extent included in the determination of
EBITDA, plus (iii) the net reduction, if any, in working capital
during such period, minus (iv) the net increase, if any, in working
capital during such period, minus (v) income taxes actually paid in
cash during such period, minus (vi) Capital Expenditures, actually
paid (and permitted to be paid pursuant hereto) in cash during such
period, minus (vii) Cash Interest Expense of TFC plus bank fees,
commissions, discounts and other fees and charges owed with respect
to letters of credit, Commitment Fees, and fees accrued or paid
under the Fee Letter for such period, minus (viii) all repayments
and prepayments of the Term Loans during such period (other than
such repayments or prepayments paid in respect of Excess Cash
Flow), (ix) plus increases (and minus decreases) in the sum of (a)
the outstanding principal amount of the Swing Loans plus (b) the
outstanding principal amount of the Revolving Loans plus (c) the
outstanding principal amount of Reimbursement Obligations during
such period based upon the difference between the sum of such
outstanding balances as of the first day of such period and the
last day of such period, minus (x) the aggregate amount of cash
dividends permitted by this Agreement and paid during such period
with respect to TFC's Capital Stock.
"Exchange Rate" means, in relation to the purchase of one currency
(for the purposes of this definition, the "first currency") with
another currency (for the purposes of this definition, the "second
currency") on a given date, Citibank's spot rate of exchange for
the amount in question in the London interbank market at 11:00 a.m.
(London time) on such date for the purchase of the first currency
with the second currency, for delivery two (2) Business Days later.
"Expense Sharing Agreement" means an agreement in form and
substance satisfactory to the Collateral Agent, in its sole
discretion, between TFC and SpinCo pursuant to which SpinCo agrees
to make payments to TFC with respect to TFC's corporate overhead
expenses allocable to SpinCo thereunder.
"Facility" means the credit facility provided under the terms of
this Agreement aggregating $300,000,000 on the Effective Date, as
such amount may be reduced from time to time thereafter by
reductions in the Revolving Credit Commitments and Term Loan
Commitments and permanent repayments of the Loans, in each
instance, pursuant to the terms of Article IV.
"Fair Market Value" means, with respect to any asset, the value of
the consideration obtainable in a sale of such asset in the open
market, assuming a sale by a willing seller to a willing purchaser
dealing at arm's length and arranged in an orderly manner over a
reasonable period of time, each having reasonable knowledge of the
nature and characteristics of such asset, neither being under any
compulsion to act.
"Fastener Business" means the Operating Units engaged in the
business of manufacturing and sales of aerospace and industrial
fasteners.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the
weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day
is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of
New York, or if such rate is not so published for any day which is
a Business Day in New York, New York, the average of the quotations
for such day on such transactions received by the Collateral Agent
from three federal funds brokers of recognized standing selected by
the Collateral Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its
functions.
"Fee Letter" means that certain fee letter addressed to Citicorp
USA, Inc. and Citicorp Securities, Inc. from FHC dated December 8,
1997.
"FHC" means Fairchild Holding Corp., a Delaware corporation.
"FII" means Fairchild Industries, Inc., a Delaware corporation.
"Financial Statements" means (i) statements of income and retained
earnings, statements of cash flow, and balance sheets, (ii) such
other financial statements as the Borrowers and their Subsidiaries
shall routinely and regularly prepare, and (iii) such other
financial statements as the Collateral Agent or the Requisite
Lenders may from time to time reasonably specify.
"Fiscal Month" means each of the month periods ending on the dates
set forth on Schedule 1.01.1 attached hereto and made a part
hereof.
"Fiscal Quarter" means each of the three-month periods ending on
the dates set forth on Schedule 1.01.1.
"Fiscal Year" means the fiscal year of TFC and its Subsidiaries for
accounting and tax purposes, which shall be the 12 month period
ending on June 30 of each calendar year.
"Foreign Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed
to for the benefit of the employees of a Borrower, any of its
Subsidiaries or any of its ERISA Affiliates and is not covered by
ERISA pursuant to ERISA Section 4(b)(4).
"Foreign Pension Plan" means any employee benefit plan as defined
in Section 3(3) of ERISA which (i) is maintained or contributed to
for the benefit of employees of a Borrower, any of its Subsidiaries
or any of its ERISA Affiliates, (ii) is not covered by ERISA
pursuant to Section 4(b)(4) of ERISA, and (iii) under applicable
local law, is required to be funded through a trust or other
funding vehicle.
"Fronting Fee" is defined in Section 5.03(b).
"Funding Date" means, with respect to any Loan, the date of funding
of such Loan.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the American Institute of
Certified Public Accountants' Accounting Principles Board and
Financial Accounting Standards Board or in such other statements by
such other entity as may be in general use by significant segments
of the accounting profession as in effect on the date hereof
(unless otherwise specified herein as in effect on another date or
dates).
"General Intangibles" means, with respect to any Person, all of
such Person's present and future (i) general intangibles, (ii)
rights, interests, choses in action, causes of action, claims and
other intangible Property of every kind and nature (other than
Receivables), (iii) corporate and other business records, (iv)
loans, royalties, and other obligations receivable, (v) trademarks,
registered trademarks, trademark applications, service marks,
registered service marks, service mark applications, patents,
registered patents, patent applications, trade names, rights of use
of any name, labels, fictitious names, inventions, designs, trade
secrets, computer programs, software, printouts and other computer
materials, goodwill, registrations, copyrights, copyright
applications, permits, licenses, franchises, customer lists, credit
files, correspondence, and advertising materials, (vi) customer and
supplier contracts, firm sale orders, rights under license and
franchise agreements, rights under tax sharing agreements, and
other contracts and contract rights, (vii) interests in
partnerships and joint ventures, (viii) tax refunds and tax refund
claims, (ix) right, title and interest under leases, subleases,
licenses and concessions and other agreements relating to property,
(x) deposit accounts (general or special) with any bank or other
financial institution, (xi) credits with and other claims against
third parties (including carriers and shippers), (xii) rights to
indemnification and with respect to support and keep well
agreements, (xiii) reversionary interests in pension and profit
sharing plans and reversionary, beneficial and residual interests
in trusts, (xiv) letters of credit, guarantees, Liens, security
interests and other security held by or granted to such Person,
(xvi) uncertificated securities and (xvii) investment securities.
"German Acquisition Loans" means loans, in the aggregate principal
amount of DM23,105,902.50 made on November 26, 1997 by Citibank
Aktiengesellschaft to the German Subsidiary Borrowers.
"German Subsidiary Borrowers" means, collectively, Fairchild
Fasteners Europe-Camloc GmbH, a Subsidiary of FHC, and Fairchild
Fasteners Europe-VSD GmbH, a Subsidiary of FHC.
"German Standby Letter of Credit" means that certain Standby Letter
of Credit No. 30022473 issued by Citibank on November 25, 1997, (i)
for the account of the German Subsidiary Borrowers with respect to
which the Borrowers are jointly and severally liable for
reimbursement of amounts drawn thereunder, (ii) in the face amount
of DM23,105,902.50, (iii) naming Citibank Aktiengesellschaft as
beneficiary, (iv) in support of the liability of the German
Subsidiary Borrowers to such beneficiary with respect to the German
Acquisition Loans, and (v) drawable in two drawings.
"Governmental Authority" means any nation or government, any
federal, state, local or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Guarantors" means each of the Subsidiaries of the Borrowers
identified on Schedule 1.01.2 attached hereto and made a part
hereof as of the Effective Date, and any other Person executing and
delivering a guaranty of payment and performance of all or any
portion of the Obligations after the Effective Date.
"Hedge Agreement" means any agreement, including, without
limitation, interest rate exchange, swap, collar or cap agreement,
interest rate future or option contract, currency swap agreement,
currency future, forward, or option contract, and other similar
agreement, evidencing an agreement or arrangement intended to
protect against fluctuation in interest rates and/or foreign
exchange rates or conversion rates for conversion of foreign
currencies to Dollars.
"Holder" means any Person entitled to enforce any of the
Obligations, whether or not such Person holds any evidence of
Indebtedness, including, without limitation, the Administrative
Agents, the Collateral Agent, each Lender and each Issuing Bank.
"Indebtedness", as applied to any Person, means, at any time,
without duplication, (a) all indebtedness, obligations or other
liabilities of such Person (i) for borrowed money or evidenced by
debt Securities, debentures, acceptances, notes or other similar
instruments, and any accrued interest, fees and charges relating
thereto, (ii) under profit payment agreements or in respect of
obligations to redeem, repurchase or exchange any Securities of
such Person or to pay dividends in respect of any Capital Stock,
(iii) with respect to letters of credit issued for such Person's
account, (iv) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising in
the ordinary course of business, (v) in respect of Capital Leases,
(vi) which are Accommodation Obligations or (vii) under warranties
and indemnities; (b) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien on any
property of such Person, whether or not such indebtedness,
obligations or liabilities are assumed by such Person, all as of
such time; (c) all indebtedness, obligations or other liabilities
of such Person in respect of interest rate contracts, Hedge
Agreements and foreign exchange contracts, net of liabilities owed
to such Person by the counterparties thereon; (d) all preferred
stock subject (upon the occurrence of any contingency or otherwise)
to mandatory redemption; and (e) all contingent Contractual
Obligations with respect to any of the foregoing.
"Indebtedness for Borrowed Money" means, to the extent the
following would be reflected on a balance sheet of TFC and its
Subsidiaries prepared in accordance with GAAP, the principal amount
of all Indebtedness of TFC and its Subsidiaries (other than Banner
and STFI) in respect of borrowed money, evidenced by debt
securities, debentures, acceptances, notes or other similar
instruments, in respect of Capital Lease obligations, in respect of
Reimbursement Obligations or in respect of the deferred purchase
price of property or services, except accounts payable and accrued
expenses arising in the ordinary course of business.
"Indemnified Matters" is defined in Section 15.03.
"Indemnitees" is defined in Section 15.03.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
EBITDA of TFC for such period to (ii) Cash Interest Expense of TFC
for such period.
"Interest Performance Level" means a level of financial performance
of TFC and its Subsidiaries, on a consolidated basis, measured as
of the end of each Fiscal Quarter, commencing with the Fiscal
Quarter ending September 27, 1998, at which the Consolidated
Indebtedness to EBITDA Ratio for the then most recently ended four
(4) Fiscal Quarter period is determined; and the aforesaid level of
financial performance required for each of the following
Performance Levels is set forth opposite such Performance Level set
forth below:
Performance LevelRatio
Level 1Less than 4.25 to 1.00
Level 2Less than 5.00 to 1.00 and equal to or greater than 4.25 to
1.00
Level 3Less than 6.00 to 1.00 and equal to or greater than 5.00 to
1.00
Level 4Less than 6.75 to 1.00 and equal to or greater than 6.00 to
1.00
Level 5Equal to or greater than 6.75 to 1.00
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any
successor statute and any regulations or guidance promulgated
thereunder.
"Inventory" means, with respect to any Person, all of such Person's
present and future (i) inventory, (ii) goods, merchandise and other
personal property furnished or to be furnished under any contract
of service or intended for sale or lease, and all consigned goods
and all other items which have previously constituted Equipment of
such Person but are then currently being held for sale or lease in
the ordinary course of such Person's business, (iii) raw materials,
work-in-process and finished goods, (iv) materials and supplies of
any kind, nature or description used or consumed in such Person's
business or in connection with the manufacture, production,
packing, shipping, advertising, finishing or sale of any of the
property described in clauses (i) through (iii) above, (v) goods in
which such Person has a joint or other interest or right of any
kind (including, without limitation, goods in which such Person has
an interest or right as consignee), and (vi) goods which are
returned to or repossessed by such Person; in each case whether in
the possession of such Person, a bailee, a consignee, or any other
Person for sale, storage, transit, processing, use or otherwise,
and any and all documents for or relating to any of the foregoing.
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial
interest in Securities, issued by any other Person, (ii) any
purchase by that Person of all or substantially all of the assets
of a business conducted by another Person, and (iii) any loan,
advance (other than deposits with financial institutions available
for withdrawal on demand, prepaid expenses, accounts receivable,
advances to employees and similar items made or incurred in the
ordinary course of business) or capital contribution by that Person
to any other Person, including all Indebtedness to such Person
arising from a sale of property by such Person other than in the
ordinary course of its business and all Indebtedness to such Person
which is not a current asset. The amount of any Investment shall
be the original cost of such Investment, plus the cost of all
additions thereto less the amount of any return of capital or
principal to the extent such return is in cash with respect to such
Investment without any adjustments for increases or decreases in
value or write ups, write downs or write offs with respect to such
Investment.
"IRS" means the Internal Revenue Service and any Person succeeding
to the functions thereof.
"Issuing Banks" means Citibank and each Lender designated as an
"Issuing Bank" on the signature pages hereof or the signature page
of the Assignment and Acceptance by which it became a Lender and
each other Lender approved by the Collateral Agent and the
Borrowers who has agreed to become an Issuing Bank for the purpose
of issuing Letters of Credit pursuant to Section 3.01.
"Lender" means, as of the Effective Date, each financial
institution a signatory hereto as a Lender and, at any other given
time, each financial institution which is a party hereto as a
Lender, whether as a signatory hereto or pursuant to an Assignment
and Acceptance.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Fee" is defined in Section 5.03(b).
"Letter of Credit Obligations" means, at any particular time, the
sum of (i) all outstanding Reimbursement Obligations, plus (ii) the
aggregate Dollar equivalent of the undrawn face amount of all
outstanding Letters of Credit, plus (iii) the aggregate Dollar
equivalent of the face amount of all Letters of Credit requested by
the Borrowers but not yet issued (unless the request for an
unissued Letter of Credit has been denied by the designated Issuing
Bank as referenced in Section 3.01(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect to
a Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several
documents, taken together) as the Issuing Bank from which the
Letter of Credit is requested may employ in the ordinary course of
business for its own account, with such modifications thereto as
may be agreed upon by the Issuing Bank and the Borrowers and as are
not materially adverse (in the judgment of the Issuing Bank and
Collateral Agent) to the interests of the Lenders; provided,
however, in the event of any conflict between the terms of any
Letter of Credit Reimbursement Agreement and this Agreement, the
terms of this Agreement shall control.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death, punitive
damages, economic damages, consequential damages, treble damages,
intentional, willful or wanton injury, damage or threat to the
environment, natural resources or public health or welfare, costs
and expenses (including, without limitation, attorney, expert and
consulting fees and costs and fees and costs associated with any
investigation, feasibility or Remedial Action studies), fines,
penalties and monetary sanctions, interest, direct or indirect,
known or unknown, absolute or contingent, past, present or future.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement,
security interest, encumbrance, lien (statutory or other and
including, without limitation, any Environmental Lien), deed of
charge, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or
imposed by law, and includes the interest of a lessor under a
Capital Lease or under any financing lease having substantially the
same economic effect as any of the foregoing and the filing of any
financing statement or similar notice (other than a financing
statement filed by a "true" lessor pursuant to ' 9-408 of the
Uniform Commercial Code), naming the owner of such property as
debtor, under the Uniform Commercial Code or other comparable law
of any jurisdiction.
"Loan Account" is defined in Section 4.03(b).
"Loan Documents" means this Agreement, the Notes, Hedge Agreements
to which any Lender or any Affiliate of a Lender is a party,
depositary account and cash management agreements to which any
Borrower or any Guarantor and any Lender or any Affiliate of a
Lender is a party, and all other instruments, agreements and
written Contractual Obligations between any Guarantor, any Borrower
or any Subsidiary of a Borrower, either Administrative Agent, the
Collateral Agent, and any of the Lenders or Issuing Banks delivered
to either Administrative Agent, the Collateral Agent, such Lender
or such Issuing Bank pursuant to or in connection with the
transactions contemplated hereby.
"Loans" means all Revolving Loans, Term Loans and Swing Loans,
whether Base Rate Loans or Eurodollar Rate Loans.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Market Value" means (i) with respect to Banner Stock which is
common stock, STFI Stock, or Eligible Marketable Securities, the
value determined based on the average closing price for the five
(5) consecutive trading days immediately preceding the date of
determination and (ii) with respect to the Banner Preferred, the
greater of (a) the liquidation value of the Banner Preferred and
(b) provided that the Banner Preferred is readily convertible into
common Capital Stock of Banner, the value of the common Capital
Stock of Banner into which the Banner Preferred would convert
determined based on the average closing price for the five (5)
consecutive trading days immediately preceding the date of
determination.
"Material Adverse Effect" means a material adverse effect upon (i)
the financial condition, operations, assets or prospects of TFC and
its Subsidiaries on a consolidated basis, (ii) the ability of TFC,
RHI, or FHC or any of its Subsidiaries to perform its respective
obligations under the Loan Documents, or (iii) the ability of the
Lenders, the Issuing Banks, or the Collateral Agent to enforce any
of the Loan Documents.
"Material Subsidiary" means a Subsidiary of one of the Borrowers
the assets of which have an aggregate book value equal to or
greater than $100,000.
"MIS" means computerized management information system for
recording and maintenance of information regarding purchases,
sales, aging, categorization, and locations of Inventory, creation
and aging of Receivables, and accounts payable (including agings
thereof).
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA (other than a Foreign Employee Benefit
Plan) which (i) is, or within the immediately preceding six (6)
years was, contributed to by either a Borrower or any ERISA
Affiliate or in respect of which a Borrower or any ERISA Affiliate
has assumed any liability and (ii) is not a Foreign Employee
Benefit Plan.
"Net Cash Proceeds of Issuance of Equity Securities" means net cash
proceeds (including cash, equivalents readily convertible into
cash, and such proceeds of any notes received as consideration or
any other non cash consideration) received by any Borrower or any
Subsidiary of a Borrower (other than Banner and STFI) at any time
on or after the Effective Date on account of:
(i) the issuance of equity Securities other than
(a) equity Securities of Banner, STFI or, prior to the Spin-Off,
any Technologies Company;
(b) equity Securities of a Subsidiary of (1) TFC issued to TFC, (2)
RHI issued to RHI, or (3) FHC issued to FHC;
(c) equity Securities of a Subsidiary of (1) TFC issued to another
Subsidiary of TFC, (2) RHI issued to another Subsidiary of RHI, or
(3) FHC issued to another Subsidiary of FHC; and
(d) equity Securities of TFC issued pursuant to the Offering, or
(ii) a contribution to its capital by any Person (other than
another "Fairchild Affiliate").
For purposes of this definition, "Fairchild Affiliate" means TFC
and any direct or indirect Subsidiary of TFC. Notwithstanding the
foregoing, (i) the exclusions of Banner and STFI set forth above
shall not be effective in the event proceeds of the types described
herein with respect to Banner and/or STFI are transferred by
dividend or otherwise to RHI or FHC and (ii) the exclusion of the
Technologies Companies set forth above shall not be effective in
the event the proceeds of the types described herein with respect
to any Technologies Company are not required for the conduct of the
business of the Technologies Companies or are transferred, as a
dividend, loan, repayment of Indebtedness (other than a repayment
of Indebtedness owing by a Technologies Company to a Borrower which
was incurred after the Effective Date in accordance with the
provisions of Section 10.01(g)), or otherwise, to any Borrower.
"Net Cash Proceeds of Issuance of Indebtedness" means net cash
proceeds (including cash, equivalents readily convertible into
cash, and such proceeds of any notes received as consideration or
any other non cash consideration) of Indebtedness for Borrowed
Money (other than such Indebtedness permitted under Section 10.01)
of any Borrower or any Subsidiary of a Borrower (other than Banner,
STFI or, prior to the Spin-Off, the Technologies Companies), in
each case net of all transaction costs and underwriters' discounts
with respect thereto. Notwithstanding the foregoing, (i) the
exclusions of Banner and STFI set forth above shall not be
effective in the event such proceeds of such Indebtedness of Banner
and/or STFI are transferred by dividend or otherwise to a Borrower
and (ii) the exclusion of the Technologies Companies set forth
above shall not be effective in the event such proceeds of such
Indebtedness of any Technologies Company are not required for the
conduct of the business of the Technologies Companies or are
transferred, as a dividend, loan, repayment of Indebtedness (other
than a repayment of Indebtedness owing by a Technologies Company to
a Borrower which was incurred after the Effective Date in
accordance with the provisions of Section 10.01(g)), or otherwise,
to a Borrower.
"Net Cash Proceeds of Sale" means:
(i) cash proceeds (including cash, equivalents readily convertible
into cash, and such proceeds of any notes received as consideration
or any other non cash consideration) from the sale, assignment or
other disposition of (but not the lease or license of) any
Property, net of (a) the costs of sale, assignment or other
disposition, (b) any income, franchise, transfer or other tax
liability arising from such transaction and (c) amounts applied to
the repayment of Indebtedness (other than the Obligations) secured
by a Lien permitted by Section 10.03 on the asset disposed of,
whether such net proceeds arise from any individual sale,
assignment or other disposition or from any group of related sales,
assignments or other dispositions received by a Borrower or any of
its Subsidiaries other than:
(1) proceeds of sales permitted under clauses (b) through (e) and
(i) of Section 10.02; and
(2)proceeds received by RHI from the sale of any of the RHI
Excluded Property and proceeds of STFI Stock, which proceeds of
STFI Stock are used exclusively to (a) make an Investment in SpinCo
or the Spin Off Businesses as specifically permitted by Section
10.04(m), (b) provide Cash Collateral, or (c) repay Revolving
Loans; and
(3)proceeds received by TFC from transfers of any of the Property
identified on Schedule 1.01.10; and
(ii) to the extent provided in Section 9.07(b), proceeds of
insurance on account of the loss of or damage to any such Property
or Properties, and payments of compensation for any such Property
or Properties taken by condemnation or eminent domain.
"Net Income" means, for any Person for any period, the net income
(or loss) after taxes of such Person and its Subsidiaries on a
consolidated basis (and, if applicable, accounting for Banner and
STFI using the equity method of accounting and excluding the equity
in the earnings of Banner and STFI as provided in Section 1.03) for
such period taken as a single accounting period determined in
conformity with GAAP.
"Net Worth" means, as of any date of determination, the amount of
shareholders' equity of TFC in accordance with GAAP minus the
amount of the equity investment in Banner (on a basis consistent
with that reflected on TFC's balance sheets delivered under the
Second Amended Credit Agreement).
"Non Pro Rata Loan" is defined in Section 4.02(f).
"Note" means a promissory note in the form attached hereto as
Exhibit E payable to a Lender, evidencing certain of the
Obligations of the Borrowers to such Lender and executed by the
Borrowers as required by Section 4.03(a), as the same may be
amended, supplemented, modified or restated from time to time,and
any promissory note issued in substitution therefor; "Notes" means,
collectively, all of such Notes outstanding at any given time.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit F attached hereto and made a part hereof.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit G attached hereto and made a part hereof with
respect to a proposed conversion or continuation of a Loan pursuant
to Section 5.01(c).
"Obligations" means all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by any Borrower,
individually or collectively, to either Administrative Agent, the
Collateral Agent, any Lender, any Issuing Bank, any Affiliate of
either Administrative Agent, the Collateral Agent, any Lender or
any Issuing Bank, or any Person entitled to indemnification
pursuant to Section 15.03 of this Agreement, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty
or other instrument, arising under this Agreement, the Notes or any
other Loan Document, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening or
amendment of a Letter of Credit or payment of any draft drawn
thereunder, loan, guaranty, indemnification, or in any other
manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired and all
liabilities and obligations arising with respect to depositary
accounts and cash management systems maintained with any Lender or
any Affiliate of any Lender and under Hedge Agreements entered into
between the Borrowers and any Lender or any Affiliate of any
Lender. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to the Borrowers under this Agreement or any
other Loan Document, any such Hedge Agreement, and with respect to
any such depositary accounts and cash management systems.
"Offering" means the offering of 3,000,000 shares of Class A Common
Stock, $0.10 par value per share, of TFC to be sold by TFC as more
particularly described in that certain Prospectus dated December
15, 1997.
"Officer's Certificate" means, as to a corporation, a certificate
executed on behalf of such corporation by the chairman or vice-
chairman of its board of directors (if an officer of such
corporation) or its president, any of its vice presidents, or its
treasurer.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee
which is not a Capital Lease.
"Operating Units" means, collectively, those segments of the
Borrowers' business known as (i) Fairchild Fasteners as more
particularly described on Schedule 1.01.3 attached hereto and made
a part hereof, (ii) Camloc (UK) Gas Spring Division as more
particularly described on Schedule 1.01.3, and (iii) Fairchild
Technologies Group as more particularly described on Schedule
1.01.3; and each of the foregoing is an "Operating Unit".
"Organizational Documents" means, with respect to any corporation,
limited liability company, unlimited liability company, or
partnership (i) the articles/certificate of incorporation or
articles of association (or the equivalent organizational
documents) of such corporation, limited liability company, or
unlimited liability company, (ii) the partnership agreement
executed by the partners in the partnership, (iii) the by-laws (or
the equivalent governing documents) of the corporation, limited
liability company, unlimited liability company, or partnership, and
(iv) any document setting forth the designation, amount and/or
relative rights, limitations and preferences of any class or series
of such corporation's Capital Stock or such limited liability
company's, unlimited liability company's or partnership's equity or
ownership interests.
"OSHA" means the Occupational Safety and Health Act of 1970, 29
U.S.C. '' 651 et seq., any amendments thereto, any successor
statutes and any regulations or guidance promulgated thereunder.
"PBGC" means the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Permits" means any permit, approval, authorization license,
variance, or permission required from a Governmental Authority or
other Person under an applicable Requirement of Law.
"Permitted Dispositions" means the sale, lease, transfer or other
disposition of the operations and/or assets and/or Investments
identified on Schedule 1.01.4 attached hereto and made a part
hereof.
"Permitted Equity Securities Options" means the subscriptions,
options, warrants, rights, convertible securities and other
agreements or commitments relating to the issuance of equity
Securities identified on Schedule 1.01.5 attached hereto and made
a part hereof.
"Permitted Existing Accommodation Obligations" means those
Accommodation Obligations of the Borrowers and Subsidiaries of the
Borrowers identified on Schedule 1.01.6 attached hereto and made a
part hereof.
"Permitted Existing Indebtedness" means the Indebtedness of the
Borrowers and their Subsidiaries identified on Schedule 1.01.7
attached hereto and made a part hereof.
"Permitted Existing Investments" means those Investments identified
as such on Schedule 1.01.8 attached hereto and made a part hereof.
"Permitted Existing Liens" means the Liens on assets of the
Subsidiaries of the Borrowers identified on Schedule 1.01.9
attached hereto and made a part hereof.
"Person" means any natural person, corporation, limited liability
company, unlimited liability company, limited partnership, general
partnership, joint stock company, joint venture, association,
company, trust, bank, trust company, land trust, business trust or
other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of
ERISA (other than a Foreign Employee Benefit Plan) (i) in respect
of which a Borrower or any ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA or a Borrower or any ERISA Affiliate has
assumed any liability and (ii) which is not a Foreign Employee
Benefit Plan.
"Potential Event of Default" means an event which, with the giving
of notice or the lapse of time, or both, would constitute an Event
of Default.
"Process Agent" is defined in Section 15.17(a)(i).
"Pro Forma Balance Sheet" means, collectively, the unaudited pro
forma estimated opening balance sheets, as of September 28, 1997 of
TFC and its Subsidiaries and of FHC and its Subsidiaries attached
hereto as Exhibit H, prepared in accordance with GAAP, dated the
Effective Date, and giving effect to the extensions of credit
contemplated hereby and the payment of the Refinanced Indebtedness.
"Projections" means the financial projections for TFC and its
Subsidiaries and assumptions prepared by the Borrowers attached
hereto as Exhibit I.
"Property" means any Real Property or personal property, plant,
building, facility, structure, underground storage tank or unit,
Equipment, Inventory, General Intangible, Receivable, or other
asset owned, leased or operated by any Borrower or any Subsidiary
of a Borrower, as applicable, (including any surface water thereon,
and soil and groundwater thereunder).
"Pro Rata Share" means, with respect to any Lender, the percentage
obtained by dividing (i) the sum of such Lender's Revolving Credit
Commitment (as adjusted from time to time in accordance with the
provisions of this Agreement or any Assignment and Acceptance to
which such Lender is a party) plus (a) until such time as the Term
Loan Commitments are fully funded, such Lender's Term Loan
Commitment (as adjusted from time to time in accordance with the
provisions of this Agreement or any Assignment and Acceptance to
which such Lender is a party) or (b) from and after the Term Loan
Commitments are fully funded, the outstanding principal balance of
such Lender's Term Loan, by (ii) the sum of the aggregate amount of
all of the Revolving Credit Commitments (notwithstanding the
termination of any such Commitments) plus the aggregate amount of
all of the Term Loan Commitments or the outstanding balance of all
Term Loans, as applicable in accordance with clauses (a) and (b)
above.
"Protective Advance" is defined in Section 13.09(a).
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42
U.S.C. '' 6901 et seq., any amendments thereto, any successor
statutes, and any regulations promulgated thereunder.
"Real Property" means, with respect to any Person, all of such
Person's present and future right, title and interest (including,
without limitation, any leasehold estate) in (i) any plots, pieces
or parcels of land, (ii) any improvements, buildings, structures
and fixtures now or hereafter located or erected thereon or
attached thereto of every nature whatsoever (the rights and
interests described in clauses (i) and (ii) above being the
"Premises"), (iii) all easements, rights of way, gores of land or
any lands occupied by streets, ways, alleys, passages, sewer
rights, water courses, water rights and powers, and public places
adjoining such land, and any other interests in property
constituting appurtenances to the Premises, or which hereafter
shall in any way belong, relate or be appurtenant thereto, (iv) all
hereditaments, gas, oil, minerals (with the right to extract, sever
and remove such gas, oil and minerals), and easements, of every
nature whatsoever, located in or on the Premises and (v) all other
rights and privileges thereunto belonging or appertaining and all
extensions, additions, improvements, betterments, renewals,
substitutions and replacements to or of any of the rights and
interests described in clauses (iii) and (iv) above.
"Receivables" means, with respect to any Person, all of such
Person's present and future (i) accounts, (ii) contract rights,
chattel paper, instruments, documents, deposit accounts, and other
rights to payment of any kind, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of
services, and whether or not earned by performance, (iii) any of
the foregoing which are not evidenced by instruments or chattel
paper, (iv) intercompany receivables, and any security documents
executed in connection therewith, (v) proceeds of any letters of
credit or insurance policies on which such Person is named as
beneficiary, (vi) claims against third parties for advances and
other financial accommodations and any other obligations whatsoever
owing to such Person, (vii) rights in and to all security
agreements, leases, guarantees, instruments, securities, documents
of title and other contracts securing, evidencing, supporting or
otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory which any of the
foregoing may represent, and (viii) rights in returned and
repossessed goods, merchandise and Inventory which any of the same
may represent, including, without limitation, any right of stoppage
in transit.
"Refinanced Indebtedness" means (i) all Indebtedness outstanding
pursuant to (a) the 11 7/8% Senior Subordinated Debenture Indenture
and the instruments issued thereunder and (b) the TFC Indentures
and the instruments issued thereunder, (ii) all Indebtedness
outstanding pursuant to the RHI Credit Agreement, other than
contingent obligations with respect to the letter of credit issued
thereunder, which letter of credit constitutes a Letter of Credit,
and (iii) all Indebtedness outstanding with respect to term loans
and revolving loans on the Effective Date under the Second Amended
Credit Agreement.
"Register" is defined in Section 15.01(c).
"Regulation A" means Regulation A of the Federal Reserve Board as
in effect from time to time.
"Regulation G" means Regulation G of the Federal Reserve Board as
in effect from time to time.
"Regulation T" means Regulation T of the Federal Reserve Board as
in effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as
in effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as
in effect from time to time.
"Reimbursement Date" is defined in Section 3.01(d)(i)(A).
"Reimbursement Obligations" means the aggregate Dollar equivalent
of the non contingent reimbursement or repayment obligations of the
Borrowers with respect to amounts drawn under Letters of Credit.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, injection, deposit, disposal, abandonment, or
discarding of barrels, containers or other receptacles, discharge,
emptying, escape, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any Property, including
the movement of Contaminants through or in the air, soil, surface
water, groundwater or Property.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or
outdoor environment; (ii) prevent the Release or threat of Release
or minimize the further Release of Contaminants; or (iii)
investigate and determine if a remedial response is needed and to
design such a response and postremedial investigation, monitoring,
operation and maintenance and care.
"Replacement Proceeds" means the amount of (i) proceeds of
insurance paid on account of the loss of or damage to any Property
and awards of compensation for Property taken by condemnation or
eminent domain to the extent actually used to replace, rebuild or
restore the Property so lost, damaged or taken, provided that if
such proceeds exceed $500,000, Borrowers shall have delivered
written notice to the Collateral Agent within 90 days after the
Collateral Agent's receipt of the proceeds of such insurance
payment or condemnation award that the owner or operator of such
Property intends to so replace, rebuild or restore such Property
and (ii) insurance paid on account of a business interruption
occurrence to the extent actually used in the restoration or
conduct of the business interrupted.
"Reportable Event" means any of the events described in Section
4043(c) of ERISA and the regulations promulgated thereunder as in
effect from time to time other than an event for which the thirty
(30) day notice requirement has been waived by the PBGC.
"Requirements of Law" means, as to any Person, the charter and
bylaws or other organizational or governing documents of such
Person, and any law, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject including,
without limitation, the Securities Act, the Securities Exchange
Act, Regulations G, T, U and X, ERISA, the Fair Labor Standards
Act, the Worker Adjustment and Retraining Notification Act,
Americans with Disabilities Act of 1990, and any certificate of
occupancy, zoning ordinance, building, environmental or land use
requirement or Permit and Environmental, Health or Safety
Requirement of Law.
"Requisite Lenders" means Lenders whose Pro Rata Shares, in the
aggregate, are greater than fifty-one percent (51%); provided,
however, that, in the event any of the Lenders shall have failed to
fund its Pro Rata Share of any Loan requested by the Borrowers
which such Lenders are obligated to fund under the terms of this
Agreement and any such failure has not been cured, then for so long
as such failure continues, "Requisite Lenders" means Lenders
(excluding all Lenders whose failure to fund their respective Pro
Rata Shares of such Loans have not been so cured) whose Pro Rata
Shares represent more than fifty-one percent (51%) of the aggregate
Pro Rata Shares of such Lenders; provided, further, however, that,
in the event that the Revolving Credit Commitments have been
terminated pursuant to the terms of this Agreement, "Requisite
Lenders" means Lenders (without regard to such Lenders' performance
of their respective obligations hereunder) whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding
principal balance of all Loans are greater than fifty-one percent
(51%).
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any
class of Capital Stock of a Borrower or Subsidiary of a Borrower
now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock or in any junior class of stock to
the holders of that class, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of equity Securities
of a Borrower or Subsidiary of a Borrower now or hereafter
outstanding, (iii) any payment or prepayment of principal of,
premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with
respect to, any Indebtedness for Borrowed Money other than the
Obligations and Refinanced Indebtedness repaid from proceeds of the
Term Loans as anticipated by this Agreement, and (iv) any payment
made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of Capital Stock or other equity
Securities of any Borrower or any Subsidiary of a Borrower now or
hereafter outstanding.
"Revolving Credit Commitment" means, with respect to any Lender,
the obligation of such Lender to make Revolving Loans and to
participate in Letters of Credit pursuant to the terms and
conditions of this Agreement, in an aggregate amount at any time
outstanding which shall not exceed the principal amount set forth
opposite such Lender's name under the heading "Revolving Credit
Commitment" on the signature pages hereto or the signature page of
the Assignment and Acceptance by which it became a Lender, as
modified from time to time pursuant to the terms of this Agreement
or to give effect to any applicable Assignment and Acceptance, and
"Revolving Credit Commitments" means the aggregate principal amount
of the Revolving Credit Commitments of all the Lenders, the maximum
amount of which shall be $75,000,000, as reduced from time to time
pursuant to Section 4.01.
"Revolving Credit Obligations" means, at any particular time, the
sum of (i) the outstanding principal amount of the Revolving Loans
at such time, plus (ii) the Letter of Credit Obligations at such
time.
"Revolving Credit Pro Rata Share" means, with respect to any
Lender, the percentage obtained by dividing (i) such Lender's
Revolving Credit Commitment (in each case, as adjusted from time to
time in accordance with the provisions of this Agreement or any
Assignment and Acceptance to which such Lender is a party) by (ii)
the aggregate Revolving Credit Commitments.
"Revolving Credit Termination Date" means the earliest to occur of
(i) June 18, 2004 (or, if not a Business Day, the next preceding
Business Day), (ii) the date of termination of the Revolving Credit
Commitments pursuant to the terms of this Agreement, and (iii) the
date of acceleration of the Obligations pursuant to Section 12.02.
"Revolving Lender" means each Lender having a Revolving Credit
Commitment.
"Revolving Loans" is defined in Section 2.01(a).
"RHI" means RHI Holdings, Inc., a Delaware corporation.
"RHI Credit Agreement" means that certain Restated and Amended
Credit Agreement dated as of May 27, 1996, as amended, among RHI,
as borrower, Citicorp North America, Inc., as lender and
administrative agent, and Citibank, as issuing bank.
"RHI Excluded Property" means (i) the following Real Property owned
by RHI: (a) the Brady Lane Real Property located in Lafayette,
Indiana; (b) the 22 acre parcel of Real Property located in West
Milwaukee, Wisconsin; and (c) the Burlington/Bellofram Real
Property located in Burlington Massachusetts; (ii) assets related
to "Eagle Environmental" consisting of Banner Capital Ventures,
Inc., a Subsidiary of RHI; a note receivable in the amount of
$8,388,363 held by Banner Capital Ventures, Inc. and payable by
Eagle Environmental, L.P.; Recycling Investments, Inc., a
Subsidiary of RHI; the equity investment in Eagle Environmental,
L.P. held by Recycling Investments, Inc.; and Recycling Investments
II, Inc., a Subsidiary of RHI formed in connection with the "Eagle
Environmental" transaction to hold an investment in "Eagle
Environmental" for Royal Oaks Landfill; (iii) the Capital Stock or
assets of MISAT Ltd., a corporation organized under the laws of
Israel and a developer and producer of new generation satellite
communication terminals; and (iv) Capital Stock of Medical
Resources, Inc.
"Schedule of SpinCo Transfers" is defined in Section 8.04.
"Second Amended Credit Agreement" is defined in the premises.
"Securities" means any Capital Stock, shares, voting trust
certificates, partnership certificates or interests, bonds,
debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "investment securities" or
"securities", including, without limitation, any "security" as such
term is defined in Section 8-102 of the Uniform Commercial Code,
whether certificated or uncertificated, or any certificates of
interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire any of the foregoing, but shall
not include the Notes or any other evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Solvent", when used with respect to any Person, means that at the
time of determination:
(i) the Fair Market Value of its assets is in excess of the total
amount of its liabilities (including, without limitation,
contingent liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts
become absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other
commitments) as they mature; and
(iv) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"SpinCo" means Fairchild Industrial Holdings Corp., a corporation
to be formed under the laws of Delaware as a Wholly Owned
Subsidiary of TFC, for the purpose of becoming the transferee of
the Capital Stock or assets of the Spin-Off Businesses to be
transferred by the Borrowers and certain of their Subsidiaries in
connection with the consummation of the Spin-Off.
"Spin-Off" means the distribution to the holders of TFC's Capital
Stock of all of the Capital Stock of SpinCo upon the transfer of
the Capital Stock or assets of the Spin-Off Businesses by TFC, RHI,
FHC and certain of their Subsidiaries.
"Spin-Off Businesses" means the Technologies Companies, Nacanco and
the entities owning the Real Property and miscellaneous investments
identified on Schedule 1.01.10 attached hereto and made a part
hereof.
"Standby Letter of Credit" means any letter of credit issued by an
Issuing Bank pursuant to Section 3.01 for the account of a Borrower
or for the account of any Guarantor or any Subsidiary of a Borrower
if the Borrowers are jointly and severally liable for reimbursement
of amounts drawn under such letter of credit, which is not a
Commercial Letter of Credit.
"STFI" means Shared Technologies Fairchild, Inc., a Delaware
corporation.
"STFI Stock" means Capital Stock of STFI which is common stock.
"Subsidiary" of a Person means any corporation, limited liability
company, unlimited liability company, general or limited
partnership, or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions
with respect to such entity are at the time directly or indirectly
owned or controlled by such Person, one or more of the other
subsidiaries of such Person or any combination thereof.
Notwithstanding the foregoing, for purposes of this Agreement,
Banner shall not be included as a Subsidiary of any Borrower.
"Super-Majority Lenders" means Lenders whose Pro Rata Shares, in
the aggregate, are greater than sixty-seven percent (67%);
provided, however, that, in the event any of the Lenders shall have
failed to fund its Pro Rata Share of any Loan requested by the
Borrowers which such Lenders are obligated to fund under the terms
of this Agreement and any such failure has not been cured, then for
so long as such failure continues, "Super-Majority Lenders" means
Lenders (excluding all Lenders whose failure to fund their
respective Pro Rata Shares of such Loans have not been so cured)
whose Pro Rata Shares represent more than sixty-seven percent (67%)
of the aggregate Pro Rata Shares of such Lenders.
"Swing Lender" means either Administrative Agent.
"Swing Loan Availability" is defined in Section 2.01(c).
"Swing Loan Reserve" means, at any time, a reserve in an amount
equal to the then outstanding balance of the Swing Loans.
"Swing Loans" is defined in Section 2.01(c).
"Swing Loan Subfacility" means, at any time, an amount equal to
$10,000,000.
"Taxes" is defined in Section 14.01(a).
"Technologies Companies" means, collectively, (i) Convac USA, Inc.,
a Delaware corporation, from and after the merger of Fairchild
Technologies USA, Inc., a California corporation, with and into
Convac USA, Inc. as permitted under Section 10.09(iii); (ii)
Fairchild Germany, Inc., a Delaware corporation; (iii) Fairchild
CDI S.A.; and (iv) the operating Subsidiaries of the Borrower
engaged in the manufacture and sale of equipment used in the
manufacture of semiconductors and optical discs and consisting of
Technologies Germany and the other Persons identified on Schedule
1.01.3 under the heading "Fairchild Technologies Group" and those
Persons engaged in such activities which may be acquired or formed
by a Technology Company after the Effective Date; and "Technologies
Company" means any of the Technologies Companies, individually.
"Technologies Germany" means Fairchild Technologies GmbH Gerate zur
Halbleitertechnologie, a corporation formed under the laws of the
Republic of Germany.
"Term Lender" means a Lender to which the Borrower is obligated
with respect to a Term Loan.
"Term Loan" and "Term Loans" are defined in Section 2.01(b).
"Term Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make up to four(4) Term Loans pursuant
to the terms and conditions of this Agreement on or before February
27, 1998 in an aggregate amount which shall not exceed the
principal amount set forth opposite such lender's name under the
heading "Term Loan Commitment" on the signature pages hereof or on
an Assignment and Acceptance pursuant to which such Lender became
a Term Lender and "Term Loan Commitments" means the aggregate
principal amount of the Term Loan Commitments of all Term Lenders,
the maximum amount of which shall be $225,000,000, as reduced from
time to time pursuant to Section 4.01.
"Term Loan Pro Rata Share" means, with respect to any Term Lender,
the percentage obtained by dividing (i) the outstanding principal
amount of the Term Loan payable to such Lender by (ii) the
aggregate outstanding principal amount of all Term Loans.
"Term Loan Termination Date" means the earlier of (i) June 18, 2004
and (ii) the date of acceleration of the Obligations pursuant to
Section 12.02.
"Termination Event" means (i) a Reportable Event with respect to
any Benefit Plan; (ii) the withdrawal of any Borrower or any ERISA
Affiliate from a Benefit Plan during a plan year in which such
Borrower or such ERISA Affiliate was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA or the cessation of
operations which results in the termination of employment of 20% of
Benefit Plan participants who are employees of such Borrower or any
ERISA Affiliate; (iii) the imposition of an obligation on any
Borrower or any ERISA Affiliate under Section 4041 of ERISA to
provide affected parties written notice of intent to terminate a
Benefit Plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the institution by the PBGC or any similar foreign
Governmental Authority of proceedings to terminate a Benefit Plan
or a Foreign Pension Plan; (v) any event or condition which could
reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; (vi) the appointment by a foreign
Governmental Authority of, or the institution of proceedings by a
foreign Governmental Authority to appoint, a trustee to administer
any Foreign Pension Plan; or (vii) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan or a Foreign Pension Plan.
"TFC" means The Fairchild Corporation, a Delaware corporation.
"TFC Indentures" means that certain (i) Indenture dated as of March
13, 1986 between Banner Industries, Inc. and J. Henry Schroder Bank
& Trust Company, as Trustee, with respect to $75,000,000 13 1/8%
Subordinated Debentures due 2006, (ii) Indenture dated as of
October 15, 1986 between Banner Industries, Inc. and National
Westminster Bank USA, as Trustee, with respect to $160,000,000 12%
Intermediate Subordinated Debentures due 2001, and (iii) Indenture
dated as of March 2, 1987 between Banner Industries, Inc. and
Norwest Bank Minneapolis, N.A., as Trustee, with respect to
$102,000,000 13% Junior Subordinated Debentures due 2007.
"Uniform Commercial Code" means the Uniform Commercial Code as
enacted in the State of New York, as it may be amended from time to
time.
"VSI" means VSI Corporation, a Delaware corporation.
"Wholly-Owned Subsidiary" means a corporation (i) one hundred
percent (100%) of the Capital Stock or other equity Securities of
which is owned by the Person of which it is a Subsidiary or (ii)
greater than ninety-five percent (95%) of the Capital Stock or
other equity Securities of which is owned by the Person of which it
is a Subsidiary and the remainder of which Capital Stock or other
equity Securities is owned by a nominee of such Person solely to
comply with the Requirements of Law of the jurisdiction governing
such corporation's organization and existence.
1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding". Periods of
days referred to in this Agreement shall be counted in calendar
days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or
years shall end on the day in the relevant calendar month in the
relevant year, if applicable, immediately preceding the date
numerically corresponding to the first day of such period; provided
that if such period commences on the last day of a calendar month
(or on a day for which there is no numerically corresponding day in
the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions
of this Agreement, end on the last day of the calendar month.
1.03. Accounting Terms; Financial Term Definitions. Subject to
Section 15.04, for purposes of this Agreement, all accounting terms
not otherwise defined herein shall have the meanings assigned to
them in conformity with GAAP. All references to "TFC and its
Subsidiaries, on a consolidated basis," shall be deemed to account
for Banner according to the equity method of accounting.
1.04. Other Terms. All other terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings
assigned to such terms by the Uniform Commercial Code to the extent
the same are defined therein.
1.05. Dollar Equivalents. For purposes of Dollar designations or
Dollar equivalent designations in this Agreement, all calculations
thereof shall be determined, with respect to amounts otherwise
denominated in a non-U.S. currency, based on the amount of Dollars
required to purchase such amount of non-U.S. currency at the
exchange rate therefor which is in effect on the date of
determination.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. Revolving Credit, Term Loan and Swing Loan Facilities. (a)
Revolving Loans. Subject to the terms and conditions set forth in
this Agreement, each Revolving Lender hereby severally and not
jointly agrees to make revolving loans, in Dollars (each
individually, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrowers from time to time during the period from
the Effective Date to the Business Day next preceding the Revolving
Credit Termination Date, in an amount not to exceed such Lender's
Revolving Credit Pro Rata Share of the amount equal to
Availability. All Revolving Loans comprising the same Borrowing
under this Agreement shall be made by the Lenders simultaneously
and proportionately to their then respective Revolving Credit Pro
Rata Shares, it being understood that no Lender shall be
responsible for any failure by any other Lender to perform its
obligation to make a Loan hereunder nor shall the Revolving Credit
Commitment of any Lender be increased or decreased as a result of
any such failure. Subject to the provisions of this Agreement, the
Borrowers may repay any outstanding Revolving Loan on any day which
is a Business Day and any amounts so repaid may be reborrowed, up
to the amount available under this Section 2.01(a) at the time of
such Borrowing, until the Business Day next preceding the Revolving
Credit Termination Date; provided, however, the Borrowers shall,
without notice or demand of any kind, immediately make such
repayments of the Revolving Loans and Term Loans, pro rata based on
the respective outstanding principal balances thereof, to the
extent necessary to reduce the aggregate outstanding principal
amount of the Loans to an amount no greater than the difference
between the Availability as of any given time and the Letter of
Credit Obligations as of such time and the Term Loans so repaid may
not be reborrowed. Each requested Borrowing of Revolving Loans
funded on any Funding Date therefor shall be (i) if Base Rate
Loans, in a principal amount of at least $100,000 and in integral
multiples of $100,000 in excess of that amount and (ii) if
Eurodollar Rate Loans, in a principal amount of at least $1,000,000
and in integral multiples of $100,000 in excess of that amount.
(b) Term Loans. (i) Amount of the Term Loans. Subject to the
terms and conditions set forth in this Agreement, each Term Lender
hereby severally and not jointly agrees to make up to four (4) term
loans, in Dollars (each such loan, individually, a "Term Loan" and,
collectively, the "Term Loans") to the Borrowers during the period
commencing on the Effective Date and ending on February 27, 1998 in
the aggregate principal amount equal to its respective Term Loan
Commitment, such Term Loans requested in a given Notice of
Borrowing to be made simultaneously, it being understood that no
Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Term Loan hereunder nor shall the
Term Loan Commitment of any Lender be increased or decreased as a
result of any such failure.
(ii) Repayment of Term Loans. The outstanding balance of the Term
Loans shall be repaid in thirteen (13) installments in the
aggregate amounts set forth below on the dates set forth below with
a final payment on June 18, 2004 unless the Term Loan Termination
Date earlier occurs:
Installment Due DateAggregate Installment
December 18, 1998$ 2,250,000
December 18, 1999$ 2,250,000
December 18, 2000$ 2,250,000
December 18, 2001$ 2,250,000
June 18, 2002$ 1,125,000
September 18, 2002$26,859,375
December 18, 2002$26,859,375
March 18, 2003$26,859,375
June 18, 2003$26,859,375
September 18, 2003$26,859,375
December 18, 2003$26,859,375
March 18, 2004$26,859,375
June 18, 2004$26,859,375
In addition to the scheduled payments on the Term Loans, the
Borrower may make voluntary prepayments as and when described in
Section 4.01(a)(i) and shall make the mandatory prepayments
required in Section 4.01(b), for credit against such scheduled
payments on the Term Loans pursuant to the provisions of Section
4.01(a)(i) or Section 4.01(b)(vii), as applicable.
(c) Swing Loans. (i) Amount. Subject to the terms and conditions
set forth in this Agreement, a Swing Lender, in its sole
discretion, may from time to time after the Effective Date make
loans to the Borrowers solely for such Swing Lender's own account
(the "Swing Loans") up to an aggregate principal amount at any one
time outstanding equal to the least of (A) lesser of (1) fifty
percent (50%) of the Swing Loan Subfacility and (2) such Swing
Lender's Revolving Credit Commitment, (B) the Revolving Credit
Commitments then in effect, and (C) the Availability as of the time
such Swing Loans are requested (such least amount being referred to
as the "Swing Loan Availability"). All Swing Loans shall be Base
Rate Loans and be payable, together with accrued interest thereon,
on such Swing Lender's demand therefor.
(ii) Notice of Borrowing. When Borrowers desire to borrow under
this Section 2.01(c), they shall make a telephonic request to the
Collateral Agent (which shall be confirmed by a Notice of
Borrowing, signed on their behalf, delivered to the Collateral
Agent on the same day by facsimile transmission) no later than 3:00
p.m. (New York time). If a Swing Loan is made, it shall be made on
the date of such Notice of Borrowing and such Notice of Borrowing
shall specify (i) the amount of the proposed Borrowing, (ii) the
Swing Loan Availability as of the date of such Notice of Borrowing,
and (iii) instructions for the disbursement of the proceeds of such
proposed Borrowing. Citicorp, as a Swing Lender, shall have the
first option to make requested Swing Loans until the outstanding
Swing Loans equals $5,000,000 and, in the event Citicorp elects not
to make a requested Swing Loan or Citicorp has Swing Loans
aggregating $5,000,000 outstanding on the Funding Date for the
requested Borrowing, NationsBank shall have the option to make the
requested Swing Loan.
(iii) Making of Swing Loans. Neither Swing Lender shall have any
duty to make or to continue to make Swing Loans at any time. In the
event a Swing Lender determines to make any Swing Loan after
Borrowers' request therefor, the Swing Lender shall make the
proceeds of such Swing Loan available to the Borrowers at the
Collateral Agent's office in New York, New York and shall disburse
such proceeds in accordance with the Borrowers' disbursement
instructions set forth in the applicable Notice of Borrowing.
Neither Swing Lender shall make any Swing Loan at any time if Swing
Lender shall have received a written notice from any Lender or
shall otherwise have actual knowledge before funding such Swing
Loan that one or more of the conditions precedent set forth in
Section 6.02 will not be satisfied on the proposed Funding Date for
such Swing Loan, but neither Swing Lender shall otherwise be
required to take any action to determine that the conditions
precedent set forth in Section 6.02 have been satisfied prior to
making any Swing Loan.
(iv) Repayment of Swing Loans. (A) Each week, the Borrowers shall
deliver a Notice of Borrowing to the Collateral Agent requesting
Revolving Loans (which shall initially be Base Rate Loans) pursuant
to Section 2.02(a) in an amount equal to the amount of the Swing
Loans then outstanding and hereby authorizes the Collateral Agent
to apply the proceeds of such Revolving Loans to the repayment of
such Swing Loans.
(B) In the event that Borrowers shall have failed to repay the
Swing Loans outstanding on the last Business Day of each week or
deliver a Notice of Borrowing as and when referenced in clause (A)
above, the Swing Lender shall promptly demand payment thereof, and
if such Swing Loan remains unpaid one (1) Business Day after such
demand, and in any event upon request by such Swing Lender to the
Collateral Agent and upon the Revolving Credit Termination Date,
each Revolving Lender shall irrevocably and unconditionally
purchase from such Swing Lender, without recourse or warranty, an
undivided interest and participation in such Swing Loan to the
extent of such Revolving Lender's Revolving Credit Pro Rata Share
thereof. The aforesaid request by the Swing Lender shall be made by
written notice to the Collateral Agent (which may be delivered by
facsimile transmission) or telephone to the Collateral Agent (with
written confirmation thereof by facsimile transmission), which
notice shall specify a proposed purchase date and be delivered to
the Collateral Agent no later than 12:00 noon at least one (1)
Business Day in advance of such proposed purchase date. Promptly
after receipt of such notice, the Collateral Agent shall notify the
Revolving Lenders of the requested purchase and each Revolving
Lender shall deposit an amount equal to its Revolving Credit Pro
Rata Share of the applicable Swing Loan with the Collateral Agent
at its office in New York, New York, in immediately available funds
not later than 10:00 a.m. (New York time) on the proposed purchase
date. The Collateral Agent shall thereupon (regardless of whether
the conditions precedent set forth in Section 6.02 are then
satisfied) remit such amount to the Swing Lender in immediately
available funds. If such amount is not made available by any
Revolving Lender to the Collateral Agent for remittance to the
Swing Lender as described above, the Swing Lender shall be entitled
to recover such amount on demand from such Revolving Lender,
together with accrued interest thereon, for each day from the date
of demand, at the Federal Funds Rate for the first three (3) days
following the date such amount was due and thereafter at the Base
Rate. The failure of any Revolving Lender to pay such amount to the
Swing Lender shall not relieve any other Revolving Lender of its
obligation to make the payment to be made by it. Upon the purchase
of a Revolving Lender of a participation in any Swing Loan pursuant
to this Section 2.01(c)(iv), such Revolving Lender shall be deemed
to have made a Revolving Loan in the amount of such participation,
and such Swing Loan shall be deemed to have been repaid in such
amount.
(C) Notwithstanding anything to the contrary in this Section
2.01(c), Borrowers shall, whether or not a Swing Lender shall have
made demand therefor, on the Revolving Credit Termination Date
repay in full the principal amount of the Swing Loans then
outstanding together with interest thereon.
2.02. General Terms. (a) Notice of Borrowing. When the
Borrowers desire to borrow under Section 2.01, the Borrowers shall
deliver to the Collateral Agent a Notice of Borrowing, signed on
behalf of the Borrowers, (i) on the Effective Date, in the case of
a Borrowing on the Effective Date, (ii) no later than 11:00 a.m.
(New York time) on the proposed Funding Date therefor, in the case
of a Borrowing of Base Rate Loans after the Effective Date, and
(iii) no later than 11:00 a.m. (New York time) at least three (3)
Business Days in advance of the proposed Funding Date therefor, in
the case of a Borrowing of Eurodollar Rate Loans after the
Effective Date. Such Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the
amount of the proposed Borrowing and whether the Borrowing is of
Term Loans or Revolving Loans, (iii) the Availability as of the
date of such Notice of Borrowing, (iv) whether the proposed
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, (v)
in the case of Eurodollar Rate Loans, the requested Eurodollar
Interest Period, and (vi) the instructions for the disbursement of
the proceeds of the proposed Borrowing. The Loans made on the
Effective Date shall initially be Base Rate Loans and thereafter
may be continued as Base Rate Loans or converted into Eurodollar
Rate Loans, in the manner provided in Section 5.01(c) and subject
to the conditions therein set forth and in Section 5.02. In lieu
of delivering such a Notice of Borrowing (except with respect to a
Borrowing of Loans on the Effective Date), the Borrowers may give
the Collateral Agent telephonic notice of any proposed Borrowing by
the time required under this Section 2.02(a), if the Borrowers
confirm such notice by delivery of the required Notice of Borrowing
to the Collateral Agent by facsimile transmission promptly, but in
no event later than 5:00 p.m. (New York time) on the same day, the
original of which facsimile copy shall be delivered to the
Collateral Agent within fourteen (14) days after the date of such
transmission. Any Notice of Borrowing (or telephonic notice in
lieu thereof) given pursuant to this Section 2.02(a) shall be
irrevocable.
(b) Making of Loans. (i) Promptly after receipt of a Notice of
Borrowing under Section 2.02(a) (or telephonic notice in lieu
thereof), the Collateral Agent shall notify each Term Lender or
each Revolving Lender, as applicable, by telecopy, or other similar
form of transmission, of the proposed Borrowing. Each Lender
obligated to make a Loan with respect to the requested Borrowing
shall deposit an amount equal to its Term Loan Pro Rata Share or
Revolving Credit Pro Rata Share, as applicable, of the respective
Term Loan or Revolving Loan amount requested with the Collateral
Agent at its office in New York, New York, in immediately available
funds not later than 1:00 p.m. (New York time) on the applicable
Funding Date therefor. Subject to the fulfillment of the
conditions precedent set forth in Section 6.01 or Section 6.02, as
applicable, the Collateral Agent shall make the proceeds of such
amounts received by it with respect to Loans available to the
Borrowers at the Collateral Agent's office in New York, New York on
such Funding Date (or on the date received if later than such
Funding Date) and shall disburse such proceeds in accordance with
the Borrowers' disbursement instructions set forth in the
applicable Notice of Borrowing. The failure of any Lender to
deposit the amount described above with the Collateral Agent on the
applicable Funding Date shall not relieve any other Lender of its
obligations hereunder to make its Loan on such Funding Date. In the
event the conditions precedent set forth in Section 6.01 or 6.02,
as applicable, are not fulfilled as of the proposed Funding Date
for any Borrowing, the Collateral Agent shall promptly return, by
wire transfer of immediately available funds, the amount deposited
by each Lender to such Lender.
(ii) Unless the Collateral Agent shall have been notified by any
Lender (A) on the Business Day immediately preceding the applicable
Funding Date in respect of any Borrowing of Loans which are
Eurodollar Rate Loans or (B) prior to the time of funding thereof
as specified in Section 2.02(a) in respect of any Borrowing of
Loans which are Base Rate Loans, that such Lender does not intend
to fund its Loan requested to be made on such Funding Date, the
Collateral Agent may assume that such Lender has funded its Loan
and is depositing the proceeds thereof with the Collateral Agent on
the Funding Date therefor, and the Collateral Agent, in its sole
discretion may, but shall not be obligated to, disburse a
corresponding amount to the Borrowers on the applicable Funding
Date. If the Loan proceeds corresponding to that amount are
advanced to the Borrowers by the Collateral Agent but are not in
fact deposited with the Collateral Agent by such Lender on or prior
to the applicable Funding Date, such Lender agrees to pay, and in
addition the Borrowers agree to repay, to the Collateral Agent,
forthwith on demand such corresponding amount, together with
interest thereon, for each day from the date such amount is
disbursed to or for the benefit of the Borrowers until the date
such amount is paid or repaid to the Collateral Agent (A) in the
case of the Borrowers, at the interest rate applicable to such
Borrowing and (B) in the case of such Lender, at the Federal Funds
Rate for the first Business Day after the applicable Funding Date,
and thereafter at the interest rate applicable to such Borrowing.
If such Lender shall pay to the Collateral Agent the corresponding
amount, the amount so paid shall constitute such Lender's Loan, and
if both such Lender and the Borrowers shall pay and repay such
corresponding amount, the Collateral Agent shall promptly pay to
the Borrowers such corresponding amount. This Section 2.02(b) does
not relieve any Lender of its obligation to make its Loan on any
applicable Funding Date.
(c)Revolving Credit Termination Date. The Revolving Credit
Commitments shall terminate on the Revolving Credit Termination
Date. Each Revolving Lender's obligation to make Revolving Loans
shall terminate on the Business Day next preceding the Revolving
Credit Termination Date. All outstanding Obligations shall be paid
in full (or, in the case of unmatured Letter of Credit Obligations,
provision for payment in cash shall be made to the satisfaction of
the Issuing Banks and the Requisite Lenders) (i) if the Revolving
Credit Commitments are terminated pursuant to Section 4.01, on the
date such termination is effective, and (ii) otherwise, on the
earlier to occur of (A) June 18, 2004 or, if not a Business Day,
the next preceding Business Day, and (B) the date of acceleration
of the Obligations pursuant to Section 12.02.
2.03. Authorized Officers and Collateral Agent. On the Effective
Date the Borrowers shall deliver, and from time to time thereafter
the Borrowers may deliver, to the Collateral Agent an Officer's
Certificate setting forth the names of the officers, employees and
agents authorized to request Loans and Letters of Credit and to
request a conversion/continuation of any Loan, in each instance
containing a specimen signature of each such officer, employee or
agent. The officers, employees and agents so authorized shall also
be authorized to act for the Borrowers in respect of all other
matters relating to the Loan Documents. The Administrative Agents,
Collateral Agent, Lenders and Issuing Banks shall be entitled to
rely conclusively on such officer's, employee's, or agent's
authority to request such Loan or Letter of Credit or such
conversion/continuation until the Administrative Agents, Collateral
Agent, Lenders and Issuing Banks receive written notice to the
contrary. Neither Administrative Agent and none of the Lenders, or
the Issuing Banks shall have any duty to verify the authenticity of
the signature appearing on any such Officer's Certificate, written
Notice of Borrowing or Notice of Conversion/Continuation, or any
other document, and, with respect to an oral request for such a
Loan or Letter of Credit or such conversion/continuation, the
Collateral Agent shall have no duty to verify the identity of any
person representing himself or herself as one of the officers,
employees or agents authorized to make such request or otherwise to
act on behalf of the Borrowers. Neither Administrative Agent and
none of the Collateral Agent, the Lenders or Issuing Banks shall
incur any liability to the Borrowers or any other Person in acting
upon any telephonic or facsimile notice referred to above which
such Administrative Agent, the Collateral Agent, such Lender, or
such Issuing Bank believes to have been given by a duly authorized
officer or other person authorized to borrow on behalf of the
Borrowers.
2.04. Use of Proceeds of Loans. The proceeds of the Revolving
Loans and Term Loans shall be used for working capital in the
ordinary course of the respective businesses of the Borrowers and
their Subsidiaries or for other lawful general corporate purposes
not prohibited by the terms of this Agreement, including, without
limitation, (a) repayment in full of the Refinanced Indebtedness
and (b) the facilitation of the Spin-Off, but excluding, in
accordance with the provisions of Section 10.11, the purchasing or
carrying of Margin Stock within the meaning of Regulation U and
Regulation G. The proceeds of the Swing Loans may be used solely
for working capital in the ordinary course of business of the
Borrowers and their Subsidiaries.
ARTICLE III
LETTERS OF CREDIT
3.01. Letters of Credit. Subject to the terms and conditions set
forth in this Agreement, each Issuing Bank hereby severally agrees
to issue for the account of the Borrowers, or for the account of
any Guarantor or any of the Borrowers' Subsidiaries if the
Borrowers are jointly and severally liable for reimbursement of
amounts drawn under such Letter of Credit, one or more Letters of
Credit, subject to the following provisions:
(a)Types and Amounts. An Issuing Bank shall not have any
obligation to issue, amend or extend, and shall not issue, amend or
extend, any Letter of Credit at any time:
(i)if the aggregate Letter of Credit Obligations with respect to
such Issuing Bank, after giving effect to the issuance, amendment
or extension of the Letter of Credit requested hereunder, shall
exceed any limit imposed by law or regulation upon such Issuing
Bank;
(ii) if the Issuing Bank receives written notice from the
Collateral Agent at or before 11:00 a.m. (New York time) on the
date of the proposed issuance, amendment or extension of such
Letter of Credit that (A) immediately after giving effect to the
issuance, amendment or extension of such Letter of Credit, (I) the
Letter of Credit Obligations at such time would exceed $30,000,000
or (II) the Availability at such time would be less than zero, or
(B) one or more of the conditions precedent contained in Sections
6.01 or 6.02, as applicable, would not on such date be satisfied,
unless such conditions are thereafter satisfied and written notice
of such satisfaction is given to the Issuing Bank by the Collateral
Agent (and an Issuing Bank shall not otherwise be required to
determine that, or take notice whether, the conditions precedent
set forth in Sections 6.01 or 6.02, as applicable, have been
satisfied);
(iii) which is in a currency other than a currency in which such
Issuing Bank is then issuing letters of credit; or
(iv) which has an expiration date later than the earlier to occur
of (A) the date one (1) year after the date of issuance (without
regard to any automatic renewal provisions thereof) and (B) the
Revolving Credit Termination Date; provided, however, that on the
Revolving Credit Termination Date, Borrowers shall deposit with the
Collateral Agent (or respective Issuing Bank(s) at the direction of
the Collateral Agent) Cash Collateral for deposit in the Cash
Collateral Account or under other agreements satisfactory to the
Collateral Agent and Issuing Bank(s) and in an amount equal to one
hundred five percent (105%) of the then undrawn face amount of all
Letters of Credit denominated in Dollars and one hundred twenty
percent (120%) of the then undrawn face amount of all Letters of
Credit denominated in any currency other than Dollars, in each
instance for all Letters of Credit which will continue outstanding
after the Revolving Credit Termination Date, plus Letter of Credit
Fees with respect to such Letters of Credit for the period
commencing on the Revolving Credit Termination Date through the
expiry date of such Letters of Credit.
(b)Conditions. In addition to being subject to the satisfaction of
the conditions precedent contained in Sections 6.01 and 6.02, as
applicable, the obligation of an Issuing Bank to issue, amend or
extend any Letter of Credit is subject to the satisfaction in full
of the following conditions:
(i)if the Issuing Bank so requests, the Borrowers or, in the case
of Letters of Credit issued for the account of a Guarantor or any
of the Borrowers' Subsidiaries, the Borrowers and such Guarantor or
Subsidiary shall have executed and delivered to such Issuing Bank
and the Collateral Agent a Letter of Credit Reimbursement Agreement
and such other documents and materials as may be required pursuant
to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall be
satisfactory to the Issuing Bank in its sole discretion.
(c)Issuance of Letters of Credit. (i) The Borrowers shall give an
Issuing Bank and the Collateral Agent written notice that it has
selected such Issuing Bank to issue a Letter of Credit not later
than 11:00 a.m. (New York time) on the third (3rd) Business Day
preceding the requested date for issuance thereof under this
Agreement, or such shorter notice as may be acceptable to such
Issuing Bank and the Collateral Agent. Such notice shall be
irrevocable unless and until such request is denied by the
applicable Issuing Bank and shall specify (A) that the requested
Letter of Credit is either a Commercial Letter of Credit or a
Standby Letter of Credit, (B) that such Letter of Credit is solely
for the account of the Borrowers or the name of the Guarantor or
Subsidiary of the Borrowers which is jointly and severally applying
for such Letter of Credit, (C) the stated amount of the Letter of
Credit requested, (D) the effective date (which shall be a Business
Day) of issuance of such Letter of Credit, (E) the date on which
such Letter of Credit is to expire (which shall be a Business Day
and no later than the Business Day immediately preceding the
scheduled Revolving Credit Termination Date), (F) the Person for
whose benefit such Letter of Credit is to be issued, (G) other
relevant terms of such Letter of Credit, (H) the Availability at
such time, and (I) the amount of the then outstanding Letter of
Credit Obligations. Such Issuing Bank shall notify the Collateral
Agent immediately upon receipt of a written notice from the
Borrowers requesting that a Letter of Credit be issued, or that an
existing Letter of Credit be extended or amended and, upon the
Collateral Agent's request therefor, send a copy of such notice to
the Collateral Agent.
(ii) The Issuing Bank shall give (A) the Collateral Agent written
notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance, amendment or extension of a Letter of
Credit and (B) promptly after issuance thereof, provide the
Collateral Agent with a copy of each Letter of Credit issued and
each amendment thereto.
(d)Reimbursement Obligations; Duties of Issuing Banks. (i)
Notwithstanding any provisions to the contrary in any Letter of
Credit Reimbursement Agreement:
(A)the Borrowers shall reimburse, or cause the Guarantor or its
Subsidiary for whose account a Letter of Credit is issued to
reimburse, the Issuing Bank for amounts drawn under such Letter of
Credit, in Dollars, no later than the date (the "Reimbursement
Date") which is the earlier of (I) the time specified in the
applicable Letter of Credit Reimbursement Agreement and (II) one
(1) Business Day after the Borrowers receive written notice from
the Issuing Bank that payment has been made under such Letter of
Credit by the Issuing Bank; and
(B)all Reimbursement Obligations with respect to any
Letter of Credit shall bear interest at the rate
applicable to Base Rate Loans in accordance with
Section 5.01(a) from the date of the relevant drawing
under such Letter of Credit until the Reimbursement Date
and thereafter at the rate applicable to Base Rate Loans
in accordance with Section 5.01(d).
(ii) The Issuing Bank shall give the Collateral Agent written
notice, or telephonic notice confirmed promptly thereafter in
writing, of all drawings under a Letter of Credit and the payment
(or the failure to pay when due) by the Borrowers, the applicable
Guarantor, or the Borrowers' applicable Subsidiary on account of a
Reimbursement Obligation (which notice the Collateral Agent shall
promptly transmit by telegram, telex, telecopy or similar
transmission to each Lender).
(iii) No action taken or omitted in good faith by an Issuing
Bank under or in connection with any Letter of Credit shall put
such Issuing Bank under any resulting liability to any Lender, any
Borrower, a Guarantor, or any of the Borrowers' Subsidiaries or, so
long as it is not issued in violation of Section 3.01(a), relieve
any Lender of its obligations hereunder to such Issuing Bank.
Solely as between the Issuing Banks and the Lenders, in determining
whether to pay under any Letter of Credit, the respective Issuing
Bank shall have no obligation to the Lenders other than to confirm
that any documents required to be delivered under a respective
Letter of Credit appear to have been delivered and that they appear
on their face to comply with the requirements of such Letter of
Credit.
(e)Participations. (i) Immediately upon issuance by an Issuing
Bank of any Letter of Credit in accordance with the procedures set
forth in this Section 3.01 and on the Effective Date with respect
to the Letters of Credit identified on Schedule 3.02 attached
hereto and made a part hereof, each Revolving Lender shall be
deemed to have irrevocably and unconditionally purchased and
received from that Issuing Bank, without recourse or warranty, an
undivided interest and participation in such Letter of Credit to
the extent of such Lender's Revolving Credit Pro Rata Share,
including, without limitation, all obligations of the Borrowers
with respect thereto (other than amounts owing to the Issuing Bank
under Section 3.01(g) and Section 5.03(b)) and any security
therefor and guaranty pertaining thereto.
(ii) If any Issuing Bank makes any payment under any Letter of
Credit and the Borrowers do, or the Guarantor or the Subsidiary of
the Borrowers for whose account the Letter of Credit was issued
does, not repay such amount to the Issuing Bank on the
Reimbursement Date, the Issuing Bank shall promptly notify the
Collateral Agent, which shall promptly notify each Lender, and each
Revolving Lender shall promptly and unconditionally pay to the
Collateral Agent for the account of such Issuing Bank, in
immediately available funds, the amount of such Lender's Revolving
Credit Pro Rata Share of such payment (net of that portion of such
payment, if any, made by such Lender in its capacity as an Issuing
Bank), and the Collateral Agent shall promptly pay to the Issuing
Bank such amounts received by it, and any other amounts received by
the Collateral Agent for the Issuing Bank's account, pursuant to
this Section 3.01(e). All amounts so paid to the Issuing Bank shall
be deemed to constitute Revolving Loans. If a Lender does not make
its Revolving Credit Pro Rata Share of the amount of such payment
available to the Collateral Agent, such Lender agrees to pay to the
Collateral Agent for the account of the Issuing Bank, forthwith on
demand, such amount together with interest thereon, for the first
Business Day after the date such payment was first due at the
Federal Funds Rate, and thereafter at the interest rate then
applicable to Base Rate Loans in accordance with Section 5.01(a).
The failure of any Lender to make available to the Collateral Agent
for the account of an Issuing Bank its Revolving Credit Pro Rata
Share of any such payment shall neither relieve any other Lender of
its obligation hereunder to make available to the Collateral Agent
for the account of such Issuing Bank such other Lender's Revolving
Credit Pro Rata Share of any payment on the date such payment is to
be made nor increase the obligation of any other Lender to make
such payment to the Collateral Agent.
(iii) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to
which the Collateral Agent has previously received payments from
any Revolving Lender for the account of such Issuing Bank pursuant
to this Section 3.01(e), such Issuing Bank shall promptly pay to
the Collateral Agent and the Collateral Agent shall promptly pay to
such Lender an amount equal to such Lender's Revolving Credit Pro
Rata Share thereof. Each such payment shall be made by such
Issuing Bank or the Collateral Agent, as the case may be, on the
Business Day on which such Person receives the funds paid to such
Person pursuant to the preceding sentence, if received prior to
11:00 a.m. (New York time) on such Business Day, and otherwise on
the next succeeding Business Day.
(iv) Upon the request of any Lender, an Issuing Bank shall furnish
such Lender copies of any Letter of Credit or Letter of Credit
Reimbursement Agreement to which such Issuing Bank is party and
such other documentation as reasonably may be requested by such
Lender.
(v) The obligations of a Lender to make payments to the Collateral
Agent for the account of any Issuing Bank with respect to a Letter
of Credit shall be irrevocable, shall not be subject to any
qualification or exception whatsoever except willful misconduct or
gross negligence of such Issuing Bank, and shall be honored in
accordance with this Article III (irrespective of the satisfaction
of the conditions described in Sections 6.01 and 6.02, as
applicable) under all circumstances, including, without limitation,
any of the following circumstances:
(A)any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B)the existence of any claim, setoff, defense or other
right which any Borrower, any Guarantor or Subsidiary of
the Borrowers may have at any time against a beneficiary
named in a Letter of Credit or any transferee of a
beneficiary named in a Letter of Credit (or any Person
for whom any such transferee may be acting), the
Collateral Agent, the Issuing Bank, any Lender, or any
other Person, whether in connection with this Agreement,
any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any
underlying transactions between the account party and
beneficiary named in any Letter of Credit);
(C)any draft, certificate or any other document presented
under the Letter of Credit having been determined to be
forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccu-
rate in any respect;
(D)the surrender or impairment of any security for the
performance or observance of any of the terms of any of
the Loan Documents;
(E)any failure by that Issuing Bank to make any reports
required pursuant to Section 3.01(h) or the inaccuracy of
any such report; or
(F)the occurrence of any Event of Default or Potential
Event of Default.
(f)Payment of Reimbursement Obligations. (i) The Borrowers
unconditionally, jointly and severally, agree to pay, or cause the
Guarantor or Borrowers' Subsidiary for whose account a Letter of
Credit is issued to pay, to each Issuing Bank, in Dollars, the
amount of all Reimbursement Obligations, interest and other amounts
payable to such Issuing Bank under or in connection with the
Letters of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right which the
Borrowers, such Guarantor or such Subsidiary of the Borrowers may
have at any time against any Issuing Bank or any other Person.
(ii)In the event any payment by the Borrowers, such Guarantor,
or such Subsidiary received by an Issuing Bank with respect to a
Letter of Credit and distributed by the Collateral Agent to the
Revolving Lenders on account of their participations is thereafter
set aside, avoided or recovered from such Issuing Bank in
connection with any receivership, liquidation or bankruptcy
proceeding, each such Lender which received such distribution
shall, upon demand by such Issuing Bank, contribute such Lender's
Revolving Credit Pro Rata Share of the amount set aside, avoided or
recovered together with interest at the rate required to be paid by
such Issuing Bank upon the amount required to be repaid by it.
(g)Issuing Bank Charges. The Borrowers shall pay, or cause the
Guarantor or Borrowers' Subsidiary for whose account a Letter of
Credit is issued to pay, to each Issuing Bank, solely for its own
account, the standard charges assessed by such Issuing Bank in
connection with the issuance, administration, amendment and payment
or cancellation of Letters of Credit and such compensation in
respect of such Letters of Credit for the Borrowers', such
Guarantor's, or such Subsidiary's account, as applicable, as may be
agreed upon by the Borrowers and such Issuing Bank from time to
time.
(h)Issuing Bank Reporting Requirements. Each Issuing Bank shall,
no later than the first (1st) Business Day following the last day
of each calendar month, provide to the Collateral Agent, the
Borrowers, and, if requested by a Lender, such Lender separate
schedules for Commercial Letters of Credit and Standby Letters of
Credit issued as Letters of Credit, in form and substance
reasonably satisfactory to the Collateral Agent, setting forth the
aggregate Letter of Credit Obligations outstanding to it at the end
of each day during such month and, to the extent not otherwise
provided in accordance with the provisions of Section 3.01(c)(ii),
any information requested by the Collateral Agent or the Borrowers
relating to the date of issue, account party, amount, expiration
date and reference number of each Letter of Credit issued by it.
(i)Indemnification; Exoneration. (i) In addition to all other
amounts payable to an Issuing Bank, the Borrowers hereby agree to
defend, indemnify, and save the Collateral Agent, each Issuing Bank
and each Lender harmless from and against any and all claims,
demands, liabilities, penalties, damages, losses (other than loss
of profits), costs, charges and expenses (including reasonable
attorneys' fees but excluding taxes) which the Collateral Agent,
such Issuing Bank or such Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter
of Credit other than as a result of the gross negligence or willful
misconduct of the Issuing Bank, as determined by a court of com-
petent jurisdiction, or (B) the failure of the Issuing Bank issuing
a Letter of Credit to honor a drawing under such Letter of Credit
as a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or Govern-
mental Authority.
(ii)As between the Borrowers and any Guarantor or any of the
Borrowers' Subsidiaries for whose account a Letter of Credit is
issued on the one hand and the Collateral Agent, the Lenders and
the Issuing Banks on the other hand, the Borrowers assume all risks
of the acts and omissions of, or misuse of Letters of Credit by,
the respective beneficiaries of the Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the
provisions of the Letter of Credit Reimbursement Agreements, the
Issuing Banks and the Lenders shall not be responsible for: (A)
the form, validity, legality, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection
with the application for and issuance of the Letters of Credit,
even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) the
validity, legality or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or
the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any
reason; (C) failure of the beneficiary of a Letter of Credit to
comply duly with conditions required in order to draw upon such
Letter of Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher;
(E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of a
Letter of Credit of the proceeds of any drawing under such Letter
of Credit; and (H) any consequences arising from causes beyond the
control of the Collateral Agent, the Issuing Banks or the Lenders.
3.02. Transitional Provisions. Schedule 3.02 contains a schedule
of certain Letters of Credit issued prior to the Effective Date by
Citibank for the account of the Borrowers, a Guarantor, or for the
account of a Subsidiary of the Borrowers and each Borrower hereby
acknowledges and confirms that it is jointly and severally liable
for reimbursement of amounts drawn thereunder. Such Letters of
Credit shall be deemed to be Letters of Credit issued pursuant to
this Agreement and be subject to the provisions hereof.
3.03. Obligations Several. The obligations of each Issuing Bank
and each Lender under this Article III are several and not joint,
and no Issuing Bank or Lender shall be responsible for the
obligation to issue Letters of Credit or participation obligation
hereunder, respectively, of any other Issuing Bank or Lender.
ARTICLE IV
PAYMENTS AND PREPAYMENTS
4.01. Prepayments; Reductions in Commitments.
(a) Voluntary Prepayments/Commitment Reductions. (i)
Prepayments. The Borrowers may prepay the Revolving Loans in whole
or in part, at any time and from time to time, subject to the right
to reborrow the same in accordance with the provisions of Section
2.01(a). The Borrowers may permanently prepay the Revolving Loans
and Term Loans in whole or in minimum amounts of $1,000,000 and
integral multiples of $1,000,000 in excess of that amount at any
time upon at least three (3) Business Days' prior written notice to
the Collateral Agent from the Borrowers (which the Collateral Agent
shall promptly transmit to each Lender), which notice shall specify
the date (which shall be a Business Day) of prepayment, the
aggregate principal amount of the prepayment, and whether such
permanent prepayment is of Revolving Loans or Term Loans. When
notice of prepayment is delivered as provided herein, the principal
amount of the Loans referenced therein shall become due and payable
on the prepayment date specified in such notice. Voluntary
permanent prepayments of the Revolving Loans shall be allocated
ratably to such Loans based on the then outstanding principal
balances thereof and voluntary prepayments of the Term Loans shall
be allocated ratably to the Term Loans based on the then
outstanding principal balances thereof and each Term Lender's Term
Loan Pro Rata Share thereof and then applied pro rata to all unpaid
installments due to each Term Lender based on the respective
principal balances thereof until paid in full.
(ii) Voluntary Commitment Reductions. The Borrowers, upon at
least three (3) Business Days' prior written notice to the
Collateral Agent from the Borrowers (which the Collateral Agent
shall promptly transmit to each Lender), shall have the right, at
any time and from time to time, (A) to terminate in whole or
permanently reduce in part the unfunded portion of the Term Loan
Commitments and (B) to terminate in whole or permanently reduce in
part the Revolving Credit Commitments; provided that, in the case
of a termination of the Revolving Credit Commitments, the Borrowers
shall have made whatever payment may be required to reduce the
outstanding principal amount of the Revolving Loans by the
aggregate amount required such that the Revolving Credit
Obligations, after giving effect to such payment, will equal an
amount less than or equal to the Revolving Credit Commitments as
reduced or terminated. Any partial reduction of the Term Loan
Commitments or Revolving Credit Commitments shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess of that amount. Each reduction of the Term
Loan Commitments shall reduce the Term Loan Commitments of each
Term Lender proportionately in accordance with its Term Loan Pro
Rata Share and each installment amount set forth in Section
2.01(b)(ii) allocated to the then unfunded Term Loan Commitments
pro rata based on the then unfunded amounts thereof. Each reduction
of the Revolving Credit Commitments shall reduce the Revolving
Credit Commitment of each Revolving Lender proportionately in
accordance with its Revolving Credit Pro Rata Share. Any notice of
termination or reduction given to the Collateral Agent under this
Section 4.01(a)(ii) shall specify (A) the date (which shall be a
Business Day) of such termination or reduction and, with respect to
a partial reduction, the aggregate principal amount thereof and (B)
whether such termination or reduction is of the Term Loan
Commitments or Revolving Credit Commitments. When notice of
termination or reduction is delivered as provided herein, the
principal amount of the Revolving Loans specified in the notice
shall become due and payable on the date specified in such notice.
(iii) Prepayment Fee. The prepayments and payments in respect of
reductions and terminations described in this Section 4.01 may be
made without premium or penalty (except as provided in Article
XIV).
(b)Mandatory Prepayments/Commitment Reductions.
(i) Net Cash Proceeds of Sale. The Borrowers shall make or cause
to be made a mandatory prepayment of the Obligations in an amount
equal to one hundred percent (100%) of the Net Cash Proceeds of
Sale received by any Borrower or any Subsidiary of a Borrower upon
such Person's receipt thereof. Notwithstanding the foregoing, the
first $10,000,000 of Net Cash Proceeds of Sale otherwise required
to be applied as a mandatory prepayment of the Obligations received
after the Effective Date may be used within three hundred sixty-
five (365) days after receipt thereof by a Borrower or a Subsidiary
of a Borrower to make Investments permitted by Section 10.04(m);
provided that the Borrowers notify the Collateral Agent, in
writing, of the intention to make such Investments and such Net
Cash Proceeds of Sale are used to repay Revolving Loans or
deposited with the Collateral Agent, as Cash Collateral, upon their
receipt as aforesaid, subject to the Borrowers' right to request
the return of such Cash Collateral to enable such Person(s) to make
such Investments within such period. To the extent such Net Cash
Proceeds of Sale are so used within such period, the same shall not
be required to be applied as a mandatory prepayment of the
Obligations and an amount equal to that portion of the Net Cash
Proceeds of Sale not so used, shall be delivered to the Collateral
Agent as a mandatory prepayment for application on the Obligations
on the 366th day after receipt thereof.
(ii) Net Cash Proceeds of Issuance of Equity Securities.
Immediately upon any Borrower's or any Subsidiary of a Borrower's
receipt of any Net Cash Proceeds of Issuance of Equity Securities,
the Borrowers shall make or cause to be made a mandatory prepayment
in an amount equal to fifty percent (50%) of such Net Cash Proceeds
of Issuance of Equity Securities.
(iii) Net Cash Proceeds of Issuance of Indebtedness. Immediately
upon any Borrower's or any Subsidiary of a Borrower's receipt of
any Net Cash Proceeds of Issuance of Indebtedness, the Borrowers
shall make or cause to be made a mandatory prepayment in an amount
equal to one hundred percent (100%) of such Net Cash Proceeds of
Issuance of Indebtedness.
(iv) Excess Cash Flow. As soon as practicable, and in any event
within one hundred ten (110) days after the end of each Cash Flow
Period, TFC shall calculate the Excess Cash Flow for such Cash Flow
Period and the Borrowers shall make a mandatory prepayment of the
Obligations in an amount equal to fifty percent (50%) of the Excess
Cash Flow for such Cash Flow Period until such time as the
Consolidated Indebtedness for Borrowed Money to EBITDA Ratio has
been reduced to 3.0 to 1.00.
(v) No Waiver or Consent. Nothing in this Section 4.01(b) shall
be construed to constitute the Lenders' consent to any transaction
referenced in clauses (i) through (iii) above which is not
expressly permitted by Article X.
(vi) Notice. The Borrowers shall give the Collateral Agent prior
written notice or telephonic notice promptly confirmed in writing
(each of which the Collateral Agent shall promptly transmit to each
Lender), when a Designated Prepayment will be made (which date of
prepayment shall be no later than the date on which such Designated
Payment becomes due and payable pursuant to this Section 4.01(b)).
(vii) Application of Designated Prepayments. Designated
Prepayments shall be allocated and applied to the Obligations as
follows:
(A) the amount of such Designated Prepayment shall be
applied, pro rata, to the outstanding principal balances
of the Term Loans based on the respective Term Loan Pro
Rata Shares of the Term Lenders, in each case pro rata to
all unpaid installments due under each Term Loan based on
the respective amounts of such installments, with each
application being made to Base Rate Loans and Eurodollar
Rate Loans as provided in Section 4.02(b); and
(B) following the payment in full of the Term Loans or
in the event there are no Term Loans outstanding as of
the date a Designated Prepayment is required to be made,
the remaining balance of (or entire amount of, in the
event there are no Term Loans outstanding as of such
required payment date) each Designated Prepayment shall
be applied to the outstanding balances of the Revolving
Loans, pro rata based on the respective Revolving Loan
Pro Rata Shares of the Revolving Lenders, with each
application being made to Base Rate Loans and Eurodollar
Rate Loans as provided in Section 4.02(b), until paid in
full.
(c) Mandatory Reductions in Revolving Credit Commitments. The
Revolving Credit Commitments shall be permanently reduced by the
amount of any Designated Prepayment required to be applied to
Revolving Loans pursuant to Section 4.01(b)(vii).
4.02. Payments. (a) Manner and Time of Payment. All payments of
principal of and interest on the Loans and Reimbursement
Obligations and other Obligations (including, without limitation,
fees and expenses) which are payable to the Collateral Agent, the
Lenders or any Issuing Bank shall be made without condition, set-
off, or reservation of right, and, with respect to payments made
other than from application of deposits in a Concentration Account,
in immediately available funds, delivered to the Collateral Agent
(or, in the case of Reimbursement Obligations, to the pertinent
Issuing Bank), not later than 11:00 a.m. (New York time) on the
date and at the place due, to such account of the Collateral Agent
(or such Issuing Bank) as it may designate; in each instance, for
the account of the Collateral Agent, the Lenders or such Issuing
Bank, as the case may be. Funds received by the Collateral Agent,
including, without limitation, funds in respect of any Loans to be
made on that date, not later than 11:00 a.m. (New York time) on any
given Business Day shall be credited against payment to be made
that day and funds received by the Collateral Agent after that time
shall be deemed to have been paid on the next succeeding Business
Day. Payments actually received by the Collateral Agent for the
account of the Lenders or the Issuing Banks, or any of them, shall
be paid to them by the Collateral Agent promptly after receipt
thereof.
(b) Pre-Default Apportionment of Payments. Subject to the
provisions of Section 4.01 and Section 4.02(f), all payments of
principal and interest in respect of outstanding Loans, all
payments in respect of Reimbursement Obligations, all payments of
fees and all other payments in respect of any other Obligations,
shall be allocated among such of the Lenders and Issuing Banks as
are entitled thereto, and, if Lenders, in proportion to their
respective Revolving Credit Pro Rata Shares or Term Loan Pro Rata
Shares, as applicable, or otherwise as provided herein. Except as
provided in Section 4.02(c) with respect to payments and proceeds
of Collateral received after the occurrence of an Event of Default,
all other payments, proceeds of Collateral, and other amounts
received by the Collateral Agent from or for the benefit of the
Borrowers shall be applied
(i) first, to pay principal of and interest on any portion of the
Loans which the Collateral Agent may have advanced on behalf of any
Lender (other than Citicorp if the Collateral Agent is Citicorp)
for which the Collateral Agent has not then been reimbursed by such
Lender or the Borrowers,
(ii) second, to pay principal of and interest on any Protective
Advance for which the Collateral Agent has not then been paid by
the Borrowers or reimbursed by the Lenders,
(iii) third, to pay the principal of the Loans then due and payable
in the order described hereinbelow and interest on such Loans then
due and payable, ratably, based on the then outstanding balances of
the such Loans,
(iv) fourth, to pay all other Obligations then due and payable,
ratably, and
(v) fifth, as the Borrowers so designate.
All such principal and interest payments in respect of Loans shall
be applied first, to repay outstanding Base Rate Loans, with those
Base Rate Loans which are Swing Loans being repaid first, and then
to repay outstanding Eurodollar Rate Loans, with those Eurodollar
Rate Loans which have earlier expiring Eurodollar Interest Periods
being repaid prior to those which have later expiring Eurodollar
Interest Periods.
(c) Post-Default Apportionment of Payments. After the occurrence
of an Event of Default and while the same is continuing, the
Collateral Agent shall apply all payments in respect of any
Obligations and all proceeds of Collateral in the following order:
(i)first, to pay principal of and interest on any portion of the
Loans which the Collateral Agent may have advanced on behalf of any
Lender (other than Citicorp if the Collateral Agent is Citicorp)
for which the Collateral Agent has not then been reimbursed by such
Lender or the Borrowers;
(ii) second, to pay principal of and interest on any Protective
Advance for which the Collateral Agent has not then been paid by
the Borrower or reimbursed by the Lenders;
(iii) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Collateral Agent;
(iv)fourth, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Lenders and the
Issuing Banks;
(v)fifth, to pay interest due in respect of the Loans, ratably, in
accordance with the Lenders' respective Revolving Credit Pro Rata
Shares and Term Loan Pro Rata Shares, as applicable;
(vi)sixth, to the ratable payment or prepayment of principal
outstanding on all Loans (with Swing Loans being repaid first),
Hedge Agreements to which any of the Lenders or any Affiliate of
any of the Lenders is a party, depositary account and cash
management agreements which constitute Loan Documents, and
principal of and interest on Letter of Credit Obligations (or, to
the extent Letter of Credit Obligations are contingent, deposited
in the Cash Collateral Account to provide Cash Collateral in
respect of such Obligations), in accordance with the Lender's
respective Revolving Credit Loan Pro Rata Shares and Term Loan Pro
Rata Shares, as applicable; and
(vii) seventh, to the ratable payment of all other Obligations.
For purposes of clause (vi) above, Obligations with respect to
Hedge Agreements and depositary account and cash management
agreements to which an Affiliate of a Lender is a party, such
Obligations shall be attributable to such Lender.
(d) Collateral Agent Authority to Apply Funds. The Collateral
Agent, in its sole discretion subject only to the terms of this
Section 4.02(d), may pay from the proceeds of Loans made to the
Borrowers hereunder, whether made following a request by the
Borrowers pursuant to Section 2.02 or a deemed request as provided
in this Section 4.02(d), all amounts payable by the Borrowers
hereunder, including, without limitation, amounts payable with
respect to payments of principal, interest, Reimbursement
Obligations and fees and all reimbursements for expenses pursuant
to Section 15.02. The Borrowers hereby irrevocably authorizes the
Revolving Lenders to make Revolving Loans to it, which Revolving
Loans shall be Base Rate Loans upon notice from the Collateral
Agent as described in the following sentence for the purpose of
paying principal, interest, Reimbursement Obligations and fees due
from the Borrowers, reimbursing expenses pursuant to Section 15.02
and paying any and all other amounts due and payable by the
Borrowers hereunder or under the Notes, and agrees that all such
Loans so made shall be deemed to have been requested by it pursuant
to Section 2.02 as of the date of the aforementioned notice. The
Collateral Agent shall request Loans on behalf of the Borrowers as
described in the preceding sentence by notifying the Lenders by
telecopy, telegram or other similar form of transmission (which
notice the Collateral Agent shall thereafter promptly transmit to
the Borrowers), of the amount and Funding Date of the proposed
Borrowing and that such Borrowing is being requested on the
Borrowers' behalf pursuant to this Section 4.02(d). On the
proposed Funding Date for such Loan, the Lenders shall make the
requested Loans in accordance with the procedures and subject to
the conditions specified in Section 2.02.
(e) Priorities and Distributions of Payments. The orders of
priority set forth in Sections 4.02(b) and (c) and the related
provisions of this Agreement are set forth solely to determine the
rights and priorities of the Collateral Agent, the Lenders, the
Issuing Banks and other Holders as among themselves. Subject to
Section 4.02(f), the Collateral Agent shall promptly distribute to
each Lender and Issuing Bank at its primary address set forth on
the appropriate signature page hereof or the signature page to the
Assignment and Acceptance by which it became a Lender or Issuing
Bank, or at such other address as a Lender, an Issuing Bank or
other Holder may request in writing, such funds as such Person may
be entitled to receive, subject to the provisions of Article XIV;
provided that the Collateral Agent shall under no circumstances be
bound to inquire into or determine the validity, scope or priority
of any interest or entitlement of any Holder and may suspend all
payments or seek appropriate relief (including, without limitation,
instructions from the Requisite Lenders or an action in the nature
of interpleader) in the event of any doubt or dispute as to any
apportionment or distribution contemplated hereby.
(f) Defaulting Lenders. In the event that any Lender fails to
fund its Revolving Credit Pro Rata Share of any Revolving Loan or
its Term Loan Pro Rata Share of any Term Loan requested by the
Borrowers which such Lender is obligated to fund under the terms of
this Agreement (the funded portion of such Loan being hereinafter
referred to as a "Non Pro Rata Loan"), until the earlier of such
Lender's cure of such failure and the termination of the Revolving
Credit Commitments, the proceeds of all amounts thereafter repaid
to the Collateral Agent by the Borrowers and otherwise required to
be applied to such Lender's share of all other Obligations pursuant
to the terms of this Agreement shall be advanced to the Borrower by
the Collateral Agent on behalf of such Lender to cure, in full or
in part, such failure by such Lender, but shall nevertheless be
deemed to have been paid to such Lender in satisfaction of such
other Obligations. Notwithstanding anything in this Agreement to
the contrary:
(i) the foregoing provisions of this Section 4.02(f)
shall apply only with respect to the proceeds of payments
of Obligations and shall not affect the conversion or
continuation of Loans pursuant to Section 5.01(c);
(ii) a Lender shall be deemed to have cured its failure
to fund its Revolving Credit Pro Rata Share or Term Loan
Pro Rata Share of any Loan at such time as an amount
equal to such Lender's original Revolving Credit Loan Pro
Rata Share or Term Loan Pro Rata Share of the requested
principal portion of such Loan is fully funded to the
Borrowers, whether made by such Lender itself or by
operation of the terms of this Section 4.02(f), and
whether or not the Non Pro Rata Loan with respect thereto
has been repaid, converted or continued;
(iii) amounts advanced to the Borrowers to cure, in full
or in part, any such Lender's failure to fund its
Revolving Loan Pro Rata Share of any Revolving Loan
("Cure Loans") shall bear interest at the rate in effect
from time to time pursuant to Section 5.01 and for all
other purposes of this Agreement shall be treated as if
they were Base Rate Loans; and
(iv) regardless of whether or not an Event of Default
has occurred or is continuing, and notwithstanding the
instructions of the Borrowers as to their desired
application, all repayments of principal which, in
accordance with the other terms of this Section 4.02,
would be applied to the outstanding Loans which are Base
Rate Loans shall be applied first, ratably to all such
Base Rate Loans constituting Non Pro Rata Loans, second,
ratably to such Base Rate Loans other than those
constituting Non Pro Rata Loans or Cure Loans and, third,
ratably to such Base Rate Loans constituting Cure Loans.
(g) Payments on Non-Business Days. Whenever any payment to be
made by the Borrowers hereunder or under the Notes is stated to be
due on a day which is not a Business Day, the payment shall instead
be due on the next succeeding Business Day (except as set forth in
Section 5.02(b)(iii) with respect to payments due on the next
preceding Business Day), and any such extension of time shall be
included in the computation of the payment of interest and fees
hereunder.
4.03. Promise to Repay; Evidence of Indebtedness.
(a) Promise to Repay. The Borrowers hereby jointly and severally
agree to pay when due the principal amount of each Loan which is
made to them, and further jointly and severally agree to pay all
unpaid interest accrued thereon, in accordance with the terms of
this Agreement and the Notes. The Borrowers shall execute and
deliver to each Lender on the Effective Date promissory notes, in
form and substance acceptable to the Collateral Agent and such
Lender, evidencing the Loans made from time to time hereunder by
such Lender and thereafter shall execute and deliver such other
promissory notes as are necessary to evidence Loans owing to the
Lenders after giving effect to any assignment thereof pursuant to
Section 15.01, all in form and substance acceptable to the
Collateral Agent and the parties to such assignment.
(b)Loan Account. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "Loan Account") evidencing
the Indebtedness of the Borrowers to such Lender resulting from
each Loan owing to such Lender from time to time, including the
amount of principal and interest payable and paid to such Lender
from time to time hereunder and under the Notes.
(c)Control Account. The Register maintained by the Collateral
Agent pursuant to Section 15.01(c) shall include a control account,
and a subsidiary account for each Lender, in which accounts (taken
together) shall be recorded (i) the date and amount of each
Borrowing made hereunder, the type of Loan comprising such
Borrowing and any Eurodollar Interest Period applicable thereto,
(ii) the effective date and amount of each Assignment and Accept-
ance delivered to and accepted by it and the parties thereto, (iii)
the amount of any principal or interest due and payable or to
become due and payable from the Borrowers to each Lender hereunder
or under the Notes, and (iv) the amount of any sum received by the
Collateral Agent from the Borrowers hereunder and each Lender's
share thereof.
(d)Entries Binding. The entries made in the Register and each Loan
Account shall be conclusive and binding for all purposes, absent
manifest error.
4.04. Proceeds of Collateral; Concentration Account Arrangements.
(a) Establishment. The Borrowers shall establish and maintain,
and shall cause the Guarantors to establish and maintain,
Collection Accounts into which all collections of Receivables shall
be deposited. All amounts deposited in Collection Accounts
established by the Borrowers and the Guarantors shall be promptly
transferred directly to the Concentration Account established at
Citibank in New York, New York. The Borrowers shall cause all other
proceeds of Collateral to be deposited in the appropriate
Concentration Account or pursuant to other similar arrangements for
the collection of such amounts established by the Borrowers and the
Collateral Agent. All collections of Receivables and other proceeds
of Collateral which are received directly by the Borrowers or any
Guarantor shall be deemed to have been received by the Borrowers or
such Guarantor as the Collateral Agent's trustee and, upon any
Borrower's or such Guarantor's receipt thereof, such Borrower or
such Guarantor shall immediately transfer, or cause to be
transferred, all such amounts into the appropriate Concentration
Account in their original form. All collections of Receivables, all
payments, and all proceeds of other Collateral received by the
Collateral Agent, whether through payment, deposit in a
Concentration Account as described above, or otherwise, will be
deemed received by the Collateral Agent, will be the sole property
of the Collateral Agent, and will be held by the Collateral Agent,
for the benefit of the Holders (i) for application to the
Obligations pursuant to Section 4.02 and (ii) thereafter, as Cash
Collateral for the Obligations, subject to the rights of the
Borrowers set forth in Section 4.04(b) and the rights of the
Collateral Agent set forth in Section 4.06.
(b) Pre-Default Withdrawals from Concentration Account. If
requested by the Borrowers, the Collateral Agent shall, so long as
no Event of Default shall have occurred and be continuing or
unwaived, from time to time, (i) apply funds in the Concentration
Accounts promptly after deposit therein to payment of the Loans and
to payment of other Obligations of the Borrowers as they become due
and payable, (ii) after giving effect to the aforesaid payments,
invest funds on deposit in the Concentration Accounts and accrued
interest thereon, reinvest proceeds of any such investments which
may mature or be sold, and invest interest or other income received
from such investments, in such Cash Equivalents as the Borrowers
may select, and (iii) upon the Borrowers' request therefor after
giving effect to the payments described in clause (i) above,
transfer funds on deposit in the Concentration Accounts to
Borrowers' or their Subsidiaries' designated accounts. Such funds,
interest, proceeds, or income which are not so disbursed, invested
or reinvested shall be deposited and held in the Concentration
Account for the benefit of the Holders as provided in Section
4.04(a). None of the Collateral Agent, any Lender or any Issuing
Bank shall be liable to any Borrower or any Subsidiary of a
Borrower for, or with respect to, any decline in value of amounts
on deposit in the Concentration Accounts which shall have been
invested pursuant to this Section 4.04(b). Cash Equivalents from
time to time purchased and held pursuant to this Section 4.04(b)
shall constitute Cash Collateral and shall, for purposes of this
Agreement, be deemed to be part of the funds held in the respective
Concentration Accounts in amounts equal to their respective
outstanding principal amounts.
(c) Reasonable Care. The Collateral Agent shall exercise
reasonable care in the custody and preservation of any funds held
in the Concentration Accounts and shall be deemed to have exercised
such care if such funds are accorded treatment substantially
equivalent to that which the Collateral Agent accords its own like
property, it being understood that the Collateral Agent shall not
have any responsibility for taking any steps necessary to preserve
rights against any parties with respect to any such funds but may
do so at its option. All reasonable expenses incurred in connection
therewith shall be for the sole account of the Borrowers and shall
constitute Obligations hereunder.
4.05. Cash Collateral Account. (a) Investments. If requested by
the Borrowers, the Collateral Agent shall, so long as no Event of
Default shall have occurred and be continuing, from time to time
invest funds on deposit in the Cash Collateral Account and accrued
interest thereon, reinvest proceeds of any such investments which
may mature or be sold, and invest interest or other income received
from any such Investments, in each case in such Cash Equivalents as
the Borrowers may select; provided, however, that such accrued
interest and other income received from any such Investments, upon
the request of the Borrowers, shall be remitted to the Borrowers.
Such funds, interest, proceeds or income which are not so invested
or reinvested in Cash Equivalents shall, except as otherwise
provided above or in Section 4.05(b) and Section 4.06, be deposited
and held by the Collateral Agent in the Cash Collateral Account.
None of the Collateral Agent, any Lender or any Issuing Bank shall
be liable to any Borrower for, or with respect to, any decline in
value of amounts on deposit in the Cash Collateral Account which
shall have been invested pursuant to this Section 4.05(a) at the
direction of the Borrowers. Cash Equivalents from time to time
purchased and held pursuant to this Section 4.05(a) shall
constitute Cash Collateral and shall, for purposes of this
Agreement, be deemed to be part of the funds held in the Cash
Collateral Account in amounts equal to their respective outstanding
principal amounts.
(b) Withdrawal Rights. Neither the Borrowers nor any Person or
entity claiming on behalf of or through the Borrowers shall have
any right to withdraw any of the funds held in the Cash Collateral
Account, except that, upon the later to occur of (i) the expiration
or termination of all of the Letters of Credit in accordance with
their respective terms and (ii) the payment in full in cash of the
Obligations, any funds remaining in the Cash Collateral Account
shall be returned by the Collateral Agent to the Borrowers or paid
to whomever may be legally entitled thereto.
(c) Additional Deposits. If at any time the Collateral Agent
determines that any funds held in the Cash Collateral Account are
subject to any interest, right, claim or Lien of any Person other
than the Collateral Agent, the Borrowers will, forthwith upon
demand by the Collateral Agent, pay to the Collateral Agent, as
additional funds to be deposited and held in the Cash Collateral
Account, an amount equal to the amount of funds subject to such
interest, right, claim or Lien.
(d) Reasonable Care. The Collateral Agent shall exercise
reasonable care in the custody and preservation of any funds held
in the Cash Collateral Account and shall be deemed to have
exercised such care if such funds are accorded treatment
substantially equivalent to that which the Collateral Agent accords
its own like property, it being understood that the Collateral
Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any
such funds but may do so at its option. All expenses incurred in
connection therewith shall be for the sole account of the Borrowers
and shall constitute Obligations hereunder.
(e) Foreign Exchange Requirements. In the event deposits have been
made to the Cash Collateral Account to secure Letter of Credit
Obligations denominated in a non-U.S. currency, the Borrowers shall
enter into a Hedge Agreement for a forward foreign exchange
contract reasonably satisfactory to the Collateral Agent to protect
against fluctuation in the Exchange Rate for the amount of such
Letter of Credit Obligations until the same are paid in full.
4.06. Post-Default Withdrawals from the Concentration Account and
Cash Collateral Account. Notwithstanding any other provision of
this Agreement, from and after (a) the occurrence of an Event of
Default described in Section 12.01(a) and for so long as the same
is continuing unwaived or (b) the occurrence of any other Event of
Default and the Collateral Agent's receipt of written notice from
the Requisite Lenders that no further withdrawals may be made from
the Concentration Accounts other than for application on the
Obligations for so long as the same is continuing unwaived, neither
the Borrowers nor any other Person or entity claiming on behalf of
or through the Borrowers shall have any right to withdraw any of
the funds held in a Concentration Account. The Collateral Agent
may, at any time during the period clause (a) or clause (b) above
is applicable, sell or cause to be sold any Cash Equivalents being
held by the Collateral Agent in the Concentration Accounts or as
Cash Collateral at any broker's board or at public or private sale,
in one or more sales or lots, at such price as the Collateral Agent
may deem best, without assumption of any credit risk, and the
purchaser of any or all such Cash Equivalents so sold shall
thereafter own the same, absolutely free from any claim,
encumbrance or right of any kind whatsoever. The Collateral Agent
or any Holder may, in its own name or in the name of a designee or
nominee, buy such Cash Equivalents at any public sale and, if
permitted by applicable law, buy such Cash Equivalents at any
private sale. The Collateral Agent shall apply the proceeds of any
such sale, net of any reasonable expenses incurred in connection
therewith, and any other funds deposited in the Concentration
Accounts or Cash Collateral Account to the payment of the
Obligations in accordance with Section 4.02(c), other than amounts
which are being held as Cash Collateral for Reimbursement
Obligations, which shall be applied to such Reimbursement
Obligations without regard to Section 4.02(c). The Borrowers agree
that any sale of Cash Equivalents conducted in conformity with
reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions
disposing of property similar to such Cash Equivalents shall be
deemed to be commercially reasonable and any requirements of
reasonable notice shall be met if such notice is given by the
Collateral Agent within a commercially reasonable time prior to
such disposition, the time of delivery of which notice the parties
hereto agree shall in no event be required to be greater than five
(5) Business Days before the date of the intended sale or
disposition. Any other requirement of notice, demand or
advertisement for sale is waived to the extent permitted by law.
The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor
and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
ARTICLE V
INTEREST AND FEES
5.01. Interest on the Loans and other Obligations. (a) Rate of
Interest. (i) All Loans and the outstanding principal balance of
all other Obligations shall bear interest on the unpaid principal
amount thereof from the date such Loans are made and such other
Obligations are incurred until paid in full, except as otherwise
provided in Section 5.01(d) or Section 14.04, as follows:
(A)If a Base Rate Loan or such other Obligation, at a
rate per annum equal to the sum of (1) the Base Rate, as
in effect from time to time as interest accrues plus (2)
the Base Rate Margin applicable from time to time; and
(B)If a Eurodollar Rate Loan, at a rate per annum equal
to the sum of (1) the applicable Eurodollar Rate deter-
mined for such Eurodollar Rate Loan for the applicable
Eurodollar Interest Period, plus (2) the Eurodollar Rate
Margin applicable from time to time.
(ii) The applicable basis for determining the rate of interest on
the Loans shall be selected by the Borrowers at the time a Notice
of Borrowing or a Notice of Conversion/Continuation is delivered by
the Borrowers to the Collateral Agent; provided, however, the
Borrowers may not select a Eurodollar Rate as the applicable basis
for determining the rate of interest on such a Loan if (A) such
Loan is to be made on the Effective Date or (B) at the time of such
selection an Event of Default or a Potential Event of Default would
occur or has occurred and is continuing. If on any day any Loan is
outstanding with respect to which notice has not been timely
delivered to the Collateral Agent in accordance with the terms of
this Agreement specifying the basis for determining the rate of
interest on that day, then for that day interest on that Loan shall
be determined by reference to clause (i)(A) above.
(b) Interest Payments. (i) Interest accrued on each Base Rate
Loan shall be payable in arrears (A) on the first Business Day of
each calendar quarter, commencing with the calendar quarter
following the calendar quarter in which such Loan was made and (B)
if not theretofore paid in full, at maturity (whether by
acceleration or otherwise) of such Base Rate Loan.
(ii) Interest accrued on each Eurodollar Rate Loan shall be
payable in arrears (A) on each Eurodollar Interest Payment Date
applicable to such Loan, (B) upon the payment or prepayment thereof
in full or in part, and (C) if not theretofore paid in full, at
maturity (whether by acceleration or otherwise) of such Eurodollar
Rate Loan.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on the first day of
each calendar quarter, commencing with the calendar quarter
following the calendar quarter in which such Obligation was
incurred, (B) upon repayment thereof in full or in part, and (C) if
not theretofore paid in full, at the time such other Obligation
becomes due and payable (whether by acceleration or otherwise).
(c) Conversion or Continuation. (i) The Borrowers shall have the
option (A) to convert at any time all or any part of outstanding
Base Rate Loans to Eurodollar Rate Loans; (B) to convert all or any
part of outstanding Eurodollar Rate Loans having Eurodollar
Interest Periods which expire on the same date to Base Rate Loans
on such expiration date; or (C) to continue all or any part of
outstanding Eurodollar Rate Loans having Eurodollar Interest
Periods which expire on the same date as Eurodollar Rate Loans, and
the succeeding Eurodollar Interest Period of such continued Loans
shall commence on such expiration date; provided, however, no such
outstanding Loan may be continued as, or be converted into, a
Eurodollar Rate Loan (i) if such continuation of, or conversion
into, would violate any of the provisions of Section 5.02 or (ii)
if an Event of Default or a Potential Event of Default would occur
or has occurred and is continuing. Any conversion into or
continuation of Eurodollar Rate Loans under this Section 5.01(c)
shall be in a minimum amount of $1,000,000 and in integral
multiples of $100,000 in excess of that amount except in the case
of a conversion into or a continuation of an entire Borrowing of
Non Pro Rata Loans.
(ii) To convert or continue a Loan under Section 5.01(c)(i), the
Borrowers shall deliver a Notice of Conversion/Continuation to the
Collateral Agent no later than 11:00 a.m. (New York time) at least
three (3) Business Days in advance of the proposed
conversion/continuation date. A Notice of Conversion/Continuation
shall specify (A) the proposed conversion/continuation date (which
shall be a Business Day), (B) the aggregate principal amount of the
respective Loans to be converted/continued, (C) whether such Loans
shall be converted and/or continued, and (D) in the case of a con-
version to, or continuation of, a Eurodollar Rate Loan, the
requested Eurodollar Interest Period. In lieu of delivering a
Notice of Conversion/Continuation, the Borrowers may give the
Collateral Agent telephonic notice of any proposed
conversion/continuation by the time required under this
Section 5.01(c)(ii), and such notice shall be confirmed in writing
delivered to the Collateral Agent by facsimile transmission
promptly (but in no event later than 5:00 p.m. (New York time) on
the same day), the original of which facsimile copy shall be
delivered to the Collateral Agent within three (3) days after the
date of such transmission. Promptly after receipt of a Notice of
Conversion/Continuation under this Section 5.01(c)(ii) (or
telephonic notice in lieu thereof), the Collateral Agent shall
notify each applicable Lender, by telecopy or other similar form of
transmission, of the proposed conversion/continuation. Any Notice
of Conversion/Continuation for conversion to, or continuation of,
a Loan (or telephonic notice in lieu thereof) shall be irrevocable,
and the Borrowers shall be bound to convert or continue in
accordance therewith.
(d) Default Interest. Notwithstanding the rates of interest
specified in Section 5.01(a), effective immediately upon the
occurrence of an Event of Default (except an Event of Default
resulting from the gross negligence or willful misconduct of the
Collateral Agent) and for as long thereafter as such Event of
Default shall be continuing unwaived, the principal balance of all
Obligations, including, to the extent permitted by applicable law,
accrued interest unpaid when due, shall bear interest, payable on
demand, at a rate which is two percent (2.0%) per annum in excess
of the rate of interest specified in Section 5.01(a)(i).
(e) Computation of Interest. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the
period during which interest accrues and a year of 360 days. In
computing interest on any Loan, the date of the making of the Loan
or the first day of a Eurodollar Interest Period, as the case may
be, shall be included and the date of payment or the expiration
date of a Eurodollar Interest Period, as the case may be, shall be
excluded; provided, however, if a Loan is repaid on the same day on
which it is made, one (1) day's interest shall be paid on such
Loan.
5.02. Special Provisions Governing Eurodollar Rate Loans. With
respect to Eurodollar Rate Loans:
(a) Amount of Eurodollar Rate Loans. Each Borrowing of Eurodollar
Rate Loans shall be for a minimum amount of $1,000,000 and in
integral multiples of $100,000 in excess of that amount.
(b) Determination of Eurodollar Interest Period. By giving notice
as set forth in Section 2.02(b) (with respect to a Borrowing of
Eurodollar Rate Loans) or Section 5.01(c) (with respect to a
conversion into or continuation of Eurodollar Rate Loans), the
Borrowers shall have the option, subject to the other provisions of
this Section 5.02, to select an interest period (each, a
"Eurodollar Interest Period") to apply to the Loans described in
such notice, subject to the following provisions:
(i) The Borrowers may only select, as to a particular Borrowing of
Eurodollar Rate Loans, a Eurodollar Interest Period of one, two,
three or six months in duration (or such intermediate periods to
which the Lenders may agree in their sole discretion, provided
that, for purposes of determining the interest rate with respect to
such intermediate periods, such periods shall be rounded up to the
next nearest period of full months);
(ii) In the case of immediately successive Eurodollar
Interest Periods applicable to a Borrowing of Eurodollar
Rate Loans, each successive Eurodollar Interest Period
shall commence on the day on which the next preceding
Eurodollar Interest Period expires;
(iii) If any Eurodollar Interest Period would otherwise
expire on a day which is not a Business Day, such
Eurodollar Interest Period shall be extended to expire on
the next succeeding Business Day if the next succeeding
Business Day occurs in the same calendar month, and if
there will be no succeeding Business Day in such calendar
month, the Eurodollar Interest Period shall expire on the
immediately preceding Business Day;
(iv) The Borrowers may not select a Eurodollar Interest
Period as to any Loan if such Eurodollar Interest Period
terminates later than the scheduled Revolving Credit
Termination Date; and
(v) There shall be no more than six (6) Eurodollar Interest
Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on the
second Business Day prior to the first day of each Eurodollar
Interest Period (the "Eurodollar Interest Rate Determination
Date"), the Collateral Agent shall determine (pursuant to the
procedures set forth in the definition of "Eurodollar Rate") the
interest rate which shall apply to the Eurodollar Rate Loans for
which an interest rate is then being determined for the applicable
Eurodollar Interest Period and shall promptly give notice thereof
(in writing or by telephone confirmed in writing) to the Borrowers
and to each Lender. The Collateral Agent's determination shall be
presumed to be correct, absent manifest error, and shall be binding
upon the Borrowers.
(d)Interest Rate Unascertainable, Inadequate or Unfair. In the
event that at least one (1) Business Day before the Eurodollar
Interest Rate Determination Date:
(i)the Collateral Agent is advised by Citibank that
deposits in Dollars (in the applicable amounts) are not
being offered by Citibank in the London interbank market
for such Eurodollar Interest Period; or
(ii)the Collateral Agent determines that adequate and
fair means do not exist for ascertaining the applicable
interest rates by reference to which the Eurodollar Rate
then being determined is to be fixed; or
(iii) the Requisite Lenders advise the Collateral Agent
that the Eurodollar Rate for Eurodollar Rate Loans
comprising such Borrowing will not adequately reflect the
cost to such Requisite Lenders of obtaining funds in
Dollars in the London interbank market in the amount
substantially equal to such Lenders' Eurodollar Rate
Loans and for a period equal to such Eurodollar Interest
Period;
then the Collateral Agent shall forthwith give notice thereof to
the Borrowers, whereupon (until the Collateral Agent notifies the
Borrower that the circumstances giving rise to such suspension no
longer exist) the right of the Borrowers to elect to have Loans
bear interest based upon the Eurodollar Rate shall be suspended and
each outstanding Eurodollar Rate Loan shall be converted into a
Base Rate Loan on the last day of the then current Eurodollar
Interest Period therefor, notwithstanding any prior election by the
Borrowers to the contrary.
(e) Booking of Eurodollar Rate Loans. Any Lender may make, carry
or transfer Eurodollar Rate Loans at, to, or for the account of,
its Eurodollar Lending Office or Eurodollar Affiliate or its other
offices or Affiliates. No Lender shall be entitled, however, to
receive any greater amount under Article XIV as a result of the
transfer of any such Eurodollar Rate Loan to any office (other than
such Eurodollar Lending Office) or any Affiliate (other than such
Eurodollar Affiliate) than such Lender would have been entitled to
receive immediately prior thereto, unless (i) the transfer occurred
at a time when circumstances giving rise to the claim for such
greater amount did not exist and (ii) such claim would have arisen
even if such transfer had not occurred.
(f)Affiliates Not Obligated. No Eurodollar Affiliate or other
Affiliate of any Lender shall be deemed a party to this Agreement
or shall have any liability or obligation under this Agreement.
5.03. Fees. (a) Collateral Agent's Fee. The Borrowers shall pay
to the Collateral Agent, solely for the account of the Collateral
Agent, during the term of this Agreement, the fee provided in the
Fee Letter as and when set forth therein.
(b) Fronting Fee and Letter of Credit Fee. In addition to any
charges paid pursuant to Section 3.01(g), the Borrowers shall pay
(i) to the Issuing Bank, a fee accruing at the rate of one-quarter
of one percent (0.25%) per annum on the undrawn face amount of each
outstanding Letter of Credit issued by such Issuing Bank (the
"Fronting Fee") and (ii) to the Collateral Agent, for the account
of the Revolving Lenders based on their respective Revolving Credit
Pro Rata Shares, a fee (the "Letter of Credit Fee") accruing at a
per annum rate equal to the Revolver Margin applicable to
Eurodollar Rate Loans minus one-quarter of one percent (0.25%) on
the undrawn face amount of each outstanding Letter of Credit, which
Fronting Fee and Letter of Credit Fee shall be payable quarterly,
in arrears, on the first day of each calendar quarter and on the
Revolving Credit Termination Date.
(c) Commitment Fee. (i) The Borrowers shall pay to the Collateral
Agent a fee (the "Commitment Fee") (A) for the account of the
Revolving Lenders in accordance with their respective Revolving
Credit Pro Rata Shares accruing at the Commitment Fee Rate
applicable from time to time on the average amount by which the
Revolving Credit Commitments exceed the sum of the Revolving Credit
Obligations and (B) for the Term Lenders in accordance with their
respective Term Loan Pro Rata Shares accruing through February 28,
1998 at the Commitment Fee Rate applicable from time to time on the
unfunded portion of the Term Loan Commitments, such Commitment Fee
being payable (C) to the Revolving Lenders, quarterly, in arrears,
commencing on the first day of the calendar quarter next succeeding
the Effective Date and on the Revolving Credit Termination Date and
(D) to the Term Lenders, in arrears, on February 28, 1998.
(ii) Notwithstanding the foregoing, in the event that any Lender
fails to fund its Revolving Credit Pro Rata Share of any Revolving
Loan which such Lender is obligated to fund under the terms of this
Agreement, (A) such Lender shall not be entitled to any Commitment
Fee with respect to its Revolving Credit Commitment until such
failure has been cured in accordance with Section 4.02(f)(ii) and
(B) until such time, the Commitment Fee shall accrue in favor of
the Lenders which have funded their respective Revolving Credit Pro
Rata Shares of such requested Revolving Loan, shall be allocated
among such performing Lenders ratably based upon their respective
Revolving Credit Commitments, and shall be calculated based upon
the average amount by which the aggregate of such Revolving Credit
Commitments of such performing Lenders exceeds the sum of (1) the
Revolving Credit Obligations owing to such performing Lenders, plus
(2) the aggregate participation interests of such performing
Lenders arising pursuant to Section 3.01(e) with respect to undrawn
and outstanding Letters of Credit.
(d) Calculation and Payment of Fees. The Commitment Fee, Fronting
Fee, and Letter of Credit Fee shall be calculated on the basis of
the actual number of days elapsed in a 360-day year. All such fees
shall be payable in addition to, and not in lieu of, interest,
compensation, expense reimbursements, indemnification and other
Obligations payable under this Agreement, to the Collateral Agent
at its office in New York, New York in immediately available funds.
All such fees shall be fully earned and nonrefundable when paid.
All fees specified or referred to in this Agreement due to the
Collateral Agent, any Issuing Bank or any Lender, including,
without limitation, those referred to in this Section 5.03, shall
bear interest, if not paid when due, at the interest rate for Base
Rate Loans set forth in Section 5.01(d), shall constitute
Obligations and shall be secured by all of the Collateral in which
Liens are granted by the Borrowers and Guarantors.
(e) Determination of Applicable Base Rate Margin, Eurodollar Rate
Margin and Commitment Fee Rate. The Base Rate Margin, Eurodollar
Rate Margin and Commitment Fee Rate applicable from time to time
after September 18, 1998, shall be determined by reference to the
Borrowers' compliance with Interest Performance Levels and
Commitment Fee Performance Levels as of the end of each Fiscal
Quarter and apply as of the date of such determination. Borrowers
shall deliver to the Collateral Agent at the addresses designated
to the Borrowers from time to time in writing, concurrently with
delivery of the Financial Statements delivered as required by
Section 8.01(b), the financial and other information necessary to
establish Borrowers' compliance with the appropriate Interest
Performance Level and Commitment Fee Performance Level as of such
Fiscal Quarter end.
ARTICLE VI
CONDITIONS TO LOANS AND LETTERS OF CREDIT
6.01. Conditions Precedent to the Initial Loans and Letters of
Credit. The effectiveness of this Agreement, the obligation of
each Lender on the Effective Date to make the Loan requested to be
made by it, and the agreement of each Issuing Bank on the Effective
Date to issue or continue Letters of Credit, shall be subject to
the satisfaction of all of the following conditions precedent on or
before the Effective Date:
(a) Documents. The Collateral Agent shall have received on or
before the Effective Date all of the following:
(i)this Agreement, the Notes and all other agreements,
documents and instruments relating to the loan and other
credit transactions contemplated by this Agreement and
described in the List of Closing Documents attached
hereto as Exhibit J and made a part hereof, each duly
executed where appropriate and in form and substance
satisfactory to the Administrative Agents; without
limiting the foregoing, the Borrowers hereby direct their
counsel, Cahill, Gordon & Reindel, and its General
Counsel, Donald L. Miller, to prepare and deliver to the
Administrative Agents, the Collateral Agent, the Lenders,
the Issuing Banks and Sidley & Austin, the opinions
referred to in such List of Closing Documents;
(ii) the Pro Forma Balance Sheet and Projections, in
form and substance satisfactory to the Administrative
Agents;
(iii) an Officer's Certificate executed and delivered by
a vice president of the Borrowers certifying that all
conditions precedent have been met;
(iv) a solvency opinion relating to each of the Borrowers rendered
by Valuation Research Corporation, dated the Effective Date, giving
effect to the financing transactions contemplated hereby and
repayment of the Refinanced Indebtedness, both before and after
giving effect to the Spin-Off, supported by such analyses,
valuations, appraisals, reviews, projections and other
documentation as the Collateral Agent deems appropriate; and
(v) such additional documentation as the Administrative
Agents may reasonably request.
(b) Perfection of Liens. Evidence to the satisfaction of the
Collateral Agent shall have been received by the Collateral Agent
that all financing statements, mortgages, leasehold mortgages, and
other required notices relating to the Collateral located in the
United States have been delivered to the Collateral Agent for
filing or filed or recorded, certificates representing Capital
Stock comprising part of the Collateral have been delivered to the
Collateral Agent (with duly executed stock powers), and all title
charges, recording fees and filing taxes have been paid.
(c) Financial Statements. The Administrative Agents shall have
determined the Financial Statements of TFC and its Subsidiaries and
for FHC and its Subsidiaries for the period ending September 28,
1997 to be satisfactory in all respects.
(d) Due Diligence. The Administrative Agents and counsel to the
Collateral Agent shall have completed their updated due diligence
review of the financial condition, business, operations, assets,
liabilities (environmental, by way of indemnification, ERISA, and
otherwise), management and business plans, pending and threatened
litigation, insurance coverage, corporate, capital, legal and
management structure and Contractual Obligations of TFC and its
Subsidiaries, the results of which shall have provided the
Administrative Agents, Collateral Agent, each Lender and each
Issuing Bank with results and information which, in the judgment of
such Person, are satisfactory to permit the Administrative Agents,
Collateral Agent, each Lender and each Issuing Bank to enter into
the financing transactions contemplated hereby. All Schedules to
this Agreement shall be acceptable to the Administrative Agents.
(e) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and neither
Administrative Agent shall have received any notice that litigation
is pending or threatened which is likely to, (i) enjoin, prohibit
or restrain either the making of the Loans and/or the issuance or
continuation of Letters of Credit on the Effective Date or the
issuance of equity Securities of TFC in accordance with the
Offering or (ii) result in a Material Adverse Effect.
(f) No Change in Condition. No change in the business, assets,
management, operations, financial condition or prospects of the
Operating Units or any business, assets, management, operations,
financial condition or prospects of any Guarantor or any Borrower
and its Subsidiaries shall have occurred since June 30, 1997,
which, in the judgment of the Administrative Agents, will, or is
reasonably likely to, result in a Material Adverse Effect.
(g) No Loss of Material Agreements and Licenses. No agreement or
license which, in the judgment of the Requisite Lenders, is
material to the business, operations or employee relations of the
Borrowers, any Guarantor, or any Subsidiary of the Borrowers (other
than a Technologies Company) shall have been terminated, modified,
revoked, breached or declared to be in default.
(h) No Market Changes. Since December 8, 1997, no material
adverse change shall have occurred in the conditions in the capital
markets or the market for loan syndications generally.
(i) No Default. No Event of Default or Potential Event of Default
shall have occurred and be continuing or would result from the
making of the Loans and no "Event of Default" (as defined in the
Second Amended Credit Agreement) shall have occurred and be
continuing unwaived.
(j) Representations and Warranties. All of the representations
and warranties contained in Section 7.01, in any of the other Loan
Documents, or otherwise provided to the Administrative Agents, the
Collateral Agent, the Lenders and Issuing Banks shall be true and
correct in all material respects on and as of the Effective Date.
(k) Fees and Expenses Paid. There shall have been paid to the
Collateral Agent, for the accounts of the Lenders, Issuing Banks,
the Administrative Agents, Collateral Agent, Citicorp Securities,
Inc. and NationsBanc Montgomery Securities, Inc., as applicable,
all fees and expenses due and payable on or before the Effective
Date, whether under the terms of the Commitment Letter or fee
letters described therein.
(l) Fees and Expenses Under Second Amended Credit Agreement Paid.
All unpaid fees, interest and expenses accrued under the terms of
the Second Amended Credit Agreement and other agreements referred
to therein through the Effective Date, shall have been paid in full
in immediately available funds.
(m) The Offering. All consents and approvals of Governmental
Authorities and other Persons required under Requirements of Law or
Contractual Obligations of TFC and its Subsidiaries for the
consummation of the transactions contemplated by this Agreement
and/or pertaining to the Offering shall have been obtained or
waived by TFC, with the prior written consent of the Administrative
Agents, and TFC shall have received a minimum of $60,000,000 in
gross cash proceeds from the issuance of equity Securities of TFC
in accordance with the terms of the Offering, the net cash proceeds
from which issuance shall have been used to repay Revolving Loans
and Term Loans, together with interest thereon and fees accrued in
connection therewith under the Second Amended Credit Agreement
and/or to ensure the repayment of the other Refinanced
Indebtedness.
(n) Refinanced Indebtedness. TFC and RHI shall have complied with
the call procedures applicable to the Refinanced Indebtedness to
the satisfaction of the Administrative Agents.
6.02. Conditions Precedent to All Loans and Letters of Credit.
The obligation of each Lender to make any Loan requested to be made
by it on any Funding Date and the agreement of each Issuing Bank to
issue any Letter of Credit on any date is subject to the following
conditions precedent as of each such date, both before and after
giving effect to the Loans to be made and/or the Letter of Credit
to be issued on such date:
(a) Representations and Warranties. All of the representations
and warranties of the Borrowers and Guarantors contained in
Section 7.01 and in any other Loan Document (other than
representations and warranties which expressly speak as of a
different date) shall be true and correct in all material respects.
(b) No Defaults. No Event of Default or Potential Event of
Default shall have occurred and be continuing or would result from
the making of the requested Loan or issuance of the requested
Letter of Credit.
(c) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the Collateral
Agent shall not have received from any Lender or Issuing Bank
notice that, in the judgment of such Lender or Issuing Bank,
litigation is pending or threatened which is likely to, enjoin,
prohibit or restrain, or impose or result in the imposition of any
material adverse condition upon, (i) such Lender's making of the
requested Loan or participation in the requested Letter of Credit
or (ii) such Issuing Bank's issuance of the requested Letter of
Credit.
(d) No Material Adverse Effect. No event shall have occurred
since the date of this Agreement which has resulted, or is
reasonably likely to result, in a Material Adverse Effect.
(e) Notice of Borrowing and Borrowing Base Certificate. The
Borrowers shall have executed and delivered to the Collateral Agent
a Notice of Borrowing in accordance with the provisions of Section
2.02 together with a Borrowing Base Certificate dated no more than
thirty-five (35) calendar days prior to the date of such Notice of
Borrowing.
Each submission by the Borrowers to the Collateral Agent of a
Notice of Borrowing with respect to any Loan or a Notice of
Conversion/Continuation with respect to any Loan, each acceptance
by the Borrowers of the proceeds of each Loan made, converted or
continued hereunder, each submission by the Borrowers to an Issuing
Bank of a request for issuance of a Letter of Credit and the issu-
ance of such Letter of Credit, shall constitute a representation
and warranty by the Borrowers as of the Funding Date in respect of
such Loan, the date of conversion or continuation and the date of
issuance of such Letter of Credit, that all the conditions
contained in this Section 6.02 have been satisfied or waived in
accordance with Section 15.07.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01. Representations and Warranties of the Borrowers. In order
to induce the Lenders and the Issuing Banks to enter into this
Agreement and to make the Loans and the other financial
accommodations to the Borrowers and to issue the Letters of Credit
described herein, the Borrowers hereby represent and warrant to
each Lender, each Issuing Bank, each Administrative Agent, and the
Collateral Agent that the following statements are true, correct
and complete:
(a) Organization; Corporate Powers. (i) The Borrowers and each
Subsidiary of the Borrowers (A) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, (B) is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction in which failure to be so qualified and
in good standing will have or is reasonably likely to have a
Material Adverse Effect, and (C) has all requisite corporate power
and authority to own, operate and encumber its Property and to
conduct its business as presently conducted and as proposed to be
conducted in connection with and following the consummation of the
transactions contemplated by this Agreement. The Borrowers and each
Subsidiary of the Borrowers which is a Domestic Subsidiary has
filed and maintained effective (unless exempt from the requirements
for filing) a current Business Activity Report with the appropriate
Governmental Authority in the states of Minnesota and New Jersey.
(ii) True, correct and complete copies of the Organizational
Documents identified on Schedule 7.01-A attached hereto have been
delivered to the Collateral Agent, each of which is in full force
and effect, has not been modified or amended except to the extent
indicated therein and, to the best of the Borrowers' knowledge,
there are no defaults under such Organizational Documents and no
events which, with the passage of time or giving of notice or both,
would constitute a default under such Organizational Documents.
(b) Authority. (i) The Borrowers and each Subsidiary of the
Borrowers has the requisite corporate power and authority (A) to
execute, deliver and perform each of the Loan Documents which have
been executed by it as required by this Agreement on or prior to
the Effective Date and (B) to file or record the Loan Documents
which have been filed or recorded by it with any Governmental
Authority as required by this Agreement on or prior to the
Effective Date.
(ii) The execution, delivery, performance and filing or recording,
as the case may be, of each of the Loan Documents which have been
executed, filed or recorded as required by this Agreement on or
prior to the Effective Date and to which any Borrower or any
Subsidiary of the Borrowers is party and the consummation of the
transactions contemplated thereby, have been duly approved by the
respective boards of directors (or substantially similar governance
bodies, as applicable) and, if necessary, the shareholders of such
Person and such approvals have not been rescinded. No other
corporate action or proceedings on the part of any Borrower or any
Subsidiary of the Borrowers is necessary to consummate such
transactions.
(iii) Each of the Loan Documents to which any Borrower or any
Subsidiary of the Borrowers is a party (A) has been duly executed,
delivered, filed or recorded, as the case may be, by it, (B) where
applicable, creates valid and perfected first Liens in the
Collateral covered thereby securing the payment of all of the
Obligations purported to be secured thereby, (C) constitutes such
Person's respective legal, valid and binding obligation,
enforceable against it in accordance with its terms, and (D) is in
full force and effect and no material term or condition thereof has
been amended, modified or waived from the terms and conditions con-
tained therein as delivered to the Collateral Agent pursuant to
Section 6.01(a) without the prior written consent of the Requisite
Lenders. All parties to the Loan Documents have performed and
complied with all the terms, provisions, agreements and conditions
set forth therein and required to be performed or complied with by
such parties on or before the Effective Date, all filings and
recordings and other actions which are necessary or desirable to
perfect and protect the Liens granted pursuant to the Loan
Documents and preserve their required priority have been duly
taken, and no Potential Event of Default, Event of Default or
breach of any covenant by any such party exists thereunder.
(c) Subsidiaries; Ownership of Equity Securities. Schedule 7.01-C
attached hereto and as the same may be amended from time to time
(i) contains a diagram indicating the corporate structure of each
Borrower, its respective Subsidiaries and any other Person in which
any Borrower or any of their respective Subsidiaries holds a direct
or indirect partnership, joint venture or other equity interest and
indicates the nature of such interest with respect to each Person
included in such diagram; and (ii) accurately sets forth (A) the
correct legal name of such Person, the jurisdiction of its
incorporation or organization and the jurisdictions in which it is
qualified to transact business as a foreign corporation or
otherwise and (B) the authorized, issued and outstanding shares or
interests of each class of equity Securities of the Borrowers and
each of their respective Subsidiaries and the owners of such shares
or interests of RHI, FHC, and the Subsidiaries of the Borrowers.
None of such issued and outstanding equity Securities is subject to
any vesting, redemption, or repurchase agreement, and there are no
warrants, puts, or options (other than Permitted Equity Securities
Options) outstanding with respect to such equity Securities other
than as disclosed on Schedule 7.01-C as attached hereto or amended
from time to time. The outstanding equity Securities of RHI, FHC
and each of their respective Subsidiaries and the other
Subsidiaries of TFC are duly authorized, validly issued, fully paid
and nonassessable free and clear of any Liens, except for the Liens
granted pursuant to the Loan Documents, and are not Margin Stock
except as specifically identified on Schedule 7.01-C.
(d) No Conflict. The execution, delivery and performance of each
of the Loan Documents to which any Borrower or any Subsidiary of
the Borrowers is a party do not and will not (i) conflict with the
Organizational Documents of such Person, (ii) constitute a tortious
interference with any Contractual Obligation of any Person or
conflict with, result in a breach of or constitute (with or without
notice or lapse of time or both) a default under any Requirement of
Law or Contractual Obligation of such Person, or require
termination of any Contractual Obligation, the consequences of
which violation, breach, default or termination, singly or in the
aggregate, will, or is reasonably likely to, result in a Material
Adverse Effect or may subject the Collateral Agent, any of the
Lenders or any of the Issuing Banks to any liability, (iii) result
in or require the creation or imposition of any Lien whatsoever
upon any of the Property or assets of such Person, other than Liens
contemplated by the Loan Documents, or (iv) require any approval of
such Person's shareholders, which has not been obtained.
(e) Governmental Consents. The execution, delivery and
performance of each of the Loan Documents to which any Borrower or
any Subsidiary of the Borrowers is a party do not and will not
require any registration with, consent or approval of, or notice
to, or other action to, with or by any Governmental Authority,
except (i) filings, consents or notices which have been made,
obtained or given and (ii) filings necessary to create or perfect
the Collateral Agent's security interests in the Collateral.
(f) Governmental Regulation. None of the Borrowers, or any
Subsidiary of the Borrowers, is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act, or the Investment Company Act of 1940,
or any other federal or state statute or regulation or other
Requirement of Law which limits its ability to incur indebtedness
or its ability to consummate the transactions contemplated hereby
or by the Loan Documents.
(g) Restricted Junior Payments. No Borrower has directly or
indirectly declared, ordered, paid or made or set apart any sum or
Property for any Restricted Junior Payment or agreed to do so,
except as permitted pursuant to Section 10.06.
(h) Intentionally omitted.
(i) Pro Forma Financials; Projections. The Pro Forma Balance
Sheet, copies of which have been furnished to the Lenders on the
Effective Date, fairly presents on a pro forma basis the financial
condition of TFC and its Subsidiaries, on a consolidated basis, as
of the date designated therein. The Projections, and the
assumptions expressed in the Pro Forma Balance Sheet, are
reasonable based on the information available to the Borrowers at
the time so furnished.
(j) Indebtedness. Schedule 1.01.7 attached hereto or as amended
from time to time sets forth all Indebtedness for Borrowed Money of
each Borrower and the Borrowers' Subsidiaries and there are no
defaults in the payment of principal or interest on any such
Indebtedness and no payments thereunder have been deferred or
extended beyond their stated maturity (except as disclosed on such
Schedule).
(k)Litigation; Adverse Effects. Except as set forth in
Schedule 7.01-K attached hereto, there is no action, suit,
proceeding, Claim, investigation or arbitration before or by any
Governmental Authority or private arbitrator pending or, to the
knowledge of the Borrowers or any of the Borrowers' Subsidiaries,
threatened against VSI or FII (with respect to which any Borrower
or any of its Subsidiaries may have successor liability), any
Borrower or any Subsidiary of the Borrowers or any of the Property
(i) challenging the validity or the enforceability of any of the
Loan Documents, (ii) which will, or is reasonably likely to, result
in any Material Adverse Effect, or (iii) under the Racketeering
Influenced and Corrupt Organizations Act or any similar federal or
state statute where such Person is a defendant in a criminal
indictment that provides for the forfeiture of assets to any
Governmental Authority as a criminal penalty. There is no material
loss contingency within the meaning of GAAP which has not been
reflected in the Pro Forma Balance Sheet or, after the Effective
Date, the consolidated Financial Statements of TFC and its
Subsidiaries. No Borrower and no Subsidiary of the Borrowers is
(A) in violation of any applicable Requirements of Law which
violation will result, or is reasonably likely to result, in a
Material Adverse Effect, or (B) subject to or in default with
respect to any final judgment, writ, injunction, restraining order
or order of any nature, decree, rule or regulation of any court or
Governmental Authority which will, or is reasonably likely to,
result in a Material Adverse Effect.
(l) No Material Adverse Effect. Since June 30, 1997, there has
occurred no event with respect to any Borrower or any Affiliate of
any Borrower which has resulted, or is reasonably likely to result,
in a Material Adverse Effect.
(m)Tax Examinations. The IRS has examined (or is foreclosed from
examining by applicable statutes) the consolidated federal income
tax returns of TFC for all tax periods prior to and including the
taxable year ending June 30, 1993. All deficiencies which have
been asserted against any Borrower or any of the Borrowers'
Subsidiaries as a result of any federal, state, local or foreign
tax examination for each taxable year in respect of which an
examination has been conducted have been fully paid or finally
settled or are being contested in good faith, and no issue has been
raised in any such examination which, by application of similar
principles, reasonably can be expected to result in assertion of a
material deficiency for any other year not so examined which has
not been reserved for in TFC's consolidated Financial Statements
heretofore delivered to the Collateral Agent to the extent, if any,
required by GAAP. No Borrower and no Subsidiary of any Borrower
has taken any reporting positions for which it does not have a
reasonable basis and does not anticipate any further material
adverse tax liability with respect to the years which have not been
closed pursuant to applicable law and which are not reserved in the
Financial Statements described above or the Financial Statements of
TFC, as applicable.
(n) Payment of Taxes. All tax returns and reports of each of the
Borrowers and their Subsidiaries (or the respective predecessors in
interest of any Borrower and its Subsidiaries) required to be filed
have been timely filed, and all taxes, assessments, fees and other
charges of Governmental Authorities thereupon and upon or relating
to their respective Property, assets, income and franchises which
are shown in such returns or reports to be due and payable have
been paid, except to the extent (i) such taxes, assessments, fees
and other charges are being contested in good faith by an
appropriate proceeding diligently pursued as permitted by the terms
of Section 9.04 and (ii) non-payment of the amounts thereof would
not, individually or in the aggregate, result in a Material Adverse
Effect. No Borrower has any knowledge of any proposed tax assess-
ment against any Borrower or any Subsidiary of the Borrowers (or
the respective predecessors in interest of any Borrower and its
Subsidiaries) that will, or is reasonably likely to, result in a
Material Adverse Effect.
(o) Performance. No Borrower, no Subsidiary of the Borrowers, and
no predecessor in interest of any Borrower or any of its
Subsidiaries, has received any notice, citation, or allegation, nor
has actual knowledge, that (i) it is in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation applicable to
it, (ii) any Property of the Borrowers or any Subsidiary of the
Borrowers is in violation of any Requirement of Law, or (iii) any
condition exists which, with the giving of notice or the lapse of
time or both, would constitute a default with respect to any such
Contractual Obligation, in each case, except where such default or
defaults, if any, will not, or is not reasonably likely to, result
in a Material Adverse Effect.
(p) Disclosure. The representations and warranties of the
Borrowers and the Borrowers' Subsidiaries contained in the
Prospectus described in the definition of "Offering", the Loan
Documents, and all certificates and other documents delivered to
the Administrative Agents and/or Collateral Agent pursuant to the
terms thereof, do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. No
Borrower has intentionally withheld any fact from the
Administrative Agents, the Collateral Agent, the Issuing Banks or
the Lenders in regard to any matter which will, or is reasonably
likely to, result in a Material Adverse Effect.
(q) Requirements of Law. Each of the Borrowers and each
Subsidiary of the Borrowers, respectively, is in compliance with
all Requirements of Law applicable to it and its respective
businesses, in each case where the failure to so comply
individually or in the aggregate will, or is reasonably likely to,
result in a Material Adverse Effect.
(r) Environmental Matters. (i) Except as disclosed on
Schedule 7.01-R attached hereto:
(A) no Borrower and no Domestic Subsidiary (or any of their
respective predecessors in interest) has received any unresolved
notice from any federal, state or local agency to the effect that
its operations are not in compliance with any applicable
Environmental, Health or Safety Requirements of Law or the subject
of any federal or state investigation evaluating whether any
remedial action is needed to respond to a Release of a Contaminant
into the environment;
(B) to the knowledge of the Borrowers, none of TFC, FHC, the
Domestic Subsidiaries (or any of their respective predecessors in
interest), or any of its their respective present or past Property
or operations, are subject to or the subject of any judicial or
administrative proceeding, order, judgment, decree, dispute,
negotiations, agreement, or settlement respecting (I) any
Environmental, Health or Safety Requirements of Law, (II) any
Remedial Action, (III) any Claims or Liabilities and Costs arising
from the Release or threatened Release of a Contaminant into the
environment, or (IV) any violation of or liability under any
Environmental, Health or Safety Requirement of Law that the
Borrowers reasonably believe will result in a material expenditure
of money;
(C) no Borrower and no Domestic Subsidiary, or any of their
respective predecessors in interest has filed any notice under any
applicable Requirement of Law (I) reporting a Release of a
Contaminant where remedial action has not been conducted to the
satisfaction of the appropriate Governmental Authority; or (II)
reporting a violation of any applicable Environmental, Health or
Safety Requirement of Law where such violation has not been
corrected to the satisfaction of the appropriate Governmental
Authority;
(D) none of the Borrowers' or the Domestic Subsidiaries' present
or past Property is listed or, to the knowledge of the Borrower,
proposed for listing on the National Priorities List ("NPL")
pursuant to CERCLA or on the Comprehensive Environmental Response
Compensation Liability Information System List ("CERCLIS") or any
similar state list of sites requiring Remedial Action;
(E) to the knowledge of the Borrowers, no Borrower and no Domestic
Subsidiary has any material contingent liability in connection with
any Release or threatened Release of any Contaminants into the
environment; and
(F) no Environmental Lien has attached to any Property.
(ii) FHC and each Domestic Subsidiary are conducting and will
continue to conduct their respective business and operations in an
environmentally responsible manner in material compliance with
Environmental, Health or Safety Requirements of Law, and the
Borrowers and their Subsidiaries, taken as a whole, have not been,
and have no reason to believe that they will be, subject to
Liabilities and Costs arising out of or relating to environmental,
health or safety matters that have or will result in material cash
expenditures by the Borrowers and the Domestic Subsidiaries in the
aggregate for the Fiscal Year ending June 30, 1998 in excess of the
reserves established therefor.
(s)ERISA. No Borrower and no Subsidiary of any Borrower
contributes to any Benefit Plan, Multiemployer Plan or Foreign
Pension Plan. No ERISA Event has occurred or is reasonably expected
to occur that has resulted or is reasonably likely to result in a
material liability of the Borrowers or any Subsidiary of the
Borrowers. Schedule B (Actuarial Information) to the 1995 annual
report (Form 5500 Series) for each Benefit Plan, copies of which
have been filed with the Internal Revenue Service and furnished to
the Collateral Agent, is complete and accurate and fairly presents
the funding status of such Benefit Plan, and since the date of such
Schedule B there has been no material adverse change in such
funding status. No Borrower and no ERISA Affiliate has incurred or
is reasonably expected to incur any withdrawal liability to any
Multiemployer Plan. No Borrower and no ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no Multiemployer Plan
is reasonably expected to be in reorganization or to be terminated,
within the meaning of Title IV of ERISA. The aggregate annualized
cost (including, without limitation, the cost of insurance
premiums) with respect to post-retirement benefits under Benefit
Plans for which any is liable does not exceed $10,000,000.
(t) Foreign Employee Benefit Matters. Each Foreign Employee
Benefit Plan is in compliance in all material respects with all
laws, regulations and rules applicable thereto and the respective
requirements of the governing documents for such Plan. The
aggregate of the liabilities to provide all of the accrued benefits
under any Foreign Pension Plan does not exceed the current fair
market value of the assets held in the trust or other funding
vehicle for such Plan. With respect to any Foreign Employee
Benefit Plan maintained or contributed to by any Borrower, any of
its Subsidiaries or any ERISA Affiliate (other than a Foreign
Pension Plan), reasonable reserves have been established in
accordance with prudent business practice or where required by
ordinary accounting practices in the jurisdiction in which such
Plan is maintained. The aggregate unfunded liabilities, after
giving effect to any reserves for such liabilities, with respect to
such Plans does not exceed the current fair market value of the
assets held in the trust or other funding vehicle for such Plan.
There are no actions, suits or claims (other than routine claims
for benefits) pending or, to the best knowledge of the Borrowers,
threatened against any Borrower, any Subsidiary of the Borrowers or
any ERISA Affiliate with respect to any Foreign Employee Benefit
Plan.
(u) Labor Matters. Schedule 7.01-U accurately sets forth all
labor contracts, other than national union agreements to which any
Subsidiary of the Borrowers domiciled in Europe is a party, to
which any Borrower or any Subsidiary of the Borrowers is a party on
the date hereof and the expiration date of each such contract.
There are no strikes, lockouts or other grievances relating to any
collective bargaining or similar agreement to which any Borrower or
any Subsidiary of the Borrowers is a party.
(v) Securities Activities. No Borrower and no Subsidiary of the
Borrowers is engaged in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(w) Solvency. After giving effect to the Loans to be made and
Letters of Credit to be issued or continued on the Effective Date
or such other date as Loans requested hereunder are made or Letters
of Credit requested hereunder are issued, the disbursement of the
proceeds of such Loans pursuant to the Borrowers' instructions, the
repayment of the Refinanced Indebtedness, and the consummation of
the Spin-Off, each of the Borrowers and each Guarantor is Solvent.
(x)Patents, Trademarks, Permits, Etc.; Government Approvals. (i)
Each Borrower and each Subsidiary of the Borrowers, as applicable,
owns, is licensed or otherwise has the lawful right to use, or has
all Permits and other governmental approvals, patents, trademarks,
trade names, copyrights, technology, know-how, permits and pro-
cesses used in or necessary for the conduct of its respective
business as currently conducted which are material to its condition
(financial or otherwise), operations, performance and prospects,
taken as a whole. Except as set forth on Schedule 7.01-X attached
hereto, no claims are pending or, to the best of the Borrowers'
knowledge following diligent inquiry, threatened that any Borrower
or any Subsidiary of the Borrowers is infringing or otherwise
adversely affecting the rights of any Person with respect to such
Permits and other governmental approvals, patents, trademarks,
trade names, copyrights, technology, know-how, permits and
processes, except for such claims and infringements as do not, in
the aggregate, give rise to any liability on the part of any
Borrower or any Subsidiary of the Borrowers which will, or is
reasonably likely to, result in a Material Adverse Effect.
(ii) The consummation of the transactions contemplated by the Loan
Documents will not impair the ownership of or rights under (or the
license or other right to use, as the case may be) any Permits and
governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how, permits or processes by any
Borrower or any Subsidiary of the Borrowers in any manner which
will, or is reasonably likely to, result in a Material Adverse
Effect.
(y) Assets and Properties. Each Borrower and each Subsidiary of
the Borrowers has good and marketable title to all of the assets
and Property (tangible and intangible) owned by it (except insofar
as marketability may be limited by any laws or regulations of any
Governmental Authority affecting such assets), and all such assets
and Property are free and clear of all Liens except Liens securing
the Obligations and Liens permitted under Section 10.03. Substan-
tially all of the assets and Property owned by, leased to, or used
by any Borrower and/or each Subsidiary of the Borrowers in their
respective businesses is in adequate operating condition and
repair, ordinary wear and tear excepted, is free and clear of any
known defects except such defects as do not substantially interfere
with the continued use thereof in the conduct of normal operations,
and is able to serve the function for which they are currently
being used, except in each case where the failure of such asset to
meet such requirements would not, or is not reasonably likely to,
result in a Material Adverse Effect. Neither this Agreement nor
any other Loan Document, nor any transaction contemplated under any
such agreement, will affect any right, title or interest of any
Borrower or any Subsidiary of the Borrowers in and to any of such
assets in a manner that would, or is reasonably likely to, result
in a Material Adverse Effect.
(z) Insurance. Schedule 7.01-Z attached hereto or as amended from
time to time accurately sets forth as of the date of such Schedule
all insurance policies and programs in effect with respect to the
respective Property and assets and business of the Borrowers and
the Borrowers' Subsidiaries, specifying for each such policy and
program, (i) the amount thereof, (ii) the risks insured against
thereby, (iii) the name of the insurer and each insured party
thereunder, (iv) the policy or other identification number thereof,
and (v) the expiration date thereof. The Borrowers have delivered
to the Collateral Agent copies of all such insurance policies.
Such insurance policies and programs are currently in full force
and effect, in compliance with the requirements of Section 9.05 and
are in amounts sufficient to cover the replacement value of the
respective Property and assets of the Borrowers and the Borrowers'
Subsidiaries.
(aa) Pledge of Capital Stock. The grant and perfection of the
security interest in the Capital Stock of RHI, FHC and the
Subsidiaries of the Borrowers constituting a portion of the
Collateral for the benefit of the Holders, as contemplated by the
terms of the Loan Documents, is not made in violation of the
registration provisions of the Securities Act, any applicable
provisions of other federal securities laws, state securities or
"Blue Sky" law, foreign securities law, or applicable general
corporation law or in violation of any other Requirement of Law.
(bb) Liquidity. The unused Revolving Credit Commitments, together
with the remaining liquidity sources available to the Borrowers is
sufficient to fund all of the Borrowers' cash requirements through
December 31, 1998, in accordance with all Requirements of Law.
ARTICLE VIII
REPORTING COVENANTS
The Borrowers each covenant and agree that so long as any Revolving
Credit Commitments are outstanding and thereafter until payment in
full of all of the Obligations (other than indemnities not yet
due), unless the Requisite Lenders shall otherwise give their prior
written consent thereto:
8.01. Financial Statements; Communications with Accountants. The
Borrowers shall, and shall cause each of their Subsidiaries to,
maintain, a system of accounting established and administered in
accordance with sound business practices to permit preparation of
consolidated Financial Statements in conformity with GAAP and each
of the Financial Statements described below shall be prepared from
such system and records.
(a) Monthly Financial Reports. (i) The Borrowers shall deliver or
cause to be delivered to the Collateral Agent and the Lenders
during the period commencing on the Effective Date and ending on
May 24, 1998, (A) consolidated balance sheets of TFC and its
Subsidiaries and consolidated balance sheets of each Operating Unit
and the related consolidated statements of income (in the forms
attached hereto as Exhibit K) for each Fiscal Month and for the
Fiscal Year to date ending on the last day of such Fiscal Month,
and (B) schedules of the Investments of the Borrowers and their
Subsidiaries in Cash Equivalents and Marketable Securities as of
the end of the applicable Fiscal Month then ending, in each event
as soon as practicable, and in any event within fifty-five (55)
days after the end of each Fiscal Month, in each case for the
Fiscal Month then ending.
(ii) From and after June 30, 1998, the Borrowers shall deliver or
cause to be delivered to the Collateral Agent and the Lenders (A)
consolidated and consolidating balance sheets and income statements
and consolidated cash flow statements for TFC and its Subsidiaries
and FHC and its Subsidiaries, and consolidated balance sheets and
income statements for each Operating Unit, for each Fiscal Month
and on a Fiscal Year to date basis and (B) schedules of the
Investments of the Borrowers and their Subsidiaries in Cash
Equivalents and Eligible Marketable Securities as of the end of the
applicable Fiscal Month then ending, in each event as soon as
practicable, and in any event within forty-five (45) days after the
end of each Fiscal Month.
(b) Quarterly Financial Reports. The Borrowers shall deliver or
cause to be delivered to the Collateral Agent and the Lenders (i)
consolidated and consolidating balance sheets and income statements
and consolidated cash flow statements of TFC and its Subsidiaries
and of FHC and its Subsidiaries, and consolidated balance sheets
and income statements for each Operating Unit, on a quarterly and
Fiscal Year to date basis and (ii) schedules of the Indebtedness
for Borrowed Money of the Borrowers and their Subsidiaries and
Investments of the Borrowers and their Subsidiaries in Cash
Equivalents and Marketable Securities as of the end of the
applicable Fiscal Quarter then ending, in each event as soon as
practicable, and in any event (1) within fifty-five (55) days after
the end of each of the first three Fiscal Quarters in each Fiscal
Year for the Fiscal Quarter then ending and (2) within one hundred
(100) days after the end of the fourth Fiscal Quarter in each
Fiscal Year for the Fiscal Quarter then ending.
(c) Annual Financial Statements. TFC shall deliver or cause to be
delivered to the Collateral Agent and the Lenders for each Fiscal
Year ending on June 30, 1998 and thereafter (i) consolidated and
consolidating balance sheets of each of TFC and its Subsidiaries
and FHC and its Subsidiaries as at the end of such Fiscal Year,
(ii) the related consolidated and consolidating statements of
income and consolidated cash flow for such Fiscal Year, and (iii)
consolidated balance sheets and statements of income for each
Operating Unit for such Fiscal Year, as soon as practicable and in
any event within one hundred (100) days after the end of each
Fiscal Year. The consolidated Financial Statements of TFC and its
Subsidiaries shall be accompanied by a report thereon of Arthur
Andersen LLP or other independent certified public accountants of
recognized national standing satisfactory to the Requisite Lenders,
which report shall be unqualified and shall state that such
consolidated financial statements present fairly the financial
position of the applicable Persons, as at the dates indicated and
the results of their operations and changes in their financial
position for the periods indicated in conformity with GAAP applied
on a basis consistent with prior years (or, in the event of a
change in accounting principles, such accountants' concurrence with
such change) and that the examination by such accountants in
connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards.
(d) Officer's Certificates. (i) An Officer's Certificate of TFC
substantially in the form of Exhibit L attached hereto and made a
part hereof shall accompany the Financial Statements referenced in
clauses (a), (b), and (c) above and an Officer's Certificate of FHC
substantially in the form of Exhibit L shall accompany the
Financial Statements referenced in clauses (a)(ii), (b), and (c)
above certifying that such Financial Statements fairly present the
financial position of the respective Operating Units or Persons, as
applicable, as at the dates indicated and the results of their
operations for the periods indicated in accordance with GAAP,
subject to normal year end adjustments, and stating that the
officer signatory thereto has reviewed the terms of the Loan
Documents, and has made, or caused to be made under his/her super-
vision, a review in reasonable detail of the transactions and
consolidated financial condition of the Operating Units or Persons,
as applicable, during the accounting period covered by such
Financial Statements, that such review has not disclosed the
existence during or at the end of such accounting period, and that
such Person does not have knowledge of the existence as at the date
of such Officer's Certificate, of any condition or event which
constitutes an Event of Default or Potential Event of Default, or,
if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action TFC, RHI,
FHC or a Borrower's Subsidiaries has/have taken, is/are taking and
proposes/propose to take with respect thereto.
(ii) The appropriate Financial Statements referenced above shall
also be accompanied by a certificate (the "Compliance
Certificate"), signed by the treasurer or vice president of the
applicable Borrower, setting forth calculations (with such
specificity as the Collateral Agent may reasonably request) for the
period then ended which demonstrate compliance with the provisions
of Article XI, including, without limitation, the amount of Capital
Expenditures made, on a cumulative basis since the beginning of the
respective Fiscal Year; provided, however, that, during the period
commencing on the Effective Date and ending on May 24, 1998,
calculations with respect to compliance with Sections 11.02 and
11.03 shall only be required to be provided in the Compliance
Certificate for the Fiscal Months ending on December 28, 1997 and
March 29, 1998. The Financial Statements described in clauses (b)
and (c) above shall set forth, in comparative form, the figures for
the like period in the previous Fiscal Year. As soon as the same
become available, and in any event no later than June 30, 1999, the
Financial Statements described in clause (a)(ii) above shall set
forth, in comparative form, the figures for the like period in the
previous Fiscal Year. The Financial Statements described for
Operating Units in clause (a) above shall set forth, in comparative
form, the figures for the period for which the report is submitted
set forth in the business plan prepared for the Board of Directors
of FHC pertaining to such period. The Financial Statements
described in clauses (b) and (c) above shall set forth, in
comparative form, the figures for the period for which the report
is submitted set forth (A) in the Projections prior to delivery of
an updated business plan as described in Section 8.01(e), or (B) in
the most recently dated business plan delivered as described in
Section 8.01(e), in each instance, all in reasonable detail.
(e) Other Financial Information. With reasonable promptness, the
Borrowers shall deliver such other information, reports, filings,
and data with respect to each Borrower and its Subsidiaries as from
time to time may be reasonably requested by any Lender. With
reasonable promptness after the Borrowers' preparation thereof, the
Borrowers shall deliver to the Collateral Agent and Lenders an
annual business plan.
(f) Communications with Accountants. The Borrowers authorize (i)
the Collateral Agent, after giving the Borrowers reasonable prior
written notice of its intent to do so, to communicate directly with
the Borrowers' independent certified public accountants concerning
the Financial Statements; provided that the Borrowers are not
precluded by the Collateral Agent from being present for such
communication and (ii) such independent certified public
accountants, upon the Collateral Agent's written request with a
copy to the Borrowers, to provide to the Collateral Agent copies of
any financial schedules prepared by such accountants for the
Borrowers or Subsidiaries of the Borrowers.
8.02. Events of Default. Promptly upon any of the president, any
vice president, or the treasurer of any Borrower obtaining
knowledge (a) of any condition or event which constitutes an Event
of Default or Potential Event of Default, or becoming aware that
any Lender or the Collateral Agent has given any notice with
respect to a claimed Event of Default or Potential Event of Default
under this Agreement, (b) that any Person has given any notice to
any Borrower or any Subsidiary of the Borrowers or taken any other
action with respect to a claimed default or event or condition of
the type referred to in Section 12.01(e), or (c) of any condition
or event which has resulted, or is reasonably likely to result, in
a Material Adverse Effect or affect the value of, or the Collateral
Agent's interest in, the Collateral in any material respect, the
Borrowers shall deliver to the Collateral Agent and the Lenders an
Officer's Certificate specifying (i) the nature and period of
existence of any such claimed default, Event of Default, Potential
Event of Default, condition or event, (ii) the notice given or
action taken by such Person in connection therewith, and (iii) what
action the Borrowers or Subsidiary of the Borrowers have/has taken,
are/is taking and proposes to take with respect thereto.
8.03. Lawsuits. Promptly upon any Borrower's obtaining knowledge
of the institution of, or written threat of, any action, suit,
proceeding, governmental investigation or arbitration against or
affecting any Borrower or any Subsidiary of the Borrowers or any of
the Property not previously disclosed pursuant to Section 7.01(k),
which action, suit, proceeding, governmental investigation or
arbitration exposes, or in the case of multiple actions, suits,
proceedings, governmental investigations or arbitrations arising
out of the same general allegations or circumstances which expose,
in the Borrowers' reasonable judgment, any Borrower and/or any
Subsidiary of the Borrowers to liability in an amount aggregating
$5,000,000 or more (exclusive of claims covered by insurance
policies of the Borrowers and their Subsidiaries unless the
insurers of such claims have disclaimed coverage or reserved the
right to disclaim coverage on such claims), the Borrowers shall
give written notice thereof to the Collateral Agent and the Lenders
and provide such other information as may be reasonably available
to enable each Lender and the Collateral Agent and its counsel to
evaluate such matters. The Borrowers upon request of the Collateral
Agent or the Requisite Lenders shall promptly give written notice
of the status of any action, suit, proceeding, governmental
investigation or arbitration covered by a report delivered in
accordance herewith and provide such other information as may be
reasonably available to it to enable each Lender and the Collateral
Agent and its counsel to evaluate such matters.
8.04. Schedules of Spin-Off Transfers. On the Effective Date, the
Borrowers shall deliver to the Collateral Agent and each Lender a
schedule of Investments in the Spin-Off Businesses which, to the
best of the Borrowers' knowledge will be made through January 25,
1998. On January 26, 1998 and the first day of each Fiscal Month
thereafter, the Borrowers shall deliver to the Collateral Agent and
each Lender a schedule in the form attached hereto as Schedule 8.04
and made a part hereof (a "Schedule of Spin-Off Transfers") setting
forth (a) to the best of the Borrowers knowledge, Investments in
the Spin-Off Businesses or SpinCo, as applicable, which will be
made in the Fiscal Month then beginning, (b) the amount of
Investments made in the Spin-Off Businesses and SpinCo during the
period commencing on the Effective Date and ending on the last day
of the immediately preceding Fiscal Month, and (c) a certification
that, to the best of the Borrowers' knowledge, no Event of Default
has occurred due to the making of any the Investments theretofore
made or will occur due to the making of the Investments forecasted
for the Fiscal Month then beginning.
8.05. Intentionally omitted.
8.06. Environmental Notices. The Borrowers shall notify the
Collateral Agent and the Lenders in writing, promptly upon any
Borrower's learning thereof, of any:
(a) notice or claim to the effect that any Borrower or
any Subsidiary of the Borrowers is subject to
investigation or may be subject to investigation or
liable in an amount exceeding $4,000,000 to any Person as
a result of the Release or threatened Release of any
Contaminant into the environment;
(b) notice that any Property is subject to an
Environmental Lien; and
(c) notice to any Borrower or any Subsidiary of the
Borrowers of any material violation of any Environmental,
Health or Safety Requirement of Law or the commencement
or threat of any judicial or Collateral proceeding
alleging such a material violation by any Borrower or any
Subsidiary of the Borrowers.
Concurrently with the annual delivery to the independent
accountants of TFC of a letter relating to financial exposure of
TFC and its Subsidiaries with respect to Environmental Liabilities
and Costs substantially in the form of that letter dated September
8, 1997 addressed to Arthur Andersen LLP, a copy of which has been
delivered to the Collateral Agent prior to the Effective Date, the
Borrowers shall deliver a like letter addressed to the Collateral
Agent; provided, however, that in the event no such letter is
provided to the independent accountants of TFC with respect to any
given Fiscal Year, such letter shall be prepared with respect to
such Fiscal Year and delivered to the Collateral Agent on October
31 of the calendar year in which such Fiscal Year ends.
8.07. Other Reports. The Borrowers shall deliver or cause to be
delivered to the Collateral Agent and the Lenders copies of all
Financial Statements, reports and notices, if any, sent or made
available generally by any Borrower to its Securities holders or
filed with the Commission and all press releases made available
generally by any Borrower or any Subsidiary of the Borrowers to the
public concerning material developments in the business of the
Borrowers or any Subsidiary of the Borrowers, and all notifications
received by any Borrower or any Subsidiary of the Borrowers
pursuant to the Securities Exchange Act and the rules promulgated
thereunder, in each instance, promptly upon the making of such
reports, giving of such notices or press releases, filings with the
Commission, and receipt of such notifications. In any event, TFC
shall deliver or cause to be delivered to the Collateral Agent and
the Lenders copies of all reports on Form 10-Q filed by TFC with
the Commission within fifty-five (55) days after the end of the
quarter to which such reports pertain and all reports on Form 10-K
filed by TFC with the Commission within one hundred (100) days
after the end of each Fiscal Year.
8.08. Other Information. Promptly upon receiving a request
therefor from the Collateral Agent or the Requisite Lenders, the
Borrowers shall prepare and deliver to the Collateral Agent and the
Lenders such other information with respect to each Borrower, any
of their Subsidiaries, or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and
any dispositions thereof, as from time to time may be reasonably
requested by the Collateral Agent or the Requisite Lenders.
8.09. Borrowing Base Certificates. The Borrowers shall prepare
and deliver to the Collateral Agent and the Lenders a Borrowing
Base Certificate dated as of the end of each Fiscal Month within
five (5) Business Days after the end of such Fiscal Month.
ARTICLE IX
AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees that so long as any
Revolving Credit Commitment is outstanding and thereafter until
payment in full of all of the Obligations (other than indemnities
not yet due), unless the Requisite Lenders shall otherwise give
prior written consent:
9.01. Corporate Existence, Etc. Each Borrower shall, and shall
cause each of its Material Subsidiaries to, at all times maintain
its corporate existence and preserve and keep, or cause to be
preserved and kept, in full force and effect its rights and
franchises material to its businesses, except where the loss or
termination of such rights and franchises is not likely to result
in a Material Adverse Effect.
9.02. Corporate Powers; Conduct of Business. Each Borrower shall,
and shall cause each of its Material Subsidiaries to, qualify and
remain qualified to do business and maintain its good standing in
each jurisdiction in which the nature of its business and the
ownership of its Property requires it to be so qualified and in
good standing.
9.03. Compliance with Laws, Etc. Each Borrower shall, and shall
cause each of its Material Subsidiaries to, (a) comply with all
Requirements of Law and all restrictive covenants affecting it or
its business, Property, assets or operations and (b) obtain as
needed all Permits necessary for its operations and maintain such
Permits in good standing, except in the case where noncompliance
with either clause (a) or (b) above is not reasonably likely to
result in a Material Adverse Effect.
9.04. Payment of Taxes and Claims; Tax Consolidation. Each
Borrower shall, and shall cause each of its Material Subsidiaries
to, pay (a) all taxes, assessments and other governmental charges
imposed upon it or on any of its Property or assets or in respect
of any of its franchises, business, income or Property before any
penalty or interest accrues thereon, and (b) all Claims (including,
without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by
law have or may become a Lien (other than a Lien permitted by
Section 10.03) upon any Property or assets of any Borrower or any
such Subsidiary, prior to the time when any penalty or fine shall
be incurred with respect thereto; provided, however, that no such
taxes, assessments and governmental charges referred to in clause
(a) above or Claims referred to in clause (b) above need be paid if
being contested in good faith by appropriate proceedings diligently
instituted and conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP
shall have been made therefor. No Borrower will, and none of them
will permit any of its Material Subsidiaries to, file or consent to
the filing of any consolidated income tax return with any Person
other than another Borrower and its Subsidiaries.
9.05. Insurance. The Borrowers shall maintain for themselves and
their respective Subsidiaries, or shall cause each of their
respective Subsidiaries to maintain, in full force and effect the
insurance policies and programs listed on Schedule 7.01-Z or
substantially similar policies and programs or other policies and
programs as are reasonably acceptable to the Collateral Agent. All
such policies and programs shall be maintained with responsible and
reputable insurers of companies engaged in similar businesses and
owning similar property in the same general geographic areas in
which such Person, as applicable, operates. Each certificate and
policy relating to Property damage, boiler and machinery and/or
business interruption coverage shall contain an endorsement, in
form and substance reasonably acceptable to the Collateral Agent,
showing loss payable to the Collateral Agent, for the benefit of
the Holders, and, if required by the Collateral Agent, naming the
Collateral Agent as an additional insured under such policy. Each
certificate and policy relating to coverage other than the
foregoing shall, if required by the Collateral Agent, contain an
endorsement naming the Collateral Agent as an additional insured or
mortgagee payee, as applicable, under such policy. Such
endorsement or an independent instrument furnished to the
Collateral Agent shall provide that the insurance companies will
give the Collateral Agent at least thirty (30) days' written notice
before any such policy or policies of insurance shall be altered
adversely to the interests of the Holders or canceled and that no
act, whether willful or negligent, or default of any Borrower, any
Subsidiary of any Borrower or any other Person shall affect the
right of the Collateral Agent to recover under such policy or
policies of insurance in case of loss or damage. In the event any
Borrower or any of their Subsidiaries, at any time or times
hereafter shall fail to obtain or maintain any of the policies or
insurance required herein or to pay any premium in whole or in part
relating thereto, then the Collateral Agent, without waiving or
releasing any obligations or resulting Event of Default hereunder,
may at any time or times thereafter (but shall be under no
obligation to do so) obtain and maintain such policies of insurance
and pay such premiums and take any other action with respect
thereto which the Collateral Agent deems advisable. All sums so
disbursed by the Collateral Agent shall constitute Protective
Advances hereunder and be part of the Obligations, payable as
provided in this Agreement.
9.06. Inspection of Property; Books and Records; Discussions. The
Borrowers shall, and shall cause each of their respective Material
Subsidiaries to, permit any authorized representative(s) designated
by either the Collateral Agent or any Lender to visit and inspect,
whether by access to the Borrowers' and such Subsidiaries' MIS or
otherwise, any of the Property, to examine, audit, check and make
copies of its respective financial and accounting records, books,
journals, orders, receipts and any correspondence (other than
privileged correspondence with legal counsel) and other data
relating to their respective businesses or the transactions
contemplated hereby or referenced herein (including, without
limitation, in connection with environmental compliance, hazard or
liability), and to discuss their affairs, finances and accounts
with their officers, management personnel, and independent certi-
fied public accountants, all upon reasonable written notice and at
such reasonable times during normal business hours, as often as may
be reasonably requested. Each such visitation and inspection (i)
by or on behalf of any Lender shall be at such Lender's expense and
(ii) by or on behalf of the Collateral Agent shall be at the
Borrowers' expense. The Borrowers shall keep and maintain, and
cause each of their respective Subsidiaries to keep and maintain,
in all material respects on its MIS and otherwise proper books of
record and account in which entries in conformity with GAAP shall
be made of all dealings and transactions in relation to its
respective businesses and activities, including, without
limitation, transactions and other dealings with respect to the
Collateral. If an Event of Default has occurred and is continuing,
the Borrowers, upon the Collateral Agent's request, shall, and
shall cause each of their respective Subsidiaries to, turn over any
such records to the Collateral Agent or its representatives;
provided, however, that the Borrowers may, in their discretion,
retain copies of such records.
9.07. Insurance and Condemnation Proceeds. (a) Direction to
Insurers. The Borrowers hereby direct (and, if applicable, shall
cause the Subsidiaries of the Borrowers to direct) all insurers
under policies of property damage, boiler and machinery and
business interruption insurance and payors of any condemnation
claim or award relating to the Property of such Persons to pay all
proceeds payable under such policies or with respect to such claim
or award directly to the Collateral Agent, for the benefit of the
Collateral Agent and the other Holders. In no case shall such
proceeds be payable to the Borrowers, or one or more of the
Borrowers or their Subsidiaries, and the Collateral Agent.
(b) Application of Proceeds. The Collateral Agent shall, upon
receipt of such proceeds, apply all of the proceeds so received in
repayment of the Obligations in the manner set forth in Section
4.01(b)(vii). Notwithstanding the foregoing, in the event proceeds
of insurance received by the Collateral Agent under property
damage, boiler and machinery policies or business interruption
insurance policies (i) is less than $500,000 or (ii) constitutes
Replacement Proceeds, the Collateral Agent shall, upon receipt of
such proceeds, remit the amount so received to the Borrowers or a
Subsidiary of the Borrowers, as applicable provided that there
shall not then exist an Event of Default which is continuing
unwaived.
9.08. ERISA Compliance. The Borrowers shall, and shall cause each
of their Subsidiaries and ERISA Affiliates to, establish, maintain
and operate all Plans to comply in all material respects with the
provisions of ERISA, the Internal Revenue Code, all other
applicable laws, and the regulations and interpretations thereunder
and the respective requirements of the governing documents for such
Plans.
9.09. Foreign Employee Benefit Plan Compliance. The Borrowers
shall, and shall cause each of their Subsidiaries and ERISA
Affiliates to, establish, maintain and operate all Foreign Employee
Benefit Plans to comply in all material respects with all laws,
regulations and rules applicable thereto and the respective
requirements of the governing documents for such Plans.
9.10. Expense Sharing Agreement. Concurrent with the consummation
of the Spin-Off, TFC and SpinCo shall have entered into the Expense
Sharing Agreement and, from and after the Expense Sharing Agreement
becomes effective, TFC shall maintain the same, or cause the same
to be maintained, in full force and effect, without any amendment
or modification which would result in aggregate reductions in the
cash payments being required to be made thereunder by SpinCo in any
Fiscal Year of more than $100,000 unless consented to by the
Requisite Lenders.
9.11. Maintenance of Property. The Borrowers shall, and shall
cause each of their respective Material Subsidiaries to, maintain
in all material respects all of its respective owned and leased
Property in good, safe and insurable condition and repair, and not
permit, commit or suffer any waste or abandonment of any such
Property and from time to time shall make or cause to be made all
material repairs, renewal and replacements thereof, including,
without limitation, any capital improvements which may be required;
provided, however, that such Property may be altered or renovated
in the ordinary course of a Borrower's or such Subsidiaries'
business.
9.12. Condemnation. Immediately upon learning of the institution
of any proceeding for the condemnation or other taking of any of
the owned or leased Real Property of a Borrower or any Subsidiary
of a Borrower, the Borrowers shall notify the Collateral Agent of
the pendency of such proceeding, and permit the Collateral Agent to
participate in any such proceeding, and from time to time will
deliver to the Collateral Agent all instruments reasonably
requested by the Collateral Agent to permit such participation.
9.13. Subsidiaries Acquired or Formed after the Effective Date.
Each Borrower shall cause each of its Domestic Subsidiaries to
become a Guarantor or Borrower, as determined by the Administrative
Agents, and execute and deliver to the Collateral Agent such Loan
Documents, including, without limitation, as may be applicable
under the circumstances, guaranties, security agreements, pledge
agreements, and other agreements and instruments related to
Collateral owned by such Domestic Subsidiaries as the Collateral
Agent shall reasonably request concurrently with such Persons
becoming Domestic Subsidiaries. Notwithstanding the foregoing,
nothing in this Section 9.13 shall permit any Borrower or
Subsidiary of a Borrower to form any Domestic Subsidiary or make
any Investment, directly or indirectly, not otherwise permitted by
Section 10.04.
9.14. Performance of Material Contracts. The Borrowers shall, and
shall cause each of their respective Subsidiaries to, perform and
observe all the terms and provisions of each material Contractual
Obligation to be performed or observed by it, maintain each such
material Contractual Obligation in full force and effect, enforce
each such material Contractual Obligation in accordance with its
terms, take all such action to such end as may be from time to time
requested by the Collateral Agent and, upon request of the
Collateral Agent, make to each other party to each such material
Contractual Obligation such demands and requests for information
and reports or for action as such Borrower or Subsidiary is
entitled to make under such material Contractual Obligation.
9.15. Further Assurances. The Borrowers shall, and shall cause
each Guarantor to, execute and deliver to the Collateral Agent, for
the benefit of the Holders, such other agreements, documents, and
instruments which the Collateral Agent deems necessary or
desirable, in form and substance satisfactory to the Collateral
Agent, to enable the Collateral Agent to perfect, or maintain
perfected, Liens in the Collateral, and all Cash Equivalents (other
than those in Deposit Accounts not subject to Collection Account
Agreement pursuant to Section 10.15) and Eligible Marketable
Securities.
9.16. Use of Proceeds of the Term Loans and the Offering. The
Borrowers shall use the proceeds of the Term Loans and the net cash
proceeds of the Offering to pay or provide for the payment, in a
manner and on or before February 27, 1998, of the Refinanced
Indebtedness outstanding as of the date of such Person's receipt of
such proceeds.
9.17. Required Hedge Agreements. In the event the Eurodollar
Rate exceeds eight percent (8.0%) for a period of thirty (30) days,
the Borrowers shall enter into Hedge Agreements on terms reasonably
satisfactory to the Administrative Agents and maintain the same in
effect, for interest rate protection with respect to the
Obligations which shall be purchased from a Lender or an Affiliate
of a Lender or, subject to the prior approval of the Requisite
Lenders (which approval shall not be unreasonably delayed or
withheld), any other Person, for a notional amount equal to the
lesser of (a) $100,000,000 minus the amount of fixed rate
Indebtedness for Borrowed Money and (b) fifty percent (50%) of all
of the Borrowers' Indebtedness for Borrowed Money minus the amount
of fixed rate Indebtedness for Borrowed Money; provided that the
Borrowers shall in no event be required to enter into Hedge
Agreements if their Indebtedness for Borrowed Money is equal to or
less than $40,000,000.
ARTICLE X
NEGATIVE COVENANTS
Each Borrower covenants and agrees, as applicable, that, so long as
any Revolving Credit Commitments are outstanding and thereafter
until payment in full of all of the Obligations (other than
indemnities not yet due), unless the Requisite Lenders shall other-
wise give prior written consent:
10.01. Indebtedness. The Borrowers shall not and shall not permit
any of their Subsidiaries to directly or indirectly create, incur,
assume or otherwise become or remain directly or indirectly liable
with respect to any Indebtedness, except:
(a)the Obligations;
(b) Indebtedness for trade payables, wages and other
accrued expenses incurred in the ordinary course of
business;
(c) Permitted Existing Indebtedness and any extensions,
renewals, refundings or replacements thereof, provided
that any such extension, renewal, refunding or
replacement is in an aggregate principal amount not
greater than the principal amount of, and is on terms no
less favorable to such Borrower or the applicable
Subsidiary than the terms of, the Permitted Existing
Indebtedness so extended, renewed, refunded or replaced;
(d) to the extent permitted by Article XI and in any
event in an aggregate amount not to exceed $15,000,000 at
any time, Indebtedness of the Borrowers and their
Subsidiaries with respect to Capital Leases and purchase
money Indebtedness incurred by the Borrowers and their
Subsidiaries to finance the acquisition of fixed assets,
and Indebtedness incurred by the Borrowers and their
Subsidiaries to refinance such Capital Leases and
purchase money Indebtedness; provided, however, that
prior to incurring Capital Lease obligations owing to any
one lessor or group of affiliated or related lessors or
purchase money Indebtedness owing to any one holder or
group of affiliated or related holders thereof, which in
either case aggregate(s) more than $5,000,000, the
Borrowers shall obtain, or cause such Subsidiary to
obtain, from such lessor(s) or holder(s) a duly executed
intercreditor agreement in form and substance reasonably
satisfactory to the Collateral Agent;
(e) Indebtedness in respect of taxes, assessments,
governmental charges and Claims for labor, materials or
supplies, to the extent that payment thereof is not
required pursuant to Section 9.04;
(f) Indebtedness, without duplication, constituting
Accommodation Obligations permitted by Section 10.05;
(g) Indebtedness arising from the following intercompany
loans:
(i) from a Borrower to any of its Subsidiaries which is a Guarantor
(other than Fairchild Technologies USA, Inc. or Convac USA, Inc.,
as its successor by merger, unless otherwise permitted under
Section 10.17) or from any such Subsidiary to a Borrower or any
other such Subsidiary,
(ii) from one Borrower to another Borrower; provided that such
loans are subordinated to the payment and performance of the
Obligations and are evidenced by promissory notes in form and
substance satisfactory to the Collateral Agent,
(iii) from a Borrower or any Subsidiary of a Borrower which is a
Guarantor, directly or indirectly, to any Subsidiary of the
Borrower which is not a Guarantor which, in the aggregate, do not
exceed $3,000,000 in any Fiscal Year, and
(iv) from any Subsidiary of the Borrower which is not a Guarantor
to any other Subsidiary of the Borrower which is not a Guarantor;
(h) Intentionally omitted
(i) Indebtedness in respect of Hedge Agreements in
respect of interest rates or foreign exchange contracts
so long as the Indebtedness thereunder receives "hedge
accounting" treatment in accordance with the regulations
promulgated by the Commission and staff interpretations
thereof and such Hedge Agreements are not entered into
for speculative purposes;
(j) Indebtedness with respect to reasonable warranties
and indemnities made under any agreements for asset sales
permitted under Section 10.02 and Contractual Obligations
of any Borrower or any Subsidiary of a Borrower entered
into in the ordinary course of its business;
(k) Indebtedness under appeal bonds in connection with
judgments which do not result in an Event of Default or
a Potential Event of Default or any other breach
hereunder, or bid or performance bonds, provided that the
aggregate amount of all such Indebtedness does not exceed
$2,000,000;
(l) Indebtedness of Fairchild Retiree Medical Services, Inc.
arising from intercompany loans from FHC and Indebtedness of FHC
arising from intercompany loans from Fairchild Retiree Medical
Services, Inc. in an aggregate net amount not to exceed $2,000,000
at any time outstanding, which Indebtedness (i) shall be evidenced
by promissory notes in form and substance satisfactory to the
Collateral Agent and endorsed to the Collateral Agent as part of
the Collateral and (ii) shall constitute part of the Indebtedness
permitted under Section 10.01(m);
(m) Indebtedness of Subsidiaries of a Borrower which are Spin-Off
Businesses arising from Investments permitted by Section 10.04(m);
(n) Indebtedness owing by Mecaero S.A. to Simmonds, S.A. in the
amount of approximately FF 20,000,000 in connection with the
transfer by Simmonds, S.A. to Mecaero S.A. of all of the Capital
Stock of Eurosim owned by Simmonds, S.A.; and
(o) in addition to the Indebtedness permitted by clauses (a)
through (n) above, other unsecured Indebtedness and secured
Indebtedness of Subsidiaries of the Borrowers which are not
Domestic Subsidiaries in an aggregate amount which, when combined
with outstanding Accommodation Obligations permitted under Section
10.05(d), does not exceed $15,000,000 outstanding.
10.02. Sales of Assets. The Borrowers shall not and shall not
permit any of the Borrowers' Subsidiaries to sell, assign,
transfer, lease, convey or otherwise dispose of any Property,
whether now owned or hereafter acquired by such Person, or any
income or profits therefrom, or enter into any agreement to do so,
except:
(a) any sale, assignment, transfer, lease, conveyance or
other disposition of any Property having a Fair Market
Value, in the case of an individual asset sale,
assignment, transfer, lease, conveyance or other
disposition, not exceeding $1,000,000 or, in the case of
aggregate asset sales, assignments, transfers, leases,
conveyances and other dispositions in any Fiscal Year,
not exceeding $5,000,000, for consideration not less than
the Fair Market Value thereof so long as (i) any non-cash
consideration resulting from such sale, assignment,
transfer, lease, conveyance or other disposition shall be
pledged or assigned to the Collateral Agent, for the
benefit of the Holders, pursuant to an instrument in form
and substance acceptable to the Collateral Agent and (ii)
the Borrowers comply with the mandatory prepayment
provisions set forth in Section 4.01(b) and the
conditions to the release of Collateral described in
Section 13.09(c);
(b) any sale of Inventory in the ordinary course of the
Borrowers' and their Subsidiaries' respective businesses;
(c) any disposition of Equipment if such Equipment is
traded in for credit against the purchase price of
replacement Equipment or the proceeds of such disposition
are reasonably promptly applied to the purchase price of
such replacement Equipment, is obsolete, or is no longer
useful in the ordinary course of the Borrowers' or their
Subsidiaries' respective businesses;
(d) the sale of Investments in Cash Equivalents
permitted pursuant to Section 10.04(a) and Eligible
Marketable Securities permitted pursuant to Section
10.04(g);
(e) any sale, lease, transfer or other disposition of Permitted
Dispositions and RHI Excluded Property;
(f) the transfers of (i) the Capital Stock of Fairchild Fasteners
France S.A.R.L. to Simmonds, S.A. for book value with a subsequent
dissolution of Fairchild Fasteners France S.A.R.L. with and into
Simmonds, S.A. and (ii) the Capital Stock of Fairchild Technologies
UK, Ltd. by Technologies Germany to Convac USA, Inc. for book
value;
(g) the transfer permitted pursuant to Section 10.09(b)(ii);
(h) any sale, transfer or other disposition (including, without
limitation, by merger) of Capital Stock of STFI held by RHI,
provided that, (i) in the event such sale, transfer or other
disposition is, in whole or in part, for cash, the Borrower
complies with the mandatory prepayment provisions set forth in
Section 4.01(b) or, to the extent such proceeds do not constitute
Net Cash Proceeds of Sale, uses the proceeds thereof exclusively to
(A) make an Investment in SpinCo or the Spin-Off Businesses as
specifically permitted by Section 10.04(m), (B) provide Cash
Collateral, or (C) repay Revolving Loans, and (ii) the aggregate
consideration therefor received upon consummation of such sale,
transfer or other disposition, is not less than $15.00 per share;
(i) any transfers of the Capital Stock or assets of the Spin-Off
Businesses or of assets required to consummate the Spin-Off;
(j) the sale by RHI of its Investment in the Capital Stock of
Sabanci Holding described in Section 10.04(f)(i); and
(k) the transfer (including, without limitation, by merger) of
Banner Stock to AlliedSignal Inc., Textron and/or other
corporations acceptable to the Requisite Lenders in exchange for
Capital Stock of such transferee at a fair value as determined in
good faith by the Board of Directors of Banner.
10.03. Liens. The Borrowers shall not and shall not permit any of
the Borrowers' Subsidiaries to directly or indirectly create,
incur, assume or permit to exist any Lien or negative pledge on or
with respect to any of their respective Property or assets except:
(a) Liens created pursuant to the Loan Documents;
(b) Permitted Existing Liens;
(c) Customary Permitted Liens;
(d) Liens arising due to the creation of escrows of proceeds from
any sale, assignment, lease, transfer or other disposition
permitted under Section 10.02;
(e) Liens securing appeal bonds permitted under Section 10.01(k);
and
(f) Liens securing purchase money Indebtedness (including the
interest of a lessor under a Capital Lease or an Operating Lease
having substantially the same economic effect) permitted under
Section 10.01(d); provided, that such Liens do not attach to any
property other than that purchased with the proceeds of such
purchase money Indebtedness (or leased).
10.04. Investments. The Borrowers shall not and shall not permit
any of the Borrowers' Subsidiaries to directly or indirectly make
or own any Investment except:
(a) Investments in Cash Equivalents;
(b) Permitted Existing Investments, in each case increased or
decreased as required under GAAP as a result of annual adjustments
made to Investments accounted for under the equity method, and
additional Investments required to be made pursuant to the terms of
the Permitted Existing Investments as disclosed on Schedule 1.01.8;
(c) Investments in the form of loans to employees in an
aggregate amount not to exceed $750,000 at any time;
provided that such Investments shall be evidenced by a
promissory note;
(d) Investments received in connection with the
bankruptcy or reorganization of suppliers and customers
and in settlement or composition of delinquent
obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(e) Investments by a Borrower in its Subsidiaries which
(i) if in the form of intercompany loans, would be
permitted under Sections 10.01(g), 10.01(l) or 10.01(m)
and (ii) if such Subsidiaries are Spin-Off Businesses,
would be permitted under clause (m) below;
(f) Investments by RHI in:
(i) Sabanci Holding, a corporation organized under the laws of
Turkey; provided that such Investments shall not exceed $1,000,000
in the aggregate;
(ii) Haargaz Ltd., an Israeli manufacturing company, aggregating
$5,000,000 (including the Accommodation Obligation permitted under
Section 10.05(g)) to effect, on behalf of itself and The
Morgenstern Group, the acquisition of Haargaz Ltd.; and
(iii) Capital Stock of Banner; provided that the amount of
Investments permitted under Section 10.04(m) shall be reduced by
the amount of Investments made in such Capital Stock at the time
made, the Borrowers notify the Collateral Agent of such Investments
promptly upon their being made, and such Capital Stock becomes
Banner Stock;
(g) Investments by a Borrower in Eligible Marketable Securities;
(h) Investments by the Borrowers and their Subsidiaries in an
aggregate amount not to exceed $100,000,000 (no more than
$50,000,000 of which may be made in cash; and which amount not made
in cash may be made in TFC common Capital Stock) made in connection
with acquisitions of assets or equity Securities of any Person
engaged in a business substantially similar to the Fasteners
Business; provided that (i) no Event of Default or Potential Event
of Default has occurred and is continuing unwaived or, after giving
effect to the making of such Investment, no Potential Event of
Default or Event of Default would occur and (ii) on a pro forma
basis, determined for the four (4) Fiscal Quarters immediately
preceding any such Investment giving effect to such Investment as
though it occurred at the commencement of such four (4) Fiscal
Quarter period, no breach of any covenant included in Article XI
would have occurred;
(i) Investments made in connection with the acquisition of
outstanding minority interests in Transfix S.A., Mecaero S.A. and
Fairchild Technologies USA, Inc.;
(j) Investments in the form of notes or equity Securities payable
to (i) the Borrowers or any of their Subsidiaries in connection
with a Permitted Disposition, (ii) RHI in connection with RHI
Excluded Property, or (iii) a transaction permitted under Section
10.02(a) or 10.02(i);
(k) Investments in an amount not to exceed $100,000 in the
aggregate in Subsidiaries of the Borrowers formed after the
Effective Date;
(l) Investments by FHC in Banner Investments U.K. Limited in
amounts aggregating $1,000,000 in any given Fiscal Year;
(m) provided that (i) no Event of Default or Potential Event of
Default has occurred and is continuing unwaived or would occur
after giving effect to such Investments, (ii) the Revolving Credit
Commitments exceed the Revolving Credit Obligations by at least
$25,000,000 after giving effect to such Investments, (iii) to the
extent such Investments are made in Fairchild Finance Company, such
Investments shall not exceed $10,000,000 in the aggregate, (iv) to
the extent such Investments are made in non-aerospace businesses
other than the Spin-Off Businesses identified in Section I. of
Schedule 1.01.10, such Investments shall not exceed $5,000,000 in
the aggregate; Investments by the Borrowers in SpinCo and/or the
Spin-Off Businesses in cash in an aggregate amount not to exceed
the amount equal to (A) $75,000,000 minus (B) the amount by which
permitted Capital Expenditures have been increased as provided in
Section 11.02(i) as such amount may be adjusted from time to time
as and when referenced in Section 10.04(e)(iii);
(n) the contribution of the Capital Stock of Fairchild CDI S.A. by
FHC to VSI Holdings, Inc. and, thereupon, by VSI Holdings, Inc. to
Technologies Germany;
(o) Investments by TFC in Banner Stock in exchange for TFC Capital
Stock;
(p) the Investment by Mecaero S.A. in Eurosim in exchange for a
promissory note in the amount of approximately FF 20,000,000; and
(q) Investments in the form of transfers of the Capital Stock or
assets of the Spin-Off Businesses to SpinCo to effect the Spin-Off.
In no event shall any Borrower or any of the Borrowers'
Subsidiaries form, create or establish any additional Subsidiaries
or become a partner in any Person without the prior written consent
of the Collateral Agent (i) other than (A) SpinCo and (B) two
Delaware corporations (Quack Quack, Inc. and Dah Dah, Inc.) or (C)
in connection with the sale, lease, transfer or other disposition
of Permitted Dispositions and RHI Excluded Property and (ii)
subject to the limitations set forth in clause (k) above; provided,
however, that, notwithstanding the foregoing, in no event shall any
Borrower or any of the Borrowers' Subsidiaries become a general
partner in any Person without the prior written consent of the
Collateral Agent. No other provision of this Agreement shall be
deemed to prohibit any Investment which is specifically permitted
by this Section 10.04.
10.05. Accommodation Obligations. The Borrowers shall not and
shall not permit any of the Borrowers' Subsidiaries to directly or
indirectly create or become or be liable with respect to any
Accommodation Obligation, except:
(a) recourse obligations resulting from endorsement of
negotiable instruments for collection in the ordinary
course of such Persons' business;
(b) Permitted Existing Accommodation Obligations and any
extensions, renewals or replacements thereof, provided
that the aggregate Indebtedness under any such extension,
renewal or replacement is not greater than the
Indebtedness under, and shall be on terms no less
favorable to the applicable Borrower or Subsidiary than
the terms of, the Permitted Existing Accommodation
Obligation so extended, renewed or replaced;
(c) Accommodation Obligations arising under the Loan
Documents;
(d) Accommodation Obligations arising with respect to guarantees
provided by banks organized under the laws of jurisdictions outside
of the United States on behalf of Subsidiaries of the Borrowers
which are not Domestic Subsidiaries in an aggregate amount not to
exceed $5,000,000 at any time outstanding;
(e) Accommodation Obligations arising with respect to appeal, bid
or performance bonds otherwise permitted under this Agreement which
bonds are supported by Letters of Credit issued under this
Agreement;
(f) Accommodation Obligations arising with respect to Indebtedness
permitted under Section 10.01(j);
(g) Accommodation Obligations incurred by RHI for the benefit of
The Morgenstern Group, as co-investor with RHI in Haargaz Ltd., an
Israeli manufacturing company, as evidenced by RHI's payment of (i)
$1,000,000 of a $2,000,000 deposit on behalf of The Morgenstern
Group and (ii) $1,500,000 of the balance ($3,000,000) of the
Investment in Haargaz Ltd. permitted by Section 10.04(f)(ii) on
behalf of The Morgenstern Group;
(h) Accommodation Obligations arising with respect to Spin-Off
Businesses; provided that the sum of such Accommodation
Obligations, Investments made in Spin-Off Businesses and SpinCo,
and Indebtedness of Subsidiaries of a Borrower which are Spin-Off
Businesses arising from Investments permitted by Section 10.04(m)
shall in no event exceed, in the aggregate, the amount equal to (i)
$75,000,000 minus (ii) the amount by which permitted Capital
Expenditures have been increased as provided in Section 11.02(i);
and
(i) in addition to the Accommodation Obligations
permitted by clauses (a) through (h) above, other
unsecured Accommodation Obligations in an aggregate
amount which, when combined with outstanding Indebtedness
permitted by Section 10.01(o), does not exceed $5,000,000
at any time outstanding.
10.06. Restricted Junior Payments. The Borrowers shall not and
shall not permit any of the Borrowers' Subsidiaries to declare or
make any Restricted Junior Payment, except:
(a) dividends or distributions to a Borrower on the
Capital Stock of any of its Wholly-Owned Subsidiaries or
to any of a Borrower's Wholly-Owned Subsidiaries from any
other Wholly-Owned Subsidiary of such Borrower or any
Subsidiary of a Borrower existing on the date of this
Agreement;
(b) dividends or distributions on the Capital Stock of TFC not to
exceed $200,000 in the aggregate;
(c) cancellations of intercompany Indebtedness which are
treated as dividends; and
(d) transfers and distributions of Capital Stock made in
connection with the consummation of the Spin-Off.
10.07. Conduct of Business; Accounting and Reporting Practices.
The Borrowers shall not and shall not permit any of the Borrowers'
Subsidiaries to (a) engage in any business other than (i) the
businesses engaged in by the Borrowers and their Subsidiaries on
the Effective Date and (ii) any business or activities which are
substantially similar, related or incidental thereto, or (b) change
any of its or their accounting or financial reporting policies or
practices from those in effect on the Effective Date, except to the
extent required to provide the financial reporting described in
Section 8.01(a)(ii).
10.08. Transactions with Shareholders and Affiliates. The
Borrowers shall not and shall not permit any of the Borrowers'
Subsidiaries to directly or indirectly enter into or permit to
exist any transaction (including, without limitation, the purchase,
sale, lease, exchange or transfer of any property (other than as
required in connection with the consummation of the Spin-Off) or
the rendering of any service) with any Affiliate on terms that are
less favorable to the Borrowers or such Subsidiaries, as
applicable, than those that might be obtained in an arm's length
transaction at the time from Persons who are not an Affiliate.
Nothing contained in this Section 10.08 shall prohibit (a) any
transaction expressly permitted by Sections 10.05 and 10.06;
(b) increases in compensation and benefits for, or payment of
bonuses to, officers and employees of the Borrowers or any of the
Borrowers' Subsidiaries which are customary in the industry or
consistent with the past business practice of such Borrower or
Subsidiary, provided that no Event of Default or Potential Event of
Default has occurred and is continuing; (c) payment of customary
directors' fees and indemnities of officers and directors; (d)
performance of any obligations arising under the Expense Sharing
Agreement (e) any transaction between a Technologies Company and an
Affiliate which is also a Technologies Company (other than
Fairchild Technologies USA, Inc. or Convac USA, Inc., as successor
by merger to Fairchild Technologies USA, Inc.) or (f) payments to
Jacques Moskovic in connection with the sale or other transfer of
the Technologies Companies from the proceeds of such sale or
transfer.
10.09. Restriction on Fundamental Changes. The Borrowers shall
not and shall not permit any of the Borrowers' Subsidiaries to (a)
enter into any merger or consolidation, or liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution), or (b) convey,
lease, sell, transfer or otherwise dispose of, in one transaction
or series of transactions, all or substantially all of such
Person's business or Property, whether now or hereafter acquired,
except:
(i) the liquidation or dissolution of Fairchild Fastener Group
Ltd. and JJS Limited;
(ii) the transfer of the Capital Stock of Camloc (U.K.) Ltd. by
Fairchild Fastener Group Ltd. to Banner Investments (U.K.) Limited;
(iii) the merger or liquidation of (A) any Subsidiary of a
Borrower with and into a Borrower or any Guarantor; provided that
such Persons are part of the same Operating Unit both before and
after such merger or liquidation, (B) any Guarantor with and into
any other Guarantor; provided that such Persons are part of the
same Operating Unit both before and after such merger or
liquidation, and (C) any Spin-Off Business which is not a Guarantor
with and into any other Spin-Off Business which is not a Guarantor;
(iv) the sale, lease, transfers or other dispositions described in
Sections 10.02(e) and (f);
(v) the dissolution of Mecair, a Canadian Subsidiary of Mecaero,
S.A.;
(vi) the liquidation or merger of Simmonds Mecaero Fasteners, Inc.
into FHC;
(vii) conveyances, transfers and distributions of Capital Stock to
effect the Spin-Off; and
(viii) the merger of Fairchild Technologies USA, Inc. with and
into Convac USA, Inc., with Convac USA, Inc. being the surviving
corporation and thereupon changing its name to Fairchild
Technologies USA, Inc.
10.10. Sales and Leasebacks. The Borrowers shall not and shall not
permit any of the Borrowers' Subsidiaries to become liable,
directly, by assumption or by Accommodation Obligation, with
respect to any lease, whether an Operating Lease or a Capital
Lease, of any Property (whether real or personal or mixed) which
such Person (a) sold or transferred or is to sell or transfer to
any other Person, or (b) intends to use for substantially the same
purposes as any other Property which has been or is to be sold or
transferred by such Person to any other Person, in either instance,
in connection with such lease.
10.11. Margin Regulations; Securities Laws. The Borrowers shall
not or permit any of the Borrowers' Subsidiaries to use all or any
portion of the proceeds of any credit extended under this Agreement
to purchase or carry Margin Stock or for purposes other than those
described in Section 2.04.
10.12. ERISA. The Borrowers shall not:
(a) engage, or permit any of the Borrowers' Subsidiaries
to engage, in any prohibited transaction described in
Sections 406 of ERISA or 4975 of the Internal Revenue
Code for which a statutory or class exemption is not
available or a private exemption has not been previously
obtained from the DOL;
(b) permit to exist any accumulated funding deficiency
(as defined in Sections 302 of ERISA and 412 of the
Internal Revenue Code), with respect to any Benefit Plan,
whether or not waived;
(c) fail, or permit any ERISA Affiliate to fail, to pay
timely required contributions or annual installments due
with respect to any waived funding deficiency to any
Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to
terminate, any Benefit Plan which would result in any
liability of the Borrowers or any ERISA Affiliate under
Title IV of ERISA;
(e) fail to make any contribution or payment to any
Multiemployer Plan which any Borrower or any ERISA
Affiliate may be required to make under any agreement
relating to such Multiemployer Plan, or any law per-
taining thereto;
(f) fail, or permit any ERISA Affiliate to fail, to pay
any required installment or any other payment required
under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other
payment;
(g) amend, or permit any ERISA Affiliate to amend, a
Benefit Plan resulting in an increase in current lia-
bility for the plan year such that the Borrower or any
ERISA Affiliate is required to provide security to such
Plan under Section 401(a)(29) of the Internal Revenue
Code;
(h) permit any unfunded liabilities with respect to any
Foreign Pension Plan; or
(i) fail, or permit any of its Subsidiaries or ERISA
Affiliates to fail, to pay any required contributions or
payments to a Foreign Pension Plan on or before the due
date for such required installment or payment
if such event results, either singly or in the aggregate, after
taking into account all other such events and any liabilities
associated therewith, in an aggregate liability in excess of
$2,000,000.
10.13. Issuance of Equity Securities. The Borrowers shall not and
shall not permit any of the Borrowers' Subsidiaries to issue any
equity Securities except equity Securities of the Borrowers
pursuant to Permitted Equity Securities Options and equity
Securities of TFC pursuant to the Offering, in exchange for Banner
Stock and in exchange for Investments as permitted by Section
10.04(h).
10.14. Organizational Documents; Material Contractual
Obligations. The Borrowers shall not and shall not permit any of
the Borrowers' Subsidiaries to amend, modify or otherwise change
any of the terms or provisions in any of (a) their respective
Organizational Documents as in effect on the Effective Date, except
(i) with respect to which written notice shall have been provided
to the Collateral Agent no less than ten (10) days prior to the
effective date of any such amendment, modification or change and
(ii) if no Event of Default or Potential Event of Default would
result therefrom or (b) Contractual Obligations evidencing any debt
Securities or other material Contractual Obligations.
10.15. Bank Accounts. No Borrower shall or permit any of its
Subsidiaries to establish or maintain any Deposit Account into
which collections of Receivables and proceeds of other Collateral
are deposited other than (a) those identified as existing on the
Effective Date and disclosed on Schedule 10.15 attached hereto or
(b) which are established after the Effective Date in the United
States by the Borrowers and their Subsidiaries which are in amounts
aggregating no more than $5,000,000 at any given time are on
deposit, without the prior written consent of the Collateral Agent
and which (other than with respect to the accounts referenced in
clause (b) above), if collections of Receivables or proceeds of
Collateral are deposited therein, are subject to Collection Account
Agreements or other arrangements (including, without limitation,
pledge agreements) satisfactory to the Collateral Agent.
10.16. Fiscal Year; Fiscal Quarters; Fiscal Months. The Borrowers
shall not and shall not permit any of the Borrowers' Subsidiaries
(other than Banner Aerospace, Inc. in the event it becomes a
Subsidiary, Fairchild Europe - Simmonds S.A.R.L., Simmonds S.A.,
and AS&C GmbH) to change its Fiscal Year for accounting or tax
purposes from a period consisting of the 12-month period ending on
June 30 of each calendar year or to change the ending dates for any
Fiscal Quarter or Fiscal Month.
10.17. Transactions with the Technologies Companies.
Notwithstanding anything to the contrary contained in this Article
X, prior to consummation of the Spin-Off, the Technologies
Companies may, directly or indirectly, (a) incur Indebtedness from
or receive the benefit of Investments made by the Borrowers or any
Subsidiary of the Borrowers after the Effective Date and (b)
receive the benefit of Accommodation Obligations incurred by the
Borrowers or any Subsidiary of the Borrowers after the Effective
Date, in an amount (in the aggregate at any time outstanding,
exclusive of fees and interest with respect thereto) not exceeding
$30,000,000.
ARTICLE XI
FINANCIAL COVENANTS
Each of Borrowers covenants and agrees that so long as any
Revolving Credit Commitments are outstanding and thereafter until
payment in full of all of the Obligations (other than indemnities
not yet due):
11.01. Interest Coverage Ratio. TFC and its Subsidiaries on a
consolidated basis (as described in Section 1.03) shall have, as of
the end of each Fiscal Quarter ending in March, 1998, June, 1998
and September, 1998, on a cumulative basis for the period
commencing on December 29, 1997 an Interest Coverage Ratio of no
less than 2.0 to 1.0 and as of the end of each Fiscal Quarter
ending thereafter for the four (4) Fiscal Quarters then ending, an
Interest Coverage Ratio of no less than that set forth below
opposite such period:
Four Fiscal
Quarters EndingRatio
December, 19982.05 to 1.0
March, 19992.10 to 1.0
June, 19992.40 to 1.0
September, 19992.40 to 1.0
December, 19992.45 to 1.0
March, 20002.55 to 1.0
June, 20002.75 to 1.0
September, 20002.75 to 1.0
December, 20002.80 to 1.0
March, 20012.90 to 1.0
June, 20013.00 to 1.0
September, 20013.00 to 1.0
December, 20013.05 to 1.0
March, 20023.15 to 1.0
June, 20023.25 to 1.0
September, 20023.25 to 1.0
December, 20023.30 to 1.0
March, 20033.60 to 1.0
June, 20034.00 to 1.0
September, 20034.00 to 1.0
December, 20034.00 to 1.0
March, 20044.00 to 1.0
11.02. Capital Expenditures. TFC and its Subsidiaries on a
consolidated basis (as described in Section 1.03) shall not make
Capital Expenditures in (a) either of the Fiscal Years ending June
30, 1998 or June 30, 1999 in excess of $35,000,000 or (b) in any
Fiscal Year ending thereafter, commencing with the Fiscal Year
ending June 30, 2000 in excess of $25,000,000; provided, however,
(i) the foregoing amount may be increased by up to $10,000,000 in
any Fiscal Year upon the prior written notice from the Borrowers to
the Collateral Agent and the Lenders of the Borrowers' election to
re-allocate a portion of the $75,000,000 permitted to be made as
Investments under Section 10.04(m) to Capital Expenditures and (ii)
in the event TFC and its Subsidiaries have not made Capital
Expenditures in the amount permitted herein for any Fiscal Year,
Capital Expenditures in an amount equal to that portion of the
maximum amount of such Capital Expenditures permitted but not made
in such Fiscal Year (but not to exceed $5,000,000) may be made in
the immediately next succeeding Fiscal Year in addition to any
amounts permitted above for such succeeding Fiscal Year; provided
that (a) amounts carried forward from one Fiscal Year to a
succeeding Fiscal Year may only be expended or accrued for Capital
Expenditures after the maximum amount permissible for such
succeeding Fiscal Year have been expended or accrued and (b) to the
extent amounts carried forward from one Fiscal Year to the next
succeeding Fiscal Year are not expended or accrued in such
succeeding Fiscal Year, such surplus may not be carried forward to
any other succeeding year.
11.03. Minimum Net Worth. TFC shall shall maintain a Net Worth of
no less than the respective amount set forth below opposite the
respective Fiscal Month end set forth below, in each instance, as
determined as of the end of the Fiscal Month ending on such
respective date based on the balance sheet of TFC for such Fiscal
Month:
Fiscal Month EndingMinimum Net Worth
March, 1998$ 85,000,000
June, 1998$ 93,000,000
September, 1998 $ 93,000,000
December, 1998$ 97,000,000
March, 1999$104,000,000
June, 1999$115,000,000
September, 1999 $115,000,000
December, 1999$120,000,000
March, 2000$127,000,000
June, 2000$140,000,000
September, 2000$140,000,000
December, 2000$145,000,000
March, 2001$153,000,000
June, 2001$165,000,000
September, 2001 $165,000,000
December, 2001$170,000,000
March 2002$180,000,000
June, 2002$200,000,000
September, 2002 $200,000,000
December, 2002$205,000,000
March, 2003$215,000,000
June, 2003$240,000,000
September, 2003$240,000,000
December, 2003$250,000,000
March, 2004$265,000,000
June, 2004$285,000,000
Each minimum Net Worth level set forth above shall be adjusted by
the Administrative Agents and Borrowers to reflect the effect of
(a) the sale of RHI's Investment in STFI Stock, (b) the Spin-Off,
(c) the disposition of Banner's hardware group, (d) the Offering,
financing provided under this Agreement, and payment of the
Refinanced Indebtedness, and (e) Investments of the Borrowers, or
any of them, in cash in Capital Stock of Banner, if any, which
adjustment(s) (i) shall be made at the time that such events are
reflected in TFC's Financial Statements delivered to the Collateral
Agent, (ii) shall be based solely on the effect of such events
under GAAP, and (iii) shall be advised to the Lenders in writing by
the Administrative Agents promptly upon their having been
determined. Until such advice is delivered to the Lenders, the
minimum net worth levels set forth above shall continue in effect.
11.04. Consolidated Indebtedness for Borrowed Money to EBITDA
Ratio. TFC and its Subsidiaries on a consolidated basis (as
described in Section 1.03) shall have, as of the end of each Fiscal
Quarter set forth below, a Consolidated Indebtedness for Borrowed
Money Ratio as of the end of such Fiscal Quarter to (b) EBITDA of
TFC for the four (4) Fiscal Quarters then ending of no more than
the ratio set forth opposite such Fiscal Quarter end set forth
below:
Fiscal Quarter EndingMaximum Ratio
March, 19987.00 to 1.0
June, 1998 6.00 to 1.0
September, 1998 6.00 to 1.0
December, 19985.75 to 1.0
March, 19995.60 to 1.0
June, 19995.25 to 1.0
September, 19995.25 to 1.0
December, 19995.15 to 1.0
March, 20005.00 to 1.0
June, 20004.75 to 1.0
September, 20004.75 to 1.0
December, 20004.70 to 1.0
March, 20014.65 to 1.0
June, 20014.50 to 1.0
September, 20014.50 to 1.0
December 20014.45 to 1.0
March, 20024.40 to 1.0
June, 20024.25 to 1.0
September, 20024.25 to 1.0
December, 20024.00 to 1.0
March, 20033.50 to 1.0
June, 20032.75 to 1.0
September, 20032.75 to 1.0
December, 20032.65 to 1.0
March, 20042.50 to 1.0
11.05. Minimum EBITDA. TFC shall maintain, as determined as of
the end of each Fiscal Quarter set forth below for the four (4)
Fiscal Quarters then ending, EBITDA of no less than the amount set
forth below opposite such Fiscal Quarter end set forth below:
Fiscal Quarter EndingMinimum EBITDA
March, 1998$35,000,000
June, 1998$42,000,000
September, 1998$42,000,000
December, 1998$44,000,000
March, 1999$47,000,000
June, 1999$51,000,000
September, 1999$51,000,000
December, 1999$53,000,000
March, 2000$55,000,000
June, 2000$58,000,000
September, 2000$58,000,000
December, 2000 $58,000,000
March, 2001$59,000,000
June, 2001$60,000,000
September, 2001$60,000,000
December, 2001$60,000,000
March 2002$60,000,000
June, 2002$61,000,000
September, 2002$61,000,000
December, 2002$61,000,000
March, 2003$61,000,000
June, 2003$62,000,000
September, 2003$62,000,000
December, 2003$62,000,000
March, 2004$63,000,000
11.06. Minimum Consolidated Fixed Charge Coverage Ratio. TFC
shall maintain, as determined as of the end of each Fiscal Quarter
set forth below for the four (4) Fiscal Quarters then ending, a
Consolidated Fixed Charge Coverage Ratio of no less than that set
forth below opposite such Fiscal Quarter end set forth below:
Fiscal Quarter EndingMinimum Ratio
December, 19981.00 to 1.0
March, 19991.00 to 1.0
June, 19991.25 to 1.0
September, 19991.25 to 1.0
December, 19991.30 to 1.0
March, 20001.35 to 1.0
June, 20001.50 to 1.0
September, 20001.50 to 1.0
December, 20001.50 to 1.0
March, 20011.55 to 1.0
June, 20011.60 to 1.0
September, 20011.60 to 1.0
December, 20011.60 to 1.0
March, 20021.65 to 1.0
June, 20021.70 to 1.0
September, 20021.70 to 1.0
December, 20021.75 to 1.0
March, 20031.85 to 1.0
June, 20032.00 to 1.0
September, 20032.00 to 1.0
December, 20032.25 to 1.0
March, 20042.50 to 1.0
For purposes of calculation of the Consolidated Fixed Charge
Coverage Ratio, "taxes" shall exclude taxes paid on the gain from
the sale of the Investment in STFI Stock and "scheduled principal
payments" shall exclude the amortization of the Term Loans.
11.07. EBITDA Calculations. For purposes of Sections 11.01, 11.04,
11.05, and 11.06, EBITDA will be determined giving effect to
acquisitions permitted by this Agreement or under the Second
Amended Credit Agreement for the applicable period as though such
acquisitions were consummated on the first day of such period.
ARTICLE XII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
12.01. Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a)Failure to Make Payments When Due. The Borrowers shall fail to
pay (i) when due any principal of any Loan or any Reimbursement
Obligation for which it is obligated hereunder or (ii) within one
(1) Business Day after the due date therefor, any other Obligation
for which it is obligated.
(b) Breach of Certain Covenants. Any Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or
obligation under Sections 9.01, 9.02, 9.03, 9.04, 9.06, 9.13 or
9.15, Article X or Article XI.
(c) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by any Borrower to the Collateral
Agent, any Lender or any Issuing Bank herein or by any Borrower or
any Subsidiary of the Borrowers in any of the other Loan Documents
or in any statement or certificate at any time given by any such
Person pursuant to any of the Loan Documents shall be false or
misleading in any material respect on the date as of which made (or
deemed made).
(d) Other Defaults. Any Borrower shall default in the performance
of or compliance with any term contained in this Agreement (other
than as identified in clauses (a), (b) or (c) of this Section
12.01) applicable thereto or any default or event of default shall
occur under any of the other Loan Documents, and such default or
event of default shall continue for fifteen (15) days after the
occurrence thereof.
(e) Default as to Other Indebtedness. Any Borrower or any
Subsidiary of the Borrowers shall fail to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) with respect to any other Indebtedness (other
than an Obligation) of such Borrower and its Subsidiaries
aggregating $2,000,000 or more; or any breach, default or event of
default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such
Indebtedness, if the effect thereof is to cause an acceleration,
mandatory redemption or other required repurchase of such
Indebtedness, or permit the holder(s) of such Indebtedness to
accelerate the maturity of any such Indebtedness or require a
redemption or other repurchase of such Indebtedness; or any such
Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or
otherwise repurchased by such Borrower or any of its Subsidiaries
(other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof. Notwithstanding the foregoing, no
breach of any obligation, default or event of default (payment or
otherwise), or acceleration of any obligation with respect to the
German Acquisition Loans shall constitute an Event of Default under
this Agreement.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An
involuntary case shall be commenced against any Borrower or any
Subsidiary of the Borrowers and the petition shall not be (A)
controverted within ten (10) days after the filing thereof and (B)
dismissed, stayed, bonded or discharged within sixty (60) days
after commencement of the case; or a court having jurisdiction in
the premises shall enter a decree or order for relief in respect of
any Borrower or any Subsidiary of the Borrowers in an involuntary
case, under any applicable bankruptcy, insolvency or other similar
law now or hereinafter in effect; or any other similar relief shall
be granted under any applicable federal, state, local or foreign
law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over any Borrower or Subsidiary of the Borrowers or over all
or a substantial part of the Property of any such Person shall be
entered; or an interim receiver, trustee or other custodian of any
Borrower or Subsidiary of the Borrowers or of all or a substantial
part of the Property of any such Person shall be appointed or a
warrant of attachment, execution or similar process against any
substantial part of the Property of any Borrower or Subsidiary of
the Borrower shall be issued and any such event shall not be
stayed, dismissed, bonded or discharged within thirty (30) days
after entry, appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Any
Borrower or Subsidiary of the Borrowers shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its
Property; or any such Person shall make any assignment for the
benefit of creditors or shall be unable or fail, or admit in
writing its inability, to pay its debts as such debts become due;
or the board of directors (or equivalent) of any such Person (or
any committee thereof) adopts any resolution or otherwise
authorizes any action to approve any of the foregoing.
(h) Dissolution. Any order, judgment or decree shall be entered
against any Borrower or Subsidiary of the Borrowers decreeing its
involuntary dissolution or split up and such order shall remain
undischarged and unstayed for a period in excess of sixty (60)
days; or any such Person shall otherwise dissolve, be dissolved, or
cease to exist except as specifically permitted by this Agreement.
(i)Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect
or any Borrower or Subsidiary of the Borrowers party thereto seeks
to repudiate its obligations thereunder or the Liens intended to be
created thereby are, or any Borrower or such Subsidiary seeks to
render such Liens, invalid or unperfected, or (ii) Liens in favor
of the Collateral Agent for the benefit of the Holders contemplated
by the Loan Documents shall, at any time, for any reason, be
invalidated or otherwise cease to be in full force and effect, or
such Liens shall be subordinated or shall not have the priority
contemplated by this Agreement or the Loan Documents.
(j)Judgments and Attachments. Any money judgment (other than a
money judgment covered by insurance as to which the insurance
company has acknowledged coverage), writ or warrant of attachment,
or similar process against any Borrower or Subsidiary of the
Borrowers or any of their respective assets involving in any case
an amount in excess of $2,000,000 is entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of
thirty (30) days or in any event later than five (5) days prior to
the date of any proposed sale thereunder; provided, however, if any
such judgment, writ or warrant of attachment or similar process is
in excess of $7,500,000, the entry thereof shall immediately
constitute an Event of Default hereunder.
(k) Termination Event. Any Termination Event occurs which could
reasonably be expected to subject the Borrowers or any ERISA
Affiliate to liability in excess of $2,000,000, for which adequate
reserves are not maintained.
(l) Waiver Application. The plan administrator of any Benefit
Plan applies under Section 412(d) of the Code for a waiver of the
minimum funding standards of Section 412(a) of the Internal Revenue
Code and the Collateral Agent believes that the substantial
business hardship upon which the application for the waiver is
based could subject the Borrowers or any ERISA Affiliate to
liability in excess of $2,000,000, for which adequate reserves are
not maintained.
(m)Change in Control. A Change of Control shall occur.
(n)Material Adverse Effect. An event shall occur which results in
a Material Adverse Effect.
(o) Refinanced Indebtedness. TFC shall fail to deposit from the
proceeds of the Offering and the Term Loans an amount sufficient to
repay in full the Refinanced Indebtedness issued under the TFC
Indentures or RHI shall fail to deposit from the proceeds of the
Term Loans an amount sufficient to repay in full the Refinanced
Indebtedness issued under the 11 7/8% Senior Subordinated Debenture
Indenture in a manner satisfactory to the Collateral Agent on or
before February 27, 1998.
An Event of Default shall be deemed "continuing" until cured or
waived in writing in accordance with Section 15.07.
12.02. Rights and Remedies.
(a)Acceleration and Termination. Upon the occurrence of any Event
of Default described in Sections 12.01(f) or 12.01(g), the Lenders'
respective obligations to make Loans under the Revolving Credit
Commitments shall automatically and immediately terminate and the
unpaid principal amount of, and any and all accrued interest on,
the Obligations and all accrued fees shall automatically become
immediately due and payable, without presentment, demand, or
protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment,
notice of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Borrowers; and upon the
occurrence and during the continuance of any other Event of
Default, the Collateral Agent shall at the request, or may with the
consent, of the Requisite Lenders, by written notice to the
Borrowers, (i) declare that the Lenders' respective obligations to
make Revolving Loans under the Revolving Credit Commitments are
terminated, whereupon such obligation of each such Lender to make
any Loan hereunder and of each such Lender or Issuing Bank to issue
or participate in any Letter of Credit not then issued shall
immediately terminate, and/or (ii) declare the unpaid principal
amount of and any and all accrued and unpaid interest on the
Obligations to be, and the same shall thereupon be, immediately due
and payable, without presentment, demand, or protest or other
requirements of any kind (including, without limitation, valuation
and appraisement, diligence, presentment, notice of intent to
demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrowers.
(b) Deposit for Letters of Credit. In addition, after the
occurrence and during the continuance of an Event of Default, the
Borrowers shall, promptly upon demand by the Collateral Agent,
deliver to the Collateral Agent, Cash Collateral in such form as
requested by the Collateral Agent for deposit in the Cash
Collateral Account, together with such endorsements, and execution
and delivery of such documents and instruments, as the Collateral
Agent may request in order to perfect or protect the Collateral
Agent's Lien with respect thereto, in an aggregate principal amount
equal to the then outstanding Letter of Credit Obligations.
(c) Rescission. If at any time after termination of the Lenders'
obligations to make Revolving Loans under the Revolving Credit
Commitments and/or acceleration of the maturity of the Loans, the
Borrowers shall pay all arrears of interest and all payments on
account of principal of the Loans and Reimbursement Obligations
which shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than
nonpayment of principal of and accrued interest on the Loans due
and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to Section 15.07, then upon the written consent of
the Requisite Lenders and written notice to the Borrowers, the
termination of the Lenders' respective obligations to make
Revolving Loans under the Revolving Credit Commitments and the
respective Lenders' and Issuing Banks' obligations to participate
in or issue Letters of Credit and/or the aforesaid acceleration and
its consequences may be rescinded and annulled; but such action
shall not affect any subsequent Event of Default or Potential Event
of Default or impair any right or remedy consequent thereon. The
provisions of the preceding sentence are intended merely to bind
the Lenders and the Issuing Banks to a decision which may be made
at the election of the Requisite Lenders; they are not intended to
benefit any Borrower and do not give any Borrower the right to
require the Lenders to rescind or annul any termination of the
aforesaid obligations of the Lenders or Issuing Banks or any
acceleration hereunder, even if the conditions set forth herein are
met.
(d) Enforcement. The Borrowers acknowledge that in the event any
Borrower or any Subsidiary of a Borrower fails to perform, observe
or discharge any of their respective obligations or liabilities
under this Agreement or any other Loan Document, any remedy of law
may prove to be inadequate relief to the Collateral Agent, the
Issuing Banks and the Lenders; therefore, the Borrowers agree that
the Collateral Agent, the Issuing Banks and the Lenders shall be
entitled to temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages.
ARTICLE XIII
THE ADMINISTRATIVE AGENTS AND COLLATERAL AGENT
13.01. Appointment. (a) Each Lender and each Issuing Bank hereby
designates and appoints (i) Citicorp and NationsBank as the
Administrative Agents of such Lender or such Issuing Bank under
this Agreement and (ii) Citicorp as the Collateral Agent of such
Lender or such Issuing Bank under this Agreement; and each Lender
and each Issuing Bank hereby irrevocably authorizes the Collateral
Agent to take such action on its behalf under the provisions of
this Agreement and the Loan Documents and to exercise such powers
as are set forth herein or therein together with such other powers
as are reasonably incidental thereto. The Collateral Agent hereby
agrees to act in the aforesaid capacities on the express conditions
contained in this Article XIII.
(b) The provisions of this Article XIII are solely for the benefit
of the Administrative Agents, the Collateral Agent, the Lenders and
Issuing Banks, and no Borrower or Subsidiary of the Borrowers shall
have any rights to rely on or enforce any of the provisions hereof
(other than as expressly set forth in Section 13.07). In per-
forming its functions and duties under this Agreement, the
Collateral Agent shall act solely as Collateral Agent of the
Lenders and the Issuing Banks and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency,
trustee or fiduciary with or for the Borrowers or any Affiliate of
the Borrowers. The Collateral Agent may perform any of its
respective duties hereunder, or under the other Loan Documents, by
or through its agents or employees.
13.02. Nature of Duties. The Administrative Agents shall not have
any duties or responsibilities other than those expressly set forth
in this Agreement or in the Loan Documents. The Collateral Agent
shall not have any duties or responsibilities other than those
expressly set forth in this Agreement or in the Loan Documents.
The duties of the Collateral Agent shall be mechanical and
administrative in nature. Neither shall either Administrative
Agent or the Collateral Agent have, by reason of this Agreement,
any fiduciary relationship in respect of any Holder. Nothing in
this Agreement or any of the Loan Documents, expressed or implied,
is intended to or shall be construed to impose upon the
Administrative Agents or the Collateral Agent any obligations in
respect of this Agreement or any of the other Loan Documents other
than as expressly set forth herein or therein. Each Lender and
each Issuing Bank shall make its own independent investigation of
the financial condition and affairs of the Borrowers and their
Affiliates in connection with the making and the continuance of the
Loans hereunder and with the issuance of the Letters of Credit and
shall make its own appraisal of the creditworthiness of the
Borrowers and Guarantors initially and on a continuing basis, and
no Administrative Agent or Collateral Agent shall have any duty or
responsibility, either initially or on a continuing basis, to
provide any Holder with any credit or other information with
respect thereto (except for reports required to be delivered by the
Collateral Agent under the terms of this Agreement). If the
Collateral Agent seeks the consent or approval of the Lenders to
the taking or refraining from taking of any action hereunder, the
Collateral Agent shall send notice thereof to each Lender. The
Collateral Agent shall promptly notify each Lender at any time that
the Lenders so required hereunder have instructed the Collateral
Agent to act or refrain from acting pursuant hereto. As to any
matters not expressly provided for by this Agreement (including,
without limitation, enforcement or collection of the Notes or any
amount payable under any provision of Article IV or Article V when
due) or the other Loan Documents, the Collateral Agent shall not be
required to exercise any discretion or take any action.
Notwithstanding the foregoing, the Collateral Agent shall be
required to act or refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the
instructions of the Requisite Lenders (unless the instructions or
consent of all of the Lenders is required hereunder or thereunder)
and such instructions shall be binding upon all Lenders, Issuing
Banks and Holders; provided, however, the Collateral Agent shall
not be required to take any action which (i) the Collateral Agent
reasonably believes will expose it to personal liability unless the
Collateral Agent receives an indemnification satisfactory to it
from the Lenders with respect to such action or (ii) is contrary to
this Agreement, the other Loan Documents or applicable law.
13.03. Rights, Exculpation, Etc. (a) Liabilities;
Responsibilities. None of the Administrative Agents, the
Collateral Agent, any Affiliate of an Administrative Agent or the
Collateral Agent, or any of their respective officers, directors,
employees or agents shall be liable to any Holder for any action
taken or omitted by them hereunder or under any of the Loan
Documents, or in connection therewith, except that no Person shall
be relieved of any liability imposed by law for gross negligence or
willful misconduct. The Collateral Agent shall not be liable for
any apportionment or distribution of payments made by it in good
faith pursuant to Section 4.02(b), and, if any such apportionment
or distribution is subsequently determined to have been made in
error, the sole recourse of any Holder to whom payment was due, but
not made, shall be to recover from other Holders any payment in
excess of the amount to which they are determined to have been
entitled. Neither the Administrative Agents nor the Collateral
Agent shall be responsible to any Holder for any recitals,
statements, representations or warranties herein or for the
execution, effectiveness, genuineness, validity, legality, enforce-
ability, collectibility, or sufficiency of this Agreement or any of
the other Loan Documents or the transactions contemplated thereby,
or for the financial condition of the Borrowers or any of their
Affiliates or the Guarantors. The Collateral Agent shall not be
required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this
Agreement or any of the other Loan Documents, or the financial
condition of the Borrowers or any of their Affiliates or the
Guarantors, or the existence or possible existence of any Potential
Event of Default or Event of Default.
(b) Right to Request Instructions. The Collateral Agent may at
any time request instructions from the Lenders with respect to any
actions or approvals which by the terms of any of the Loan
Documents the Collateral Agent is permitted or required to take or
to grant, and shall be absolutely entitled to refrain from taking
any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action
or withholding any approval under any of the Loan Documents until
it shall have received such instructions from those Lenders from
whom the Collateral Agent is required to obtain such instructions
for the pertinent matter in accordance with the Loan Documents.
Without limiting the generality of the foregoing, no Holder shall
have any right of action whatsoever against the Collateral Agent as
a result of the its acting or refraining from acting under the Loan
Documents in accordance with the instructions of the Requisite
Lenders or, where required by the express terms of this Agreement,
a greater proportion of the Lenders.
13.04. Reliance. The Collateral Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or other
documents or any telephone message believed by it in good faith to
be genuine and correct and to have been signed, sent or made by the
proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or
thereunder, upon advice of legal counsel (including counsel for the
Borrowers), independent public accountants and other experts
selected by it.
13.05. Indemnification. To the extent that the Collateral Agent
is required to be reimbursed and indemnified by the Borrowers but
is not reimbursed and indemnified by the Borrowers, the Lenders
will reimburse and indemnify the Collateral Agent for and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or
asserted against it in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Collateral
Agent under the Loan Documents, in proportion to each Lender's Pro
Rata Share. The obligations of the Lenders under this Section
13.05 shall survive the payment in full of the Loans, the
Reimbursement Obligations and all other Obligations and the
termination of this Agreement.
13.06. Citicorp Individually. With respect to its Pro Rata Share
of the Revolving Credit Commitments hereunder, and the Loans made
by it, Citicorp shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar
terms shall, unless the context clearly otherwise indicates,
include Citicorp in its individual capacity as a Lender or one of
the Requisite Lenders. Citicorp and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with the Borrowers or any of their
Affiliates as if it were not acting as the Collateral Agent
pursuant hereto.
13.07. Successor Collateral Agents. (a) Resignation. The
Collateral Agent may resign from the performance of all its
functions and duties hereunder at any time by giving at least
thirty (30) Business Days' prior written notice to the Borrowers
and the Lenders. Such resignation shall take effect upon the
acceptance by a successor Collateral Agent of appointment pursuant
to this Section 13.07.
(b)Appointment by Requisite Lenders. Upon any such notice of
resignation, an Administrative Agent shall have the right to be
appointed as a successor Collateral Agent and, if such
Administrative Agent declines such right to appointment, the
Requisite Lenders shall have the right to appoint a successor
Collateral Agent selected from among the Lenders which appointment
shall be subject to the prior written approval of the Borrowers
(which may not be unreasonably withheld, and shall not be required
upon the occurrence and during the continuance of an Event of
Default).
(c) Appointment by Retiring Collateral Agent. If a successor
Collateral Agent shall not have been appointed within the thirty
(30) Business Day period provided in clause (a) of this
Section 13.07, the retiring Collateral Agent, with the consent of
the Borrowers (which may not be unreasonably withheld, and shall
not be required upon the occurrence and during the continuance of
an Event of Default), shall then appoint a successor Collateral
Agent who shall serve as such until such time, if any, as the
Requisite Lenders appoint a successor Collateral Agent as provided
above.
(d) Rights of the Successor and Retiring Collateral Agents. Upon
the acceptance of any appointment as Collateral Agent hereunder by
a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Collateral
Agent's resignation hereunder as Collateral Agent, the provisions
of this Article XIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Collateral
Agent under this Agreement.
13.08. Relations Among Lenders. Each Lender and each Issuing Bank
agrees (except as provided in Section 15.05) that it will not take
any legal action, nor institute any actions or proceedings, against
the Borrowers or any other obligor hereunder or under the other
Loan Documents with respect to any Collateral, without the prior
written consent of the Requisite Lenders. Without limiting the
generality of the foregoing, no Lender may accelerate or otherwise
enforce its portion of the Obligations, or unilaterally terminate
its Revolving Loan Commitment except in accordance with
Section 12.02(a).
13.09. Concerning the Collateral and the Loan Documents. (a)
Protective Advances. The Collateral Agent may from time to time,
before or after the occurrence of an Event of Default, make such
disbursements and advances pursuant to the Loan Documents which the
Collateral Agent, in its sole discretion, deems necessary or
desirable to preserve or protect the Collateral or any portion
thereof or to enhance the likelihood or maximize the amount of
repayment of the Loans and other Obligations ("Protective
Advances"). The Collateral Agent shall promptly notify the
Borrowers and each Lender in writing of each such Protective
Advance, which notice shall include a description of the purpose of
such Protective Advance. The Borrowers jointly and severally agree
to pay the Collateral Agent, upon demand, the principal amount of
all outstanding Protective Advances, together with interest thereon
at the rate from time to time applicable to Base Rate Loans from
the date of such Protective Advance until the outstanding principal
balance thereof is paid in full. If the Borrowers fail to make
payment in respect of any Protective Advance within one (1)
Business Day after the date the Borrowers receive written demand
therefor from the Collateral Agent, the Collateral Agent shall
promptly notify each Lender and each Lender agrees that it shall
thereupon make available to the Collateral Agent, in Dollars in
immediately available funds, the amount equal to such Lender's Pro
Rata Share of such Protective Advance. If such funds are not made
available to the Collateral Agent by such Lender within one (1)
Business Day after the Collateral Agent's demand therefor, the
Collateral Agent will be entitled to recover any such amount from
such Lender together with interest thereon at the Federal Funds
Rate for the first day after the date of such demand and at the
interest rate applicable to Base Rate Loans for each day during the
period commencing on the second day after the date of such demand
and ending on the date such amount is received. The failure of any
Lender to make available to the Collateral Agent its Pro Rata Share
of any such Protective Advance shall neither relieve any other
Lender of its obligation hereunder to make available to the
Collateral Agent such other Lender's Pro Rata Share of such
Protective Advance on the date such payment is to be made nor
increase the obligation of any other Lender to make such payment to
the Collateral Agent. All outstanding principal of, and interest
on, Protective Advances shall constitute Obligations secured by the
Collateral until paid in full by the Borrowers.
(b) Authority. Each Lender and each Issuing Bank authorizes and
directs the Collateral Agent to enter into the Loan Documents
relating to the Collateral for the benefit of the Lenders and the
Issuing Banks. Each Lender and each Issuing Bank agrees that any
action taken by the Collateral Agent or the Requisite Lenders (or,
where required by the express terms of this Agreement, a greater
proportion of the Lenders) in accordance with the provisions of
this Agreement or the other Loan Documents, and the exercise by the
Collateral Agent or the Requisite Lenders (or, where so required,
such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all of the Lenders
and Issuing Banks. Without limiting the generality of the
foregoing, the Collateral Agent shall have the sole and exclusive
right and authority to (i) act as the disbursing and collecting
agent for the Lenders and the Issuing Banks with respect to all
payments and collections of the Obligations of the Borrowers
arising in connection with this Agreement and the Loan Documents or
relating to the Collateral; (ii) execute and deliver each Loan
Document relating to the Collateral and accept delivery of each
such agreement delivered by the Borrowers, any Subsidiary of the
Borrowers, or any Guarantor a party thereto; (iii) act as
collateral agent for the Lenders and the Issuing Banks for purposes
of the perfection of all security interests and Liens created by
such agreements and all other purposes stated therein; provided,
however, the Collateral Agent hereby appoints, authorizes and
directs the Lenders and the Issuing Banks to act as collateral sub-
agent for the Collateral Agent, the Lenders and the Issuing Banks
for purposes of the perfection of all security interests and Liens
with respect to the Property at any time in the possession of such
Lender or such Issuing Bank, including, without limitation, Deposit
Accounts maintained with, and cash and Cash Equivalents held by,
such Lender or such Issuing Bank; (iv) manage, supervise and
otherwise deal with the Collateral; (v) take such action as is
necessary or desirable to maintain the perfection and priority of
the security interests and liens created or purported to be created
by the Loan Documents; and (vi) except as may be otherwise
specifically restricted by the terms of this Agreement or any other
Loan Document, exercise all remedies given to the Administrative
Agents, the Collateral Agent, the Lenders or the Issuing Banks with
respect to the Collateral under the Loan Documents relating
thereto, applicable law or otherwise.
(c)Release of Collateral. (i) Each Lender and each Issuing Bank
hereby directs, in accordance with the terms of this Agreement, the
Collateral Agent to release any Lien held by it for the benefit of
the Holders:
(A)against all of the Collateral, upon final and
indefeasible payment in full of the Obligations and
termination of this Agreement;
(B)against any part of the Collateral sold or disposed
of by a Borrower or any of its Subsidiaries, if such sale
or disposition is permitted by Section 10.02 or is
otherwise consented to by the Requisite Lenders, as
certified to the Collateral Agent by the Borrowers in an
Officer's Certificate and any mandatory prepayments
required with respect to the proceeds of such sale or
disposition are made; and/or
(C) against any part of the Collateral consisting of a promissory
note, upon final and indefeasible payment in full of the
Indebtedness evidenced thereby.
(ii) Each Lender and each Issuing Bank hereby directs the
Collateral Agent to execute and deliver or file such termination
and partial release statements and do such other things as are
necessary to release Liens to be released pursuant to this
Section 13.09(c) promptly upon the effectiveness of any such
release; provided that the Collateral Agent shall have received the
proceeds of the Collateral subject to such Liens to which the
Lenders and Issuing Banks are entitled under the terms of this
Agreement and the other Loan Documents.
ARTICLE XIV
YIELD PROTECTION
14.01. Taxes. (a) Payment of Taxes. Any and all payments by the
Borrowers hereunder or under any Note or other document evidencing
any Obligations shall be made, in accordance with Section 4.02,
free and clear of and without reduction for any and all present or
future taxes, levies, imposts, deductions, charges, withholdings,
and all stamp or documentary taxes, excise taxes, ad valorem taxes
and other taxes imposed on the value of the Property, charges or
levies which arise from the execution, delivery or registration, or
from payment or performance under, or otherwise with respect to,
any of the Loan Documents or the Revolving Credit Commitments and
all other liabilities with respect thereto excluding, in the case
of each Lender, each Issuing Bank and the Collateral Agent, taxes
imposed on or measured by net income or overall gross receipts and
capital and franchise taxes imposed on it by (i) the United States,
(ii) the Governmental Authority of the jurisdiction in which such
Lender's Applicable Lending Office is located or any political
subdivision thereof or (iii) the Governmental Authority in which
such Person is organized, managed and controlled or any political
subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges and withholdings being hereinafter referred to
as "Taxes"). If any Borrower shall be required by law to withhold
or deduct any Taxes from or in respect of any sum payable hereunder
or under any such Note or document to any Lender, any Issuing Bank
or the Collateral Agent, (x) the sum payable to such Lender,
Issuing Bank, or the Collateral Agent shall be increased as may be
necessary so that after making all required withholding or
deductions (including withholding or deductions applicable to
additional sums payable under this Section 14.01) such Lender, such
Issuing Bank or the Collateral Agent (as the case may be) receives
an amount equal to the sum it would have received had no such
withholding or deductions been made, (y) such Borrower shall make
such withholding or deductions, and (z) such Borrower shall pay the
full amount withheld or deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) Indemnification. The Borrowers will indemnify each Lender,
each Issuing Bank, each Administrative Agent, and the Collateral
Agent against, and reimburse each on demand for, the full amount of
all Taxes (including, without limitation, any Taxes imposed by any
Governmental Authority on amounts payable under this Section 14.01
and any additional income or franchise taxes resulting therefrom)
incurred or paid by such Lender, such Issuing Bank, such
Administrative Agent or the Collateral Agent (as the case may be)
or any of their respective Affiliates and any liability (including
penalties, interest, and out-of-pocket expenses paid to third
parties) arising therefrom or with respect thereto, whether or not
such Taxes were lawfully payable. A certificate as to any
additional amount payable to any Person under this Section 14.01
submitted by it to the Borrowers shall, absent manifest error, be
final, conclusive and binding upon all parties hereto. Each Lender
and each Issuing Bank agrees, within a reasonable time after
receiving a written request from the Borrowers, to provide the
Borrowers and the Collateral Agent with such certificates as are
reasonably required, and take such other actions as are reasonably
necessary to claim such exemptions as such Lender or such Issuing
Bank may be entitled to claim in respect of all or a portion of any
Taxes which are otherwise required to be paid or deducted or
withheld pursuant to this Section 14.01 in respect of any payments
under this Agreement or under the Notes.
(c) Receipts. Within thirty (30) days after the date of any
payment of Taxes by any Borrower, it will furnish to the Collateral
Agent, at its address referred to in Section 15.08, the original or
a certified copy of a receipt evidencing payment thereof.
(d) Foreign Bank Certifications. (i) Each Lender that is not
created or organized under the laws of the United States or a
political subdivision thereof shall deliver to the Borrowers and
the Collateral Agent on the Effective Date or the date on which
such Lender becomes a Lender pursuant to Section 15.01 hereof a
true and accurate certificate executed in duplicate by a duly
authorized officer of such Lender to the effect that such Lender is
eligible to receive payments hereunder and under the Notes without
deduction or withholding of United States federal income tax
(I) under the provisions of an applicable tax treaty concluded by
the United States (in which case the certificate shall be accom-
panied by two duly completed copies of IRS Form 1001 (or any
successor or substitute form or forms)), (II) under
Sections 1442(c)(1) and 1442(a) of the Internal Revenue Code (in
which case the certificate shall be accompanied by two duly
completed copies of IRS Form 4224 (or any successor or substitute
form or forms)), or (III) due to such Lender's not being a "bank"
as such term is used in Section 881(c)(3)(A) of the Internal
Revenue Code (in which case, the certificate shall be accompanied
by two accurate and complete original signed copies of IRS Form W-8
(or any successor or substitute form or forms)).
(ii) Each Lender further agrees to deliver to the Borrowers and
the Collateral Agent from time to time, a true and accurate
certificate executed in duplicate by a duly authorized officer of
such Lender before or promptly upon the occurrence of any event
requiring a change in the most recent certificate previously deliv-
ered by it to the Borrowers and the Collateral Agent pursuant to
this Section 14.01(d). Each certificate required to be delivered
pursuant to this Section 14.01(d)(ii) shall certify as to one of
the following:
(A)that such Lender can continue to receive payments
hereunder and under the Notes without deduction or
withholding of United States federal income tax;
(B)that such Lender cannot continue to receive payments
hereunder and under the Notes without deduction or
withholding of United States federal income tax as
specified therein but does not require additional
payments pursuant to Section 14.01(a) because it is
entitled to recover the full amount of any such deduction
or withholding from a source other than the Borrowers; or
(C)that such Lender is no longer capable of receiving
payments hereunder and under the Notes without deduction
or withholding of United States federal income tax as
specified therein and that it is not capable of recov-
ering the full amount of the same from a source other
than the Borrowers.
Each Lender agrees to deliver to the Borrowers and the Collateral
Agent further duly completed copies of the above-mentioned IRS
forms on or before the earlier of (x) the date that any such form
expires or becomes obsolete or otherwise is required to be
resubmitted as a condition to obtaining an exemption from
withholding from United States federal income tax and (y) fifteen
(15) days after the occurrence of any event requiring a change in
the most recent form previously delivered by such Lender to the
Borrowers and Collateral Agent, unless any change in treaty, law,
regulation, or official interpretation thereof which would render
such form inapplicable or which would prevent the Lender from duly
completing and delivering such form has occurred prior to the date
on which any such delivery would otherwise be required and the
Lender promptly advises the Borrowers that it is not capable of
receiving payments hereunder and under the Notes without any
deduction or withholding of United States federal income tax.
14.02. Increased Capital. If after the date hereof any Lender or
Issuing Bank determines that (i) the adoption or implementation of
or any change in or in the interpretation or administration of any
law or regulation or any guideline or request from any central bank
or other Governmental Authority or quasi-governmental authority
exercising jurisdiction, power or control over any Lender, Issuing
Bank or banks or financial institutions generally (whether or not
having the force of law), compliance with which affects or would
affect the amount of capital required or expected to be maintained
by such Lender or Issuing Bank or any Person controlling such
Lender or Issuing Bank and (ii) the amount of such capital is
increased by or based upon (A) the making or maintenance by any
Lender of its Loans, any Lender's participation in or obligation to
participate in the Loans, Letters of Credit or other advances made
hereunder or the existence of any Lender's obligation to make Loans
or (B) the issuance or maintenance by any Issuing Bank of, or the
existence of any Issuing Bank's obligation to issue, Letters of
Credit, then, in any such case, upon written demand by such Lender
or Issuing Bank (with a copy of such demand to the Collateral
Agent), the Borrowers shall immediately pay to the Collateral Agent
for the account of such Lender or Issuing Bank, from time to time
as specified by such Lender or Issuing Bank, additional amounts
sufficient to compensate such Lender or Issuing Bank or such Person
therefor. Such demand shall be accompanied by a statement as to
the amount of such compensation and include a brief summary of the
basis for such demand. Such statement shall be conclusive and
binding for all purposes, absent manifest error.
14.03. Changes; Legal Restrictions. If after the date hereof any
Lender or Issuing Bank determines that the adoption or
implementation of or any change in or in the interpretation or
administration of any law or regulation or any guideline or request
from any central bank or other Governmental Authority or quasi-
governmental authority exercising jurisdiction, power or control
over any Lender, Issuing Bank or over banks or financial
institutions generally (whether or not having the force of law),
compliance with which:
(a) does or will subject a Lender or an Issuing Bank (or
its Applicable Lending Office or Eurodollar Affiliate) to
charges (other than taxes) of any kind which such Lender
or Issuing Bank reasonably determines to be applicable to
the Revolving Credit Commitments of the Lenders and/or
the Issuing Banks to make Eurodollar Rate Loans or issue
and/or participate in Letters of Credit or change the
basis of taxation of payments to that Lender or Issuing
Bank of principal, fees, interest, or any other amount
payable hereunder with respect to Eurodollar Rate Loans
or Letters of Credit; or
(b) does or will impose, modify, or hold applicable, in
the determination of a Lender or an Issuing Bank, any
reserve (other than reserves taken into account in
calculating the Eurodollar Rate), special deposit,
compulsory loan, FDIC insurance or similar requirement
against assets held by, or deposits or other liabilities
(including those pertaining to Letters of Credit) in or
for the account of, advances or loans by, commitments
made, or other credit extended by, or any other
acquisition of funds by, a Lender or an Issuing Bank or
any Applicable Lending Office or Eurodollar Affiliate of
that Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to
that Lender or Issuing Bank of making, renewing or maintaining the
Loans or its Revolving Credit Commitment with respect to, or
issuing or participating in, the Letters of Credit or to reduce any
amount receivable thereunder; then, in any such case, upon written
demand by such Lender or Issuing Bank (with a copy of such demand
to the Collateral Agent), the Borrowers shall immediately pay to
the Collateral Agent for the account of such Lender or Issuing
Bank, from time to time as specified by such Lender or Issuing
Bank, such amount or amounts as may be necessary to compensate such
Lender or Issuing Bank or its Eurodollar Affiliate for any such
additional cost incurred or reduced amount received. Such demand
shall be accompanied by a statement as to the amount of such
compensation and include a brief summary of the basis for such
demand. Such statement shall be conclusive and binding for all
purposes, absent manifest error.
14.04. Illegality. (i) If at any time any Lender determines
(which determination shall, absent manifest error, be final and
conclusive and binding upon all parties) that the making or
continuation of or conversion into any Eurodollar Rate Loan has
become unlawful or impermissible by compliance by that Lender with
any law, governmental rule, regulation or order of any Governmental
Authority (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful or would result
in costs or penalties), then, and in any such event, such Lender
may give notice of that determination, in writing, to the Borrowers
and the Collateral Agent, and the Collateral Agent shall promptly
transmit the notice to each other Lender.
(ii) When notice is given by a Lender under Section 14.04(i),
(A) the Borrowers' right to request from such Lender and such
Lender's obligation, if any, to make Eurodollar Rate Loans shall be
immediately suspended, and such Lender shall make a Base Rate Loan
as part of any requested Borrowing of Eurodollar Rate Loans and (B)
if the affected Eurodollar Rate Loan or Loans are then outstanding,
the Borrowers shall immediately, or if permitted by applicable law,
no later than the date permitted thereby, upon at least one (1)
Business Day's prior written notice to the Collateral Agent and the
affected Lender, convert each such Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under Section
14.04(i) such Lender determines that it may lawfully make
Eurodollar Rate Loans, such Lender shall promptly give notice of
that determination, in writing, to the Borrowers and the Collateral
Agent, and the Collateral Agent shall promptly transmit the notice
to each other Lender. The Borrowers' right to request, and such
Lender's obligation, if any, to make Eurodollar Rate Loans shall
thereupon be restored.
14.05. Compensation. In addition to all amounts required to be
paid by the Borrowers pursuant to Section 5.01, the Borrowers shall
compensate each Lender, upon demand, for all losses, expenses and
liabilities (including, without limitation, any loss or expense
incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such Lender to fund or maintain such
Lender's Eurodollar Rate Loans to the Borrowers but excluding any
loss of Applicable Eurodollar Rate Margin on the relevant Loans)
which that Lender may sustain (i) if for any reason a Borrowing,
conversion into or continuation of Eurodollar Rate Loans does not
occur on a date specified therefor in a Notice of Borrowing or a
Notice of Conversion/Continuation given by the Borrowers or in a
telephonic request by them for borrowing or conversion/continuation
or a successive Eurodollar Interest Period does not commence after
notice therefor is given pursuant to Section 5.01(c), including,
without limitation, pursuant to Section 5.02(e), (ii) if for any
reason any Eurodollar Rate Loan is prepaid (including, without
limitation, mandatorily pursuant to Section 4.01) on a date which
is not the last day of the applicable Eurodollar Interest Period,
(iii) as a consequence of a required conversion of a Eurodollar
Rate Loan to a Base Rate Loan as a result of any of the events
indicated in Section 5.02(e), or (iv) as a consequence of any
failure by the Borrowers to repay Eurodollar Rate Loans made to it
when required by the terms of this Agreement. The Lender making
demand for such compensation shall deliver to the Borrowers
concurrently with such demand a written statement in reasonable
detail as to such losses, expenses and liabilities, and this
statement shall be conclusive as to the amount of compensation due
to that Lender, absent manifest error.
14.06. Limitation on Additional Amounts Payable by the Borrowers.
Notwithstanding the provisions of Section 14.01(a), the Borrowers
shall not be required to pay any additional amounts hereunder to a
Lender or Issuing Bank if (a) the obligation to pay such additional
amounts would not have arisen but for a failure by the Lender or
Issuing Bank to comply with the requirements described in Section
14.01 or (b) the Lender or Issuing Bank shall not have furnished
the Borrowers with such forms or shall not have taken such other
action as reasonably may be available to it under applicable tax
laws and any applicable tax treaty to obtain an exemption from, or
reduction (to the lowest applicable rate) of withholding of such
United States federal income tax; provided, however, the Borrowers'
obligation to pay such additional amounts shall be reinstated upon
receipt of such forms or evidence that action with respect to
obtaining such exemption or reduction has been taken.
14.07. Change in Lending Office. Any Lender claiming any
additional amounts payable pursuant to Section 14.01 shall use
reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to change the Domestic Lending Office
designated by it for purposes of this Agreement to a Domestic
Lending Office in another jurisdiction, if the making of such a
change would avoid the need for, or reduce the amount of, any such
additional amounts which may thereafter accrue and would not, in
the judgment of such Lender, be otherwise disadvantageous to such
Lender.
14.08. Judgment Currency. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due under
this agreement or any Note in any currency (the "first currency")
into another currency (the "second currency"), the parties hereto
agree, to the fullest extent permitted by law, that the Exchange
Rate used shall be that determined on the Business Day preceding
that on which final judgment is given. To the fullest extent
permitted by applicable law, the Obligation in respect of any sum
due in a first currency shall, notwithstanding any judgment in a
second currency, be discharged only to the extent that on the
Business Day following receipt by any of the Collateral Agent, any
Lender or any Issuing Bank of any sum adjudged to be so due in the
second currency, such Person may purchase the first currency with
the second currency at the Exchange Rate determined on the date of
such purchase; if the amount of the first currency so purchased is
less than the sum originally due to such Person in the first
currency, the Borrowers agree, as a separate obligation and
notwithstanding any such judgment, to indemnify such Person against
such loss, and if the amount of the first currency so purchases
exceeds the sum originally due to such Person in the first
currency, such Person agrees to remit to the Borrowers such excess.
ARTICLE XV
MISCELLANEOUS
15.01. Assignments and Participations. (a) Assignments. No
assignments or participations of any Lender's rights or obligations
under this Agreement shall be made except in accordance with this
Section 15.01. Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this
Agreement (including all of its rights and obligations with respect
to the Loans and the Letters of Credit) in accordance with the
provisions of this Section 15.01.
(b)Limitations on Assignments. Each assignment shall be subject to
the following conditions: (i) each such assignment may be of any
of the following: (A) all of a Lender's outstanding Term Loan, (B)
all of a Lender's Revolving Credit Commitment (together with its
Revolving Loans and participations in outstanding Letters of
Credit), and (C) in the event the outstanding balance of the
assigning Lender's Term Loan is greater than $5,000,000 or the
amount of the assigning Lender's Revolving Credit Commitment is
greater than $5,000,000 and such Lender desires to assign a portion
of either its Term Loan or Revolving Credit Commitment, such
assignment shall be in a minimum principal amount of $5,000,000,
(ii) each such assignment shall be of a constant, and not a
varying, ratable percentage of all of the assigning Lender's rights
and obligations under this Agreement which are subject to such
assignment, (iii) each such assignment shall be to an Eligible
Assignee consented to by the Issuing Banks, which consent shall not
be unreasonably withheld or delayed, (iv) the Borrowers shall have
the right to approve each such Eligible Assignee which is not
another Lender or an Affiliate of a Lender, which approval shall
not be unreasonably withheld or delayed and (v) the parties to each
such assignment shall execute and deliver to the Collateral Agent,
for its acceptance and recording in the Register, an Assignment and
Acceptance. Upon such execution, delivery, acceptance and
recording in the Register, from and after the effective date
specified in each Assignment and Acceptance and agreed to by the
Collateral Agent, (A) the assignee thereunder shall, in addition to
any rights and obligations hereunder held by it immediately prior
to such effective date, if any, have the rights and obligations
hereunder that have been assigned to it pursuant to such Assignment
and Acceptance and shall, to the fullest extent permitted by law,
have the same rights and benefits hereunder as if it were an
original Lender hereunder, (B) the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or
the remaining portion of such assigning Lender's rights and obliga-
tions under this Agreement, the assigning Lender shall cease to be
a party hereto), and (C) the Borrowers shall execute and deliver to
the assignee thereunder one or more Notes, as applicable,
evidencing its obligations to such assignee with respect to the
Loans.
(c) The Register. The Collateral Agent shall maintain at its
address referred to in Section 15.08 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register (the
"Register") for the recordation of the names and addresses of the
Lenders and their respective Revolving Credit Commitments, and the
principal amount of the Loans owing to, each Lender from time to
time and whether such Lender is an original Lender or the assignee
of another Lender pursuant to an Assignment and Acceptance. The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrowers and each of
their Subsidiaries, the Collateral Agent, and the Lenders may treat
each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d)Fee. Upon its receipt of an Assignment and Acceptance executed
by the assigning Lender and an Eligible Assignee and a processing
and recordation fee of $3,000 (payable by the assigning Lender or
the assignee, as shall be agreed between them), the Collateral
Agent shall, if such Assignment and Acceptance has been completed
and is in compliance with this Agreement and in substantially the
form of Exhibit B, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii)
give prompt notice thereof to the Borrowers and the other Lenders.
(e)Participations. Each Lender may sell participations to one or
more other financial institutions in or to all or a portion of its
rights and obligations under and in respect of any and all
facilities under this Agreement (including, without limitation, all
or a portion of any or all of its Revolving Credit Commitment
hereunder and the Loans owing to it and its undivided interest in
the Letters of Credit); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation,
its Revolving Credit Commitments hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the
Borrowers, the Collateral Agent, and the other Lenders shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and
(iv) such participant's rights to agree or to restrict such
Lender's ability to agree to the modification, waiver or release of
any of the terms of the Loan Documents or to the release of any
Collateral covered by the Loan Documents, to consent to any action
or failure to act by any party to any of the Loan Documents or any
of their respective Affiliates, or to exercise or refrain from
exercising any powers or rights which any Lender may have under or
in respect of the Loan Documents or any Collateral, shall be
limited to the right to consent to (A) increase in the Commitment
of the Lender from whom such participant purchased a participation,
(B) reduction of the principal of, or rate or amount of interest on
the Loans(s) subject to such participation (other than by the
payment or prepayment thereof), (C) postponement of any date fixed
for any payment of principal of, or interest on, the Loan(s)
subject to such participation and (D) release of any Guarantor or
all or a substantial portion of the Collateral except as provided
in Section 13.09(c).
(f)Payment to Participants. Anything in this Agreement to the
contrary notwithstanding, in the case of any participation, all
amounts payable by the Borrowers under the Loan Documents shall be
calculated and made in the manner and to the parties required
hereby as if no such participation had been sold; provided,
however, that each participant shall be the beneficiary of the
provisions of Article XIV to the extent amounts payable thereunder
do not exceed the amounts payable thereunder to the Lender from
which such participation has been purchased.
(g) Lenders' Creation of Security Interests. Notwithstanding any
other provision set forth in this Agreement, any Lender may at any
time create a security interest in all or any portion of its rights
under this Agreement (including, without limitation, Obligations
owing to it and any Notes held by it) in favor of any Federal
Reserve bank in accordance with Regulation A of the Federal Reserve
Board.
(h) Assignments by Citicorp. If Citicorp ceases to be a Lender
under this Agreement by virtue of any assignment made pursuant to
this Section 15.01, then, as of the effective date of such
cessation, Citibank's obligations to issue Letters of Credit
pursuant to Section 3.01 shall terminate and Citibank shall be an
Issuing Bank hereunder only with respect to outstanding Letters of
Credit issued prior to such date.
(i) Information Regarding the Borrowers. Any Lender may, in
connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 15.01,
disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers or their
Subsidiaries furnished to such Lender by the Collateral Agent or by
or on behalf of the Borrowers; provided that, prior to any such
disclosure, such assignee or participant, or proposed assignee or
participant, shall agree to preserve in accordance with Section
15.20 the confidentiality of any confidential information described
therein.
15.02. Expenses. (a) Generally. The Borrowers jointly and
severally agree upon demand to pay, or reimburse the Collateral
Agent for, all of the Administrative Agents' and Collateral Agent's
reasonable internal and external audit, legal, appraisal,
valuation, filing, document duplication and reproduction and
investigation expenses and for all other out-of-pocket costs and
expenses of every type and nature (including, without limitation,
the reasonable fees, expenses and disbursements of Sidley & Austin,
local legal counsel, auditors, accountants, appraisers, printers,
insurance and environmental advisers, and other consultants and
agents) incurred by the Collateral Agent in connection with (i) the
Collateral Agent's review and investigation of the Borrowers and
their Affiliates and the Collateral in connection with the
preparation, negotiation, and execution of the Loan Documents and
the Collateral Agent's periodic reviews and audits of the Borrowers
and Guarantors; (ii) the preparation, negotiation, execution and
interpretation of this Agreement (including, without limitation,
the satisfaction or attempted satisfaction of any of the conditions
set forth in Article VI) and the other Loan Documents and the
making of the Loans hereunder; (iii) the creation, perfection or
protection of the Liens under the Loan Documents (including, with-
out limitation, any reasonable fees and expenses for local counsel
in various jurisdictions); (iv) the ongoing administration of this
Agreement, the other Loan Documents, and the Loans, including,
without limitation, consultation with attorneys in connection
therewith and with respect to the Collateral Agent's rights and
responsibilities under this Agreement and the other Loan Documents;
(v) the protection, collection or enforcement of any of the
Obligations or the enforcement of any of the Loan Documents;
(vi) the commencement, defense or intervention in any court
proceeding relating in any way to the Obligations, the Property,
the Borrowers, any of their Subsidiaries, this Agreement or any of
the other Loan Documents; (vii) the response to, and preparation
for, any subpoena or request for document production with which the
Collateral Agent is served or deposition or other proceeding in
which the Collateral Agent is called to testify, in each case,
relating in any way to the Obligations, the Property, the
Borrowers, any of their Subsidiaries, this Agreement or any of the
other Loan Documents; and (viii) any amendments, consents, waivers,
assignments, restatements, or supplements to any of the Loan
Documents and the preparation, negotiation, and execution of the
same.
(b) After Default. The Borrowers jointly and severally further
agree to pay or reimburse the Collateral Agent, the Issuing Banks
and the Lenders upon demand for all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees
(including allocated costs of internal counsel and costs of
settlement) incurred by any of them after the occurrence of an
Event of Default (i) in enforcing any Loan Document or Obligation
or any security therefor or exercising or enforcing any other right
or remedy available by reason of such Event of Default; (ii) in
connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing
a petition, complaint, answer, motion or other pleadings in any
legal proceeding relating to the Obligations, the Property, the
Borrowers or any of their Subsidiaries and related to or arising
out of the transactions contemplated hereby or by any of the other
Loan Documents; and (iv) in taking any other action in or with
respect to any suit or proceeding (bankruptcy or otherwise)
described in clauses (i) through (iii) above.
15.03. Indemnity. The Borrowers further jointly and severally
agree (a) to defend, protect, indemnify, and hold harmless the
Collateral Agent, each of the Administrative Agents, and each and
all of the Lenders and Issuing Banks and each of their respective
officers, directors, employees, attorneys and agents (including,
without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set
forth in Article VI) (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses (other than
loss of profits), damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (excluding any taxes and including, without limitation,
the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a
party thereto), imposed on, incurred by, or asserted against such
Indemnitees in any manner relating to or arising out of (i) this
Agreement or the other Loan Documents or any act, event or
transaction related or attendant thereto, the making of the Loans
and the issuance of and participation in Letters of Credit
hereunder, the management of such Loans or Letters of Credit, the
use or intended use of the proceeds of the Loans or Letters of
Credit hereunder, or any of the other transactions contemplated by
any of the Loan Documents, or (ii) any Liabilities and Costs
relating to any violation by any Borrower, its Subsidiaries, or the
Guarantors, or their respective predecessors-in-interest of any
Environmental, Health or Safety Requirements of Law, the past,
present or future operations of any Borrower, its Subsidiaries, any
Guarantor, or any of their respective predecessors in interest, or,
the past, present or future environmental, health or safety
condition of any respective past, present or future Property of any
Borrower, any of its Subsidiaries, or any Guarantor, the presence
of asbestos-containing materials at any respective past, present or
future Property of any Borrower, any of its Subsidiaries, or any
Guarantor, or the Release or threatened Release of any Contaminant
into the environment by any Borrower, its Subsidiaries, any
Guarantor, or their respective predecessors-in-interest, or the
Release or threatened Release of any Contaminant into the
environment from or at any facility to which any Borrower, any of
its Subsidiaries, or any Guarantor, or their respective
predecessors-in-interest sent or directly arranged the transport of
any Contaminant (collectively, the "Indemnified Matters");
provided, however, the Borrowers shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Matters caused by
or resulting from the willful misconduct or gross negligence of
such Indemnitee, as determined by a court of competent jurisdiction
and (b) not to assert any claim against any of the Indemnified
Parties on any theory of liability for special, indirect,
consequential or punitive damages arising out of, or in any way in
connection with, the Revolving Credit Commitments, the Obligations
or any other matters governed by this Agreement and/or the other
Loan Documents. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy,
the Borrowers shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the
Indemnitees. The Collateral Agent, Administrative Agents, Lenders
and the Issuing Banks agree to notify the Borrowers of the
institution or assertion of any Indemnified Matter, but the parties
hereto hereby agree that the failure to so notify the Borrowers
shall not release any Borrower from its obligations hereunder.
15.04. Change in Accounting Principles. If any change in the
accounting principles used in the preparation of the most recent
Financial Statements referred to in Section 8.01 are hereafter
required or permitted by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the
Borrowers with the agreement of their independent certified public
accountants and such changes result in a change in the method or
result of calculation of any of the covenants, standards or terms
found in Article IX, Article X, and Article XI, the parties hereto
agree to enter into negotiations in order to amend such provisions
so as to equitably reflect such changes with the desired result
that the criteria for evaluating compliance with such covenants,
standards and terms by the Borrowers and their Subsidiaries shall
be the same after such changes as if such changes had not been
made; provided, however, no change in such accounting principles
that would affect the method of calculation of any of the
covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner
satisfactory to the Requisite Lenders and the Borrowers, to so
reflect such change in accounting principles.
15.05. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable
law, upon the occurrence and during the continuance of any Event of
Default, each Lender, each Issuing Bank and any Affiliate of any
Lender or Issuing Bank is hereby authorized by the Borrowers at any
time or from time to time, without notice to any Person (any such
notice being hereby expressly waived) to set off and to appropriate
and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured (but not including trust
accounts)) and any other Indebtedness at any time held or owing by
such Lender, Issuing Bank or any of their Affiliates to or for the
credit or the account of the Borrowers against and on account of
the Obligations of the Borrowers to such Lender, Issuing Bank or
any of their Affiliates, including, but not limited to, all Loans
and Letters of Credit and all claims of any nature or description
arising out of or in connection with this Agreement, irrespective
of whether or not (i) such Lender or Issuing Bank shall have made
any demand hereunder or (ii) the Collateral Agent, at the request
or with the consent of the Requisite Lenders, shall have declared
the principal of and interest on the Loans and other amounts due
hereunder to be due and payable as permitted by Article XII and
even though such Obligations may be contingent or unmatured. Each
Lender and each Issuing Bank agrees that it shall not, without the
express consent of the Requisite Lenders, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of the
Requisite Lenders, exercise its setoff rights hereunder against any
accounts of any Borrower, any of its Subsidiaries, or a Guarantor
now or hereafter maintained with such Lender, Issuing Bank or any
Affiliate of such Lender or Issuing Bank.
15.06. Ratable Sharing. The Lenders agree among themselves that
(i) with respect to all amounts received by them which are
applicable to the payment of the Obligations (excluding the fees
described in Section 5.03 and Article XIV), equitable adjustment
will be made so that, in effect, all such amounts will be shared
among them ratably in accordance with their Pro Rata Shares,
whether received by voluntary payment, by the exercise of the right
of setoff or banker's lien, by counterclaim or cross-action or by
the enforcement of any or all of the Obligations (excluding the
fees described in Section 5.03 and Article XIV) or the Collateral,
(ii) if any of them shall by voluntary payment or by the exercise
of any right of counterclaim, setoff, banker's lien or otherwise,
receive payment of a proportion of the aggregate amount of the
Obligations held by it, which is greater than the amount which such
Lender is entitled to receive hereunder, the Lender receiving such
excess payment shall purchase, without recourse or warranty, an
undivided interest and participation (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in such
Obligations owed to the others so that all such recoveries with
respect to such Obligations shall be applied ratably in accordance
with their Pro Rata Shares; provided, however, that if all or part
of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases shall be rescinded
and the purchase prices paid for such participations shall be
returned to such party to the extent necessary to adjust for such
recovery, but without interest except to the extent the purchasing
party is required to pay interest in connection with such recovery.
The Borrowers agree that any Lender so purchasing a participation
from another Lender pursuant to this Section 15.06 may, to the
fullest extent permitted by law, exercise all its rights of payment
(including, subject to Section 15.05, the right of setoff) with
respect to such participation as fully as if such Lender were the
direct creditor of the Borrowers in the amount of such
participation.
15.07. Amendments and Waivers. (a) General Provisions. Unless
otherwise provided for or required in this Agreement, no amendment
or modification of any provision of this Agreement or any of the
other Loan Documents shall be effective without the written
agreement of the Requisite Lenders (which the Requisite Lenders
shall have the right to grant or withhold in their sole discretion)
and the Borrowers. No termination or waiver of any provision of
this Agreement or any of the other Loan Documents, or consent to
any departure by any Borrower therefrom, shall be effective without
the written concurrence of the Requisite Lenders, which the
Requisite Lenders shall have the right to grant or withhold in
their sole discretion. All amendments, modifications, waivers and
consents not specifically reserved to Lenders, Issuing Banks, and
the Collateral Agent in Section 15.07(b), Section 15.07(c) and in
other provisions of this Agreement shall require only the approval
of the Requisite Lenders. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which it was given. No notice to or demand on any Borrower in any
case shall entitle any Borrower to any other or further notice or
demand in similar or other circumstances.
(b) Amendments, Consents and Waivers by Super- Majority Lenders.
Any amendment, modification, termination, waiver or consent with
respect to any of the provisions of Section 4.01(b) of this
Agreement shall be effective only by a written agreement signed by
the Super-Majority Lenders.
(c) Amendments, Consents and Waivers by All Lenders. Any
amendment, modification, termination, waiver or consent with
respect to any of the following provisions of this Agreement shall
be effective only by a written agreement, signed by each Lender:
(i) increase in the amount of any of the Revolving Credit
Commitments,
(ii) form of payment required with respect to or reduction of the
principal of, rate or amount of interest on the Loans, the
Reimbursement Obligations, or any fees or other amounts payable to
the Lenders or Issuing Banks (other than by the payment or prepay-
ment thereof),
(iii) postponement of the Revolving Credit Termination Date, the
Term Loan Termination Date, or any date fixed for any payment of
principal of, or interest on, the Loans, the Reimbursement
Obligations or any fees or other amounts payable to the Lenders or
the Issuing Banks, except to the extent provided for in clause (b)
above,
(iv) the orders of priority of applications set forth in Section
4.01,
(v) change in the definitions of the Revolving Credit Commitments,
Term Loan Commitments, Term Loans, Requisite Lenders or Super-
Majority Lenders;
(vi) waiver of any of the conditions specified in Sections 6.01 or
6.02 or the covenant set forth in Section 9.15,
(vii) release of any Guarantor or all or a substantial portion of
the Collateral (except as provided in Section 13.09(c)),
(viii) change in the aggregate Pro Rata Share of the Lenders which
shall be required for the Lenders or any of them to take action
under this Agreement or the other Loan Documents,
(ix) amendment of Section 15.01 or this Section 15.07,
(x) assignment of any right or interest in or under this Agreement
or any of the other Loan Documents by any Borrower, and
(xi) waiver of any Event of Default described in Sections
12.01(a), (f), (g), (h), and (n).
(d) Collateral Agent Authority. The Collateral Agent may, but
shall have no obligation to, with the written concurrence of any
Lender, execute amendments, modifications, waivers or consents on
behalf of that Lender. Notwithstanding anything to the contrary
contained in this Section 15.07, no amendment, modification, waiver
or consent shall affect the rights or duties of the Collateral
Agent under this Agreement or the other Loan Documents, unless made
in writing and signed by the Collateral Agent in addition to the
Lenders required above to take such action; and the order of
priority set forth in clauses (i) and (ii) of Section 4.02(b) may
be changed only with the prior written consent of the Collateral
Agent. Notwithstanding anything herein to the contrary, in the
event that the Borrowers shall have requested, in writing, that any
Lender agree to an amendment, modification, waiver or consent with
respect to any particular provision or provisions of this Agreement
or the other Loan Documents, and such Lender shall have failed to
state, in writing, that it either agrees or disagrees (in full or
in part) with all such requests (in the case of its statement of
agreement, subject to satisfactory documentation and such other
conditions it may specify) within thirty (30) days after such
request, then such Lender shall be deemed to not have approved such
amendment, modification, waiver or consent and the Collateral Agent
shall thereupon determine whether the Lenders required above to
take the requested action have approved the same within the
required time and communicate such determination to the Borrowers
and the Lenders.
15.08. Notices. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to
be given shall be in writing and may be personally served, sent by
facsimile transmission or courier service or United States
certified mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a
facsimile transmission, or four (4) Business Days after deposit in
the United States mail with postage prepaid and properly addressed.
Notices to the Collateral Agent pursuant to Articles II, IV or XIII
shall not be effective until received by the Collateral Agent. For
the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this
Section 15.08) shall be as set forth below each party's name on the
signature pages hereof or the signature page of any applicable
Assignment and Acceptance, or, as to each party, at such other
address as may be designated by such party in a written notice to
all of the other parties to this Agreement.
15.09. Survival of Warranties and Agreements. All representations
and warranties made herein and all covenants and other obligations
of the Borrowers in respect of taxes, indemnification and expense
reimbursement shall survive the execution and delivery of this
Agreement and the other Loan Documents, the making and repayment of
the Loans, the issuance and discharge of Letters of Credit
hereunder and the termination of this Agreement and shall not be
limited in any way by the passage of time or occurrence of any
event and shall expressly cover time periods when the Collateral
Agent, any of the Issuing Banks or any of the Lenders may have come
into possession or control of any of any Borrower's or its
Subsidiaries' Property.
15.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of the Collateral Agent, any Lender or
any Issuing Bank in the exercise of any power, right or privilege
under any of the Loan Documents shall impair such power, right or
privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All
rights and remedies existing under the Loan Documents are
cumulative to and not exclusive of any rights or remedies otherwise
available.
15.11. Marshalling; Payments Set Aside. None of the Collateral
Agent, any Lender or any Issuing Bank shall be under any obligation
to marshall any assets in favor of any Borrower or any other Person
or against or in payment of any or all of the Obligations. To the
extent that any Borrower makes a payment or payments to the
Collateral Agent, the Lenders or the Issuing Banks or any of such
Persons receives payment from the proceeds of the Collateral or
exercises its rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
receiver or any other party, then to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied,
and all Liens, right and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
15.12. Severability. In case any provision in or obligation under
this Agreement or the other Loan Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
15.13. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute
a part of this Agreement or be given any substantive effect.
15.14. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
15.15. Limitation of Liability. No claim may be made by any
Borrower, any Lender, any Issuing Bank, either Administrative
Agent, the Collateral Agent, or any other Person against the
Collateral Agent, an Administrative Agent, any other Issuing Bank
or any other Lender or the Affiliates, directors, officers,
employees, attorneys or agents of any of them for any special,
consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of
or related to the transactions contemplated by this Agreement, or
any act, omission or event occurring in connection therewith; and
each Borrower, each Lender, each Issuing Bank, each Administrative
Agent and the Collateral Agent hereby waives, releases and agrees
not to sue upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its
favor.
15.16. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and permitted assigns of the
Lenders and the Issuing Banks. The rights hereunder of the
Borrowers, or any interest therein, may not be assigned without the
written consent of all Lenders.
15.17. Certain Consents and Waivers of the Borrowers.
(a) Personal Jurisdiction. (i) EACH OF THE ADMINISTRATIVE AGENTS,
THE COLLATERAL AGENT, THE LENDERS, THE ISSUING BANKS, AND THE
BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY
COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH
COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW,
IN SUCH FEDERAL COURT. EACH BORROWER IRREVOCABLY DESIGNATES AND
APPOINTS TFC, 110 EAST 59TH STREET, 30TH FLOOR, NEW YORK, NEW YORK
10022, AS ITS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. EACH OF THE ADMINISTRATIVE AGENTS, THE COLLATERAL
AGENT, THE LENDERS, THE ISSUING BANKS, AND THE BORROWERS AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH BORROWER
WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) EACH BORROWER AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE
RIGHT TO PROCEED AGAINST IT OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE THE ADMINISTRATIVE AGENTS, THE COLLATERAL AGENT,
THE ISSUING BANKS, THE LENDERS AND OTHER HOLDERS TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF AN
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, ANY ISSUING BANK, ANY
LENDER OR OTHER HOLDER. EACH BORROWER AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY AN
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, ANY LENDER, ANY ISSUING
BANK OR OTHER HOLDER TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AN ADMINISTRATIVE AGENT, THE COLLATERAL
AGENT, ANY LENDER, ANY ISSUING BANK OR ANY OTHER HOLDER. EACH
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH AN ADMINISTRATIVE AGENT, THE COLLATERAL AGENT,
ANY ISSUING BANK, LENDER OR OTHER HOLDER MAY COMMENCE A PROCEEDING
DESCRIBED IN THIS SECTION.
(b) Service of Process. EACH BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR THE
BORROWERS' NOTICE ADDRESS SPECIFIED BELOW, SUCH SERVICE TO BECOME
EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH BORROWER
IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH
ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE AGENTS,
COLLATERAL AGENT, LENDERS, ISSUING BANKS, AND BORROWERS IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. ANY OF THE BORROWERS,
ADMINISTRATIVE AGENTS, COLLATERAL AGENT, LENDERS, OR ISSUING BANKS
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
15.18. Counterparts; Effectiveness; Inconsistencies. This
Agreement and any amendments, waivers, consents, or supplements
hereto may be executed in counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument. This Agreement shall become effective against each
Borrower, each Lender, each Issuing Bank, the Administrative Agents
and the Collateral Agent on the Effective Date, whereupon the terms
and provisions of the Second Amended Agreement shall be and hereby
are amended, superseded and restated in their entirety by the terms
and provisions of this Agreement. This Agreement shall not
constitute a novation. This Agreement and each of the other Loan
Documents shall be construed to the extent reasonable to be
consistent one with the other, but to the extent that the terms and
conditions of this Agreement are actually inconsistent with the
terms and conditions of any other Loan Document, this Agreement
shall govern.
15.19. Limitation on Agreements. All agreements between and among
the Borrowers, the Administrative Agents, the Collateral Agent,
each Lender and each Issuing Bank in the Loan Documents are hereby
expressly limited so that in no event shall any of the Loans or
other amounts payable by the Borrowers under any of the Loan
Documents constitute "purpose credit" within the meaning of
Regulation U or G.
15.20. Confidentiality. Subject to Section 15.01(f), the Lenders
and the Issuing Banks shall hold all nonpublic information obtained
pursuant to the requirements of this Agreement and identified as
such by the Borrowers in accordance with such Lender's or such
Issuing Bank's customary procedures for handling confidential
information of this nature and in accordance with safe and sound
banking practices and in any event may make disclosure (a) to its
Affiliates or (b) as is reasonably required by a bona fide offeree,
transferee or participant in connection with a contemplated
assignment, transfer or participation permitted under Section 15.01
or (c) as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process or (d) to any
direct or indirect contractual counterparties in swap agreements or
such contractual counterparties' professional advisors, provided
that such offeree, transferee, participant, contractual
counterparty or professional advisor to such contractual
counterparty agrees, in writing, to keep such information
confidential to the same extent required of the Lenders hereunder.
In no event shall any Lender or any Issuing Bank be obligated or
required to return any materials furnished by the Borrowers;
provided, however, each offeree shall be required to agree that if
it does not become a transferee or participant it shall return all
materials furnished to it by the Borrowers in connection with this
Agreement. Any and all confidentiality agreements entered into
between any Lender or any Issuing Bank and the Borrowers shall
survive the execution of this Agreement.
15.21. Obligations of Borrowers Joint and Several. Each of the
Borrowers agrees that it shall be jointly and severally liable for
all of the Obligations. Each of the Borrowers is accepting joint
and several liability hereunder in consideration of the financial
accommodations to be provided by the Lenders and Issuing Banks
under this Agreement, for the mutual benefit, directly and
indirectly, of each of the Borrowers and in consideration of the
undertakings of each of the Borrowers to accept joint and several
liability for the obligations of each of them. Each of the
Borrowers jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers
with respect to the payment and performance of all of the
Obligations, it being the intention of the parties hereto that all
the Obligations shall be the joint and several obligations of each
of the Borrowers without preferences or distinction among them. If
and to the extent that any of the Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or
to perform any of the Obligations in accordance with the terms
thereof, then in each such event, the other Borrowers will make
such payment with respect to, or perform, such Obligation. The
obligations of each Borrower under the provisions of this Section
15.21 constitute full recourse obligations of such Borrower,
enforceable against it to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability
of this Agreement or any other circumstances whatsoever. Except as
otherwise expressly provided herein, each Borrower hereby waives
notice of acceptance of its joint and several liability, notice of
any Loan made, or Letter of Credit issued, under this Agreement,
notice of occurrence of any Event of Default, or of any demand for
any payment under this Agreement, notice of any action at any time
taken or omitted by any Lender or Issuing Bank under or in respect
of any of the Obligations, any requirement of diligence and,
generally, all demands, notices and other formalities of every kind
in connection with this Agreement. Each Borrower hereby assents to,
and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or
acquiescence by any Lender or Issuing Bank at any time or times in
respect of any default by any Borrower in the performance or
satisfaction of any term, covenant, condition or provision of this
Agreement, any and all other indulgences whatsoever by any Lender
in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times,
of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower.
Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on
the part of any Lender, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy
or to comply fully with applicable laws, or regulations thereunder,
which might, but for the provisions of this Section 15.21, afford
grounds for terminating, discharging or relieving such Borrower, in
whole or in part, from any of its obligations under this Section
15.21, it being the intention of each Borrower that, so long as any
of the Obligations remain unsatisfied, the obligations of such
Borrower under this Section 15.21 shall not be discharged except by
performance and then only to the extent of such performance. The
Obligations of each Borrower under this Section 15.21 shall not be
diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Lender. The joint
and several liability of the Borrowers hereunder shall continue in
full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any Borrower or
any Lender or Issuing Bank. The provisions of this Section 15.21
are made for the benefit of the Holders and their respective
successors and assigns, and may be enforced by any such Person from
time to time against any of the Borrowers as often as occasion
therefor may arise and without requirement on the part of any
Holder first to marshal any of its claims or to exercise any of its
rights against any of the other Borrowers or to exhaust any
remedies available to it against any of the other Borrowers or to
resort to any other source or means of obtaining payment of any of
the Obligations or to elect any other remedy. The provisions of
this Section 15.21 shall remain in effect until all the Obligations
shall have been paid in full or otherwise fully satisfied. If at
any time, any payment, or any part thereof, made in respect of any
of the Obligations, is rescinded or must otherwise be restored or
returned by any Holder upon the insolvency, bankruptcy or
reorganization of any of the Borrowers, or otherwise, the
provisions of this Section 15.21 will forthwith be reinstated in
effect, as though such payment had not been made. Notwithstanding
any provision to the contrary contained herein or in any other of
the Loan Documents, to the extent the joint obligations of a
Borrower shall be adjudicated to be invalid or unenforceable for
any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances
or transfers) then the obligations of each Borrower hereunder shall
be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without
limitation, the federal Bankruptcy Code). The Borrowers hereby
agree, as among themselves, that if any Borrower shall become an
Excess Funding Borrower (as defined below), each other Borrower
shall, on demand of such Excess Funding Borrower (but subject to
the next sentence hereof and to clause (B) below), pay to such
Excess Funding Borrower an amount equal to such Borrower's Pro Rata
Share (as defined below and determined, for this purpose, without
reference to the properties, assets, liabilities and debts of such
Excess Funding Borrower) of such Excess Payment (as defined below).
The payment obligation of any Borrower to any Excess Funding
Borrower under this Section 15.21 shall be subordinate and subject
in right of payment to the prior payment in full of the Obligations
of such Borrower under the other provisions of this Agreement, and
such Excess Funding Borrower shall not exercise any right or remedy
with respect to such excess until payment and satisfaction in full
of all of such Obligations. For purposes hereof, (i) "Excess
Funding Borrower" shall mean, in respect of any Obligations arising
under the other provisions of this Agreement (hereafter, the "Joint
Obligations"), a Borrower that has paid an amount in excess of its
Pro Rata Share of the Joint Obligations; (ii) "Excess Payment"
shall mean, in respect of any Joint Obligations, the amount paid by
an Excess Funding Borrower in excess of its Pro Rata Share of such
Joint Obligations; and (iii) "Pro Rata Share", for the purposes of
this Section 15.21, shall mean, for any Borrower, the ratio
(expressed as a percentage) of (A) the amount by which the
aggregate present fair saleable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such
Borrower (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of such
Borrower hereunder) to (B) the amount by which the aggregate
present fair saleable value of all assets and other properties of
such Borrower and all of the other Borrowers exceeds the amount of
all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Borrower and the other Borrowers
hereunder) of such Borrower and all of the other Borrowers, all as
of the Effective Date.
15.22. Entire Agreement. This Agreement, taken together with all
of the other Loan Documents, embodies the entire agreement and
understanding among the parties hereto and supersedes all prior
agreements and understandings, written and oral, relating to the
subject matter hereof.
15.23. Advice of Counsel. Each Borrower and each Lender and
Issuing Bank understand that the Collateral Agent's counsel
represents only the Collateral Agent's and its Affiliates'
interests and that the Borrowers, other Lenders and other Issuing
Banks are advised to obtain their own counsel. Each Borrower
represents and warrants to the Collateral Agent and the other
Holders that it has discussed this Agreement with its counsel.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
BORROWERS:FAIRCHILD HOLDING CORP.
By: Colin M. Cohen
Vice President
RHI HOLDINGS, INC.
By: Colin M. Cohen
Vice President and
Chief Financial Officer
THE FAIRCHILD CORPORATION
By: Colin M. Cohen
Senior Vice President
Notice Address:
300 West Service Road
Chantilly, Virginia 20153
Attn: Colin M. Cohen
Telecopier No. (703) 478-5767 and
Donald E. Miller
Telecopier No. (703) 478-5775
with a copy to:
Cahill Gordon & Reindel
Eighty Pine Street
New York, New York 10005-1702
Attn: James J. Clark
Telecopier No. (212) 269-5420
ADMINISTRATIVE AGENTS:CITICORP USA, INC., as Administrative
Agent
By: Timothy L. Freeman
Attorney-in-Fact
NATIONSBANK, N.A., as Administrative
Agent
By: Michael R. Heredia
Senior Vice President
COLLATERAL AGENT:CITICORP USA, INC., as Collateral Agent
By: Timothy L. Freeman
Attorney-in-Fact
Notice Address:
Citicorp USA, Inc.
c/o Citicorp Securities, Inc.
399 Park Avenue
6th Floor, Zone 4
New York, New York 10043
Attn: Timothy L. Freeman
Telecopier No. (212) 793-1290
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: DeVerille A. Huston
Telecopier No. (312) 853-7036
<PAGE>
ISSUING BANK:CITIBANK, N.A.
By: Timothy L. Freeman
Attorney-in-Fact
Notice Address:
Citibank, N.A.
399 Park Avenue
10th Floor, Zone 3
New York, New York 10043
Attn: Melissa Motelson
Telecopier No. (212) 793-4806
<PAGE>
LENDER:CITICORP USA, INC.
By: Timothy L. Freeman
Attorney-in-Fact
Notice Address:
Citicorp USA, Inc.
c/o Citicorp Securities, Inc.
399 Park Avenue
6th Floor, Zone 4
New York, New York 10043
Attn: Timothy L. Freeman
Telecopier No. (212) 793-1290
Domestic Lending Office and Eurodollar
Lending Office or Eurodollar Affiliate:
Citicorp USA, Inc.
c/o Citibank, N.A.
399 Park Avenue
10th Floor, Zone 3
New York, New York 10043
Attn: Melissa Motelson
Telecopier No. (212) 793-4806
Pro Rata Share: 50%
Revolving Credit
Commitment: $37,500,000
Revolving Credit
Pro Rata Share: 50%
Term Loan Commitment: $112,500,000
Term Loan Pro Rata
Share: 50%
<PAGE>
LENDER AND
ISSUING BANK:NATIONSBANK, N.A.
By: Michael R. Heredia
Senior Vice President
Notice Address
and Domestic and Eurodollar
Lending Office:
NationsBank, N.A.
6610 Rockledge Drive
6th Floor
Bethesda, Maryland 20817-1876
Attn: Michael R. Heredia
Telecopier No. (301) 571-0719
Pro Rata Share: 50%
Revolving Credit
Commitment: $37,500,000
Revolving Credit
Pro Rata Share: 50%
Term Loan Commitment: $112,500,000
Term Loan Pro Rata
Share: 50%
<PAGE>
EXHIBITS
Exhibit A -- Statement of Sources and Uses
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Borrowing Base Certificate
Exhibit D -- Form of Collection Account Agreement
Exhibit E -- Forms of Notes
Exhibit F -- Form of Notice of Borrowing
Exhibit G -- Form of Notice of Conversion/Continuation
Exhibit H -- Pro Forma Balance Sheet
Exhibit I -- Projections
Exhibit J -- List of Closing Documents
Exhibit K -- Forms of Financial Reports
Exhibit L -- Form of Officer's Certificate to Accompany Reports
<PAGE>
SCHEDULES
Schedule 1.01.1 -- Fiscal Month End and Fiscal Quarter End Dates
Schedule 1.01.2 -- Subsidiary Guarantors as of the Effective Date
Schedule 1.01.3 --Operating Units
Schedule 1.01.4 --Permitted Dispositions
Schedule 1.01.5 --Permitted Equity Securities Options
Schedule 1.01.6 --Permitted Existing Accommodation
Obligations
Schedule 1.01.7 --Permitted Existing Indebtedness
Schedule 1.01.8 --Permitted Existing Investments
Schedule 1.01.9 -- Permitted Existing Liens
Schedule 1.01.10 --Spin-Off Businesses
Schedule 3.02 -- Existing Letters of Credit
Schedule 7.01-A -- Organizational Documents
Schedule 7.01-C -- Organizational Structure
Schedule 7.01-K -- Pending Actions
Schedule 7.01-R -- Environmental Matters
Schedule 7.01-U -- Labor Contracts
Schedule 7.01-X -- Patent, Trademark & Permit Claims Pending
Schedule 7.01-Z -- Insurance Policies
Schedule 8.04 --Form of Schedule of SpinCo Transfers
Schedule 10.15 -- Collection Accounts
