--------------------------------------------------------------------------------
LOAN AGREEMENT
by and among
GRIFFON CORPORATION,
THE LENDERS PARTY HERETO,
FLEET BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT
and
THE CHASE MANHATTAN BANK, AS DOCUMENTATION AGENT
Dated as of August 31, 1999
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Article 1 Definitions.............................................. 1
Article 2 Commitments; Loans....................................... 23
Section 2.1. Loans............................................... 23
Section 2.2. Notices Relating to Loans........................... 23
Section 2.3. Disbursement of Loan Proceeds....................... 24
Section 2.4. Notes............................................... 24
Section 2.5. Repayment of Principal of Loans..................... 25
Section 2.6. Interest............................................ 26
Section 2.7. Fees................................................ 27
Section 2.8. Voluntary Changes in Commitment; Prepayments After
Commitment Termination Date......................... 27
Section 2.9. Use of Proceeds of Loans; Existing Indebtedness..... 28
Section 2.10. Computations........................................ 29
Section 2.11. Minimum Amounts of Borrowings, Conversions,
Prepayments and Interest Periods.................... 29
Section 2.12. Time and Method of Payments......................... 29
Section 2.13. Lending Offices..................................... 30
Section 2.14. Failure to Fund..................................... 30
Section 2.15. Pro Rata Treatment Between Banks.................... 30
Section 2.16. Sharing of Payments, and Set-Off Among Banks........ 31
Section 2.17. Conversions of Loans................................ 31
Section 2.18. Additional Costs; Capital Requirements.............. 32
Section 2.19. Limitation on Types of Loans........................ 33
Section 2.20. Illegality.......................................... 34
Section 2.21. Certain Conversions pursuant to Sections 2.18 and
2.20................................................ 34
Section 2.22. Indemnity........................................... 35
Section 2.23. Security............................................ 36
Article 3 Representations and Warranties........................... 36
Section 3.1. Organization........................................ 37
Section 3.2. Power, Authority, Consents.......................... 37
Section 3.3. No Violation of Law or Agreements................... 38
Section 3.4. Due Execution, Validity, Enforceability............. 38
Section 3.5. Properties, Priority of Liens; Existing Guarantees.. 38
Section 3.6. Judgments, Actions, Proceedings..................... 39
Section 3.7. No Defaults, Compliance With Laws................... 39
Section 3.8. Burdensome Documents................................ 39
Section 3.9. Financial Statements................................ 39
Section 3.10. Tax Returns......................................... 40
Section 3.11. Intangible Assets................................... 40
Section 3.12. Regulation U........................................ 40
Section 3.13. Name Changes, Mergers, Acquisitions................. 41
Section 3.14. Full Disclosure..................................... 41
Section 3.15. Licenses and Approvals.............................. 41
Section 3.16. Labor Disputes; Collective Bargaining Agreements;
Employee Grievances................................. 41
Section 3.17. Condition of Assets................................. 42
Section 3.18. ERISA............................................... 42
Section 3.19. Year 2000 Issue..................................... 44
Article 4 Conditions to the Loans.................................. 45
Section 4.1. Conditions to Initial Loans......................... 45
Section 4.2. Conditions to Subsequent Loans...................... 46
Article 5 Delivery of Financial Reports, Documents and Other
Information.............................................. 46
Section 5.1. Annual Financial Statements......................... 47
Section 5.2. Quarterly Financial Statements...................... 47
Section 5.3. Projections......................................... 47
Section 5.4. Compliance Information.............................. 48
Section 5.5. No Default Certificate.............................. 48
Section 5.6. Certificate of Accountants.......................... 48
Section 5.7. Accountants, Reports................................ 48
Section 5.8. Copies of Documents................................. 48
Section 5.9. Certain Notices..................................... 49
Section 5.10. ERISA Notices and Requests.......................... 49
Section 5.11. Permitted Acquisition Deliveries.................... 50
Article 6 Affirmative Covenants.................................... 51
Section 6.1. Books and Records................................... 51
Section 6.2. Inspections and Audits.............................. 51
Section 6.3. Maintenance and Repairs............................. 51
Section 6.4. Continuance of Business............................. 51
Section 6.5. Copies of Corporate Documents....................... 52
Section 6.6. Perform Obligations................................. 52
Section 6.7. Notice of Litigation................................ 52
Section 6.8. Insurance........................................... 52
Section 6.9. Financial Covenants................................. 53
Section 6.10. Notice of Certain Events............................ 53
Section 6.11. Comply with ERISA................................... 54
Section 6.12. Environmental Compliance............................ 54
Section 6.13. Year 2000 Issue..................................... 54
Section 6.14. Projections......................................... 55
Article 7 Negative Covenants....................................... 55
Section 7.1. Indebtedness........................................ 55
Section 7.2. Liens............................................... 55
Section 7.3. Guaranties.......................................... 57
Section 7.4. Mergers, Acquisitions............................... 57
Section 7.5. Redemptions; Distributions.......................... 57
Section 7.6. Stock Issuance...................................... 58
Section 7.7. Changes in Business and Sales or Pledges of Assets.. 58
Section 7.8. Investments......................................... 58
Section 7.9. Fiscal Year......................................... 60
Section 7.10. ERISA Obligations................................... 60
Section 7.11. Reserved............................................ 60
Section 7.12. Transactions with Affiliates........................ 60
Section 7.13. Hazardous Material.................................. 61
Section 7.14. Regulation U........................................ 61
Section 7.15. Limitations on Restrictions on Upstreaming of Funds. 62
Section 7.16. Derivative Protection Arrangements.................. 62
Article 8 Events of Default........................................ 62
Section 8.1. Payments............................................ 62
Section 8.2. Certain Covenants................................... 62
Section 8.3. Other Covenants..................................... 63
Section 8.4. Other Defaults...................................... 63
Section 8.5. Representations and Warranties...................... 63
Section 8.6. Bankruptcy.......................................... 63
Section 8.7. Judgments........................................... 64
Section 8.8. ERISA............................................... 64
Section 8.9. Liens............................................... 65
Section 8.10. Change of Control................................... 65
Article 9 Miscellaneous Provisions................................. 65
Section 9.1. Fees and Expenses, Indemnity........................ 65
Section 9.2. Taxes............................................... 66
Section 9.3. Payments............................................ 67
Section 9.4. Survival of Agreements and Representations;
Construction........................................ 67
Section 9.5. Lien on and Set-off of Deposits..................... 68
Section 9.6. Modifications, Consents and Waivers; Entire
Agreement........................................... 68
Section 9.7. Remedies Cumulative................................. 69
Section 9.8. Further Assurances.................................. 69
Section 9.9. Notices............................................. 70
Section 9.10. Counterparts........................................ 71
Section 9.11. Severability........................................ 71
Section 9.12. Binding Effect; No Assignment or Delegation by
Borrower............................................ 72
Section 9.13. Assignments and Participations by Banks............. 72
Section 9.14. Relief From Bankruptcy Stay......................... 74
Section 9.15. Governing Law; Consent to Jurisdiction; Waiver of
Trial by Jury....................................... 75
Section 9.16. Prior Agreement..................................... 76
Section 9.17. Interest Adjustment................................. 76
Section 9.18. Lost Notes.......................................... 76
Article 10 The Administrative Agent................................. 77
Section 10.1. Appointment......................................... 77
Section 10.2. Individual Capacity................................. 77
Section 10.3. Exculpatory Provisions.............................. 77
Section 10.4. Reliance by Administrative Agent.................... 78
Section 10.5. Delegation.......................................... 78
Section 10.6. Resignation; Successor Administrative Agent......... 78
Section 10.7. NonReliance on Other Credit Parties................. 79
EXHIBITS
--------
A-1 Form of Note
A-2 Form of Pledge Agreement
B. States of Incorporation and Qualification, and Capitalization
and Ownership of Stock, of Borrower and Subsidiaries
C. Consents, Waivers, Approvals; Violation of Agreements
D. Permitted Security Interests, Liens and Encumbrances
E. Judgements, Actions, Proceedings
F. Defaults; Compliance with Laws, Regulations, Agreements
G. Burdensome Documents
H. Name Changes, Mergers, Acquisitions
I. Labor Disputes; Collective Bargaining Agreements; Employee
Grievances
J. Pension Plans
K. Permitted Contingent Obligations and Guaranties and Existing
Guarantees, Contingent Obligations and Investments
L. Form of Assignment and Acceptance
SCHEDULE
--------
I. Rollover Eurodollar Loans
LOAN AGREEMENT
---- ---------
THIS LOAN AGREEMENT, made this 31st day of August, 1999 (this "Agreement"),
is by and among GRIFFON CORPORATION, a Delaware corporation (the "Borrower"),
the several banks and other parties from time to time that are permitted parties
hereto (individually, a "Bank" and, collectively, the "Banks"), FLEET BANK,
NATIONAL ASSOCIATION, a national banking association, in its capacity as
Administrative Agent (as hereinafter defined) and THE CHASE MANHATTAN BANK, a
New York banking corporation, in its capacity as Documentation Agent (as
hereinafter defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower wishes to obtain loans from the Banks in the
aggregate principal sum of up to One Hundred Twenty Million Dollars
($120,000,000), and the Banks are willing to make such loans to the Borrower in
an aggregate principal amount of up to such sum on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
Article 1 Definitions.
-----------
As used in this Agreement, in addition to the other terms defined herein,
the following terms shall have the following meanings:
"Additional Costs" is defined in subsection 2.18(b) hereof.
"Adjusted Net Income" means, for any period, the aggregate income (or loss)
for such period which shall be an amount equal to net revenues and other proper
items of income, plus extraordinary and unusual non-cash losses for such period,
less any and all items that are treated as expenses under generally accepted
accounting principles, less, without duplication, Federal, state and local
income taxes and income taxes expensed for taxes payable to jurisdictions
outside of the United States, and less extraordinary and unusual non-cash gains
for such period, as determined in accordance with generally accepted accounting
principles.
"Administrative Agent" means Fleet Bank, National Association, a national
banking association, in its capacity as administrative and collateral agent
pursuant to the terms and conditions of this Agreement, and any successor
thereto.
"Affected Loans" is defined in Section 2.21 hereof.
"Affected Type" is defined in Section 2.21 hereof.
"Affiliate" means, as to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event: (i) any Person that owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
(ii) each director and officer of the Borrower shall be deemed to be an
Affiliate of the Borrower.
"Agent" means the Administrative Agent or the Documentation Agent.
"Agents" means the Administrative Agent and the Documentation Agent
collectively.
"Aggregate Revolving Commitment" means, at any time, the sum at such time
of the Commitments of all the Banks.
"Aggregate Revolving Exposure" means, at any time, the sum at such time of
the outstanding principal balance of the Loans of all the Banks.
"Applicable Lending office" means, with respect to each Bank, with respect
to each type of Loan, the Lending Office as designated for such type of Loan
below its name on the signature pages hereof or such other office of such Bank
or of an affiliate of such Bank as such Bank may from time to time specify to
the Borrower as the office at which its Loans of such type are to be made and
maintained.
"Applicable Margin" means as at any date of determination thereof, (i) if
the Funded Debt to Cash Flow Ratio is less than 1.50 to 1.00, then with respect
to any Prime Rate Loans, 0%, and with respect to any Eurodollar Loans, 1.00%;
and (ii) if the Funded Debt to Cash Flow Ratio is equal to or greater than 1.50
to 1.00, then with respect to any Prime Rate Loans, 0%, and with respect to any
Eurodollar Loans, 1.50%. The determination of the applicable percentage set
forth above shall be made on a quarterly basis based on an examination of the
financial statements of the Borrower delivered pursuant to and in compliance
with Section 5.1 or Section 5.2 hereof; provided, however, that the applicable
percentages as of the date of this Agreement shall be as set forth in clause
(ii) above until adjusted pursuant to this definition; and provided further,
that upon the occurrence and during the continuance of a Default or an Event of
Default (other than a Default or Event of Default under Section 8.1 hereof), the
Applicable Margin shall be 1% in excess of the applicable percentages set forth
in clause (ii) above.
The determination of the applicable percentage set forth above shall be
made on a quarterly basis based on an examination of the financial statements of
the Borrower delivered pursuant to and in compliance with Section 5.1 or Section
5.2 hereof. Each determination of the Applicable Margin shall be effective as of
(a) January 15 of each year with respect to financial statements to be delivered
pursuant to Section 5.1 hereof and (b) the first day of the calendar quarter
following the date on which the financial statements on which such determination
was based were to be delivered pursuant to Section 5.2 hereof. In the event that
financial statements for the four full fiscal quarters most recently completed
prior to such date of determination either: (i) have not been delivered to the
Banks in compliance with Section 5.1 or 5.2 hereof, or (ii) if delivered, do not
comply in form or substance with Section 5.1 or 5.2 hereof (in the sole judgment
of the Banks), then the Banks may determine, in their reasonable judgment, the
ratio referred to above that would have been in effect as at such date, and
consequently, the Applicable Margin in effect for the period commencing on such
date.
"Assessment Rate" means, at any time, the rate (rounded upwards, if
necessary, to the nearest 1/100 of 1%) then charged by the Federal Deposit
Insurance Corporation (or any successor) to the applicable Principal Office for
deposit insurance for Dollar time deposits with such Principal Office as
determined by such Principal Office.
"Assignment and Acceptance" - an agreement in the form of Exhibit L hereto.
"Bohme" means Bohme-Clopay Verpackungsfolien GmbH, a wholly-owned
subsidiary of Clopay Plastic Products and successor in interest to Bohme
Verwaltungs-Gesellschaft mbH and Bohme GmbH & Co. KG Verpackungsfolien.
"Borrowing Date" means any Business Day on which the Banks make Loans.
"Borrowing Notice" is defined in Section 2.2 hereof.
"Business Day" means, any day other than Saturday, Sunday or any other day
on which commercial banks in New York City are authorized or required to close
under the laws of the State of New York.
"Capital Expenditures" means for any period, the sum of (a) expenditures
for any fixed assets or improvements and replacements, substitutions or
additions thereto which would be treated as capital expenditures in accordance
with generally accepted accounting principles and (b) the portion of all
payments with respect to each Capitalized Lease which are required to be
capitalized on the balance sheet of the applicable lessee in accordance with
generally accepted accounting principles.
"Capitalized Lease" means, any lease the obligations to pay rent or other
amounts under which constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under generally accepted accounting principles and, for
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
"Cash" means, as to any Person, such Person's cash and cash equivalents, as
defined in accordance with generally accepted accounting principles consistently
applied.
"Change of Control" means (a) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 30% or more of the outstanding shares of voting stock of the
Borrower, or (b) during any period of 25 consecutive calendar months, commencing
on the date of this Agreement, the ceasing of those individuals (the "Continuing
Directors") who (i) were directors of the Borrower on the first day of each such
period or (ii) subsequently became directors of the Borrower and whose initial
election or initial nomination for election subsequent to that date was approved
by a majority of the Continuing Directors then on the board of directors of the
Borrower, to constitute a majority of the board of directors of the Borrower.
"Chase" means The Chase Manhattan Bank, a New York banking corporation, in
its capacity as a Bank hereunder.
"Clopay" means Clopay Corporation, a Delaware corporation.
"Clopay Plastic Products" means Clopay Plastic Products Company, Inc., a
Delaware Corporation.
"Clopay Service" means Clopay Service Company, Inc., a Delaware
Corporation.
"Code" means the Internal Revenue Code of 1986, as it may be amended from
time to time.
"Commitment" means, as to each Bank, the amount set forth opposite such
Bank's name on the signature pages hereof under the caption "Commitment" as such
amount is subject to reduction in accordance with the terms hereof, which amount
includes, with respect to Chase and Fleet, the principal amount of all Rollover
Eurodollar Loans.
"Commitment Fee" is defined in subsection 2.7(a) hereof.
"Commitment Termination Date" means October 1, 2002.
"Compliance Certificate" means a certificate executed by the president or
chief financial officer of the Borrower to the effect that: (i) as of the
effective date of the certificate, no Default or Event of Default under this
Agreement exists or would exist after giving effect to the action intended to be
taken by the Borrower as described in such certificate, including, without
limitation, that the covenants set forth in Section 6.9 hereof would not be
breached after giving effect to such action, together with a calculation in
reasonable detail, and in form and substance satisfactory to the Administrative
Agent and the Documentation Agent, of such compliance, and (ii) the
representations and warranties contained in Article 3 hereof are true and with
the same effect as though such representations and warranties were made on the
date of such certificate, except for changes in the ordinary course of business
none of which, either singly or in the aggregate, have had a Material Adverse
Effect.
"Contingent Obligation" as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person, without
duplication: (a) with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; (b) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (c) under any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect that Person against fluctuations in interest
rates; or (d) under any foreign exchange contract, currency swap agreement or
other similar agreement or arrangement designed to protect that Person against
fluctuations in currency values. Contingent Obligations shall include (i) the
direct or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, (ii) the
obligation to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement, and (iii) any
liability of such Person for the obligations of another through any agreement to
purchase, repurchase or otherwise acquire such obligation or any property
constituting security therefor, to provide funds for the payment or discharge of
such obligation or to maintain the solvency, financial condition or any balance
sheet item or level of income of another. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if not a fixed and determined amount, the maximum amount
so guaranteed.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414(b), 414(c) or 414(m) of the Code and Section 4001(a)(14) of ERISA.
"Credit Party" means the Administrative Agent or a Bank, as the case may
be.
"Current Assets" means current assets as determined in accordance with
generally accepted accounting principles, consistently applied; provided,
however, that any of such assets that are subject to a pledge, lien or security
interest held by any Person to secure payment of any Indebtedness that is not
included in Current Liabilities shall be excluded from Current Assets to the
extent of such Indebtedness.
"Current Liabilities" means current liabilities, as determined in
accordance with generally accepted accounting principles, consistently applied,
and shall include, as of the date of determination thereof: (i) all Indebtedness
payable on demand or maturing within one year after such date without any option
on the part of the obligor to extend or renew beyond such year, (ii) final
maturities, installments and prepayments of Indebtedness required to be made
within one year after such date, (iii) the unpaid principal balance of the Notes
due within one year after such date, and (iv) all other items (including taxes
accrued as estimated and reserves for deferred income taxes) that in accordance
with generally accepted accounting principles, would be included on a balance
sheet as current liabilities.
"Debt Instrument" is defined in subsection 8.4(a) hereof.
"Default" means an event which with notice or lapse of time, or both, would
constitute an Event of Default.
"Defined Contribution Plan" means a plan which is not covered by Title IV
of ERISA or subject to the minimum funding standards of Section 412 of the Code
and which provides for an individual account for each participant and for
benefits based solely on the amount contributed to the participant's account,
and any income, expenses, gains and losses, and any forfeitures of accounts of
other participants which may be allocated to such participant's account.
"Derivative Protection Arrangement" means (i) any interest rate swap, cap
or collar arrangement or any other derivative product customarily offered by
banks or other financial institutions to their customers in order to reduce the
exposure of such customers to interest rate fluctuations, as the same may be
amended, supplemented or otherwise modified from time to time or (ii) any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement customarily offered by banks or other financial institutions to
their customers designed to protect such customers against fluctuations in
currency values.
"Documentation Agent" means The Chase Manhattan Bank, a New York banking
corporation, in its capacity as Documentation Agent pursuant to the terms and
conditions of this Agreement, and any successor thereto.
"Dollars" and "$" means lawful currency of the United States of America.
"Domestic Debt Service Coverage Ratio" means, for any period, the ratio of
(a) EBITDA of the Domestic Loan Parties on a consolidated basis for the most
recently completed four fiscal quarters of the Domestic Loan Parties minus,
Federal, state and local income taxes expensed with respect to the most recently
completed four fiscal quarters minus, Unfunded Capital Expenditures of the
Domestic Loan Parties on a consolidated basis for the most recently completed
four fiscal quarters to (b) the current portion of Long-term Indebtedness for
borrowed money of the Domestic Loan Parties on a consolidated basis outstanding
as of the last day of such period plus, Interest Expense of the Domestic Loan
Parties on a consolidated basis for the most recently completed four fiscal
quarters, all determined in accordance with generally accepted accounting
principles consistently applied.
"Domestic Funded Debt Coverage Ratio" means, for any period, the ratio of
(a) Long-term Indebtedness for borrowed money of the Domestic Loan Parties on a
consolidated basis plus, without duplication, any Indebtedness for money
borrowed of the Domestic Loan Parties on a consolidated basis which will be due
and payable during the immediately succeeding twelve month period plus, the
Domestic Guarantee Amount, in each case outstanding as of the last day of such
period, to (b) EBITDA of the Domestic Loan Parties on a consolidated basis for
the most recently completed four fiscal quarters minus Unfunded Capital
Expenditures of the Domestic Loan Parties on a consolidated basis for the most
recently completed four fiscal quarters, all determined in accordance with
generally accepted accounting principles consistently applied.
"Domestic Guarantee Amount" means the aggregate amount of outstanding
obligations of Foreign Loan Parties that are guaranteed by Domestic Loan
Parties.
"Domestic Loan Party" means the Borrower and each Subsidiary of the
Borrower that is organized under the laws of any State of the United States.
"EBITDA" means, for any period, the sum of (i) Adjusted Net Income, (ii)
Interest Expense, (iii) depreciation and amortization and (iv) Federal, state
and local income taxes, in each case, computed in accordance with generally
accepted accounting principles.
"Eligible Assignee" - (a) any of the following that have been approved by
the Required Banks: (i) a commercial bank organized under the laws of the United
States, or any state thereof; (ii) a savings and loan association or savings
bank organized under the laws of the United States, or any state thereof; (iii)
a commercial bank organized under the laws of any other country that is a member
of the OECD or has concluded special lending arrangements with the International
Monetary Fund associated with its General Arrangements to Borrow, or a political
subdivision of any such country, so long as such bank is acting through a branch
or agency located in the country in which it is organized or another country
that is described in this clause (iii); (iv) the central bank of any country
that is a member of the OECD which bank has assumed the assets and liabilities
of a Bank; and (v) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial loans
in the ordinary course of its business; (b) any other Person approved by the
Administrative Agent and the Required Banks; and (c) a Bank or an Affiliate of a
Bank.
"Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of Borrower or
any of its ERISA Affiliates or (b) has at any time within the preceding six (6)
years been maintained for employees of the Borrower or any current ERISA
Affiliate while an ERISA Affiliate.
"Employee Welfare Benefit Plan" means any employee benefit plan within the
meaning of Section 3(1) of ERISA.
"Environmental Laws and Regulations" means all environmental, health and
safety laws, regulations, resolutions, and ordinances applicable to the Borrower
or any Subsidiary, or any of their respective assets or properties, including,
without limitation: (i) all regulations, resolutions, ordinances, decrees, and
other similar documents and instruments of all courts and governmental
authorities, bureaus and agencies, domestic and foreign, whether issued by
environmental regulatory agencies or otherwise, and (ii) all laws, regulations,
resolutions, ordinances and decrees relating to Environmental Matters.
"Environmental Liability" means any liability under any applicable law for
any release of a hazardous substance caused by the seeping, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of hazardous wastes or other chemical substances,
pollutants or contaminants into the environment, and any liability for the costs
of any clean-up or other remedial action including, without limitation, costs
arising out of security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance undertaken by any
environmental regulatory body having jurisdiction over the Borrower or any
Subsidiary to prevent or minimize any actual or threatened release by the
Borrower or any Subsidiary of any hazardous wastes or other hazardous
substances, pollutants and contaminants into the environment that would endanger
the public health or the environment.
"Environmental Matter(s)" means a release of any toxic or hazardous waste
or other hazardous substance, pollutant or contaminant into the environment or
the generation, treatment, storage or disposal of any toxic or hazardous wastes
or other hazardous substances.
"Environmental Proceeding" means any judgment, action, proceeding or
investigation pending before any court or governmental authority, bureau or
agency, including, without limitation, any environmental regulatory body, with
respect to, or to the best of Borrower's knowledge threatened against, the
Borrower or any Subsidiary or relating to the assets or liabilities of any of
them, including, without limitation, in respect of any "facility" owned, leased
or operated by any of them under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or under any state, local or
municipal statute, ordinance or regulation in respect thereof, in connection
with any release of any toxic or hazardous waste or other chemical substance,
pollutant or contaminant into the environment, or with the generation, storage
or disposal of any toxic or hazardous wastes or other chemical substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" means as applied to the Borrower, any corporation, person
or trade or business which is a member of the Borrower's Controlled Group.
"ERISA MAE" means any matter which would result in liability to the
Borrower or any ERISA Affiliate in an amount which would materially adversely
affect the business or financial condition of the Borrower and its Subsidiaries
on a consolidated basis.
"Eurodollar Business Day" means a Business Day on which dealings in Dollar
deposits are carried out in the Eurodollar interbank market.
"Eurodollar Loans" means Loans the interest on which is determined on the
basis of rates referred to in subparagraph (a) of the definition of "Fixed Base
Rate" in this Article 1.
"Event of Default" is defined in Article 8 hereof.
"Facility Fee" is defined in subsection 2.7(b) hereof.
"Federal Funds Rate" means, for any day, the weighted average of the rates
on overnight federal funds transactions with member banks of the Federal Reserve
System arranged by federal funds brokers as published by the Federal Reserve
Bank of New York for such day, or if such day is not a Business Day, for the
next preceding Business Day (or, if such rate is not so published for any such
day, the average rate charged to each Bank on such day on such transactions as
reasonably determined by the Banks).
"Fee(s)" is defined in subsection 2.7(d) hereof.
"Financial Statements" means, with respect to the Borrower: (i) its
consolidated audited Balance Sheet as at September 30, 1998, together with the
related audited Income Statement, Statement of Shareholders' Equity and
Statement of Cash Flows for the fiscal year then ended, (ii) its consolidated
unaudited Balance Sheet as at June 30, 1999, together with the related unaudited
Income Statement and Statement of Cash Flows for the 9-month period then ended,
and (iii) each of the financial statements delivered to the Banks pursuant to
subsections 5.1 and 5.2 hereof.
"Finotech" means Finotech Verbundstoffe GmbH, a 60% owned subsidiary of
Clopay Plastic Products.
"Firstar" means Firstar Bank, National Association.
"Fixed Base Rate" means, with respect to any Eurodollar Loan for any
Interest Period therefor, a rate of interest per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent), as determined by the
Administrative Agent, on the basis of the offered rates for deposits in U.S.
dollars, for a period of time comparable to such Eurodollar Loan which appears
on the Telerate page 3750 as of 11:00 a.m. London time on the day that is two
Eurodollar Business Days preceding the first day of such Eurodollar Loan
Interest Period; provided, however, if the rate described above does not appear
on the Telerate System on any applicable interest determination date, the Fixed
Base Rate shall be determined by the Administrative Agent based on the rate
(rounded upwards, if necessary, to the nearest 1/32 of 1%) for deposits in
dollars for a period substantially equal to the Interest Period on the Reuters
Page "LIBO" (or such other page as may replace the LIBO Page on that service for
the purpose of displaying such rates), as of 11:00 a.m.(London Time), on the day
that is two (2) Eurodollar Business Days prior to the beginning of such Interest
Period. If two or more of such rates appear on the Reuters Screen LIBO Page, the
rate shall be the arithmetic mean of such rates as determined by the
Administrative Agent. If both the Telerate and Reuters system are unavailable,
then the rate for that date will be determined by the Administrative Agent on
the basis of the offered rates for deposits in U.S. dollars for a period of time
comparable to such Eurodollar Loan which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time, on the day that
is two (2) Eurodollar Business Days preceding the first day of such Eurodollar
Loan as selected by the Administrative Agent. The principal London office of
each of the four major London banks will be requested to provide a quotation of
its U.S. dollar deposit offered rate. If at least two such quotations are
provided, the rate for the date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that date
will be determined on the basis of the rates quoted for loans in U.S. dollars to
leading European banks for a period of time comparable to such Eurodollar Loan
offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that is two Eurodollar Business Days preceding the first
day of such Eurodollar Loan. In the event that the Bank is unable to obtain any
such quotation as provided above, it will be deemed that the Fixed Base Rate
pursuant to a Eurodollar Loan cannot be determined.
"Fixed Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Administrative Agent equal to (x) the Fixed Base
Rate for such Loan for such Interest Period; divided by (y) 1 minus the Reserve
Requirement for such Loan for such Interest Period. The Administrative Agent
shall use its best efforts to advise the Borrower upon its request of the Fixed
Rate for each Interest Period as soon as practicable after each change in the
Fixed Rate; provided, however, that the failure of the Administrative Agent to
so advise the Borrower on any one or more occasions shall not affect the rights
of any Agent or any Bank or the obligations of the Borrower hereunder.
"Fleet" means Fleet Bank, National Association, a national banking
association, in its capacity as a Bank hereunder.
"Foreign Loan Party" means each Subsidiary of the Borrower that is
organized under the laws of a jurisdiction other than any State of the United
States.
"Funded Debt to Cash Flow Ratio" means, for any period, the ratio of (a)
Long-term Indebtedness for borrowed money of the Borrower and its Subsidiaries
plus, without duplication, any Indebtedness for money borrowed of the Borrower
and its Subsidiaries which will be due and payable during the immediately
succeeding twelve month period, in each case outstanding as of the last day of
such period, to (b) Adjusted Net Income of the Borrower and its Subsidiaries on
a consolidated basis plus, without duplication, depreciation and amortization
expense, each for the most recently completed four fiscal quarters.
"Indebtedness" means, with respect to any Person and without duplication,
all: (i) liabilities or obligations, direct and contingent, which in accordance
with generally accepted accounting principles would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person at the date as of which Indebtedness is to be determined, including,
without limitation, contingent liabilities that in accordance with such
principles, would be set forth in a specific Dollar amount on the liability side
of such balance sheet, and Capitalized Lease Obligations of such Person; (ii)
liabilities or obligations of others for which such Person is directly or
indirectly liable, by way of guaranty (whether by direct guaranty, suretyship,
discount, endorsement, take-or-pay agreement, agreement to purchase or advance
or keep in funds or other agreement having the effect of a guaranty) or
otherwise; (iii) liabilities or obligations secured by Liens on any assets of
such Person, whether or not such liabilities or obligations shall have been
assumed by it; and (iv) liabilities or obligations of such Person, direct or
contingent, with respect to letters of credit (other than documentary letters of
credit used in connection with the purchase of goods) issued for the account of
such Person and bankers acceptances created for such Person.
"Interest Expense" means, for the applicable period of determination
thereof, the interest expense during such period determined in accordance with
generally accepted accounting principles; provided, that, notwithstanding any
such determination under generally accepted accounting principles, in each event
"Interest Expense" shall be net of all interest income for the applicable period
of determination.
"Interest Period" means, with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or converted from a Loan or Loans of
another type, or the last day of the next preceding Interest Period with respect
to such Loan, and ending on the same day in the first, second, third or sixth
calendar month thereafter, as the Borrower may select as provided in Section 2.2
hereof, except that each such Interest Period that commences on the last
Eurodollar Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Eurodollar Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (i) each Interest Period that
would otherwise end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, in the case of an Interest Period for Eurodollar
Loans, if such next succeeding Eurodollar Business Day falls in the next
succeeding calendar month, on the next preceding Eurodollar Business Day) ; (ii)
no more than five (5) Interest Periods for Eurodollar Loans shall be in effect
at the same time (not including Interest Periods in respect of Rollover
Eurodollar Loans); (iii) any Interest Period for any type of Loan that commences
before the Commitment Termination Date shall end no later than the Commitment
Termination Date; and (iv) notwithstanding clause (iii) above, no Interest
Period shall have a duration of less than one month (in the case of Eurodollar
Loans). In the event that the Borrower fails to select the duration of any
Interest Period for any Loan within the time period and otherwise as provided in
Section 2.2 hereof, such Loans will be automatically converted into a Prime Rate
Loan on the last day of the preceding Interest Period for such Loan.
Notwithstanding anything to the contrary contained herein, during the period
commencing on the date hereof and ending on January 19, 2000, with respect to
all Loans, including Rollover Eurodollar Loans, the Borrower may elect one or
more Interest Periods (including Interest Periods of durations other than as
otherwise provided herein), so long as each such Interest Period ends no later
than January 19, 2000. Interest Periods commencing on or after January 19, 2000
may be of any duration otherwise permitted hereunder.
"Investment" means, by any Person:
(a) the amount paid or committed to be paid, or the value of property or
services contributed or committed to be contributed, by such Person for or in
connection with the acquisition by such Person of any stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of any
other Person; and
(b) the amount of any advance, loan or extension of credit by such Person,
to any other Person, or guaranty or other similar obligation of such Person with
respect to any Indebtedness of such other Person (other than Indebtedness
constituting trade payables in the ordinary course of business), and (without
duplication) any amount committed to be advanced, loaned, or extended by such
Person to any other Person, or any amount the payment of which is committed to
be assured by a guaranty or similar obligation by such Person for the benefit
of, such other Person.
"IRS" means the Internal Revenue Service.
"Latest Balance Sheet" is defined in subsection 3.9(a) hereof.
"Leases" means leases and subleases (other than Capitalized Leases),
licenses for the use of real property, easements, grants, and other attachment
rights and similar instruments under which the Borrower has the right to use
real or personal property or rights of way.
"Lien" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature of any of the foregoing, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction.
"Lightron" means Lightron Corporation, a Delaware corporation.
"Limited Contingent Obligation" as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person, without
duplication: (a) with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto or (b) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings. Limited Contingent Obligations shall include (i) the
direct or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, (ii) the
obligation to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement, and (iii) any
liability of such Person for the obligations of another through any agreement to
purchase, repurchase or otherwise acquire such obligation or any property
constituting security therefor, to provide funds for the payment or discharge of
such obligation or to maintain the solvency, financial condition or any balance
sheet item or level of income of another. The amount of any Limited Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if not a fixed and determined amount, the maximum amount
so guaranteed.
"Loan(s)" is defined in Section 2.1 hereof. Loans of different types made
or converted from Loans of other types on the same day (or of the same type but
having different Interest Periods) shall be deemed to be separate Loans for all
purposes of this Agreement.
"Loan Documents" means this Agreement, the Notes, the Pledge Agreement and
all other documents required to be executed and delivered in connection herewith
or therewith, including all amendments, modifications and supplements of or to
all such documents.
"Loan Party" means the Borrower and any Subsidiary which on the date hereof
or hereafter executes and delivers to any Agent or any Bank any Loan Document.
"Long-term Indebtedness" means:
(i) any Indebtedness payable more than one year from the date of creation
thereof (including, without limitation and without duplication, any portion
thereof payable on demand or maturing within one year after such date), which
under generally accepted accounting principles is shown on the balance sheet as
a liability (including Capitalized Lease Obligations but excluding reserves for
deferred income taxes and other reserves to the extent that such reserves do not
constitute an obligation), and
(ii) Indebtedness payable more than one year from the date of creation
thereof (including, without limitation and without duplication, any portion
thereof payable on demand or maturing within one year after such date), which is
secured by any Lien on property owned by the Borrower or any Subsidiary, whether
or not the indebtedness secured thereby shall have been assumed by the Borrower
or such Subsidiary.
Any obligation shall be treated as Long-term Indebtedness, regardless of its
term if such obligation is renewable pursuant to the terms thereof or of a
revolving credit or similar agreement effective for more than one year after the
date of the creation of such obligation, or may be payable out of the proceeds
of a similar obligation pursuant to the terms of such obligation or of any such
agreement.
"Material Adverse Effect" means any matter which would materially adversely
affect the business, operations, properties or financial condition of the
Borrower and its Subsidiaries on a consolidated basis.
"Monthly Dates" means the first day of each calendar month, the first of
which shall be the first day of the first calendar month following the date of
this Agreement.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001 (a) (3) of ERISA which is a Pension Plan and to which the Borrower or any
ERISA Affiliate is making, or is accruing an obligation to make, contributions
or has made, or been obligated to make, contributions within the preceding six
(6) years while an ERISA Affiliate.
"New Type Loans" is defined in Section 2.21 hereof.
"Note(s)" is defined in Section 2.4 hereof.
"Obligations" means collectively, all of the Indebtedness, liabilities and
obligations of the Borrower to the Administrative Agent, the Documentation Agent
and/or the Banks, whether now existing or hereafter arising, whether or not
currently contemplated, arising under the Loan Documents.
"Payment Office" means the office of the Administrative Agent located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means at any time an employee pension benefit plan that is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either: (i) maintained by the Borrower or any
ERISA Affiliate for employees of the Borrower, or by the Borrower for employees
of any ERISA Affiliate, or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which the Borrower or any ERISA Affiliate is then making or
accruing an obligation to make contributions or has, while an ERISA Affiliate,
within the preceding five plan years made contributions.
"Permitted Acquisition" means the acquisition by the Borrower or any
Subsidiary of any Person or of any division or line of business of any Person
(whether a Person, or division or line of business, an "Eligible Business"),
either by merger, consolidation, purchase of stock, or purchase of all or a
substantial part of the assets of such Eligible Business (any such type of
transaction is referred to in this Agreement as an "acquisition" and the
principal agreement relating thereto, whether a stock purchase agreement, an
asset purchase agreement, a merger agreement or otherwise, is referred to in
this Agreement as the "acquisition agreement"); provided that (i) the aggregate
Permitted Acquisition Purchase Price of all such Permitted Acquisitions during
the term of this Agreement from and after June 1, 1999 does not exceed (a) Two
Hundred Million Dollars ($200,000,000) in the aggregate, and (b) after excluding
the value of any capital stock issued by the Borrower in connection with any
Permitted Acquisition, One Hundred Million Dollars ($100,000,000) in the
aggregate, (ii) no Default or Event of Default shall exist immediately before
and after giving affect to such Permitted Acquisition or result from the
consummation thereof, and (iii) each of the following conditions shall have been
satisfied:
(a) such transaction shall not be a "hostile" acquisition or other
"hostile" transaction (i.e., such transaction shall not be opposed by the Board
of Directors (or similar governing body) of the Eligible Business), provided
that in the event the Borrower proposes to initiate such transaction as a
hostile transaction with the intent to subsequently obtain the approval of the
Board of Directors of the Eligible Business, the Borrower may notify the
Administrative Agent and each Bank in writing in advance of the initiation of
such proposed transaction together with any information concerning such
transaction as the Administrative Agent or any Bank may request, and, provided
that the Administrative Agent and each Bank shall have approved such transaction
in writing prior to the initiation of such transaction, with the approval of the
each Bank being based on any possible conflict of any kind or other policy
considerations of such Bank concerning such proposed acquisition and with such
approval not to be unreasonably withheld, the Borrower may proceed with such
transaction so long as the transaction ultimately is approved by the Board of
Directors (or similar governing body) of the Eligible Business (and a majority
of which were members of such Board of Directors (or similar governing body) at
the time such transaction was initiated) and is otherwise in accordance with the
terms of this Agreement;
(b) such acquisition (1) if such acquisition is a stock acquisition, shall
be of greater than 50% of the issued and outstanding capital stock of such
Eligible Business, whether by purchase or as a result of merger or consolidation
(provided that the Borrower shall be the surviving corporation in any such
merger or consolidation in which it is directly involved), and in any event
shall consist of shares of capital stock with sufficient voting rights which
entitles the Borrower to elect a majority of the directors of such Eligible
Business and to control the outcome of any shareholder votes with respect to the
shareholders of such Eligible Business, and (2) if such acquisition is an asset
acquisition, shall be of all or a substantial part of an Eligible Business; and
(c) the Borrower or its Subsidiaries shall have (1) pledged to the
Administrative Agent for the benefit of the Banks all of the issued and
outstanding capital stock acquired by the Borrower or any subsidiary of (A) any
Eligible Business the capital stock of which is to be acquired pursuant to such
acquisition in which the Permitted Acquisition Purchase Price is greater than
$15,000,000, and (B) any new Subsidiary created as an acquisition vehicle with
respect to such acquisition, (2) delivered to the Administrative Agent,
simultaneously with consummation of such acquisition, all of the stock
certificates representing such shares, together with stock powers executed in
blank and proxies with respect thereto and (3) caused to be delivered to the
Banks from any new Subsidiary customary corporate documents (including certified
certificate of incorporation, by-laws and good standing certificates); provided,
however, that so long as (i) Clopay remains a wholly-owned direct subsidiary of
the Borrower and all of the issued and outstanding capital stock of Clopay
remains subject to a first priority security interest in favor of the
Administrative Agent, Clopay shall not be obligated to pledge, or cause the
pledge of, the capital stock of any of its direct or indirect subsidiaries; and
(ii) Telephonics remains a wholly-owned subsidiary of the Borrower and all of
the issued and outstanding capital stock of Telephonics remains subject to a
first priority security interest in favor of the Administrative Agent,
Telephonics shall not be obligated to pledge, or cause the pledge of, the
capital stock of any of its direct or indirect subsidiaries.
"Permitted Acquisition Purchase Price" means, with respect to any Permitted
Acquisition, collectively, without duplication, (i) all Cash paid by the
Borrower or any of its Subsidiaries in connection with such Permitted
Acquisition, including in respect of transaction costs, fees and other expenses
incurred by the Borrower or any of its Subsidiaries in connection with such
Permitted Acquisition, (ii) all Indebtedness created, and all Indebtedness
assumed, by the Borrower or any of its subsidiaries in connection with such
Permitted Acquisition, including, without limitation, the maximum amount of any
purchase price to be paid pursuant to any "earn out" provision contained in the
agreements related to any Permitted Acquisition, (iii) the value of all capital
stock issued by the Borrower or any of its Subsidiaries in connection with such
Permitted Acquisition and (iv) any deferred portion of the purchase price or any
other costs paid by the Borrower or any of its Subsidiaries in connection with
such Permitted Acquisition.
"Permitted Liens" means, as to any Person: (i) pledges or deposits by such
Person under workers' compensation laws, unemployment insurance laws, social
security laws, or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness of such
Person), or leases to which such Person is a party, or deposits to secure public
or statutory obligations of such Person or deposits of Cash or United States
Government Bonds to secure surety, appeal, performance or other similar bonds to
which such Person is a party, or deposits as security for contested taxes or
import duties or for the payment of rent; (ii) Liens imposed by law, such as
carriers', warehousemen's, materialmen's and mechanics' liens, or Liens arising
out of judgments or awards against such Person with respect to which such Person
at the time shall currently be prosecuting an appeal or proceedings for review;
(iii) Liens for taxes not yet subject to penalties for non-payment and Liens for
taxes the payment of which is being contested as permitted by Section 6.6
hereof; and (iv) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of, others for rights of way, highways and railroad
crossings, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of real
properties, or Liens incidental to the conduct of the business of such Person or
to the ownership of such Person's property that were not incurred in connection
with Indebtedness of such Person, all of which Liens referred to in the
preceding clause (iv) do not in the aggregate materially detract from the value
of the properties to which they relate or materially impair their use in the
operation of the business taken as a whole of such Person, and as to all the
foregoing only to the extent arising and continuing in the ordinary course of
business.
"Person" means an individual, a corporation, a partnership, a joint
venture, a trust or unincorporated organization, a joint stock company or other
similar organization, a government or any political subdivision thereof, a
court, or any other legal entity, whether acting in an individual, fiduciary or
other capacity.
"Pledge Agreement" means that certain Pledge Agreement substantially in the
form of Exhibit A-2 hereto, dated as of the date hereof between the Borrower and
the Administrative Agent, for the ratable benefit of the Banks, and any other
pledge agreement executed and delivered by the Borrower or any Subsidiary from
time to time in connection herewith, including all amendments, modifications and
supplements of or to all such agreements.
"Post-Default Rate" means (i) in respect to principal of or interest on any
Loans not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period commencing on the due date until
such unpaid principal is paid in full equal to: (x) if such Loans are Prime Rate
Loans, 2% above the Prime Rate as in effect from time to time plus the
Applicable Margin for Prime Rate Loans (but in no event less than the interest
rate in effect on the due date), or (y) if such Loans are Eurodollar Loans, 2%
above the rate of interest in effect thereon at the time of such default until
the end of the then current Interest Period therefor and, thereafter, 2% above
the Prime Rate as in effect from time to time plus the Applicable Margin for
Prime Rate Loans (but in no event less than the interest rate in effect on the
due date); and (ii) in respect of other amounts payable by the Borrower
hereunder (other than interest) not paid when due (whether at stated maturity,
by acceleration or otherwise), a rate per annum during the period commencing on
the due date until such other amounts are paid in full equal to 2% above the
Prime Rate as in effect from time to time plus the Applicable Margin for Prime
Rate Loans (but in no event less than the interest rate in effect on the due
date).
"Prime Rate" means the interest rate established by Fleet from time to time
as its prime rate at its Principal Office. Notwithstanding the foregoing, the
Borrower acknowledges that Fleet may regularly make domestic commercial loans at
rates of interest less than the rate of interest referred to in the preceding
sentence and that the Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate being charged to any borrower. Each change in
any interest rate provided for herein based upon the Prime Rate resulting from a
change in the Prime Rate shall take effect at the time of such change in the
Prime Rate.
"Prime Rate Loans" means Loans that bear interest at a rate based upon the
Prime Rate.
"Principal Office" means, as to the Administrative Agent or any Bank, the
principal office designated from time to time by such Person.
"Principal Subsidiary" means Clopay or Telephonics.
"Prior Agreement" means that that certain Loan Agreement dated June 8, 1995
by and among the Borrower, NatWest Bank N.A. (now known as Fleet), individually
and as Collateral Agent, and Chemical Bank (now known as Chase), as the same has
been amended and modified.
"Projections" means the projections delivered to the Banks pursuant to
Section 5.3 hereof (in the format provided in connection with the Prior
Agreement).
"Purchase Money Indebtedness" means Indebtedness (other than Loans)
incurred in connection with the Borrower's acquisition of fixed assets;
provided, that:
(i) The transaction in which any Purchase Money Indebtedness is proposed to
be created is not then prohibited by this Agreement and
(ii) The Indebtedness incurred or to be incurred does not exceed the cost
of the property or asset acquired.
"Purchase Money Security Interest" is defined in subsection 7.2(c) hereof.
"Quarterly Dates" means the first day of each January, April, July and
October of each year, the first of which shall be the first such day after the
date of this Agreement, provided that, if any such date is not a Eurodollar
Business Day, the relevant Quarterly Date shall be the next succeeding
Eurodollar Business Day (or, if the next succeeding Eurodollar Business Day
falls in the next succeeding calendar month, then on the next preceding
Eurodollar Business Day).
"Quick Ratio" means as at any date, the ratio of Current Assets (excluding
inventories) to Current Liabilities.
"Real Property" is defined in Section 7.13 hereof.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be amended or supplemented from time to time.
"Regulatory Change" means, as to any Bank, any change after the date of
this Agreement in United States federal, state or foreign laws or regulations
(including Regulation D and the laws or regulations that designate any
assessment rate relating to certificates of deposit or otherwise (including the
"Assessment Rate" if applicable to any Loan) or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks, including such Bank, of or under any United States federal, state or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"Related Parties" means, with respect to any Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
"Required Banks" means, at any time while no Loans are outstanding
hereunder, Banks having at least sixty six and two-thirds percent (66 2/3%) of
the aggregate amount of the Commitments and, at any time while Loans are
outstanding hereunder, Banks holding at least sixty six and two-thirds percent
(66 2/3%) of the outstanding aggregate principal amount of the Loans hereunder.
"Reserve Requirement" means, for any Eurodollar Loans for any quarterly
period (or, as the case may be, shorter period) as to which interest is payable
hereunder, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
period under Regulation D by member banks of the Federal Reserve System in New
York City with deposits exceeding one billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against: (i) any category of liabilities that includes deposits by
references to which the Fixed Rate for Eurodollar Loans is to be determined as
provided in the definition of "Fixed Base Rate" in this Article 1, or (ii) any
category of extensions of credit or other assets that include Eurodollar Loans.
"Revolving Credit Period" means the period commencing on the date of this
Agreement and ending on the Commitment Termination Date.
"Revolving Exposure" means, with respect to any Bank as of any date, the
sum as of such date of the outstanding principal balance of such Bank's Loans.
"Revolving Percentage" means, as of any date and with respect to each Bank,
the percentage equal to a fraction (i) the numerator of which is the Commitment
of such Bank on such date (or, if there are no Commitments on such date, on the
last date upon which one or more Commitments were in effect), and (ii) the
denominator of which is sum of the Commitments of all the Banks on such date
(or, if there are no Commitments on such date, on the last date upon which one
or more Commitments were in effect).
"Rollover Eurodollar Loans" means Eurodollar Loans made pursuant to the
---------------------------------------------------------------------------
Prior Agreement that have an Interest Period that terminates after the effective
--------------------------------------------------------------------------------
date of this Agreement, all as set forth in Schedule I hereto.
--------------------------------------------------------------
"Security Documents" is defined in subsection 2.23(b) hereof.
"Standard-▇▇▇▇" means Standard-▇▇▇▇ Industries, Inc., a Delaware
corporation.
"Subordinated Debt" means unsecured Indebtedness for money borrowed that is
subordinated upon terms and in form and substance reasonably satisfactory to the
Administrative Agent and the Banks, as evidenced by the Administrative Agent's
and Banks' written consent thereto given prior to the creation of such
Indebtedness.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or joint venture whether now existing or hereafter organized or
acquired: (i) in the case of a corporation, of which a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person, or (ii) in the case of a partnership or joint
venture in which such Person is a general partner or joint venturer or of which
a majority of the partnership or other ownership interests are at the time owned
by such Person and/or one or more of its Subsidiaries. Unless the context
otherwise requires, references in this Agreement to "Subsidiary" or
"Subsidiaries" shall be deemed to be references to a Subsidiary or Subsidiaries
of the Borrower or any of its Subsidiaries.
"Tangible Net Worth" means the sum of capital surplus, earned surplus and
capital stock, minus deferred charges (including, but not limited to,
unamortized debt discount and expense, organization expenses and experimental
and development expenses, but excluding prepaid expenses and deferred income tax
assets), intangibles and treasury stock, all as determined in accordance with
generally accepted accounting principles consistently applied.
"Telephonics" means Telephonics Corporation, a Delaware corporation.
"Termination Date" means October 1, 2006.
"Termination Event" means (a) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder for which the 30-day notice
requirement is not waived by the regulations; or (b) the withdrawal of the
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a) (2) of ERISA or
was deemed such under Section 4068(f) of ERISA; or (c) the termination of a
Pension Plan subject to Title IV of ERISA, the filing of a notice of intent to
terminate a Pension Plan subject to Title IV of ERISA, or the treatment of a
Pension Plan amendment as a termination under Section 4041 of ERISA; or (d) the
institution of proceedings to terminate a Pension Plan by the PBGC; or (e) any
other event or condition which would constitute grounds under Section 4042 (a)
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan subject to such Section 4042(a); or (f) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan; or
(g) the imposition of a Lien pursuant to Section 412 of the IRC or Section 302
of ERISA; or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (i) any event or condition which results in the termination of
a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Unfunded Capital Expenditures" shall mean Capital Expenditures during the
applicable period of determination minus increases in Purchase Money
Indebtedness and offsetting cash sales of capital equipment, all determined in
accordance with generally accepted accounting principles applied on a consistent
basis.
"Unsubordinated Liabilities" means, with respect to any Person, all
Indebtedness as defined in clause (i) of the definition of "Indebtedness" but
excluding any Subordinated Debt.
"Unused Commitment" means, as at any date, for each Bank, the difference,
if any, between: (i) the amount of such Bank's Commitment as in effect on such
date, and (ii) the then aggregate outstanding principal amount of all Loans made
by such Bank.
"Western Synthetic" means Western Synthetic Felt Company, a division of
Lightron.
"Year 2000 Issue" means failure of computer software, hardware and firmware
systems and equipment containing embedded computer chips to properly receive,
transmit, process, manipulate, store, retrieve, retransmit or in any other way
utilize data and information due to the occurrence of the year 2000 or the
inclusion of dates on or after January 1, 2000.
Any accounting terms used in this Agreement that are not specifically defined
herein shall have the meanings customarily given to them in accordance with
generally accepted accounting principles as in effect on the date of this
Agreement, except that references in Article 5 to such principles shall be
deemed to refer to such principles as in effect on the date of the financial
statements delivered pursuant thereto.
Article 2 Commitments; Loans.
------------------
Section 2.1. Loans.
-----
Each Bank hereby severally agrees, on the terms and subject to the
conditions of this Agreement, to make loans (each a "Loan" and, as the context
may require, collectively with all other Loans of such Bank and with the Loans
of all other Banks, the "Loans") to the Borrower from time to time on any
Business Day during the Revolving Credit Period to and including the Commitment
Termination Date, provided that after giving effect thereto (i) such Bank's
Revolving Exposure would not exceed such Bank's Commitment as then in effect,
and (ii) the Aggregate Revolving Exposure would not exceed the Aggregate
Revolving Commitment as then in effect. Subject to the terms of this Agreement,
during the Revolving Credit Period the Borrower may borrow, repay (provided that
repayment of Eurodollar Loans shall be subject to the provisions of Section 2.22
hereof) and reborrow up to the amount of each Bank's Commitment and the
Aggregate Revolving Commitment (after giving effect to the mandatory and
voluntary reductions required and permitted herein) by means of Prime Rate Loans
or Eurodollar Loans, and during such period and thereafter until the date of the
payment in full of all of the Loans, the Borrower may convert Loans of one type
into Loans of another type (as provided in section 2.17 hereof).
Section 2.2. Notices Relating to Loans.
-------------------------
The Borrower shall give the Administrative Agent written notice of each
termination or reduction of the Commitments, each borrowing, conversion and
prepayment of each Loan and of the duration of each Interest Period applicable
to each Eurodollar Loan (in each case, a "Borrowing Notice"). Each such written
notice shall be irrevocable and shall be effective only if received by the
Administrative Agent not later than 11 a.m., New York City time, on the date
that is:
(a) in the case of each notice of termination or reduction and each notice
of borrowing or prepayment of, or conversion into, Prime Rate Loans, the same as
the date of the related termination, reduction, borrowing, prepayment or
conversion; and
(b) in the case of each notice of borrowing or prepayment of, or conversion
into, Eurodollar Loans, or the duration of an Interest Period for Eurodollar
Loans, three (3) Eurodollar Business Days prior to the date of the related
borrowing, prepayment, or conversion or the first day of such Interest Period.
Each such notice of termination or reduction shall specify the amount
thereof. Each such notice of borrowing, conversion or prepayment shall specify
the amount (subject to Section 2.1 hereof) and type of Loans to be borrowed,
converted or prepaid (and, in the case of a conversion, the type of Loans to
result from such conversion), the date of borrowing, conversion or prepayment
(which shall be: (x) a Business Day in the case of each borrowing or prepayment
of Prime Rate Loans and (y) a Eurodollar Business Day in the case of each
borrowing or prepayment of Eurodollar Loans and each conversion of or into a
Eurodollar Loan). Each such notice of the duration of an Interest Period shall
specify the Loans to which such Interest Period is to relate.
Section 2.3. Disbursement of Loan Proceeds.
-----------------------------
(a) The Borrower shall give the Administrative Agent notice of each
borrowing hereunder as provided in Section 2.2 hereof. Upon receipt of each
Borrowing Notice, the Administrative Agent shall promptly notify each Bank
thereof. Subject to its receipt of the notice referred to in the preceding
sentence, each Bank will make the amount of its Revolving Percentage of the
requested Loans available to the Administrative Agent for the account of the
Borrower at the Payment Office not later than 2:00 p.m. on the relevant
Borrowing Date specified for each borrowing hereunder, in funds immediately
available to the Administrative Agent at such office. The amounts so made
available to the Administrative Agent on such Borrowing Date will then, subject
to the satisfaction of the terms and conditions of this Agreement, be made
available on such date to the Borrower by the Administrative Agent at the
Payment Office by crediting the account of the Borrower on the books of the
Administrative Agent at such office with the aggregate of said amounts (in like
funds) received by the Administrative Agent.
(b) Unless the Administrative Agent shall have confirmed that prior to its
funding of a Loan it received notice from a Bank (by telephone or otherwise,
such notice to be promptly confirmed by facsimile or other writing) that such
Bank will not make available to the Administrative Agent such Bank's share of
the requested Loans, the Administrative Agent may assume that such Bank has made
such share available to the Administrative Agent on the Borrowing Date in
accordance with this Section and, in reliance upon such assumption, make
available to the Borrower on such Borrowing Date a corresponding amount. If and
to the extent such Bank shall not have so made such share available to the
Administrative Agent, such Bank and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount (to the
extent not previously paid by the other), together with interest thereon for
each day from the date such amount is made available to the Borrower to the date
such amount is paid to the Administrative Agent, at a rate per annum equal to,
in the case of the Borrower, the interest rate otherwise applicable to such
Loan, and, in the case of such Bank, at a rate of interest per annum equal to
the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rates on interbank
compensation. If such Bank shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Bank's Loan as
part of the relevant borrowing for purposes of this Agreement.
Section 2.4. Notes.
-----
(a) The Loans made by the Banks shall be evidenced by separate promissory
notes of the Borrower payable to each Bank (each, a "Note" and collectively, the
"Notes"), each in substantially the form of Exhibit A-1 hereto. Each Note shall
be dated the date of this Agreement, shall be payable to the order of such Bank
in a principal amount equal to such Bank's Commitment as originally in effect,
and shall otherwise be duly completed. The Notes shall be payable as provided in
Sections 2.1 and 2.5 hereof.
(b) Each Bank shall enter on a schedule attached to its Note a notation
with respect to each Loan made hereunder of: (i) the date and principal amount
thereof, (ii) each payment and prepayment of principal thereof, (iii) whether
the interest rate is initially to be determined in accordance with subsection
2.6(a) (i) or 2.6(a) (ii) hereof, and (iv) the Interest Period, if applicable.
The failure of any Bank to make a notation on the schedule to its Note as
aforesaid shall not limit or otherwise affect the obligation of the Borrower to
repay the Loans in accordance with their respective terms as set forth herein.
Section 2.5. Repayment of Principal of Loans.
-------------------------------
(a) The Commitments of the Banks to make additional Loans shall terminate
on the Commitment Termination Date and the Borrower shall pay to each Bank the
principal of the Loans made by such Bank outstanding on the close of business on
the Commitment Termination Date in sixteen (16) consecutive quarterly
installments on the Quarterly Dates, commencing on January 1, 2003 and with the
final installment payable on the Termination Date (provided that the last such
payment shall be in an amount sufficient to repay in full the principal amount
of such Loans), with the amount of the installment paid on each payment date to
be equal to six and one-quarter percent (6.25%) of the principal of such Loans
outstanding at the close of business on the Commitment Termination Date.
(b) The Loans: (i) shall be repaid as and when necessary to cause the
aggregate principal amount of the Loans outstanding not to exceed each Bank's
Commitment, as reduced pursuant to Section 2.8 hereof, and (ii) may be repaid at
any time and from time to time, in whole or in part, without premium or penalty
(except as otherwise provided in Section 2.22 hereof), upon prior written notice
to each Bank as provided in Section 2.2 hereof, in a minimum amount of $500,000
and in integral multiples of $100,000 in the case of Prime Rate Loans, and in a
minimum amount of $2,000,000 and in integral multiples of $100,000 in the case
of Eurodollar Loans, except as otherwise provided in Section 2.11 hereof, and
any amount so repaid may, subject to the terms and conditions hereof, including
the borrowing limitation imposed by the Commitments, be reborrowed hereunder
during the Revolving Credit Period; provided, however, that: (A) Eurodollar
Loans may be repaid only on the last day of an Interest Period for such Loans,
and (B) all repayments of Loans or any portion thereof shall be made together
with payment of all interest accrued on the amount repaid through the date of
such repayment.
(c) Except as set forth in Sections 2.18, 2.19 and 2.21 hereof, all
payments and repayments made pursuant to the terms hereof shall be applied first
to Prime Rate Loans, and shall be applied to Eurodollar Loans only to the extent
any such payment exceeds the principal amount of Prime Rate Loans outstanding at
the time of such payment.
(d) The Borrower may request a Eurodollar Loan only if compliance with the
payment schedule set forth in subsection 2.5(a) hereof (with the payments
provided for therein being applied in accordance with subsection 2.5(c) hereof)
would not result in any portion of the principal amount of such Eurodollar Loan
being paid prior to the last day of the Interest Period applicable thereto.
Section 2.6. Interest.
--------
(a) The Borrower agrees to pay to the Administrative Agent, for the account
of the Banks in accordance with each Bank's Revolving Percentage, interest on
the unpaid principal amount of each Loan made by such Bank for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the following rates per annum:
(i) During such periods that such Loan is a Prime Rate Loan, the Prime Rate
plus the Applicable Margin; and
(ii) During such periods that such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Fixed Rate for such Loan for such Interest
Period plus the Applicable Margin.
(b) Notwithstanding the foregoing, the Borrower shall pay interest on any
Loan or any installment thereof, and on any other amount payable by the Borrower
hereunder (to the extent permitted by law) that shall not be paid in full when
due (whether at stated maturity, by acceleration or otherwise) for the period
commencing on the due date thereof until the same is paid in full at the
applicable Post-Default Rate.
(c) Except as provided in the next sentence, accrued interest on each Loan
shall be payable: (i) in the case of a Prime Rate Loan, monthly in arrears on
the Monthly Dates, (ii) in the case of a Eurodollar Loan, on the last day of
each Interest Period for such Loan (and, if such Interest Period exceeds three
months in duration, on the last day of each three-month period occurring during
such Interest Period) and (iii) in the case of any Loan, upon the payment or
prepayment thereof or the conversion thereof into a Loan of another type (but
only on the principal so paid, prepaid or converted). Interest that is payable
at the Post-Default Rate shall be payable from time to time on demand of any
Bank. Promptly after the establishment of any interest rate provided for herein
or any change therein, the Administrative Agent will notify the Borrower
thereof, provided that the failure to so notify the Borrower shall not affect
the obligations of the Borrower hereunder or under any of the Notes in any
respect.
(d) Anything in this Agreement or any of the Notes to the contrary
notwithstanding, the obligation of the Borrower to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be made to any Bank to the extent that such Bank's receipt thereof
would not be permissible under the law or laws applicable to such Bank limiting
rates of interest that may be charged or collected by such Bank. Any such
payments of interest that are not made as a result of the limitation referred to
in the preceding sentence shall be made by the Borrower to such Bank on the
earliest interest payment date or dates on which the receipt thereof would be
permissible under the laws applicable to such Bank limiting rates of interest
that may be charged or collected by such Bank. Such deferred interest shall not
bear interest.
Section 2.7. Fees.
----
(a) The Borrower agrees to pay to the Administrative Agent, for the account
of the Banks in accordance with each Bank's Revolving Percentage, a commitment
fee (the "Commitment Fee") on the daily average amount of such Bank's Unused
Commitment, for the period from the date hereof to and including the earlier of
the date such Bank's Commitment is terminated or the Commitment Termination
Date, at the rate of one-quarter of one percent (0.25%) per annum on the total
Unused Commitment for such Bank. The accrued Commitment Fee shall be payable
quarterly in arrears on the Quarterly Dates, commencing with October 1, 1999,
and on the earlier of the date the Commitments are terminated or the Commitment
Termination Date, and, in the event the Borrower reduces the Commitment as
provided in section 2.8 hereof, on the effective date of such reduction.
(b) Simultaneously with the execution and delivery of this Agreement, the
Borrower shall pay to the Administrative Agent, for the account of the Banks in
accordance with each Bank's Revolving Percentage, a non-refundable facility fee
(the "Facility Fee") in an amount equal to Two Hundred Forty Thousand ($240,000)
Dollars in the aggregate.
(c) Simultaneously with the execution and delivery of this Agreement, the
Borrower shall pay to Fleet and Chase any and all accrued and unpaid interest,
fees and other amounts that are due and owing to them under or in connection
with the Prior Agreement, whether as a "Bank" or as "Collateral Agent" (as such
terms are defined in the Prior Agreement).
(d) The Commitment Fee and the Facility Fee are hereinafter sometimes
referred to individually as a "Fee" and collectively as the "Fees".
Section 2.8. Voluntary Changes in Commitment; Prepayments
After Commitment Termination Date.
----------------------------------
Subject to Section 2.15 hereof, the Borrower shall be entitled to terminate
or reduce the Banks' Commitments provided that the Borrower shall give notice of
such termination or reduction to the Administrative Agent as provided in Section
2.2 hereof and that any partial reduction of the Commitments shall be in an
aggregate amount equal to $500,000 or an integral multiple thereof. Any such
termination or reduction shall be permanent and irrevocable.
Section 2.9. Use of Proceeds of Loans; Existing Indebtedness.
-----------------------------------------------
(a) The proceeds of the Loans hereunder may be used by the Borrower solely:
(i) to refinance the indebtedness of the Borrower under the Prior Agreement, and
(ii) the Borrower's working capital purposes and for other corporate purposes
permitted hereunder (including, without limitation, Permitted Acquisitions and
the repurchase, redemption, retirement or acquisition of the Borrower's capital
stock not prohibited by Section 7.5 hereof).
(b) The Notes executed in connection with this Agreement payable to the
order of each of Chase and Fleet shall amend, restate, replace and supersede the
Notes made by the Borrower to the order of each of such Banks in connection with
the Prior Agreement (the "Prior Notes"); provided, however, that the execution
and delivery of the Notes hereunder shall not in any circumstance be deemed to
have terminated, extinguished or discharged the Borrower's indebtedness under
such Prior Notes with respect to the Rollover Eurodollar Loans, all of which
indebtedness shall continue under and be governed by the Notes and the
documents, instruments and agreements executed pursuant hereto or in connection
herewith.
(c) With respect to each of Chase and Fleet, Schedule I sets forth (i) each
Rollover Eurodollar Loan outstanding to such Bank as of the date hereof, and
(ii) the last day of the Interest Period for each such Rollover Eurodollar Loan.
(d) With respect to all loans outstanding under the Prior Agreement other
than Rollover Eurodollar Loans, the Borrower shall pay to each of Chase and
Fleet on the date hereof, the then outstanding principal balance of each such
loan, if any, together with all accrued and unpaid interest with respect
thereto. With respect to all Rollover Eurodollar Loans set forth on Schedule I
hereto, such loans shall remain outstanding until the last day of the Interest
Period therefor, at which time the Borrower shall pay to the respective Bank the
entire principal balance of such Rollover Eurodollar Loan together with all
accrued and unpaid interest with respect thereto (provided each such Rollover
Eurodollar Loan shall be subject to all the terms and conditions of this
Agreement unless in the opinion of the Agent and the Required Banks the context
should indicate otherwise).
(e) Notwithstanding anything to the contrary contained in this Agreement,
from the date hereof through and including January 19, 2000, the Banks shall (i)
on the last day of each Interest Period, and (ii) on the date of each borrowing,
repayment or prepayment of Loan(s) hereunder, at the direction of the Agent,
make appropriate adjustments (whether by participation or otherwise) among
themselves in order to insure that the amount (and type) of Loans outstanding to
the Borrower from each Bank hereunder (as of such date) are proportionate to the
aggregate amount of the total Commitments of the Banks hereunder. The Borrower
agrees and consents to the terms of this subsection 2.9(e).
Section 2.10. Computations.
------------
Interest on all Loans and each Fee shall be computed on the basis of a year
of 360 days and actual days elapsed (including the first day but excluding the
last) occurring in the period for which payable.
Section 2.11. Minimum Amounts of Borrowings, Conversions,
Prepayments and Interest Periods.
---------------------------------
Except for borrowings, conversions and prepayments that exhaust the full
remaining amount of the Aggregate Revolving Commitment (in the case of
borrowings) or result in the conversion or prepayment of all Loans of a
particular type (in the case of conversions or prepayments) or conversions made
pursuant to Section 2.18 or Section 2.20 hereof, each borrowing from each Bank,
each conversion of Loans of one type into Loans of another type and each
prepayment of principal of Loans hereunder shall be in an amount at least equal
to $500,000 and in integral multiples of $100,000 in the case of Prime Rate
Loans, and in an amount at least equal to $2,000,000 and in integral multiples
of $100,000 in the case of Eurodollar Loans (borrowings, conversions and
prepayments of different types of Loans at the same time hereunder to be deemed
separate borrowings, conversions and prepayments for purposes of the foregoing,
one for each type).
Section 2.12. Time and Method of Payments.
---------------------------
(a) Except as provided below, all payments of principal, interest, Fees and
other amounts (including indemnities) to be paid by the Borrower under the Loan
Documents or payable by the Borrower hereunder shall be made in Dollars, in
immediately available funds, shall be made to the Administrative Agent, prior to
11:00 a.m. on the date such payment is due, for the account of the applicable
Credit Party at the Payment Office, without set-off, offset, recoupment or
counterclaim. The failure of the Borrower to make any such payment by such time
shall not constitute a Default, provided that such payment is made on such due
date, but any such payment made after 1:00 p.m. on such due date shall be deemed
to have been made on the next Business Day for the purpose of calculating
interest on amounts outstanding on the Revolving Loans. As between the Borrower
and each Credit Party, any payment by the Borrower to the Administrative Agent
for the account of such Credit Party shall be deemed to be payment by the
Borrower to such Credit Party. Notwithstanding the foregoing, all payments
pursuant to Sections 2.18, 2.22, 9.1 and 9.2 shall be paid directly to the
Credit Party entitled thereto. Furthermore, the Administrative Agent and any
Bank for whose account any such payment is to be made may, but shall not be
obligated to, debit the amount of any such payment that is not made by such time
to any ordinary deposit account of the Borrower with the Administrative Agent or
such Bank, as the case may be. If any payment under the Loan Documents shall be
due and payable on a day which is not a Business Day, the due date thereof
(except as otherwise provided with respect to Interest Periods) shall be
extended to the next Business Day and (except with respect to payments in
respect of the Fees) interest shall be payable at the applicable rate specified
herein during such extension, provided, however, that if such next Business Day
would be after the Termination Date, such payment shall instead be due on the
immediately preceding Business Day. Additional provisions relating to payments
are set forth in Section 9.3 hereof.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (A) first, towards payment of
interest and fees then due under the Loan Documents, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due to
such parties, and (B) second, towards payment of principal then due under the
Loan Documents, ratably among the parties entitled thereto in accordance with
the amounts of principal then due to such parties.
Section 2.13. Lending Offices.
---------------
The Loans of each type made by each Bank shall be made and maintained at
such Bank's Applicable Lending Office for Loans of such type.
Section 2.14. Failure to Fund.
---------------
The failure of any Bank to make any Loan to be made by it on the date
specified therefor shall not relieve any other Bank of its respective
obligations to make its Loans on such date, but no Bank shall be responsible for
the failure of any other Bank to make Loans to be made by such other Bank.
Section 2.15. Pro Rata Treatment Between Banks.
--------------------------------
Notwithstanding anything to the contrary provided herein, other than as set
forth in Section 2.9 hereof: (i) each borrowing from the Banks under Section 2.1
hereof will be made from the Banks and each payment of each Fee shall be made to
the Banks pro rata according to each Bank's Revolving Percentage (without giving
effect to the termination thereof, whether pursuant to subsection 2.5 (a),
Article 8 or otherwise) ; (ii) each partial reduction of the Commitments shall
be applied to the Commitments of the Banks pro rata according to each Bank's
Revolving Percentage; (iii) each conversion of Loans of a particular type under
Section 2.17 hereof (other than conversions provided for by Section 2.20 or 2.21
hereof) will be made pro rata among the Banks holding Loans of such type
according to the respective principal amounts of such Loans held by such Banks;
(iv) each payment and prepayment of principal of or interest on Loans of a
particular type will be made to the Banks pro rata in accordance with the
respective unpaid principal amounts of such Loans held by such Banks; and (v)
each borrowing from the Banks under Section 2.1 hereof will be made from the
Banks at the same Interest Period (if applicable) with respect to each such
borrowing.
Section 2.16. Sharing of Payments, and Set-Off Among Banks.
--------------------------------------------
The Borrower hereby agrees that, in addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim a Bank may otherwise have,
each Bank shall be entitled, at its option, to offset balances held by it at any
of its offices against any principal of or interest on any of its Loans
hereunder, or any Fee or other amount payable to it, that is not paid when due
(regardless of whether such balances are then due to the Borrower), in which
case it shall promptly notify the Borrower and the other Banks thereof, provided
that its failure to give such notice shall not affect the validity thereof. If a
Bank shall effect payment of any principal of or interest on Loans held by it
under this Agreement through the exercise of any right of set-off, banker's
lien, counterclaim or similar right, it shall promptly purchase from the other
Banks participations in the Loans held by the other Banks in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that each Bank shall share the benefit of such payment pro rata in accordance
with the unpaid principal and interest on the Loans held by each of them. To
such end the Banks shall make appropriate adjustments between themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees that such Bank so purchasing a
participation in the Loans held by the other Banks may, to the fullest extent
permitted by law, exercise all rights of payment (including the rights of
set-off, banker's lien, counterclaim or similar rights) with respect to such
participation as fully as if such Bank were a direct holder of Loans in the
amount of such participation. Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower.
Section 2.17. Conversions of Loans.
--------------------
The Borrower shall have the right to convert Loans of one type into Loans
of another type from time to time, provided that: (i) the Borrower shall give
the Administrative Agent notice of each such conversion as provided in Section
2.2 hereof; (ii) Eurodollar Loans may be converted only on the last day of an
Interest Period for such Loans; and (iii) except as required by Sections 2.18 or
2.21 hereof, no Prime Rate Loan may be converted into a Eurodollar Loan if on
the proposed date of conversion a Default or an Event of Default exists. The
Administrative Agent shall use its best efforts to notify the Borrower of the
effectiveness of such conversion, and the new interest rate to which the
converted Loans are subject, as soon as practicable after the conversion;
provided, however, that any failure to give such notice shall not affect the
Borrower's obligations, or the Banks' or the Administrative Agent's rights and
remedies, hereunder in any way whatsoever.
Section 2.18. Additional Costs; Capital Requirements.
--------------------------------------
(a) In the event that any existing or future law or regulation, guideline
or interpretation thereof, by any court or administrative or governmental
authority charged with the administration thereof, or compliance by any Bank
with any request or directive (whether or not having the force of law) of any
such authority shall impose, modify or deem applicable or result in the
application of, any capital maintenance, capital ratio or similar requirement
against loan commitments made by any Bank hereunder, and the result of any event
referred to above is to impose upon any Bank or increase any capital requirement
applicable as a result of the making or maintenance off such Bank's Commitment
or the obligation of the Borrower hereunder with respect to such Commitment
(which imposition of capital requirements may be determined by each Bank's
reasonable allocation of the aggregate of such capital increases or
impositions), then, upon demand made by such Bank as promptly as practicable
after it obtains knowledge that such law, regulation, guideline, interpretation,
request or directive exists and determines to make such demand, the Borrower
shall immediately pay to such Bank from time to time as specified by such Bank
additional commitment fees which shall be sufficient to compensate such Bank for
such imposition of or increase in capital requirements together with interest on
each such amount from the date demanded until payment in full thereof at the
Post-Default Rate. A certificate setting forth in reasonable detail the amount
necessary to compensate such Bank as a result of an imposition of or increase in
capital requirements submitted by such Bank to the Borrower shall be conclusive,
absent manifest error, as to the amount thereof. For purposes of this Section
2.18: (i) in calculating the amount necessary to compensate any Bank for any
imposition of or increase in capital requirements, such Bank shall be deemed to
be entitled to a rate of return on capital (after federal, state and local
taxes) of fifteen percent per annum, and (ii) all references to any "Bank" shall
be deemed to include any participant in such Bank's Commitment.
(b) In the event that any Regulatory Change shall: (i) change the basis of
taxation of any amounts payable to any Bank under this Agreement or the Notes in
respect of any Loans including, without limitation, Eurodollar Loans (other than
taxes imposed on the overall net income of such Bank for any such Loans by the
United States of America or the jurisdiction in which such Bank has its
Principal Office); or (ii) impose or modify any reserve, Federal Deposit
Insurance Corporation premium or assessment, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Bank (including any of such Loans or
any deposits referred to in the definition of "Fixed Base Rate" in Article 1
hereof); or (iii) impose any other conditions affecting this Agreement in
respect of Loans, including, without limitation, Eurodollar Loans (or any of
such extensions of credit, assets, deposits or liabilities); and the result of
any event referred to in clause (i), (ii) or (iii) above shall be to increase
such Bank's costs of making or maintaining any Loans, including, without
limitation, Eurodollar Loans, or its Commitment, or to reduce any amount
receivable by such Bank hereunder in respect of any of its Eurodollar Loans, or
its Commitment (such increases in costs and reductions in amounts receivable are
hereinafter referred to as "Additional Costs") in each case, only to the extent
that such Additional Costs are not included in the Fixed Base Rate applicable to
such Eurodollar Loans, then, upon demand made by such Bank as promptly as
practicable after it obtains knowledge that such a Regulatory Change exists and
determines to make such demand, the Borrower shall pay to such Bank from time to
time as specified by such Bank, additional commitment fees or other amounts
which shall be sufficient to compensate such Bank for such increased cost or
reduction in amounts receivable by such Bank from the date of such change,
together with interest on each such amount from the date demanded until payment
in full thereof at the Post-Default Rate. All references to any "Bank" shall be
deemed to include any participant in such Bank's Commitment.
(c) Without limiting the effect of the foregoing provisions of this Section
2.18, in the event that, by reason of any Regulatory Change, any Bank either:
(i) incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of such Bank
which includes deposits by reference to which the interest rate on Eurodollar
Loans is determined as provided in this Agreement or a category of extensions of
credit or other assets of such Bank which includes Eurodollar Loans, or (ii)
becomes subject to restrictions on the amount of such a category of liabilities
or assets that it may hold, then, if such Bank so elects by notice to the
Borrower (with a copy to the other Banks), the obligation of such Bank to make,
and to convert Loans of any other type into, Loans of such type hereunder shall
be suspended until the date such Regulatory Change ceases to be in effect (and
all Loans of such type then outstanding shall be converted into Prime Rate Loans
or into Eurodollar Loans of another duration, as the case may be, in accordance
with Sections 2.17 and 2.21 hereof).
(d) Determinations by any Bank for purposes of this Section 2.18 of the
effect of any Regulatory Change on its costs of making or maintaining Loans or
on amounts receivable by it in respect of Loans, and of the additional amounts
required to compensate such Bank in respect of any Additional Costs, shall be
set forth in writing in reasonable detail and shall be conclusive, absent
manifest error.
Section 2.19. Limitation on Types of Loans.
----------------------------
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of an interest rate for any Eurodollar Loans for any Interest
Period therefor, the Administrative Agent or any Bank determines (which
determination shall be conclusive):
(a) by reason of any event affecting the Eurodollar interbank market,
quotations of interest rates for the relevant deposits are not being provided in
the relevant amounts or for the relevant maturities for purposes of determining
the rate of interest for such Loans under this Agreement; or
(b) the rates of interest referred to in the definition of "Fixed Base
Rate" in Article 1 hereof upon the basis of which the rate of interest on any
Eurodollar Loans for such period is determined, do not accurately reflect the
cost to the Banks of making or maintaining such Loans for such period;
then the Administrative Agent or such Bank, as the case may be, shall give the
Borrower and the other Banks prompt notice thereof (and shall thereafter give
the Borrower and such other Banks prompt notice of the cessation, if any, of
such condition), and so long as such condition remains in effect, the Banks
shall be under no obligation to make Loans of such type or to convert Loans of
any other type into Loans of such type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected type either prepay such Loans in accordance with Section 2.8 hereof or
convert such Loans into Loans of another type in accordance with Section 2.17
hereof.
Section 2.20. Illegality.
----------
Notwithstanding any other provision in this Agreement, in the event that it
becomes unlawful for any Bank or its Applicable Lending Office to: (i) honor its
obligation to make Eurodollar Loans hereunder, or (ii) maintain Eurodollar Loans
hereunder, then such Bank shall promptly notify the Borrower thereof (with a
copy to the other Banks), describing such illegality in reasonable detail (and
shall thereafter promptly notify the Borrower and the other Banks of the
cessation, if any, of such illegality), and such Bank's obligation to make
Eurodollar Loans and to convert other types of Loans into Eurodollar Loans
hereunder shall, upon written notice given by such Bank to the Borrower, be
suspended until such time as such Bank may again make and maintain Eurodollar
Loans and such Bank's outstanding Eurodollar Loans shall be converted into Prime
Rate Loans in accordance with Sections 2.17 and 2.21 hereof.
Section 2.21. Certain Conversions pursuant to Sections 2.18 and 2.20.
------------------------------------------------------
If the Loans of any Bank of a particular type (Loans of such type are
hereinafter referred to as "Affected Loans" and such type is hereinafter
referred to as the "Affected Type") are to be converted pursuant to Section 2.18
or 2.20 hereof, such Bank's Affected Loans shall be converted into Prime Rate
Loans, or Eurodollar Loans of another type, as the case may be (the "New Type
Loans") on the last day(s) of the then current Interest Period(s) for the
Affected Loans (or, in the case of a conversion required by subsection 2.18(c)
or Section 2.20 hereof, on such earlier date as such Bank may specify to the
Borrower with a copy to the other Banks) and, until such Bank gives notice as
provided below that the circumstances specified in Section 2.18 or 2.20 hereof
that gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been so converted,
all payments and prepayments of principal that would otherwise be applied to
such Affected Loans shall be applied instead to its New Type Loans; and
(b) all Loans that would otherwise be made by such Bank as Loans of the
Affected Type shall be made instead as New Type Loans and all Loans of such Bank
that would otherwise be converted into Loans of the Affected Type shall be
converted instead into (or shall remain as) New Type Loans.
Section 2.22. Indemnity.
---------
The Borrower hereby agrees to indemnify each Bank against any loss or
expense which such Bank may sustain or incur as a consequence of any of the
following:
(a) the failure of the Borrower to borrow a Eurodollar Loan after agreement
shall have been reached on the amount, interest rate and Interest Period
thereof;
(b) the receipt or recovery by such Bank, whether by voluntary prepayment,
acceleration or otherwise, of all or any part of a Eurodollar Loan prior to the
last day of an Interest Period applicable thereto; or
(c) the conversion, prior to the last day of an applicable Interest Period,
of a Eurodollar Loan into a Prime Loan.
Without limiting the effect of the foregoing, the amount to be paid by the
Borrower to such Bank in order to so indemnify such Bank for any loss occasioned
by any of the events described in the preceding paragraph, and as liquidated
damages therefor, shall be equal to the excess, discounted to its present value
as of the date paid to such Bank, of (i) the amount of interest which otherwise
would have accrued on the principal amount so received, recovered, converted or
not borrowed during the period (the "Indemnity Period") commencing with the date
of such receipt, recovery, conversion, or failure to borrow to the last day of
the applicable Interest Period for such Eurodollar Loan at the rate of interest
applicable to such Loan (or the rate of interest agreed to in the case of a
failure to borrow) provided for herein (prior to default) over (ii) the amount
of interest which would be earned by such Bank during the Indemnity Period if it
invested the principal amount so received, recovered, converted or not borrowed
at the rate per annum determined by such Bank as the rate it would bid in the
London interbank market for a deposit of eurodollars in an amount approximately
equal to such principal amount for a period of time comparable to the Indemnity
Period.
A certificate as to any additional amounts payable pursuant to this Section
2.22 setting forth the basis and method of determining such amounts shall be
conclusive, absent manifest error, as to the determination by such Bank set
forth therein if made reasonably and in good faith. The Borrower shall pay any
amounts so certified to it by such Bank within 10 days of receipt of any such
certificate. For purposes of this Section 2.22, all references to the "Bank"
shall be deemed to include any participant in such Bank's Commitment and/or
Loans.
The indemnities set forth herein shall survive payment in full of all
Eurodollar Loans and all other Loans made pursuant to this Agreement.
Section 2.23. Security.
--------
(a) In order to secure the due payment and performance by the Borrower of
the Obligations, simultaneously with the execution and delivery of this
Agreement (or such later date as referenced below) the Borrower shall:
(A) Grant to the Administrative Agent for the ratable benefit of the Banks
a first Lien on, and pledge to the Administrative Agent for the ratable benefit
of the Banks, all of the issued and outstanding shares of the capital stock of
Telephonics and Clopay by the execution and delivery to the Administrative Agent
of a Pledge Agreement substantially in the form of Exhibit A-2 hereto;
(B) Grant, or cause each of its Subsidiaries to grant, to the
Administrative Agent for the ratable benefit of the Banks, all of the issued and
outstanding shares of the capital stock of any Eligible Business acquired after
the date hereof in a Permitted Acquisition, provided that the foregoing terms of
this subsection (B) in respect of Subsidiaries of Clopay and of Telephonics
shall be subject to the terms of the proviso at the conclusion of subsection (c)
of the definition of "Permitted Acquisition"; and
(C) Execute and deliver or cause to be executed and delivered such other
agreements, instruments and documents as the Administrative Agent or any Bank
may reasonably require in order to effect the purposes of the Pledge Agreement,
this Section 2.23 and this Agreement.
(b) All of the agreements, instruments and documents provided for or
referred to in this Section 2.23 are hereinafter sometimes referred to
collectively as the "Security Documents".
Article 3 Representations and Warranties.
------------------------------
The Borrower hereby represents and warrants to the Administrative Agent and
the Banks that:
Section 3.1. Organization.
------------
(a) Each of the Borrower and each Subsidiary is duly organized and validly
existing under the laws of its state of organization and has the power to own
its assets and to transact the business in which it is presently engaged and in
which it proposes to be engaged. Exhibit B hereto accurately and completely
lists, as to the Borrower and each Principal Subsidiary: (i) the state of
incorporation or organization, and the type of legal entity that each of them
is, and (ii) the classes and number of authorized and outstanding shares of
capital stock of each such corporation, and the owners of such outstanding
shares of capital stock (other than with respect to the Borrower). All of the
shares of capital stock of the Borrower and each Subsidiary or other equity
interests that are issued and outstanding have been duly and validly issued and
are fully paid and non-assessable, and are owned by the Persons (other than with
respect to the Borrower and any Subsidiary that is not a Principal Subsidiary)
referred to on Exhibit B, free and clear of any Lien except as otherwise
provided for herein. Except as set forth on Exhibit B, there are no outstanding
warrants, options, contracts or commitments of any kind entitling any Person to
purchase or otherwise acquire any shares of capital stock or other equity
interests of any Subsidiary nor are there outstanding any securities that are
convertible into or exchangeable for any shares of capital stock or other equity
interests of any Subsidiary. Except as set forth on Exhibit B, neither the
Borrower nor any Subsidiary has any Subsidiary.
(b) Each of the Borrower and each Subsidiary is in good standing in its
state of organization and in each state in which it is qualified to do business.
There are no jurisdictions other than as set forth on Exhibit B hereto in which
the character of the properties owned or proposed to be owned by the Borrower or
any Principal Subsidiary or in which the transaction of the business of the
Borrower or any Principal Subsidiary as now conducted or as proposed to be
conducted requires or will require the Borrower or any Principal Subsidiary to
qualify to do business and as to which failure to so qualify could have a
Material Adverse Effect.
Section 3.2. Power, Authority, Consents.
--------------------------
The Borrower and each Loan Party has the power to execute, deliver and
perform the Loan Documents to which it is a party. The Borrower has the power to
borrow hereunder and has taken all necessary corporate action to authorize the
borrowing hereunder on the terms and conditions of this Agreement. The Borrower
and each Loan Party has taken all necessary action, corporate or otherwise, to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. No consent or approval of any Person (including, without
limitation, any stockholder of the Borrower or any Loan Party ), no consent or
approval of any landlord or mortgagee, no waiver of any Lien or right of
distraint or other similar right and no consent, license, certificate of need,
approval, authorization or declaration of any governmental authority, bureau or
agency, is or will be required in connection with the execution, delivery or
performance by the Borrower or any Loan Party, or the validity, enforcement or
priority, of the Loan Documents or any Lien created and granted thereunder,
except as set forth on Exhibit C hereto, each of which either has been duly and
validly obtained on or prior to the date hereof and is now in full force and
effect, or is designated on Exhibit C as waived by the Required Banks.
Section 3.3. No Violation of Law or Agreements.
---------------------------------
The execution and delivery by the Borrower and each Subsidiary of each Loan
Document to which it is a party and performance by it hereunder and thereunder,
will not violate any provision of law applicable to the Borrower and its
Subsidiaries and will not, except as set forth on Exhibit C hereto, conflict
with or result in a breach of any order, writ, injunction, ordinance,
resolution, decree, or other similar document or instrument of any court or
governmental authority, bureau or agency, domestic or foreign applicable to the
Borrower and its Subsidiaries, or any certificate of incorporation or by-laws of
the Borrower or any Subsidiary or create (with or without the giving of notice
or lapse of time, or both) a default under or breach of any agreement, bond,
note or indenture to which the Borrower or any Subsidiary is a party, or by
which it is bound or any of its properties or assets is affected, or result in
the imposition of any Lien of any nature whatsoever upon any of the properties
or assets owned by or used in connection with the business of the Borrower or
any Subsidiary.
Section 3.4. Due Execution, Validity, Enforceability.
---------------------------------------
This Agreement and each other Loan Document has been duly executed and
delivered by the Borrower and each Loan Party and each constitutes the valid and
legally binding obligation of the Borrower and each Loan Party, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally and except that the remedy of specific performance
and other equitable remedies are subject to judicial discretion.
Section 3.5. Properties, Priority of Liens; Existing Guarantees.
--------------------------------------------------
All of the properties and assets owned by the Borrower and each Subsidiary
are owned by each of them, respectively, free and clear of any Lien of any
nature whatsoever, except as provided for in the Security Documents, and as
permitted by Section 7.2 hereof. The Liens that have been created and granted by
the Security Documents constitute valid perfected first Liens on the properties
and assets covered by the Security Documents, subject to no prior or equal Lien
except as permitted by Section 7.2 hereof. Exhibit K correctly sets forth all
Guarantees, Investments in Foreign Loan Parties and other known Contingent
Obligations of the Borrower and each of its subsidiaries as of the date hereof.
Section 3.6. Judgments, Actions, Proceedings.
-------------------------------
Except as set forth on Exhibit E hereto, there are no outstanding
judgments, actions or proceedings, including, without limitation, any
Environmental Proceeding, pending before any court or governmental authority,
bureau or agency, with respect to or, to the best of the Borrower's knowledge,
threatened against or affecting the Borrower or any Subsidiary that would, if
adversely determined, in the case of any action or court proceeding, have a
Material Adverse Effect, nor, to the best of the Borrower's knowledge, is there
any reasonable basis for the institution of any such material action or
proceeding that is probable of assertion, nor are there any such actions or
proceedings in which the Borrower or any Subsidiary is a plaintiff or
complainant.
Section 3.7. No Defaults, Compliance With Laws.
---------------------------------
Except as set forth on Exhibit F hereto, neither the Borrower nor any
Subsidiary is in default under any agreement, ordinance, resolution, decree,
bond, note, indenture, order or judgment to which it is a party or by which it
is bound, or any other agreement or other instrument by which any of the
properties or assets owned by it or used in the conduct of its business is
affected, which default could have a material adverse effect on the business,
operations, financial condition or properties of the Borrower and its
Subsidiaries on a consolidated basis or on the ability of the Borrower to
perform its obligations under the Loan Documents. The Borrower and each
Subsidiary has complied and is in compliance in all respects with all applicable
laws, ordinances and regulations, resolutions, ordinances, decrees and other
similar documents and instruments of all courts and governmental authorities,
bureaus and agencies, domestic and foreign, including, without limitation, all
applicable Environmental Laws and Regulations, non-compliance with which could
have a material adverse effect on the business, operations, financial condition
or properties of the Borrower and its Subsidiaries on a consolidated basis or on
the ability of the Borrower to perform its obligations under the Loan Documents.
Section 3.8. Burdensome Documents.
--------------------
Except as set forth on Exhibit G hereto, neither the Borrower nor any
Subsidiary is a party to or bound by, nor are any of the properties or assets
owned by the Borrower or any Subsidiary used in the conduct of their respective
businesses affected by, any agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment, including, without limitation, any of the
foregoing relating to any Environmental Matter, that materially and adversely
affects their respective businesses, assets or conditions, financial or
otherwise, on a consolidated basis.
Section 3.9. Financial Statements.
--------------------
Each of the Financial Statements is correct and complete and presents
fairly the consolidated financial position, the consolidated results of
operations and cash flows of the Borrower and its Subsidiaries, as at and for
its date, and has been prepared in accordance with generally accepted accounting
principles consistently applied. Neither the Borrower nor any Subsidiary has any
material obligation, liability or commitment, direct or contingent (including,
without limitation, any Environmental Liability and any Contingent Obligation) ,
that is required to be but is not reflected in the Financial Statements. There
has been no material adverse change in the financial position or operations of
the Borrower and its Subsidiaries on a consolidated basis since the date of the
latest balance sheet included in the Financial Statements (the "Latest Balance
Sheet") which could reasonably result in the Borrower's inability to perform its
obligations under the Loan Documents. The Borrower's fiscal year is the
twelve-month period ending on September 30th in each year.
Section 3.10. Tax Returns.
-----------
Each of the Borrower and each of the Subsidiaries has filed all federal,
state and local tax returns required to be filed by it and has not failed to pay
any taxes, or interest and penalties relating thereto, on or before the due
dates thereof. Except to the extent that reserves therefor are reflected in the
Financial Statements: (i) there are no material federal, state or local tax
liabilities of the Borrower or any subsidiary due or to become due for any tax
year ended on or prior to the date of the Latest Balance Sheet relating to such
entity, whether incurred in respect of or measured by the income of such entity,
that are not properly reflected in the Latest Balance Sheet relating to such
entity, and (ii) there are no material claims pending or, to the knowledge of
the Borrower, proposed or threatened against the Borrower or any Subsidiary for
past federal, state or local taxes, except those, if any, as to which proper
reserves are reflected in the Financial Statements.
Section 3.11. Intangible Assets.
-----------------
Each of the Borrower and each Subsidiary possesses all patents, trademarks,
service marks, trade names, and copyrights, and rights with respect to the
foregoing, necessary to conduct its business as now conducted and as proposed to
be conducted, without any conflict with the patents, trademarks, service marks,
trade names, and copyrights and rights with respect to the foregoing, of any
other Person.
Section 3.12. Regulation U.
------------
No part of the proceeds received by the Borrower from the Loans will be
used directly or indirectly for: (a) any purpose other than as set forth in
Section 2.9 hereof, or (b) the purpose of purchasing or carrying, or for payment
in full or in part of Indebtedness that was incurred for the purposes of
purchasing or carrying, any "margin stock", as such term is defined in 221.3 of
Regulation U of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II, Part 221, other than purchases made in compliance with Regulation U.
Section 3.13. Name Changes, Mergers, Acquisitions.
-----------------------------------
Except as set forth on Exhibit H hereto, neither the Borrower nor any
Principal Subsidiary has within the six-year period immediately preceding the
date of this Agreement changed its name, been the surviving entity of a merger
or consolidation, or acquired all or substantially all of the assets of any
Person, where the value of the assets acquired in such merger, consolidation or
acquisition was material in relation to the total assets of the Borrower and its
Subsidiaries on a consolidated basis.
Section 3.14. Full Disclosure.
---------------
None of the Financial Statements, nor any certificate, opinion, or any
other statement made or furnished in writing to the Administrative Agent or the
Banks by or on behalf of the Borrower or any Subsidiary in connection with this
Agreement or the transactions contemplated herein, contains any untrue statement
of a material fact, or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading, as of the date such
statement was made. There is no fact known to the Borrower that has, or would in
the forseeable future have, a Material Adverse Effect, which fact has not been
set forth herein, or in the Financial Statements, or any certificate, opinion or
other written statement so made or furnished to the Administrative Agent or the
Banks.
Section 3.15. Licenses and Approvals.
----------------------
The Borrower and each of the Subsidiaries has all material licenses,
permits and governmental authorizations, including, without limitation,
licenses, permits and authorizations relating to Environmental Matters, to own
and operate its properties and to carry on its business as now conducted.
Section 3.16. Labor Disputes; Collective Bargaining Agreements;
Employee Grievances.
--------------------
Except as set forth on Exhibit I hereto: (a) no collective bargaining
agreement or other labor contract will expire during the term of this Agreement;
(b) to the Borrower's knowledge, no union or other labor organization is seeking
to organize, or to be recognized as bargaining representative for, a bargaining
unit of employees of the Borrower or any Subsidiary; (c) there is no pending or
threatened strike, work stoppage, material unfair labor practice claim or
charge, arbitration or other material labor dispute against or affecting the
Borrower or any Subsidiary or their representative employees, in each case the
consequences of which could reasonably be expected to affect aggregate business
(regardless of division or entity) of the Borrower and its Subsidiaries which
business generated gross revenues in excess of $50,000,000 individually or in
the aggregate in the prior fiscal year; and (d) there are no actions, suits,
charges, demands, claims, counterclaims or proceedings pending or, to the best
of the Borrower's knowledge, threatened against the Borrower or any of the
Subsidiaries, by or on behalf of, or with, its employees, other than any such
actions, suits, charges, demands, claims, counterclaims or proceedings arising
in the ordinary course of business that are not, in the aggregate, material.
Section 3.17. Condition of Assets.
-------------------
All of the assets and properties of the Borrower and the Subsidiaries that
are reasonably necessary for the operation of their respective businesses, are
in good working condition, ordinary wear and tear excepted, and are able to
serve the function for which they are currently being used.
Section 3.18. ERISA.
-----
(a) Except as disclosed on Exhibit J hereto, no Pension Plan or Defined
Contribution Plan which is an Employee Benefit Plan including, without
limitation, any Multiemployer Plan, exists or has ever, within the six-year
period immediately preceding the date of this Agreement, existed and neither the
Borrower nor any ERISA Affiliate is a participating employer in any Pension Plan
which is an Employee Benefit Plan in which more than one employer makes
contributions as described in Sections 4063 and 4064 of ERISA. Except as
disclosed on Exhibit J, neither the Borrower nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement benefit under any
Employee Welfare Benefit Plan which is a welfare plan (as defined in Section
3(l) of ERISA), other than liability for health plan continuation coverage
described in Part 6 of Title I of ERISA, which together with any disclosed
liability on Exhibit J, will not have an ERISA MAE. The Borrower has given, made
available, or upon request will deliver, to the Administrative Agent and the
Banks true and complete copies of all the following: each Pension Plan or
Defined Contribution Plan which is an Employee Benefit Plan and related trust
agreement (including all amendments and commitments with respect to such
Employee Benefit plan or trust) which the Borrower or any ERISA Affiliate
maintains or is committed to contribute to as of the date hereof and the most
recent summary plan description, actuarial report, determination letter issued
by the Internal Revenue Service and Form 5500 filed in respect of each such
Employee Benefit Plan; a listing of all of the Multiemployer Plans to which the
Borrower or any ERISA Affiliate contributes or is committed to contribute and
the aggregate amount of the most recent annual contributions required to be made
to each such Multiemployer Plan, and any information which has been provided to
the Borrower or any ERISA Affiliate regarding withdrawal liability under any
Multiemployer Plan and the collective bargaining agreement pursuant to which
such contribution is required to be made.
(b) Each Employee Benefit Plan complies, in both form and operation in all
material respects, with its terms, ERISA and the Code including, without
limitation, Code Section 4980B, and no condition exists or event has occurred
with respect to any such plan which would result in the incurrence by the
Borrower or any ERISA Affiliate of any material liability, fine or penalty.
Neither the Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC which remains outstanding other than the payment of premiums, and there are
no premiums which have become due which are unpaid. Neither the Borrower nor any
ERISA Affiliate has engaged in any transaction which could subject it to
material liability under Section 4069 or Section 4212(c) of ERISA. Each Employee
Benefit Plan, related trust agreement, arrangement and commitment of the
Borrower and each ERISA Affiliate is legally valid and binding and in full force
and effect. Except as provided on Exhibit J and subject to amendment and
submission for a determination letter with regard to the Tax Reform Act of 1986
requirements and other post 1986 requirements, each Employee Benefit Plan that
is intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such plan has been determined to be exempt under Section 501(a) of the Code. To
the knowledge of the Borrower, nothing has occurred or is expected to occur that
would adversely affect the qualified status of the Employee Benefit Plan or any
related trust subsequent to the issuance of such determination letter. No
Employee Benefit Plan is being audited or, to the knowledge of the Borrower,
investigated by any government agency or subject to any pending or threatened
claim or suit.
(c) Each Pension Plan currently meets the minimum funding standard of
Section 302 of ERISA and Section 412 of the Code (without regard to any funding
waiver). All contributions or payments due and owing as required by Section 302
of ERISA, Section 412 of the Code or the terms of any Pension Plan have been
made by the due date for such contributions or payments. With respect to each
Multiemployer Plan, the Borrower and each ERISA Affiliate has paid or accrued
all contributions pursuant to the terms of the applicable collective bargaining
agreement required to be paid or accrued by it and neither the Borrower nor any
ERISA Affiliate has incurred any withdrawal liability in connection with a
complete withdrawal or partial withdrawal from any Multiemployer Plan that has
not been discharged. With respect to each Pension Plan, the market value of
assets (exclusive of any contribution due to the Pension Plan) equals or exceeds
or is not more than $250,000 below the present value of benefit liabilities (FAS
35) (assuming such Plan were to continue in existence) as of the latest
actuarial valuation date for such plan (but not prior to 24 months prior to the
date hereof), determined on the basis of such Pension Plan's actuarial
assumptions set forth in the most recent actuarial report, and since its last
valuation date, there have been no amendments to such plan that materially
increased the present value of accrued benefits nor any other material adverse
changes in the funding status of such plan. Neither the Borrower nor any ERISA
Affiliate is required to provide security to a Pension Plan pursuant to Section
307 of ERISA or Section 401(a) (29) of the Code.
(d) Neither the Borrower nor any ERISA Affiliate, nor, to the best of the
Borrower's knowledge, any fiduciary of any Employee Benefit Plan, has engaged in
a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
with regard to any such Employee Benefit Plans. The execution, delivery and
carrying out of the terms of any agreements that are related to this transaction
will not constitute a prohibited transaction under the aforementioned sections.
(e) No Termination Event has occurred or is reasonably expected to occur.
(f) None of the following "reportable events" which are subject to the
30-day notice requirement of Section 4043(b) of ERISA in respect of any of the
Pension Plans has occurred: (i) an inability to pay benefits when due, (ii)
bankruptcy or insolvency of the sponsor of the Pension Plan, (iii) liquidation
or dissolution of the sponsor of the Pension Plan, (iv) a failure to meet the
minimum funding standards, or (v) certain transactions involving a change of
employer. The Borrower has not received any notice from the PBGC that any of the
Pension Plans is being involuntarily terminated or from the Secretary of the
Treasury that any partial or full termination of any of the Employee Benefit
Plans has occurred and no event shall have occurred, and there shall exist as of
the date hereof no condition or set of circumstances which present a material
risk of the involuntary termination of any of the Pension Plans.
(g) All references to the Borrower in this Section 3.18 or in any other
Section of this Agreement relating to ERISA shall be deemed to refer to the
Borrower, and any other entity which is considered an ERISA Affiliate.
(h) All references in this Section 3.18, and in other provisions of this
Agreement relating to ERISA, to materiality or material liability or similar
phrases shall be deemed to refer to the event or matter described both
individually and when taken together in the aggregate with respect to all other
events and matters referred to in this Agreement relating to ERISA as to which a
materiality standard applies.
Section 3.19. Year 2000 Issue.
---------------
The Borrower and its Subsidiaries are addressing the effect of the Year
2000 Issue on the computer software, hardware and firmware systems and equipment
containing embedded microchips owned or operated by or for the Borrower and its
Subsidiaries or used or relied upon in the conduct of their business (including
systems and equipment supplied by others or with which such computer systems of
the Borrower and its Subsidiaries interface). The costs to the Borrower and its
Subsidiaries of any reprogramming required as a result of the Year 2000 Issue to
permit the proper functioning of such systems and equipment and the proper
processing of data, and the testing of such reprogramming, and of the reasonably
foreseeable consequences of the Year 2000 Issue to the Borrower or any of its
Subsidiaries (including reprogramming errors and the failure of systems or
equipment supplied by others) are not reasonably expected to result in a Default
or Event of Default or to have a Material Adverse Effect.
Article 4 Conditions to the Loans.
-----------------------
Section 4.1. Conditions to Initial Loans.
---------------------------
The obligation of each Bank to make the initial Loan to be made by it
hereunder shall be subject to the fulfillment of the following conditions
precedent:
(a) The Borrower shall have executed and delivered to each Bank its Note.
(b) The Borrower shall have executed and delivered to the Banks the Pledge
Agreement together with the certificates evidencing the capital stock of
Telephonics and Clopay, accompanied by stock powers duly endorsed in blank and
undated, and irrevocable proxies relating thereto;
(c) The Borrower shall have paid to the Administrative Agent (for the
ratable benefit of the Banks) the Facility Fee.
(d) The Borrower shall have paid all amounts required to be paid by Section
2.7(c) and the Administrative Agent shall have received all fees and other
amounts due and payable to the Administrative Agent under the Loan Documents on
or prior to the date hereof.
(e) Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C., general counsel to the
Borrower and the Subsidiaries shall have delivered its opinion to, and in form
and substance satisfactory to, the Banks.
(f) The Administrative Agent shall have received and reviewed to its
satisfaction copies of the following:
(i) All of the consents, approvals and waivers referred to on Exhibit C
hereto (except only those which, as stated on Exhibit C, shall not be
delivered);
(ii) The certificate of incorporation of the Borrower and each Principal
Subsidiary certified by the Secretary of State of its state of incorporation;
(iii) The by-laws of the Borrower and each Principal Subsidiary certified
by its secretary or assistant secretary;
(iv) All corporate action taken by the Borrower to authorize the execution,
delivery and performance of the Loan Documents and the transactions contemplated
thereby, certified by its secretary or assistant secretary, including, without
limitation, resolutions of the Board of Directors of the Borrower;
(v) Good standing certificates as of dates not more than forty (40) days
prior to the date of the initial Loan, with respect to the Borrower and each
Principal Subsidiary from the Secretary of State of its state of incorporation
and each state in which it is qualified to do business;
(vi) An incumbency certificate (with specimen signatures) with respect to
the Borrower; and
(vii) Lien searches from such jurisdictions and in such names as the Banks
may request.
(g) (i) The Borrower and each Subsidiary shall have complied and shall then
be in compliance with all of the terms, covenants and conditions of this
Agreement;
(ii) After giving effect to the initial Loan, there shall exist no Default
or Event of Default hereunder; and
(iii) The representations and warranties contained in Article 3 hereof and
in the other Loan Documents shall be true and correct on the date hereof;
and the Administrative Agent shall have received a Compliance Certificate dated
the date hereof certifying, inter alia, that the conditions set forth in this
subsection 4.1(g) are satisfied on such date.
(h) All legal matters incident to the initial Loans shall be satisfactory
to counsel to the Administrative Agent and each Bank.
Section 4.2. Conditions to Subsequent Loans.
------------------------------
The obligation of each Bank to make each Loan subsequent to its initial
Loan shall be subject to the fulfillment of the condition precedent that the
Administrative Agent shall have received a Borrowing Notice in accordance with
Section 2.2 hereof, containing, in addition to the notice of borrowing, a
representation by the Borrower (signed by the president or chief financial
officer of the Borrower) that (i) no Default or Event of Default has occurred
and is continuing and (ii) the representations and warranties made by the
Borrower under Section 3.9 hereof shall be correct on and as of the borrowing
date for such extension of credit as if made on and as of such date.
Article 5 Delivery of Financial Reports, Documents and Other Information.
--------------------------------------------------------------
While the Commitments are outstanding, and, in the event any Loan remains
outstanding, so long as the Borrower is indebted to the Banks under this
Agreement, and until payment in full of the Notes and full and complete
performance of all of its other obligations arising hereunder, the Borrower
shall deliver to the Administrative Agent and each Bank:
Section 5.1. Annual Financial Statements.
---------------------------
Annually, as soon as available, but in any event within one hundred (100)
days after the last day of each of its fiscal years, a consolidated balance
sheet of the Borrower and the Subsidiaries as at such last day of the fiscal
year, and consolidated statements of income, shareholders' equity and cash
flows, for such fiscal year, each prepared in accordance with generally accepted
accounting principles consistently applied, in reasonable detail, and certified
without a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or another firm of
independent certified public accountants satisfactory to the Banks, which shall
state that such consolidated financial statements present fairly the
consolidated financial position, the consolidated results of operations and cash
flows of the Borrower as at and for the year ending on its date and as having
been prepared in accordance with generally accepted accounting principles.
Section 5.2. Quarterly Financial Statements.
------------------------------
As soon as available, but in any event within (i) seventy (70) days after
the end of each of the Borrower's first three fiscal quarterly periods and (ii)
one hundred, (100) days after the end of each of the Borrower's fourth fiscal
quarterly periods, a consolidated and consolidating balance sheet of the
Borrower and the Subsidiaries as of the last day of such quarter and
consolidated and consolidating statements of income and cash flows, for such
quarter, and on a comparative basis figures for the corresponding period of the
immediately preceding fiscal year, all in reasonable detail, each such statement
to be certified in a certificate of the president or chief financial officer of
the Borrower and the Subsidiaries as fairly presenting the consolidated and
consolidating financial position, the consolidated and consolidating results of
operations and cash flows of the Borrower as at its date and for such quarter
and as having been prepared in accordance with generally accepted accounting
principles consistently applied (subject to year-end audit adjustments).
Section 5.3. Projections.
-----------
Annually, as soon as available, but in any event within 60 days after the
last day of each of the Borrower's fiscal years, consolidated and consolidating
projections of the Borrower and the Subsidiaries for the following five (5)
fiscal years of the Borrower.
Section 5.4. Compliance Information.
----------------------
Promptly after a written request therefor, such other financial data or
information evidencing compliance with the requirements of this Agreement, the
Notes and the other Loan Documents, as any Bank may reasonably request from time
to time.
Section 5.5. No Default Certificate.
-----------------------------------
At the same time as it delivers the financial statements required under the
provisions of Section 5.2 hereof, a certificate of the president or chief
financial officer of the Borrower to the effect that no Default or Event of
Default hereunder and that no default under any other agreement to which the
Borrower or any of the Subsidiaries is a party or by which it is bound, or by
which, to the best knowledge of the Borrower or any Subsidiary any of its
properties or assets, taken as a whole, may be materially adversely affected,
and no event which, with the giving of notice or the lapse of time, or both,
would constitute such an Event of Default or default, exists, or, if such cannot
be so certified, specifying in reasonable detail the exceptions, if any, to such
statement. Such certificate shall be accompanied by a detailed calculation
indicating compliance with the covenants contained in Sections 6.9, 7.3 and 7.8
(other than 7.8(a)) hereof.
Section 5.6. Certificate of Accountants.
--------------------------
At the same time as it delivers the financial statements required under the
provisions of Section 5.1 hereof, a certificate of the independent certified
public accountants of the Borrower to the effect that during the course of their
audit of the operations of the Borrower and its condition as of the end of the
fiscal year, nothing has come to their attention which would indicate that the
Borrower was not in compliance with any of the terms, covenants, provisions or
conditions of Section 6.9 or Article 7 insofar as they relate to accounting
matters, or, if such cannot be so certified, specifying in reasonable detail the
exceptions, if any, to such statement.
Section 5.7. Accountants, Reports.
--------------------
Promptly upon receipt thereof, copies of all other reports submitted to the
Borrower by its independent certified public accountants in connection with any
annual or interim audit or review of the books of the Borrower made by such
accountants.
Section 5.8. Copies of Documents.
-------------------
(a) Promptly upon their becoming available, copies of any: (i) financial
statements, projections, and requests for waivers, in each case, delivered by
the Borrower or any of the Subsidiaries to any lending institution other than
the Banks; (ii) correspondence or notices received by the Borrower from any
federal, state or local governmental authority that regulates the operations of
the Borrower or any of its Subsidiaries or relating to an actual or threatened
change or development that would be materially adverse to the Borrower or any
Subsidiary; (iii) registration statements and any amendments and supplements
thereto, and any regular and periodic reports, if any, filed by the Borrower or
any of its Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental authority succeeding to any or all of
the functions of the said Commission; and (iv) any other items which the Banks
may reasonably request.
(b) Promptly upon request by any Bank, copies of all acquisition
agreements, exhibits, schedules, documents and other agreements relating to any
Permitted Acquisition (as and when available and whether in draft or final
form).
Section 5.9. Certain Notices.
---------------
Promptly, notice of the occurrence of any Default or Event of Default, or
any event that would constitute or cause a material adverse change in the
condition, financial or otherwise, or the operations of the Borrower or any of
its Subsidiaries on a consolidated basis.
Section 5.10. ERISA Notices and Requests.
--------------------------
Notice of any of the following within twenty (20) days after such event or
occurrence:
(a) the Borrower or any ERISA Affiliate knowing or having reason to know
that a Termination Event has occurred or that a Defined Contribution Plan has
been terminated or partially terminated, and a written statement by the
appropriate chief financial officer setting forth the details of such event;
(b) the filing of a request for a funding waiver by the Borrower or any
ERISA Affiliate with respect to any Pension Plan, and a copy of such request and
all communications received by the Borrower or any ERISA Affiliate with respect
to such request;
(c) receipt by the Borrower or any ERISA Affiliate of a notice of the
PBGC's intent to terminate a Pension Plan, and a copy of such notice;
(d) the Borrower or any ERISA Affiliate failing to make a required
installment or payment under Section 302 of ERISA or Section 412 of the Code by
the due date, and a written notice of such failure;
(e) the Borrower or any ERISA Affiliate knowing or having reason to know
that a prohibited transaction (as defined in Section 406 of ERISA or Section
4975 of the Code) has occurred with respect to any Employee Benefit Plan, and a
written statement of the appropriate chief financial officer describing such
transaction and the action taken;
(f) the establishment of a Pension Plan and written notice of such
occurrence;
(g) receipt by the Borrower or any ERISA Affiliate of any disqualification
notice from the Internal Revenue Service regarding the qualification of a
Pension Plan under Section 401(a) of the Code and a copy of such letter;
(h) upon the request of any Bank, the filing of an annual report (Form 5500
series), including Schedule B thereto, filed by the Borrower or any ERISA
Affiliate with respect to a Employee Benefit Plan, and a copy of such report;
(i) upon request of any Bank, receipt by the Borrower or any ERISA
Affiliate of an actuarial report for any Pension Plan, and a copy of such
report;
(j) receipt by the Borrower or any ERISA Affiliate of all correspondence
from the PBGC, the Secretary of Labor or any representative of the IRS with
respect to any Employee Benefit Plans, relating to an actual or threatened
change or development which would have a materially adverse effect on Borrower's
business; and
(k) receipt by the Borrower or any ERISA Affiliate of any correspondence
from a Multiemployer Plan with respect to withdrawal liability.
Section 5.11. Permitted Acquisition Deliveries.
--------------------------------
Not later than ten (10) Business Days after the consummation of a Permitted
Acquisition, (i) on a pro forma basis after giving effect to the proposed
acquisition and based on reasonable assumptions made by the Borrower in good
faith, a consolidated and consolidating balance sheet of the Borrower, its
subsidiaries and each Eligible Business, and a related consolidated and
consolidating statement of income and statements of cash flow for the three (3)
fiscal years following the date of such acquisition, each such statement (1) to
show all deferred and contingent payments which the Borrower or the Eligible
Business, as applicable, directly or indirectly, would be required to make based
on the Eligible Business' projected pro forma results of operations, and (2) to
be accompanied by a certificate of the chief financial officer of the Borrower
certifying that after giving effect to the acquisition, no Default or Event of
Default has occurred and is continuing, which certificate shall be accompanied
by a list of Liens, Indebtedness, guaranties and letters of credit incurred or
otherwise assumed in connection with such acquisition and such other information
as the Administrative Agent or any Bank may reasonably request.
Article 6 Affirmative Covenants.
---------------------
While the Commitments are outstanding, and, in the event any Loan remains
outstanding, so long as the Borrower is indebted to the Banks under this
Agreement, and until payment in full of the Notes and full and complete
performance of all of its other obligations arising hereunder, the Borrower
shall and shall cause each Subsidiary to:
Section 6.1. Books and Records.
-----------------
Keep proper books of record and account in which full, true and correct
entries shall be made of all dealings or transactions in relation to its
business and activities.
Section 6.2. Inspections and Audits.
----------------------
Permit the Administrative Agent and the Banks (i) to make or cause to be
made (and, after the occurrence of and during the continuance of an Event of
Default, at the Borrower's expense), inspections and audits of any books,
records and papers of the Borrower and each of its Subsidiaries and to make
extracts therefrom and copies thereof and (ii) make inspections and examinations
of any properties' and facilities of the Borrower and the Subsidiaries on
reasonable notice, at all such reasonable times and as often as the
Administrative Agent or any Bank may reasonably require, in order to assure the
Administrative Agent and each Bank that the Borrower is and will be in
compliance with its obligations under the Loan Documents or to evaluate any
Bank's investment in the then outstanding Notes.
Section 6.3. Maintenance and Repairs.
-----------------------
Maintain in good repair, working order and condition, subject to normal
wear and tear, all material properties and assets from time to time owned by it
and used in or necessary for the operation of its business, and make all
reasonable repairs, replacements, additions and improvements thereto.
Section 6.4. Continuance of Business.
-----------------------
Do, or cause to be done, all things reasonably necessary to preserve and
keep in full force and effect its corporate existence and all permits, rights
and privileges necessary for the proper conduct of its business and continue to
engage in the same line of business and comply in all material respects with all
applicable laws, regulations and orders.
Section 6.5. Copies of Corporate Documents.
-----------------------------
Promptly deliver to the Administrative Agent and the Banks copies of any
amendments or modifications to its and any Subsidiary's certificate of
incorporation and by-laws, certified with respect to the certificate of
incorporation by the Secretary of State of its state of incorporation and, with
respect to the by-laws, by the secretary or assistant secretary of such
corporation.
Section 6.6. Perform Obligations.
-------------------
Pay and discharge all of its obligations and liabilities, including,
without limitation, all taxes, assessments and governmental charges upon its
income and properties when due, unless and to the extent only that such
obligations, liabilities, taxes, assessments and governmental charges shall be
contested in good faith and by appropriate proceedings and that, to the extent
required by generally accepted accounting principles then in effect, proper and
adequate book reserves relating thereto are established by the Borrower, or, as
the case may be, by the appropriate Subsidiary and then only to the extent that
a bond is filed in cases where the filing of a bond is necessary to avoid the
creation of a Lien, other than a Permitted Lien, against any of its properties.
Section 6.7. Notice of Litigation.
--------------------
Promptly notify the Administrative Agent and the Banks in writing of any
litigation, legal proceeding or dispute (including, without limitation, any
Environmental Proceeding), other than disputes in the ordinary course of
business or, whether or not in the ordinary course of business, involving
amounts in excess of One Million ($1,000,000) Dollars, affecting the Borrower,
any Subsidiary or any Eligible Business whether or not fully covered by
insurance, and regardless of the subject matter thereof (excluding, however, any
actions relating to workers' compensation claims or negligence claims relating
to use of motor vehicles, if fully covered by insurance, subject to
deductibles).
Section 6.8. Insurance.
---------
(a) (i) Maintain with responsible insurance companies such insurance on
such of its properties, in such amounts and against such risks as is customarily
maintained by similar businesses; (ii) file with the Administrative Agent and
each of the Banks upon its request a detailed list of the insurance then in
effect, stating the names of the insurance companies, the amounts and rates of
the insurance, the dates of the expiration thereof and the properties and risks
covered thereby; and (iii) within ten (10) days after notice in writing from the
Administrative Agent or any of the Banks, obtain such additional insurance as
the Administrative Agent or any Bank may reasonably request; provided, that, the
Borrower may maintain self-insurance consistent with its past practices and
policies; and
(b) Carry all insurance available through the PBGC or any private insurance
companies covering its obligations to the PBGC. Section
6.9. Financial Covenants.
-------------------
Have or maintain, on a consolidated basis:
(a) As of the end of each fiscal quarter, a Quick Ratio of not less than
1.10 to 1.00.
(b) As of the end of each fiscal quarter, on a rolling four quarter basis,
a Funded Debt to Cash Flow Ratio for the most recently completed four fiscal
quarters at not more than 4.00 to 1.00.
(c) As of the end of each fiscal quarter, a ratio of (i) Unsubordinated
Liabilities of the Borrower and its Subsidiaries to (ii) the sum of Tangible Net
Worth plus Subordinated Debt of the Borrower and its Subsidiaries at not more
than 2.00 to 1.00.
(d) A Domestic Funded Debt Coverage Ratio of not more than (i) 4.50 to 1.00
as of the end of each fiscal quarter ending during the period from June 30, 1999
through and including December 31, 1999, on a rolling four quarter basis, and
(ii) 4.00 to 1.00 as of the end of each fiscal quarter ending after December 31,
1999, on a rolling four quarter basis.
(e) As of the end of each fiscal quarter, on a rolling four quarter basis,
a Domestic Debt Service Coverage Ratio of not less than 2.50 to 1.00. Section
6.10. Notice of Certain Events.
------------------------
(a) Promptly notify the Administrative Agent and the Banks in writing of
the occurrence of any "Reportable Event", as defined in Section 4043 of ERISA,
if a notice of such Reportable Event is required under ERISA to be delivered to
the PBGC within 30 days after the occurrence thereof, together with a
description of such Reportable Event and a statement of the action the Borrower
or any ERISA Affiliate intends to take with respect thereto, together with a
copy of the notice thereof given to the PBGC.
(b) Promptly notify the Administrative Agent and the Banks in writing of
the receipt by the Borrower or any ERISA Affiliate of an assessment of
withdrawal liability in connection with a complete or partial withdrawal with
respect to any Multiemployer Plan, which liability of the Borrower and/or any
ERISA Affiliate may exceed $1,000,000 in aggregate amount, and a statement of
the action that the Borrower or any ERISA Affiliate intends to take with respect
thereto.
(c) Promptly notify the Administrative Agent and the Banks in writing if
the Borrower or any Subsidiary receives: (i) any notice of any violation or
administrative or judicial complaint or order having been filed or about to be
filed against the Borrower or such subsidiary alleging violations of any
Environmental Law and Regulation which could reasonably be expected to result in
liability to the Borrower or any subsidiary in excess of $1,000,000, or (ii) any
notice from any governmental body or any other Person alleging that the Borrower
or such Subsidiary is or may be subject to any Environmental Liability in excess
of $1,000,000; and promptly upon receipt thereof, provide the Banks with a copy
of such notice together with a statement of the action the Borrower or such
Subsidiary intends to take with respect thereto.
Section 6.11. Comply with ERISA.
-----------------
Materially comply with all applicable provisions of ERISA and the Code now
or hereafter in effect.
Section 6.12. Environmental Compliance.
-------------------------
Operate all property owned or leased by it such that no obligation,
including a clean-up obligation, shall arise under any Environmental Law and
Regulation, which obligation would constitute a Lien on any property of the
Borrower or any of its Subsidiaries; provided, however, that in the event that
any such claim is made or any such obligation arises, the Borrower or such
Subsidiary shall, at its own cost and expense:
(a) provide the Administrative Agent and the Banks with prompt written
notice with respect to any suit or claim initiated or threatened against the
Borrower or any of its Subsidiaries involving liability in excess of $1,000,000;
and
(b) either: (i) immediately satisfy such claim or obligation; or (ii)
contest such claim by appropriate proceedings and upon final judgment (subject
to no further appeal) immediately satisfy such judgment; provided, however,
that, in all such cases, the Borrower shall file a bond when necessary to avoid
the creation of a Lien against any of its or any of its Subsidiaries'
properties; and provided, further, that the Borrower shall indemnify and hold
harmless the Administrative Agent and the Banks from any liability,
responsibility or obligation in respect thereof or in respect of any clean-up or
any other liability, as successor, secured party or otherwise for any reason,
including, without limitation the enforcement of the Administrative Agent and/or
the Banks' rights under any Loan Document or by operation of law.
Section 6.13. Year 2000 Issue.
---------------
Take, and cause each of its Principal Subsidiaries to take, all necessary
action to complete in all material respects by October 31, 1999, the
reprogramming of computer software, hardware and firmware systems and equipment
containing embedded microchips owned or operated by or for the Borrower and its
Subsidiaries or used or relied upon in the conduct of their business (including
systems and equipment supplied by others or with which such systems of the
Borrower or any of its Subsidiaries interface) required as a result of the Year
2000 Issue to permit the proper functioning of such computer systems and other
equipment and the testing of such systems and equipment, as so reprogrammed. At
the request of the Administrative Agent or any Bank, the Borrower shall provide,
and shall cause each of its Subsidiaries to provide, to the Administrative Agent
and each Bank reasonable assurance of its compliance with the preceding
sentence.
Section 6.14. Projections.
-----------
Take all necessary action to ensure that the Projections when delivered
reflect as of the date thereof the Borrower's good faith projections, after
reasonable analysis, of the matters set forth therein.
Article 7 Negative Covenants.
-------------------
While the Commitments are outstanding, and, in the event any Loan remains
outstanding, so long as the Borrower is indebted to the Banks under this
Agreement, and until payment in full of the Notes and full and complete
performance of all of its other obligations arising hereunder, the Borrower
shall not and shall not permit any of its Subsidiaries to do or agree to do, or
permit to be done, any of the following:
Section 7.1. Indebtedness.
------------
Create, incur, permit to exist or have outstanding any Indebtedness that
would violate the terms of this Agreement.
Section 7.2. Liens.
-----
Create, or assume or permit to exist, any Lien on any of the properties or
assets of the Borrower or any of its Subsidiaries whether now owned or hereafter
acquired, except:
(a) Permitted Liens;
(b) Liens in favor of the Banks under the Loan Documents;
(c) Purchase money mortgages or security interests, conditional sale
arrangements and other similar security interests, on property acquired by the
Borrower or any Subsidiary (hereinafter referred to individually as a "Purchase
Money Security Interest") with the proceeds of Indebtedness; provided, however,
that:
(i) The transaction in which any Purchase Money Security Interest is
proposed to be created is not then prohibited by this Agreement;
(ii) Any Purchase Money Security Interest shall attach only to the property
or asset acquired in such transaction and shall not extend to or cover any other
assets or properties of the Borrower or, as the case may be, a Subsidiary;
(iii) The Indebtedness secured or covered by any Purchase Money Security
Interest is secured solely by such Purchase Money Security Interest and shall
not exceed the cost of the property or asset acquired; and
(iv) Such Indebtedness may be refinanced provided that the principal amount
of such outstanding Indebtedness is not increased;
(d) The interests of the lessor under any Capitalized Lease as permitted
hereunder;
(e) Liens on specifically identified inventory and accounts receivable
covered by bankers acceptances resulting from import letters of credit which do
not cover any assets other than those financed with such bankers acceptances;
(f) Liens securing Indebtedness permitted to exist in accordance with the
terms of Section 7.4 hereof in connection with a Permitted Acquisition which
Liens are of the type otherwise permitted under subsections 7.2(a), (c), (d) and
(e) hereof, provided that (i) such Liens were existing prior to the Permitted
Acquisition in which such Indebtedness was assumed or acquired and not created
in contemplation of such Permitted Acquisition, and (ii) such Liens shall only
attach to or encumber the property and assets acquired in the Permitted
Acquisition in which such Indebtedness was assumed or acquired and shall not
attach to or encumber any other property or assets of the Borrower or any
subsidiary (including, without limitation, any Eligible Business);
(g) As set forth on Exhibit D hereto;
(h) Liens on the properties or assets of Finotech securing Indebtedness of
Finotech not in excess of an aggregate of $32,000,000 at any one time
outstanding and liens on the properties or assets of Bohme not in excess of an
aggregate of $35,000,000 at any one time outstanding; and
(i) Liens on the properties or assets of Clopay Service or any subsidiaries
of Clopay Service securing Indebtedness of Clopay Service and any subsidiaries
of Clopay Service not in excess of any aggregate of $5,000,000 at any one time
outstanding.
Section 7.3. Guaranties.
----------
Assume, endorse, be or become liable for, or guarantee, (a) the obligations
of any Person (except by the endorsement of negotiable instruments for deposit
or collection in the ordinary course of business), or (b) any Limited Contingent
Obligations, except (i) as set forth on Exhibit K hereto, (ii) guarantees of the
Borrower and its Subsidiaries not in excess of an aggregate of $5,000,000 at any
one time outstanding, (iii) guarantees by the Borrower or any Subsidiary of
obligations of the Subsidiaries; provided, that the Borrower or any Domestic
Loan Party may guarantee the Indebtedness of any Foreign Loan Party as long as
the aggregate amount of Indebtedness which is so guaranteed does not in the
aggregate at any one time outstanding exceed the sum of $20,000,000 plus the
aggregate amount of such guaranteed Indebtedness outstanding as of June 30,
1999, (iv) guarantees by a Subsidiary of obligations of the Borrower under
leases for real or personal property, provided, that such Subsidiary will
utilize all or a portion of such property, and (v) other Limited Contingent
Obligations not described in the preceding clauses (i) through (iv) of the
Borrower and the Subsidiaries not in excess of an aggregate amount of 20% of the
consolidated Tangible Net Worth of the Borrower and its Subsidiaries (as
computed at any time as shown on the Borrower's Financial Statements most
recently delivered to the Banks) at any one time outstanding. For the purposes
hereof, the term "guarantee" shall include any agreement, whether such agreement
is on a contingency or otherwise, to purchase, repurchase or otherwise acquire
Indebtedness of any other Person, or to purchase, sell or lease, as lessee or
lessor, property or services, in any such case primarily for the purpose of
enabling another person to make payment of Indebtedness, or to make any payment
(whether as an advance, capital contribution, purchase of an equity interest or
otherwise) to assure a minimum equity, asset base, working capital or other
balance sheet or financial condition, in connection with the Indebtedness of
another Person, or to supply funds to or in any manner invest in another Person
in connection with such Person's Indebtedness.
Section 7.4. Mergers, Acquisitions.
----------------------
Merge or consolidate with any Person (whether or not the Borrower or any
Subsidiary is the surviving entity), or acquire all or substantially all of the
assets or any of the capital stock of any Person; provided, however, that (i)
any Subsidiary may merge with and into any other Subsidiary or the Borrower (so
long as the Borrower or a wholly-owned Subsidiary is the surviving entity) and
(ii) the Borrower or any Subsidiary may make Permitted Acquisitions.
Section 7.5. Redemptions; Distributions.
---------------------------
Upon the occurrence and during the continuance of a Default or Event of
Default, or if a Default or Event of Default would be caused thereby:
(a) Purchase, redeem, retire or otherwise acquire, directly or indirectly,
or make any sinking fund payments with respect to, any shares of any class of
stock of the Borrower now or hereafter outstanding or set apart any sum for any
such purpose; or
(b) Declare or pay any dividends or make any distribution of any kind on
the Borrower's outstanding stock, or set aside any sum for any such purpose,
except that the Borrower may declare or pay any dividend payable solely in
shares of its capital stock.
Section 7.6. Stock Issuance.
--------------
Issue any additional shares or any right or option to acquire any shares,
or any security convertible into any shares, of the capital stock of any
Subsidiary, except (a) in connection with stock dividends permitted under
subsection 7.5(b) hereof and (b) to the Borrower or a Subsidiary.
Section 7.7. Changes in Business and Sales or Pledges of Assets.
--------------------------------------------------
Make any material change in its business on a consolidated basis, or in the
nature of its operation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, assets or business except in the
ordinary course of business and for a fair consideration or dispose of any
shares of stock (other than sales or issuances of the Borrower's treasury stock)
or any Indebtedness, whether now owned or hereafter acquired, or discount, sell,
pledge, hypothecate or otherwise dispose of accounts receivable, except in the
ordinary course of business and for fair consideration; provided, however, that
the Borrower or any Subsidiary may convey, sell, lease, assign, transfer or
otherwise dispose of (a) its property and assets the fair market value of which
does not exceed in the aggregate in any fiscal year three percent (3%) of the
consolidated assets of the Borrower and its Subsidiaries as of the end of the
immediately preceding fiscal year for fair consideration, (b) the capital stock
of any Subsidiary (i) the net revenues of which do not exceed three percent (3%)
of the consolidated net revenues of the Borrower and its subsidiaries or (ii)
the assets of which do not exceed three percent (3%) of the consolidated assets
of the Borrower and its Subsidiaries; provided, however, that in no event may
the Borrower or any subsidiary convey, sell, lease, assign, transfer or
otherwise dispose of any capital stock that is at any time pledged to the Banks
pursuant to the Security Documents and (c) all or any portion of the current
property and assets of Lightron, Standard-▇▇▇▇ and Western Synthetic.
Section 7.8. Investments.
-----------
Make, or suffer to exist, any Investment in any Person, including, without
limitation, any shareholder, director, officer or employee of the Borrower or
any of the Subsidiaries, except Investments which do not in the aggregate,
exceed $1,000,000 and:
(a) Investments in:
(i) obligations issued or guaranteed by the United States of America;
(ii) certificates of deposit, bankers acceptances and other "money market
instruments" issued by any bank or trust company organized under the laws of the
United States of America or any State thereof and having capital and surplus in
an aggregate amount of not less than $100,000,000;
(iii) open market commercial paper bearing the highest credit rating issued
by Standard & Poor's Corporation or by another nationally recognized credit
rating agency;
(iv) repurchase agreements entered into with any bank or trust company
organized under the laws of the United States of America or any State thereof
and having capital and surplus in an aggregate amount of not less than
$100,000,000 relating to United States of America government obligations;
(v) shares of "money market funds", each having net assets of not less than
$100,000,000; and
(vi) corporate bonds rated at least AA or the equivalent thereof by
Standard & Poor's Corporation or Aa or the equivalent thereof by ▇▇▇▇▇'▇
Investors Service, Inc.;
in each case maturing or being due or payable in full not more than 180 days
after the Borrower's acquisition thereof;
(b) Investments by the Borrower or any Subsidiary in entities related to
the business of the Borrower or any Subsidiary in an aggregate amount not to
exceed $5,000,000;
(c) Investments, other than guarantees permitted by Section 7.3, by the
Borrower or any Subsidiary in any majority-owned Subsidiary of the Borrower or
any Subsidiary; provided, that the Borrower or any Domestic Loan Party may make
an Investment in any Foreign Loan Party as long as the aggregate amount of such
Investments does not in the aggregate at any one time outstanding exceed the sum
of $10,000,000 plus the aggregate amount of such Investments that are
outstanding as of June 30, 1999; and
(d) Permitted Acquisitions by the Borrower or any subsidiary pursuant to
Section 7.4 hereof.
Section 7.9. Fiscal Year.
-----------
Change its fiscal year.
Section 7.10. ERISA Obligations.
-----------------
The Borrower will not:
(a) permit the occurrence of any Termination Event, or the occurrence of a
termination or partial termination of a Defined Contribution Plan which would
have a material adverse effect on the Borrower; or
(b) permit any accumulated deficiency (as defined in Section 302 of ERISA
and Section 412 of the Code) in excess of $1,000,000 in the aggregate liability
to the Borrower and its ERISA Affiliates with respect to all Pension Plans,
whether or not waived; or
(c) engage, or permit the Borrower or any ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
for which a civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant
to Section 4975 of the Code which would have a material adverse effect on the
Borrower; or
(d) engage or permit the Borrower or any ERISA Affiliate to engage, in any
breach of fiduciary duty under Part 4 of Title I of ERISA for which 20 percent
of the applicable recovery amount under Section 502(l) of ERISA which would have
a material adverse effect on the Borrower; or
(e) fail, or permit any ERISA Affiliate to fail, to establish, maintain and
operate each Employee Benefit Plan in compliance in all material respects with
the provisions of ERISA, the Code and all other applicable laws and the
regulations and interpretations thereof.
Section 7.11. Reserved.
--------
Section 7.12. Transactions with Affiliates.
----------------------------
Except as expressly permitted by this Agreement, directly or indirectly:
(a) make any Investment in an Affiliate; (b) transfer, sell, lease, assign or
otherwise dispose of any assets to an Affiliate; (c) merge into or consolidate
with or purchase or acquire assets from an Affiliate; or (d) enter into any
other transaction directly or indirectly with or for the benefit of any
Affiliate (including, without limitation, guarantees and assumptions of
obligations of an Affiliate) ; provided, however, that: (i) payments on
Investments expressly permitted by Section 7.8 hereof may be made, (ii) any
Affiliate who is a natural person may serve as an employee or director of the
Borrower and receive reasonable compensation for his services in such capacity,
(iii) the Borrower may enter into any transaction with an Affiliate providing
for the leasing of property, the rendering or receipt of services or the
purchase or sale of product, inventory and other assets in the ordinary course
of business if the monetary or business consideration arising therefrom would be
substantially as advantageous to the Borrower as the monetary or business
consideration that would obtain in a comparable arm's length transaction with a
Person not an Affiliate and (iv) the Borrower or any Subsidiary may make loans
to Persons who are stockholders, officers or directors of the Borrower or a
Subsidiary which do not, in the aggregate, exceed $250,000; provided, however,
that for purposes of this Section 7.12 an Affiliate shall not be deemed to
include a Subsidiary of the Borrower.
Section 7.13. Hazardous Material.
------------------
(a) Cause or permit (i) any "Hazardous Material" (as defined in any
applicable Environmental Laws and Regulations) to be placed, held, located or
disposed of, on, under or at any real property used in connection with the
operation of the business of the Borrower or any of its Subsidiaries ("Real
Property") or any part thereof, except for such Hazardous Materials which are
necessary for the Borrower's operation of its business thereon and which shall
be used, stored and disposed of in compliance with all applicable Environmental
Laws and Regulations or (ii) such Real Property or any part thereof to be used
as a collection, storage or dump site for any Hazardous Material.
(b) The Borrower and each Subsidiary acknowledges and agrees that the Banks
shall have no liability or responsibility for either:
(i) damage, loss, or injury to human health, the environment or natural
resources caused by the presence, disposal, release or threatened release of
Hazardous Materials on any part of such real property;
or (ii) abatement and/or clean-up required under any applicable
Environmental Laws and Regulations for a release, threatened release or disposal
of any Hazardous Materials located at such real property or used by or in
connection with the Borrower's or any Subsidiary's or any such tenant's
business.
Section 7.14. Regulation U.
------------
Not use any part of the proceeds received by the Borrower from the Loans
directly or indirectly for: (a) any purpose other than as set forth in Section
2.9 hereof, or (b) the purpose of purchasing or carrying, or for payment in full
or in part of Indebtedness that was incurred for the purposes of purchasing or
carrying, any "margin stock", as such term is defined in 221.3 of Regulation U
of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II,
Part 221, other than purchases made in compliance with Regulation U.
Section 7.15. Limitations on Restrictions on Upstreaming of Funds
--------------------------------------------------------
No Loan Party shall enter into any agreement which prohibits or limits the
ability of any Subsidiary to pay dividends or otherwise advance funds to the
Borrower with respect to any fiscal year in an aggregate amount at least equal
to the sum of (i) the amount of Federal, state and local income taxes payable by
the Borrower with respect to the income of such Subsidiary (as determined in
accordance with generally accepted accounting principles consistently applied)
for such fiscal year and (ii) 50% of the net income of such Subsidiary (as
determined in accordance with generally accepted accounting principles
consistently applied) for such fiscal year.
Section 7.16. Derivative Protection Arrangements
-----------------------------------
No Loan Party shall enter into any Derivative Protection Arrangement unless
such Loan Party has reasonably determined that entering into such Derivative
Protection Arrangement is in the best interests of such Loan Party and is not
for speculative purposes.
Article 8 Events of Default.
-----------------
If any one or more of the following events ("Events of Default") shall
occur and be continuing, the Commitments shall terminate and the entire unpaid
balance of the principal of and interest on the Notes outstanding and all other
obligations and Indebtedness of the Borrower to each Bank arising hereunder and
under the other Loan Documents shall immediately become due and payable upon
written notice to that effect given to the Borrower by the Administrative Agent
upon the direction of the Required Banks (except that in the case of the
occurrence of any Event of Default described in Section 8.6 no such notice shall
be required), without presentment or demand for payment, notice of non-payment,
protest or further notice or demand of any kind, all of which are expressly
waived by the Borrower:
Section 8.1. Payments.
--------
Failure to make (i) any payment or mandatory prepayment of principal under
any Note when due or (ii) any payment or mandatory prepayment of interest upon
any Note or to make any payment of any Fee not later than five (5) days after
such payment or prepayment is due; or
Section 8.2. Certain Covenants.
------------------
Failure to perform or observe any of the agreements of the Borrower
contained in Section 6.9 or Article 7 hereof; or
Section 8.3. Other Covenants.
----------------
Failure by the Borrower or any Subsidiary to perform or observe any other
term, condition or covenant of this Agreement or of any of the other Loan
Documents to which it is a party, which shall remain unremedied for a period of
15 days after notice thereof shall have been given to the Borrower by any Bank;
provided, that, a failure to perform under Section 6.13 shall not be an Event of
Default unless such failure to perform such covenant results or would result in
a Material Adverse Effect; or
Section 8.4. Other Defaults.
--------------
(a) Failure to perform or observe any term, condition or covenant of any
bond, note, debenture, loan agreement, indenture, guaranty, trust agreement,
mortgage or similar instrument to which the Borrower or any Subsidiary is a
party or by which it is bound, or by which any of its properties or assets may
be affected (a "Debt Instrument"), so that, as a result of any such failure to
perform, the Indebtedness included therein or secured or covered thereby has
been declared due and payable prior to the date on which such Indebtedness would
otherwise become due and payable; or
(b) Any event or condition referred to in any Debt Instrument shall occur
or fail to occur, so that, as a result thereof, the Indebtedness included
therein or secured or covered thereby has been declared due and payable prior to
the date on which such Indebtedness would otherwise become due and payable; or
(c) Failure to pay any Indebtedness for borrowed money when due;
provided, however, that the provisions of this Section 8.4 shall not be
applicable to any Debt Instrument that on the date this Section 8.4 would
otherwise be applicable thereto, relates to or evidences Indebtedness in a
principal amount of less than $1,000,000; or
Section 8.5. Representations and Warranties.
------------------------------
Any representation or warranty made in writing to the Administrative Agent
or the Banks in any of the Loan Documents, or any certificate, statement or
report made or delivered in compliance with this Agreement, shall have been
false or misleading in any material respect when made or delivered; or
Section 8.6. Bankruptcy.
----------
(a) The Borrower or any Subsidiary shall make an assignment for the benefit
of creditors, file a petition in bankruptcy, be adjudicated insolvent, petition
or apply to any tribunal for the appointment of a receiver, custodian, or any
trustee for it or a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect, or the Borrower or any Subsidiary shall take any
corporate action to authorize any of the foregoing actions; or there shall have
been filed any such petition or application, or any such proceeding shall have
been commenced against it, that remains undismissed for a period of thirty (30)
days or more; or any order for relief shall be entered in any such proceeding;
or the Borrower or any Subsidiary by any act or omission shall indicate its
consent to, approval of or acquiescence in any such petition, application or
proceeding or the appointment of a custodian, receiver or any trustee for it or
any substantial part of any of its properties, or shall suffer any
custodianship, receivership or trusteeship to continue undischarged for a period
of thirty (30) days or more; or
(b) The Borrower or any Subsidiary shall generally not pay its debts as
such debts become due; or
(c) The Borrower or any Subsidiary shall have concealed, removed, or
permitted to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property that may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any transfer of its
property to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid; or shall have suffered or permitted,
while insolvent, any creditor to obtain a Lien upon any of its property through
legal proceedings or distraint that is not vacated within thirty (30) days from
the date thereof; or
Section 8.7. Judgments.
---------
Any judgment against the Borrower or any Subsidiary or any attachment, levy
or execution against any of their properties for any amount in excess of
$500,000 shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days or more; or
Section 8.8. ERISA.
-----
(a) The termination of any Pension Plan or the institution by the PBGC of
proceedings for the involuntary termination of any Pension Plan, in either case,
by reason of, or that results in, a material "accumulated funding deficiency"
with respect to the Borrower and its ERISA Affiliates, individually or in the
aggregate, under Section 412 of the Code; or
(b) Failure by the Borrower to make required contributions, in accordance
with the applicable provisions of ERISA, to each of the Pension Plans hereafter
established or assumed by it; or
Section 8.9. Liens.
-----
Any of the Liens created and granted to the Administrative Agent for the
ratable benefit of the Banks under the Security Documents shall fail to be
valid, first, perfected Liens, subject to no prior or equal Lien, except as
permitted by Section 7.2 hereof; or
Section 8.10. Change of Control.
-----------------
A Change of Control shall occur.
Upon any Event of Default, the Commitments shall terminate and the entire unpaid
balance of the principal of and interest on the Notes outstanding and all other
obligations and Indebtedness of the Borrower to each Agent and each Bank arising
hereunder and under the other Loan Documents shall immediately become due and
payable upon written notice to that effect given to the Borrower by the
Administrative Agent upon consent of the Required Banks (except that in the case
of the occurrence of any Event of Default described in Section 8.6 no such
notice shall be required) and in any such event the Administrative Agent (i)
upon the direction of the Required Banks, shall proceed to enforce the rights of
the holders of the Notes by suit in equity, action at law and/or other
appropriate proceedings, whether for payment or the specific performance of any
covenant or agreement contained in the Loan Documents and (ii) may exercise any
and all rights and remedies provided to the Administrative Agent by the Loan
Documents. Except as otherwise expressly provided in the Loan Documents, the
Borrower expressly waives presentment, demand, notice of non-payment, protest
and any similar notice.
Article 9 Miscellaneous Provisions.
------------------------
Section 9.1. Fees and Expenses, Indemnity.
----------------------------
The Borrower will on demand pay: (a) all reasonable costs of the
Administrative Agent in preparing the Loan Documents and (b) all costs and
expenses of the issuance of the Notes and of the Borrower's performance and the
Subsidiaries' performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with (including,
without limitation, all costs of filing or recording any assignments, mortgages,
financing statements and other documents), and (c) the fees and expenses and
disbursements of special counsel to the Administrative Agent in connection with
the preparation, execution and delivery, review, administration, interpretation
and enforcement of the Loan Documents, the consummation of the transactions
contemplated by all such documents, the negotiation, preparation, execution and
delivery of any amendment, modification or supplement of or to, or any consent
or waiver under, any such document (or any such instrument which is proposed but
not executed and delivered) and with any claim or action threatened, made or
brought against any Bank or the Administrative Agent arising out of or relating
to any extent to the Loan Documents, or the transactions contemplated hereby or
thereby and (d) the fees and expenses and disbursements of counsel to the Banks
and of examiners and consultants of each Bank in connection with enforcement of
the Loan Documents and with any claim or action threatened, made or brought
against any Bank arising out of or relating to any extent to the Loan Documents,
or the transactions contemplated hereby or thereby. In addition, the Borrower
will on demand pay all costs and expenses (including, without limitation, fees
and disbursements of counsel) suffered or incurred by the Administrative Agent
and/or the Banks in connection with its enforcement of the payment of any Note
or any sum due to the Administrative Agent and/or the Banks under the Loan
Documents, as the case may be, or any of Administrative Agent's and/or the
Banks' other rights hereunder or thereunder. In addition to the foregoing, the
Borrower shall indemnify the Administrative Agent and each Bank and each of
their respective directors, officers, employees, attorneys, agents and
Affiliates against, and hold each of them harmless from, any loss, liabilities,
damages, claims, costs and expenses (including reasonable attorneys' fees and
disbursements) suffered or incurred by any of them arising out of, resulting
from or in any manner connected with, the execution, delivery and performance of
each of the Loan Documents, the Loans and any and all transactions related to or
consummated in connection with the Loans, including, without limitation, losses,
liabilities, damages, claims, costs and expenses suffered or incurred by the
Administrative Agent, such Bank and/or any of their respective directors,
officers, employees, attorneys or Affiliates in investigating, preparing for,
defending against, or providing evidence, producing documents or taking any
other action in respect of any commenced or threatened litigation,
administrative proceeding or investigation under any federal securities law or
any other statute of any jurisdiction, or any regulation, or at common law or
otherwise. The indemnity set forth herein shall be in addition to any other
obligations or liabilities of the Borrower to the Administrative Agent and/or
each such Bank hereunder or at common law or otherwise. All fees, expenses,
costs, charges and other amounts payable by the Borrower hereunder shall be
deemed to be Obligations, and the Administrative Agent and each Bank may, in its
sole discretion, exercise its rights under Section 9.5 of this Agreement in
respect of any or all thereof. The provisions of this Section 9.1 shall survive
the payment of the Notes and the termination of this Agreement.
Section 9.2. Taxes.
-----
If, under any law in effect on the date of the closing of any Loan
hereunder, or under any retroactive provision of any law subsequently enacted,
it shall be determined that any Federal, state or local tax is payable in
respect of the issuance of any Note, or in connection with the filing or
recording of any assignments, mortgages, financing statements, or other
documents (whether measured by the amount of Indebtedness secured or otherwise)
as contemplated by this Agreement, then the Borrower will pay any such tax and
all interest and penalties, if any, and will indemnify each Bank and the
Administrative Agent against and save each of them harmless from any loss or
damage resulting from or arising out of the nonpayment or delay in payment of
any such tax. If any such tax or taxes shall be assessed or levied against any
Bank or the Administrative Agent, such Bank or the Administrative Agent, as the
case may be, may notify the Borrower and make immediate payment thereof,
together with interest or penalties in connection therewith, and shall thereupon
be entitled to and shall receive immediate reimbursement therefor from the
Borrower. Notwithstanding any other provision contained in this Agreement, the
covenants and agreements of the Borrower in this Section 9.2 shall survive
payment of the Notes and the termination of this Agreement.
Section 9.3. Payments.
--------
As set forth in Article 2 hereof, all payments by the Borrower on account
of principal, interest, fees and other charges (including any indemnities) shall
be made to the Administrative Agent for the account of the applicable Credit
Party at the Payment Office, in lawful money of the United States of America in
immediately available funds, by wire transfer or otherwise, not later than 11:00
A.M. New York City time on the date such payment is due. Any such payment made
on such date but after such time shall, if the amount paid bears interest, be
deemed to have been made on, and interest shall continue to accrue and be
payable thereon until, the next succeeding Business Day. If any payment of
principal or interest becomes due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day and such extension shall
be included in computing interest in connection with such payment. All payments
hereunder and under the Notes shall be made without set-off or counterclaim and
in such amounts as may be necessary in order that all such payments shall not be
less than the amounts otherwise specified to be paid under this Agreement and
the Notes (after withholding for or on account of: (i) any present or future
taxes, levies, imposts, duties or other similar charges of whatever nature
imposed by any government or any political subdivision or taxing authority
thereof, other than any tax (except those referred to in clause (ii) below) on
or measured by the net income of the Bank or the Administrative Agent to which
any such payment is due pursuant to applicable federal, state and local income
tax laws, and (ii) deduction of amounts equal to the taxes on or measured by the
net income of such Bank or the Administrative Agent payable by such Bank or the
Administrative Agent with respect to the amount by which the payments required
to be made under this sentence exceed the amounts otherwise specified to be paid
in this Agreement and the Notes). Upon payment in full of any Note, the Bank
holding such Note shall ▇▇▇▇ the Note "Paid" and return it to the Borrower.
Section 9.4. Survival of Agreements and Representations; Construction.
--------------------------------------------------------
All agreements, representations and warranties made herein shall survive
the delivery of this Agreement and the Notes. The headings used in this
Agreement and the table of contents are for convenience only and shall not be
deemed to constitute a part hereof. All uses herein of the masculine gender or
of singular or plural terms shall be deemed to include uses of the feminine or
neuter gender, or plural or singular terms, as the context may require.
Section 9.5. Lien on and Set-off of Deposits.
-------------------------------
As security for the due payment and performance of all the Obligations, the
Borrower hereby grants to each Bank and the Administrative Agent a Lien on any
and all deposits or other sums at any time credited by or due from any Bank or
the Administrative Agent to the Borrower, whether in regular or special
depository accounts or otherwise, and any and all monies, securities and other
property of the Borrower, and the proceeds thereof, now or hereafter held or
received by or in transit to any Bank or the Administrative Agent from or for
the Borrower, whether for safekeeping, custody, pledge, transmission, collection
or otherwise, and any such deposits, sums, monies, securities and other
property, may at any time after the occurrence and during the continuance of any
Event of Default be set-off, appropriated and applied by any Bank or the
Administrative Agent against any of the obligations, whether or not any of such
Obligations is then due or is secured by any collateral, or, if it is so
secured, whether or not the collateral held by any Bank or the Administrative
Agent is considered to be adequate, all as set forth in and pursuant to Section
2.16 hereof.
Section 9.6. Modifications, Consents and Waivers; Entire Agreement.
------------------------------------------------------
No modification, amendment or waiver of or with respect to any provision of
this Agreement, any Notes, the Security Documents, or any of the other Loan
Documents and all other agreements, instruments and documents delivered pursuant
hereto or thereto, nor consent to any departure by the Borrower from any of the
terms or conditions thereof, shall in any event be effective unless it shall be
in writing and signed by the Required Banks; provided, however, that
notwithstanding the foregoing, without the written consent of each Bank and the
Administrative Agent, in no event shall any amendment, modification, waiver or
consent:
(a) Be effective with respect to Article 2 or Article 3 (it being
understood that a waiver of any Default or Event of Default under Section 8.5
hereof shall not constitute an amendment or modification of any Section
therein), or Sections 8.1 or 9.6 hereof or the definitions in Article 1 which
are used in any of the foregoing;
(b) Extend the final maturity of any Loan or Note (it being understood that
any waiver of the application of any prepayment of or the method of application
of any prepayment to the amortization of, the Loans shall not constitute any
such extension) or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon;
(c) Reduce the percentage specified in the definition of Required Banks;
(d) Increase the amount of the Commitment of any Bank hereunder (it being
understood that a waiver of any Default or Event of Default shall not constitute
a change in the terms of any Commitment of any Bank);
(e) Extend the Commitment Termination Date;
(f) Release or permit the release of any asset pledged under any of the
Security Documents; or
(g) Consent to any assignment by the Borrower of the Obligations. Any such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No consent to or demand on the Borrower in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Agreement and the other Loan Documents embody the
entire agreement and understanding among the Banks, the Administrative Agent and
the Borrower and supersede all prior agreements and understandings relating to
the subject matter hereof.
Section 9.7. Remedies Cumulative.
-------------------
Each and every right granted to the Banks and the Administrative Agent
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of any Bank or the
Administrative Agent to exercise, and no delay in exercising, any right shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude any other or future exercise thereof or the exercise of any other
right. The due payment and performance of the obligations shall be without
regard to any counterclaim, right of offset or any other claim whatsoever that
the Borrower may have against any Bank or the Administrative Agent and without
regard to any other obligation of any nature whatsoever that any Bank or the
Administrative Agent may have to the Borrower, and no such counterclaim or
offset shall be asserted by the Borrower in any action, suit or proceeding
instituted by any Bank or the Administrative Agent for payment or performance of
the obligations.
Section 9.8. Further Assurances.
-----------------
At any time and from time to time, upon the request of any Bank or the
Administrative Agent, the Borrower shall execute, deliver and acknowledge or
cause to be executed, delivered and acknowledged, such further documents and
instruments and do such other acts and things as any Bank or the Administrative
Agent may reasonably request in order to fully effect the purposes of this
Agreement, the other Loan Documents and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the Loans.
Section 9.9. Notices.
-------
All notices, requests, reports and other communications pursuant to this
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by certified mail, return receipt requested, except
for routine reports delivered in compliance with Article 5 hereof which may be
sent by ordinary first-class mail) or telegram or telecopy, addressed as
follows:
(a) If to the Borrower:
Griffon Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Administrative Agent:
Fleet Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Vice President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (other than in the case of Borrowing Notices
and reports and other documents delivered in compliance
with Article 5 hereof) to:
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Documentation Agent:
The Chase Manhattan Bank
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to a Bank:
To its respective address (telecopy number) set forth on its
signature page to this Agreement.
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is telecopied to such party at the telecopier
number referred to above or delivered by hand or such commercial messenger
service to such party at its address referred to above, or, if sent by mail, on
the third Business Day after the day deposited in the mail, postage prepaid, or
in the case of telegraphic notice, when delivered to the telegraph company,
addressed as aforesaid. Any party may change the person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
Section 9.10. Counterparts.
------------
This Agreement may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Section 9.11. Severability.
------------
The provisions of this Agreement are severable, and if any clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Agreement is independent
and compliance by the Borrower with any of them shall not excuse non-compliance
by the Borrower with any other. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 9.12. Binding Effect; No Assignment or Delegation by Borrower.
-------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the
Borrower and its successors and to the benefit of the Banks and the
Administrative Agent and their respective successors and assigns. The rights and
obligations of the Borrower under this Agreement shall not be assigned or
delegated without the prior written consent of each Bank and the Administrative
Agent, and any purported assignment or delegation without such consent shall be
void.
Section 9.13. Assignments and Participations by Banks.
---------------------------------------
(a) Each Bank may assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Loans owing to it, and the
Note or Notes held by it); provided, however, that: (i) each such assignment
shall be of a constant, and not a varying, percentage of all of the assigning
Bank's rights and obligations under this Agreement, (ii) the amount of the
Commitment of the assigning Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000 and shall be an integral
multiple of $500,000, (iii) each assignee shall agree in writing satisfactory in
form and substance to the Administrative Agent to be bound by the terms and
conditions of this Agreement, (iv) each such assignment other than to a Bank
party hereto or a banking Affiliate of such a Bank shall require the consent of
the Borrower (unless an Event of Default has occurred and is continuing in which
case such consent shall not be required), and (v) each such assignment shall be
to an Eligible Assignee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof: (x) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Bank hereunder, and (y) the Bank assignor thereunder 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 an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of such financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon such assigning Bank or the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; and (vi) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Bank.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assignee representing that it is an Eligible Assignee, together with any Note
subject to such assignment, the assigning Bank shall: (i) accept such Assignment
and Acceptance, and (ii) give prompt notice thereof to the Administrative Agent,
the Borrower and each of the other Banks. Within five Business Days after its
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the assignee Bank in exchange for the surrendered Note a new Note to
the order of such Eligible Assignee in an amount equal to the Commitment assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment hereunder, a new Note to the order of the assigning Bank
in an amount equal to the Commitment retained by it hereunder. Such new Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit A-1 hereto.
(d) Each Bank may, without the prior consent of any other Bank or the
Borrower, sell participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Loans owing to it, and the
Note held by it); provided, however, that: (i) such Bank's obligations under
this Agreement (including, without limitation, its Commitment hereunder) shall
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Bank shall
remain the holder of any such Note for all purposes of this Agreement, and the
Borrower and the other Bank shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement.
(e) Each Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.13, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Bank by or on behalf of the Borrower;
provided that, prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree to preserve the confidentiality of
any confidential information relating to the Borrower received by it from such
Bank.
(f) Notwithstanding any other provision contained in this Agreement or any
other Loan Document to the contrary, each Bank may assign all or any portion of
its Loans and its Notes to any Federal Reserve Bank or the United States
Treasury (and its transferees) as collateral security pursuant to Regulation A
of the Board of Governors of the Federal Reserve System and any operating
Circular issued by such Federal Reserve Bank, provided that any payment in
respect of such assigned Loan made by the Borrower to or for the account of the
assigning Bank in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned Loans to the extent
of such payment. No such assignment shall release the assigning Bank from its
obligations hereunder.
Section 9.14. Relief From Bankruptcy Stay.
---------------------------
In the event that the Borrower or any of the persons or parties
constituting the Borrower shall (i) file with any bankruptcy court of competent
jurisdiction or be the subject of any petition under Title 11 of the U.S. Code,
as amended ("Bankruptcy Code"), (ii) be the subject of any order for relief
issued under the Bankruptcy Code, (iii) file or be the subject of any petition
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency, or other relief for debtors
(collectively, "Insolvency Law") , (iv) have sought or consented to or
acquiesced in the appointment of any trustee, receiver, conservator, or
liquidator, or (v) be the subject of any order, judgment, or decree entered by
any court of competent jurisdiction approving a petition filed against such
party for any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any Insolvency Law, the
Administrative Agent and each Bank shall thereupon be entitled and the Borrower
irrevocably consents to immediate and unconditional relief from any automatic
stay imposed by Section 362 of the Bankruptcy Code, or any other stay issued
pursuant to the Bankruptcy Code or any Insolvency Law, on or against the
exercise of the rights and remedies otherwise available to each Bank or the
Administrative Agent as provided in connection herewith and as otherwise
provided by law, and the Borrower hereby irrevocably waives any right to object
to such relief and will not contest any motion by each Bank or the
Administrative Agent seeking relief from such stay and the Borrower will
cooperate with each Bank and the Administrative Agent, in any manner requested
by each Bank or the Administrative Agent, in its efforts to obtain relief from
any such stay.
Section 9.15. Governing Law; Consent to Jurisdiction; Waiver of Trial by
Jury.
------------------------------------------------------------
(a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND THEREWITH, SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES PERTAINING TO CONFLICTS OF
LAWS.
(b) THE BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT,
AND EACH OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY COURT OF THE STATE OF NEW
YORK, COUNTY OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK. THE BORROWER, BY THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS,
NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR PROCEEDING BY DELIVERY
THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER PROVIDED FOR IN SECTION 9.9
HEREOF. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS. THE
BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY
DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW
YORK UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF
NEW YORK. NOTHING IN THIS SECTION 9.15 SHALL AFFECT OR IMPAIR IN ANY MANNER OR
TO ANY EXTENT THE RIGHT OF THE ADMININSRATIVE AGENT OR ANY BANK TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY JURISDICTION
OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
(c) EACH OF THE BORROWER, EACH AGENT AND EACH BANK WAIVES TRIAL BY JURY IN
ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT
OF, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
Section 9.16. Prior Agreement
---------------
Upon the execution of this Agreement and the satisfaction of the conditions
set forth in Article 4 and the repayment in full of all Rollover Eurodollar
Loans, the Prior Agreement shall be deemed terminated; provided, that, all right
of the Banks thereunder and all obligations of the Borrower thereunder not
theretofore satisfied shall survive to the extent not covered by this Agreement.
Section 9.17. Interest Adjustment.
-------------------
All agreements between the Borrower, the Administrative Agent and the Banks
are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid to any Bank for
the use or the forbearance of the indebtedness evidenced hereby exceed the
maximum permissible under applicable law. As used herein, the term "applicable
law" shall mean the law in effect as of the date hereof provided, however, that
in the event there is a change in the law which results in a higher permissible
rate of interest, then the Loan Documents shall be governed by such new law as
of its effective date. In this regard, it is expressly agreed that it is the
intent of Borrower and the Bank in the execution, delivery and acceptance of
this Agreement to contract in strict compliance with the laws of the State of
New York from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the Loan Documents
at the time of performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such
validity, and if under or from circumstances whatsoever the applicable Bank
should ever receive as interest and amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced by a Note (in such manner as such
Bank may determine in its sole discretion) and not to the payment of interest.
This provision shall control every other provision of all agreements between the
Borrower and such Bank.
Section 9.18. Lost Notes.
----------
Upon receipt of a certificate of an officer of any Bank as to the loss,
theft, destruction or mutilation of any Note or any other security document
which is not of public record, and, in the case of any such loss, theft,
destruction or mutilation, upon surrender and cancellation of such Note or other
security document, the Borrower will issue, in lieu thereof, a replacement Note
or other security document in the same principal amount thereof and otherwise of
like tenor.
Article 10 The Administrative Agent.
------------------------
Section 10.1. Appointment.
-----------
Each of the Banks hereby irrevocably appoints the Administrative Agent as
its agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof, together with such actions and powers as are reasonably
incidental thereto.
Section 10.2. Individual Capacity.
-------------------
The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Bank as any other Bank and may
exercise the same as though it were not the Administrative Agent, and such
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower, any Subsidiary, or any
Affiliate of the Borrower as if it were not the Administrative Agent hereunder.
Section 10.3. Exculpatory Provisions.
The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein. Without limiting the generality of the
foregoing, (1) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (2) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing pursuant to a written directive from the
Required Banks (or such other number or percentage of the Banks as shall be
necessary under the circumstances as provided in Section 9.6), and (3) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any Subsidiary that is communicated to or obtained
by the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Banks (or
such other number or percentage of the Banks as shall be necessary under the
circumstances as provided in Section 9.6) or in the absence of its own gross
negligence or willful misconduct. The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or another Credit Party and
the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection herewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth herein, (iv) the validity, enforceability, effectiveness
or genuineness of this Agreement or any other agreements, instrument or
document, or (v) the satisfaction of any condition set forth in Article 4 or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
Section 10.4. Reliance by Administrative Agent.
--------------------------------
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel to the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
Section 10.5. Delegation.
----------
The Administrative Agent may perform any and all of its duties and exercise
its rights and powers by or through any one or more subagents appointed by the
Administrative Agent, including, without limitation, the appointment of Chase as
Documentation Agent, provided that no such delegation shall serve as a release
of the Administrative Agent or waiver by the Borrower of any rights hereunder;
provided further that although Chase, as Documentation Agent shall be entitled
to all the benefits of the exculpatory provisions set forth in this Agreement,
Chase, as Documentation Agent shall have no duties, responsibilities or
liabilities whatsoever, in such capacity. The Administrative Agent and any such
subagent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
this Article 10 shall apply to any such subagent and to the Related Parties of
the Administrative Agent and any such subagent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Section 10.6. Resignation; Successor Administrative Agent.
-------------------------------------------
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this Section 10.6, the Administrative Agent may resign at
any time by notifying the Banks and the Borrower. Upon any such resignation, the
Required Banks shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Required Banks and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After the Administrative
Agent's resignation hereunder, the provisions of this Article and Section 9.6
shall continue in effect for the benefit of such retiring Administrative Agent,
its subagents and their respective Related Parties in respect of any actions
taken or permitted to be taken by any of them while it was acting as
Administrative Agent.
Section 10.7. NonReliance on Other Credit Parties.
-----------------------------------
Each Credit Party acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Credit Party and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Credit Party also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Credit Party and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURES FOLLOW ON NEXT PAGES]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
GRIFFON CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Title: President
--------------------------------------
[SIGNATURES CONTINUE ON NEXT PAGE]
Commitment:
----------
$50,000,000 FLEET BANK, NATIONAL
ASSOCIATION, individually and in its
capacity as Administrative Agent
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Title: Vice President
--------------------------------------
Lending Office for Prime Rate Loans and
---------------------------------------
Eurodollar Loans:
----------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Address for Notices:
-------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUE ON NEXT PAGE]
Commitment:
----------
$45,000,000 THE CHASE MANHATTAN BANK,
individually and in its capacity as
Documentation Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title: Vice President
--------------------------------------
Lending Office for Prime Rate Loans and
---------------------------------------
Eurodollar Loans:
----------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address for Notices:
-------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
[SIGNATURES CONTINUE ON NEXT PAGE]
Commitment:
----------
$25,000,000 FIRSTAR BANK, NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Vice President
--------------------------------------
Lending Office for Prime Rate Loans and
---------------------------------------
Eurodollar Loans:
----------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
Address for Notices:
-------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
Telecopier No.: ▇▇▇ ▇▇▇-▇▇▇▇
