LOAN AGREEMENT
by and among
GRIFFON CORPORATION,
NATWEST BANK N.A., individually
and as Collateral Agent
and
CHEMICAL BANK
Dated June 8, 1995
TABLE OF CONTENTS
Article 1. Definitions . . . . . . . . . . . . . . . . . . .
Article 2. Commitments; Loans. . . . . . . . . . . . . . . .
Section 2.1 Loans. . . . . . . . . . . . . . . . . . .
Section 2.2 Notices Relating to Loans. . . . . . . . .
Section 2.3 Disbursement of Loan Proceeds. . . . . . .
Section 2.4 Notes. . . . . . . . . . . . . . . . . . .
Section 2.5 Repayment of Principal of Loans. . . . . .
Section 2.6 Interest . . . . . . . . . . . . . . . . .
Section 2.7 Fees . . . . . . . . . . . . . . . . . . .
Section 2.8 Voluntary Changes in
Commitment; Prepayments After
Commitment Termination Date . . . . .
Section 2.9 Use of Proceeds of Loans . . . . . . . . .
Section 2.10 Computations . . . . . . . . . . . . . . .
Section 2.11 Minimum Amounts of Borrowings,
Conversions, Prepayments
and Interest Periods. . . . . . . . .
Section 2.12 Time and Method of Payments. . . . . . . .
Section 2.13 Lending Offices. . . . . . . . . . . . . .
Section 2.14 Several Obligations. . . . . . . . . . . .
Section 2.15 Pro Rata Treatment Between Banks . . . . .
Section 2.16 Sharing of Payments
and Set-Off Among Banks . . . . . . .
Section 2.17 Conversions of Loans . . . . . . . . . . .
Section 2.18 Additional Costs; Capital Requirements . .
Section 2.19 Limitation on Types of Loans . . . . . . .
Section 2.20 Illegality . . . . . . . . . . . . . . . .
Section 2.21 Certain Conversions pursuant
to Sections 2.18 and 2.20 . . . . . .
Section 2.22 Indemnity. . . . . . . . . . . . . . . . . .
Section 2.23 Security . . . . . . . . . . . . . . . . . .
Article 3. Representations and Warranties. . . . . . . . . .
Section 3.1 Organization . . . . . . . . . . . . . . .
Section 3.2 Power, Authority, Consents . . . . . . . .
Section 3.3 No Violation of Law or Agreements. . . . .
Section 3.4 Due Execution, Validity, Enforceability. .
Section 3.5 Properties, Priority of Liens. . . . . . .
Section 3.6 Judgments, Actions, Proceedings. . . . . .
Section 3.7 No Defaults, Compliance With Laws. . . . .
Section 3.8 Burdensome Documents . . . . . . . . . . .
Section 3.9 Financial Statements; Projections. . . . .
Section 3.10 Tax Returns. . . . . . . . . . . . . . . .
Section 3.11 Intangible Assets. . . . . . . . . . . . .
Section 3.12 Regulation U . . . . . . . . . . . . . . .
Section 3.13 Name Changes, Mergers, Acquisitions. . . .
Section 3.14 Full Disclosure. . . . . . . . . . . . . .
Section 3.15 Licenses and Approvals . . . . . . . . . .
Section 3.16 Labor Disputes; Collective Bargaining
Agreements; Employee Grievances. . . .
Section 3.17 Condition of Assets. . . . . . . . . . . .
Section 3.18 ERISA. . . . . . . . . . . . . . . . . . .
Article 4. Conditions to the Loans . . . . . . . . . . . . .
Section 4.1 Conditions to Initial Loans. . . . . . . .
Section 4.2 Conditions to Subsequent Loans . . . . . .
Article 5. Delivery of Financial Reports,
Documents and Other Information. . . . . . .
Section 5.1 Annual Financial Statements. . . . . . . .
Section 5.2 Quarterly Financial Statements . . . . . .
Section 5.3 Projections. . . . . . . . . . . . . . . .
Section 5.4 Compliance Information . . . . . . . . . .
Section 5.5 No Default Certificate . . . . . . . . . .
Section 5.6 Certificate of Accountants . . . . . . . .
Section 5.7 Accountants' Reports . . . . . . . . . . .
Section 5.8 Copies of Documents. . . . . . . . . . . .
Section 5.9 Certain Notices. . . . . . . . . . . . . .
Section 5.10 ERISA Notices and Requests . . . . . . . .
Section 5.11 Permitted Acquisition Deliveries . . . . .
Article 6. Affirmative Covenants . . . . . . . . . . . . . .
Section 6.1 Books and Records. . . . . . . . . . . . .
Section 6.2 Inspections and Audits . . . . . . . . . .
Section 6.3 Maintenance and Repairs. . . . . . . . . .
Section 6.4 Continuance of Business. . . . . . . . . .
Section 6.5 Copies of Corporate Documents. . . . . . .
Section 6.6 Perform Obligations. . . . . . . . . . . .
Section 6.7 Notice of Litigation . . . . . . . . . . .
Section 6.8 Insurance. . . . . . . . . . . . . . . . .
Section 6.9 Financial Covenants. . . . . . . . . . . .
Section 6.10 Notice of Certain Events . . . . . . . . .
Section 6.11 Comply with ERISA. . . . . . . . . . . . .
Section 6.12 Environmental Compliance . . . . . . . . .
Section 6.13 Pledge of Clopay Capital Stock . . . . . .
Article 7. Negative Covenants. . . . . . . . . . . . . . . .
Section 7.1 Indebtedness . . . . . . . . . . . . . . .
Section 7.2 Liens. . . . . . . . . . . . . . . . . . .
Section 7.3 Guaranties . . . . . . . . . . . . . . . .
Section 7.4 Mergers, Acquisitions. . . . . . . . . . .
Section 7.5 Redemptions; Distributions . . . . . . . .
Section 7.6 Stock Issuance . . . . . . . . . . . . . .
Section 7.7 Changes in Business and
Sales or Pledges of Assets. . . . . .
Section 7.8 Investments. . . . . . . . . . . . . . . .
Section 7.9 Fiscal Year. . . . . . . . . . . . . . . .
Section 7.10 ERISA Obligations. . . . . . . . . . . . .
Section 7.11 Rental Obligations . . . . . . . . . . . .
Section 7.12 Transactions with Affiliates . . . . . . .
Section 7.13 Hazardous Material . . . . . . . . . . . .
Section 7.14 Regulation U . . . . . . . . . . . . . . .
Article 8. Events of Default . . . . . . . . . . . . . . . .
Section 8.1 Payments . . . . . . . . . . . . . . . . .
Section 8.2 Certain Covenants. . . . . . . . . . . . .
Section 8.3 Other Covenants. . . . . . . . . . . . . .
Section 8.4 Other Defaults . . . . . . . . . . . . . .
Section 8.5 Representations and Warranties . . . . . .
Section 8.6 Bankruptcy . . . . . . . . . . . . . . . .
Section 8.7 Judgments. . . . . . . . . . . . . . . . .
Section 8.8 ERISA. . . . . . . . . . . . . . . . . . .
Section 8.9 Liens. . . . . . . . . . . . . . . . . . .
Section 8.10 Change of Control. . . . . . . . . . . . .
Article 9. Miscellaneous Provisions. . . . . . . . . . . . .
Section 9.1 Fees and Expenses; Indemnity . . . . . . .
Section 9.2 Taxes. . . . . . . . . . . . . . . . . . .
Section 9.3 Payments . . . . . . . . . . . . . . . . .
Section 9.4 Survival of Agreements and
Representations; Construction . . . .
Section 9.5 Lien on and Set-off of Deposits. . . . . .
Section 9.6 Modifications, Consents and
Waivers; Entire Agreement . . . . . .
Section 9.7 Remedies Cumulative. . . . . . . . . . . .
Section 9.8 Further Assurances . . . . . . . . . . . .
Section 9.9 Notices. . . . . . . . . . . . . . . . . .
Section 9.10 Counterparts . . . . . . . . . . . . . . .
Section 9.11 Severability . . . . . . . . . . . . . . .
Section 9.12 Binding Effect; No Assignment
or Delegation by Borrower . . . . . .
Section 9.13 Assignments and Participations by Banks . .
Section 9.14 Relief From Bankruptcy Stay. . . . . . . .
Section 9.15 Governing Law; Consent to Juris-
diction; Waiver of Trial by Jury. . .
EXHIBITS
A-1. Form of Note to NatWest
A-2. Form of Note to Chemical
A-3. 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. Judgments, 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
L. Form of Assignment and Acceptance
M. Form of Collateral Agent Agreement
LOAN AGREEMENT
THIS LOAN AGREEMENT, made this 8th day of June, 1995 (this
"Agreement"), is by and among:
GRIFFON CORPORATION, a Delaware corporation (the "Borrower");
NATWEST BANK N.A., a national banking association, and
CHEMICAL BANK, a New York banking corporation (individually, a
"Bank" and, collectively, the "Banks"); and
NATWEST BANK N.A., in its capacity as Collateral 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 Sixty Million Dollars
($60,000,000), 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.
"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.
"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 determina-
tion thereof, (i) if the Funded Debt to Cash Flow Ratio is less
than 1.00 to 1.00, then with respect to any Prime Rate Loans, 0%,
and with respect to any Eurodollar Loans, 0.625%; (ii) if the
Funded Debt to Cash Flow Ratio is less than 1.50 to 1.00 but equal
to or greater than 1.00 to 1.00, then with respect to any Prime
Rate Loans, 0%, and with respect to any Eurodollar Loans, 0.875%;
(iii) if the Funded Debt to Cash Flow Ratio is less than 2.50 to
1.00 but 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, 1.25%; (iv) if the Funded Debt to Cash Flow Ratio is less
than 3.50 to 1.00 but equal to or greater than 2.50 to 1.00, then
with respect to any Prime Rate Loans, 0.25%, and with respect to
any Eurodollar Loans, 1.75%; and (v) if the Funded Debt to Cash
Flow Ratio is equal to or greater than 3.50 to 1.00, then with
respect to any Prime Rate Loans, 0.50%, and with respect to any
Eurodollar Loans, 2.00%. 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 (i)
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, the Applicable Margin shall be as
set forth in clause (v) above, unless the Funded Debt to Cash Flow
Ratio is equal to or greater than 3.50 to 1:00, in which event the
Applicable Margin shall be 1.00% with respect to any Prime Rate
Loans and 2.50% with respect to any Eurodollar Loans. 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 judgement 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.
"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.
"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.
"Chemical" means Chemical Bank, a New York banking
corporation, in its capacity as a Bank hereunder.
"Clopay" means Clopay Corporation, a Delaware
corporation.
"Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
"Collateral Agent" means NatWest Bank N.A., a national
banking association, in its capacity as Collateral Agent pursuant
to the terms and conditions of the Collateral Agent Agreement, and
any successor thereto.
"Collateral Agent Agreement" means that certain
Collateral Agent Agreement substantially in the form of Exhibit M
hereto, dated as of the date hereof between NatWest and Chemical,
including all amendments, modifications and supplements thereto.
"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.
"Commitment Fee" is defined in subsection 2.7(a) hereof.
"Commitment Termination Date" means May 31, 1998.
"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 Banks, 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 on
the business, operations or financial conditions of the Borrower or
any of its Subsidiaries.
"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.
"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.
"Dollars" and "$" means lawful currency of the United
States of America.
"Eligible Assignee" - (a) any of the following that have
been approved by the Majority 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 Majority 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 environ-
mental, 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 contam-
inant 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 govern-
mental 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 regu-
lations 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.
"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(c) hereof.
"Financial Statements" means, with respect to the
Borrower: (i) its consolidated audited Balance Sheet as at
September 30, 1994, 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 March 31, 1995, together with the
related unaudited Income Statement and Statement of Cash Flows for
the 3-month period then ended, and (iii) each of the financial
statements delivered to the Banks pursuant to subsections 5.1 and
5.2 hereof.
"Fixed Base Rate" means, with respect to any Eurodollar
Loan for any Interest Period therefor, the rate per annum equal to
the offered rate for deposits in Dollars, for a period comparable
to the Interest Period and in an amount substantially equal to the
principal amount of the Eurodollar Loan to be made by each Bank to
which such Interest Period relates, appearing on the Reuters Screen
LIBO Page as of 11:00 a.m. London time (or as soon thereafter as
practicable) on the day that is two (2) Eurodollar Business Days
prior to the first day 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. If the foregoing rate is
unavailable from the Reuters Screen for any reason, then such rate
shall be determined by each Bank from Telerate Page 3750 or, if
such rate is also unavailable on such service, then from any other
interest rate reporting service of recognized standing designated
in writing by each Bank to the Borrower and the other Bank.
"Fixed Rate" means, for any Eurodollar Rate Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) 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.
Each Bank 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 either Bank to so advise the Borrower on any
one or more occasions shall not affect the rights of either Bank or
the obligations of the Borrower hereunder.
"Funded Debt to Cash Flow Ratio" means, for any period,
the ratio of (a) Long-term Indebtedness 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) the
sum of net income of the Borrower and its Subsidiaries (determined
in accordance with generally accepted accounting principles
consistently applied) for the most recently completed four fiscal
quarters, plus extraordinary and unusual non-cash losses for such
period, plus depreciation and amortization expense for such period,
minus extraordinary and unusual non-cash gains for such period,
minus capital expenditures for such period.
"Indebtedness" means, with respect to any Person, 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 obliga-
tions 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 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 Rate Loans shall be
in effect at the same time; (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.
"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 acqui-
sition 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, 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.
"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 Agreements 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
hereafter executes and delivers to the Banks 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.
"Majority Banks" means, at any time while no Loans are
outstanding hereunder, Banks having at least 66-2/3% of the
aggregate amount of the Commitments and, at any time while Loans
are outstanding hereunder, Banks holding at least 66-2/3% of the
outstanding aggregate principal amount of the Loans hereunder.
"Material Adverse Effect" 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.
"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.
"NatWest" means NatWest Bank N.A., a national banking
association, in its capacity as a Bank hereunder.
"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
Banks, whether now existing or hereafter arising, whether or not
currently contemplated, arising under the Loan Documents.
"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 does not exceed 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 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 each Bank in writing
in advance of the initiation of such proposed transaction together
with any information concerning such transaction as any Bank may
request, and, provided that each Bank shall have approved such
transaction in writing prior to the initiation of such transaction,
with the approval of 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 of the Eligible Business (and a majority of
which were members of such Board of Directors 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 Collateral 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 Collateral 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).
"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 organiza-
tion, 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 Agreements" means that certain Pledge Agreement
substantially in the form of Exhibit A-3 hereto, dated as of the
date hereof between the Borrower and 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 Rate 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 with respect to Prime Rate Loans made
by NatWest, the interest rate established from time to time by
NatWest as its prime rate at its Principal Office, and (ii) with
respect to Prime Rate Loans made by Chemical, the interest rate
publicly announced by Chemical at its Applicable Lending Office as
its prime rate. Notwithstanding the foregoing, the Borrower
acknowledges that the Banks may regularly make domestic commercial
loans at rates of interest less than the rate of interest referred
to in the preceding sentence. 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 (i) with respect to NatWest, the
principal office presently located at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, and (ii) with respect to Chemical, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
"Principal Subsidiary" means Clopay, Telephonics or
Lightron.
"Projections" means (i) the Griffon Corporation Statement
of Operations for the years ended September 30, 1995 through 1999,
and delivered to the Banks on or prior to the date of this
Agreement (which includes projected income statements and balance
sheets), and (ii) the projections delivered to the Banks pursuant
to Section 5.3 hereof.
"Purchase Money Security Interest" is defined in
subsection 7.2(c) hereof.
"Quarterly Dates" means the first day of each March,
June, September and December 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 adminis-
tration thereof.
"Reserve Requirement" means, for any Eurodollar Rate
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.
"Security Documents" is defined in subsection 2.23(b)
hereof.
"Standard-Xxxx" means Standard-Xxxx 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 Banks, as evidenced by the
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.
"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 May 31, 2003.
"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.
"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.
Any accounting terms used in this Agreement that are not specif-
ically 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
(individually a "Loan" and, collectively, the "Loans") to the
Borrower during the Revolving Credit Period to and including the
Commitment Termination Date in an aggregate principal amount at any
one time outstanding up to, but not exceeding, the Commitment of
such Bank 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 (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 each Bank 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 Rate Loan (in each
case, a "Borrowing Notice"). Each such written notice shall be
irrevocable and shall be effective only if received by each Bank
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 borrow-
ing, 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 conver-
sion), 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.
The Borrower shall give the Banks notice of each
borrowing hereunder as provided in Section 2.2 hereof. Not later
than 3:00 p.m., New York City time, on the date specified for each
borrowing hereunder, each Bank shall transfer to the Borrower the
amount of the Loan to be made by it on such date by depositing the
amount thereof in an account of the Borrower maintained with such
Bank.
Section 2.4 Notes.
(a) The Loans made by NatWest shall be evidenced by
a single promissory note of the Borrower in substantially the form
of Exhibit A-1 hereto and the Loans made by Chemical shall be
evidenced by a single promissory note of the Borrower in
substantially the form of Exhibit A-2 hereto (each, a "Note" and
collectively, the "Notes"). 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 twenty (20) consecutive quarterly installments
on the Quarterly Dates, commencing on September 1, 1998 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 five
percent (5.0%) 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 $250,000 and in integral multiples
of $50,000 in the case of Prime Rate Loans, and in a minimum amount
of $1,250,000 and in integral multiples of $50,000 in the case of
Eurodollar Rate 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 Rate 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 Rate 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 Rate 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 Rate Loan being paid prior to the last day of the
Interest Period applicable thereto.
Section 2.6 Interest.
(a) The Borrower shall pay to each Bank 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 Rate Loan, on the last day of each
Interest Period for such Loan (and, if such Interest Period exceeds
one month in duration, monthly, on the Monthly Dates), 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 either Bank. Promptly after the establishment of any
interest rate provided for herein or any change therein, each Bank
will notify the Borrower thereof, provided that the failure of
either Bank to so notify the Borrower shall not affect the
obligations of the Borrower hereunder or under either of the Notes
in any respect.
(d) Anything in this Agreement or either 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 either 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 shall pay to each Bank for the
account of each Bank 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 Ter-
mination Date, at the rate of one-quarter of one (0.25%) percent
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 September 1, 1995, and on the
earlier of the date the Commitments are terminated or the Commit-
ment 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 each Bank pro rata
according to their respective Commitments, a non-refundable
facility fee (the "Facility Fee") in an amount equal to One Hundred
Fifty Thousand ($150,000) Dollars in the aggregate.
(c) 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 Banks 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.
The proceeds of the Loans hereunder may be used by
the Borrower solely for its 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).
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 either 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 $250,000 and in integral multiples of $50,000 in the case
of Prime Rate Loans, and in an amount at least equal to $1,250,000
and in integral multiples of $50,000 in the case of Eurodollar Rate
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.
All payments of principal, interest, Fees and other
amounts (including indemnities) payable by the Borrower hereunder
shall be made in Dollars, in immediately available funds, to each
Bank at its Applicable Lending Office not later than 11:00 a.m.,
New York City time, on the date on which such payment shall become
due (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 such Bank). Additional provisions
relating to payments are set forth in Section 9.3 hereof.
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 Several Obligations.
The failure of either Bank to make any Loan to be
made by it on the date specified therefor shall not relieve the
other Bank of its respective obligations to make its Loans on such
date, but neither Bank shall be responsible for the failure of the
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: (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 respective
Commitment (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
respective Commitment; (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
between 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 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 Bank 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 Bank participations in the Loans held by
the other Bank 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 other-
wise) 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 Bank 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 either Bank to exercise any
such right or shall affect the right of either 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 Banks notice of each such
conversion as provided in Section 2.2 hereof; (ii) Eurodollar Rate
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
Rate Loan if on the proposed date of conversion a Default or an
Event of Default exists. The Banks shall use their 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' 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 either 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
either Bank hereunder, and the result of any event referred to
above is to impose upon either Bank or increase any capital
requirement applicable as a result of the making or maintenance of,
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 Rate 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 Rate 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 Rate Loans, or its Commitment, or to reduce
any amount receivable by such Bank hereunder in respect of any of
its Eurodollar Rate 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 Rate 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, either 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 Rate Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of
such Bank which includes Eurodollar Rate 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 Bank),
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 Rate 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, either 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 such Bank shall give the Borrower and the other Bank prompt
notice thereof (and shall thereafter give the Borrower and such
other Bank 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 either 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 Bank), describing such illegality
in reasonable detail (and shall thereafter promptly notify the
Borrower and the other Bank of the cessation, if any, of such ille-
gality), 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 Rate 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 Bank) 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 either Bank may sustain or incur
as a consequence of any of the following:
(a) the failure of the Borrower to borrow a
Eurodollar Rate Loan after agreement shall have been reached on the
amount, interest rate and Interest Period thereof;
(b) the receipt or recovery by either Bank, whether
by voluntary prepayment, acceleration or otherwise, of all or any
part of a Eurodollar Rate 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 Rate Loan into a Prime
Loan.
Without limiting the effect of the foregoing, the
amount to be paid by the Borrower to either 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 Rate 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 Rate 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 Collateral Agent for the
ratable benefit of the Banks a first Lien on, and pledge to the
Collateral Agent for the ratable benefit of the Banks, all of the
issued and outstanding shares of the capital stock of Telephonics
by the execution and delivery to the Collateral Agent of a Pledge
Agreement substantially in the form of Exhibit A-3 hereto;
(B) Grant to the Collateral Agent for the
ratable benefit of the Banks a first Lien on, and pledge to the
Collateral Agent for the ratable benefit of the Banks, all of the
issued and outstanding shares of the capital stock of Clopay at
such time as required by Section 6.13 hereof by the execution and
delivery to the Collateral Agent of a Pledge Agreement
substantially in the form of Exhibit A-3 hereto;
(C) Grant to the Collateral Agent for the
ratable benefit of the Banks a first Lien on, and pledge to the
Collateral 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;
and
(D) Execute and deliver or cause to be
executed and delivered such other agreements, instruments and
documents as the Collateral Agent of any Bank may reasonably
require in order to effect the purposes of the Pledge Agreements,
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 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 so to qualify could have a material adverse
effect on the business, operations, financial condition or
properties of the Borrower or any Principal Subsidiary on a
consolidated basis.
Section 3.2 Power, Authority, Consents.
The Borrower and each Loan Party has the power to
execute, deliver and perform the Loan Documents. 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. No
consent or approval of any Person (including, without limitation,
any stockholder of the Borrower), 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
Majority 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.
All of the properties and assets owned by the
Borrower and each Subsidiary that is executing a Security Document
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.
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 involving, in the case
of any court proceeding, a claim in excess of $200,000, nor, to the
best of the Borrower's knowledge, is there any reasonable basis for
the institution of any 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 author-
ities, 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; Projections.
(a) Each of the Financial Statements is correct and
complete and presents fairly the consolidated financial position,
the consolidated results of operations and changes in financial
position 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").
The Borrower's fiscal year is the twelve-month period ending on
September 30th in each year.
(b) The Projections reflect as of the date thereof
the Borrower's good faith projections, after reasonable analysis,
of the matters set forth therein.
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, the Projections,
nor any certificate, opinion, or any other statement made or
furnished in writing to 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 on the Borrower or any of
its Subsidiaries on a consolidated basis, which fact has not been
set forth herein, or in the Financial Statements, the Projections,
or any certificate, opinion or other written statement so made or
furnished to 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(1) 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 a Material Adverse
Effect. The Borrower has given, made available, or upon request
will deliver, to 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.
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, accompanied by stock
powers duly endorsed in blank and undated, and irrevocable proxies
relating thereto;
(c) The Borrower shall have paid to the Banks the
Facility Fee.
(d) Blau, Kramer, Wactlar & Xxxxxxxxx, 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.
(e) The Banks shall have received 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) 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.
(f) (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 Banks shall have received a Compliance Certificate dated
the date hereof certifying, inter alia, that the conditions set
forth in this subsection 4.1(f) are satisfied on such date.
(g) The Banks shall have executed and delivered the
Collateral Agent Agreement.
(h) All legal matters incident to the initial Loans
shall be satisfactory to counsel to 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 each Bank 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 no Default or Event of Default has occurred and is
continuing.
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 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 Xxxxxx Xxxxxxxx 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 prin-
ciples.
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 consis-
tently 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, 7.4, 7.8 (other than 7.8(a)) and
7.11 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) regis-
tration 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 either 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 either 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 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 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 either Bank
may reasonably require, in order to assure each Bank that the
Borrower is and will be in compliance with its obligations under
the Loan Documents or to evaluate either Bank's investment in the
then outstanding Notes.
Section 6.3 Maintenance and Repairs.
Maintain in good repair, working order and condi-
tion, 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 Banks copies of any amend-
ments 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 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 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 Banks, obtain such additional insurance as either
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) A Quick Ratio of not less than 1.10:1.00 at all
times.
(b) Tangible Net Worth at not less than
$120,000,000 at all times, provided that for purposes of
calculating Tangible Net Worth for this subsection 6.9(b), any net
loss after-income tax up to an aggregate amount of $6,000,000
recognized by the Borrower from the sale or other disposition of
Standard-Xxxx or Western Synthetic shall be excluded.
(c) As of the end of each fiscal quarter, a Funded
Debt to Cash Flow Ratio for the most recently completed four fiscal
quarters at not more than 4.00 to 1.00.
(d) The ratio of (a) Unsubordinated Liabilities of
the Borrower and its Subsidiaries to (b) the sum of Tangible Net
Worth plus Subordinated Debt of the Borrower and its Subsidiaries
at not more than 1.25 to 1.00 at all times.
Section 6.10 Notice of Certain Events.
(a) Promptly notify 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 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 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 Regula-
tion 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 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 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 Banks' rights under any Loan Document or by
operation of law.
Section 6.13 Pledge of Clopay Capital Stock.
Pledge to the Banks all of the issued and
outstanding capital stock of Clopay at such time as the outstanding
principal amount of the Loans exceeds $20,000,000, pursuant to a
pledge agreement substantially in the form of Exhibit A-3 hereto,
and deliver to the Banks all of the stock certificates representing
such shares, together with stock powers duly executed in blank and
undated, and proxies with respect thereto.
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 Capi-
talized 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, 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); and
(g) As set forth on Exhibit D hereto.
Section 7.3 Guaranties.
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, (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 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, 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 Contingent Obligations.
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 any Default or Event of Default
would exist after giving effect to any of the following:
(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.
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 five percent (5%) 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 five
percent (5%) of the consolidated net revenues of the Borrower and
its Subsidiaries or (ii) the assets of which do not exceed five
percent (5%) 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, (c) all or any
portion of the property and assets of Standard-Xxxx and Western
Synthetic and (d) all or any portion of the capital stock of
Standard-Xxxx.
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 accep-
tances 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 Xxxxx'x 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;
to the business of the Borrower or any Subsidiary in an aggregate
amount not to exceed $5,000,000;
(c) Investment by the Borrower in any majority-
owned Subsidiary; 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 Rental Obligations.
Enter into, or permit to remain in effect, any lease
of personal property during any fiscal year (other than Capitalized
Leases), if, after giving effect thereto, the aggregate amount of
all rentals under any such lease, including, without limitation,
all percentage rents, due from the Borrower and the Subsidiaries
thereunder would exceed an amount equal to four (4%) percent of the
gross sales of the Borrower and its Subsidiaries on a consolidated
basis for the preceding fiscal year.
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.
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
either Bank upon consent of the Majority 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 prepay-
ment 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, Section 6.13 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 either Bank; 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 $500,000;
or
Section 8.5 Representations and Warranties.
Any representation or warranty made in writing to
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
Collateral 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.
Article 9. Miscellaneous Provisions.
Section 9.1 Fees and Expenses; Indemnity.
The Borrower will on demand pay: (a) all reasonable
costs of each Bank 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 each Bank
and the Collateral Agent and of examiners and consultants of each
Bank 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 either
Bank or the Collateral Agent 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 each Bank and the
Collateral Agent in connection with its enforcement of the payment
of the Note held by it or any sum due to it under the Loan
Documents, or any of its other rights hereunder or thereunder. In
addition to the foregoing, the Borrower shall indemnify each Bank
and the Collateral Agent 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 each Bank or the Collateral Agent 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
each Bank or the Collateral Agent 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 each Bank or the Collateral Agent 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 Collateral 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 either
Bank or the Collateral Agent, such Bank or the Collateral 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 each Bank or
the Collateral Agent at its Applicable Lending 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 succeed-
ing 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 Collateral 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 Collateral Agent payable by such
Bank or the Collateral 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 xxxx 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 Collateral Agent a Lien on any and all deposits or other sums
at any time credited by or due from either Bank or the Collateral
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 either Bank or the
Collateral 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 either
Bank or the Collateral 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 either Bank or the Collateral 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 Majority Banks;
provided, however, that notwithstanding the foregoing, without the
written consent of each Bank and the Collateral 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 Majority 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
Collateral 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
Collateral 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 either Bank or the Collateral 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 either Bank or the Collateral Agent and without regard to
any other obligation of any nature whatsoever that either Bank or
the Collateral Agent may have to the Borrower, and no such counter-
claim or offset shall be asserted by the Borrower in any action,
suit or proceeding instituted by either Bank or the Collateral
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 either Bank or the Collateral 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 either Bank or the Collateral 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 con-
nection with the Loans.
Section 9.9 Notices.
All notices, requests, reports and other communi-
cations 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
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Blau, Kramer, Wactlar &
Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(b) If to Chemical:
Chemical Bank
0000 Xxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Vice President
Telecopier No.: (000) 000-0000
(c) If to NatWest or the Collateral Agent:
NatWest Bank N.A.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
Vice President
Telecopier No.: (000) 000-0000
with a copy (other than in the case
of Borrowing Notices and reports
and other documents delivered in
compliance with Article 5 hereof) to:
Winston & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx-Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
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 specified above or delivered by hand or
such commercial messenger service to such party at its address
specified 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 jurisdic-
tion, 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 limita-
tions 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 Collateral 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 Collateral 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 Collateral
Agent to be bound by the terms and conditions of the Collateral
Agent Agreement, (iv) each such assignment other than to a Bank or
a banking Affiliate of a Bank shall require the consent of the
Borrower, 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 there-
under 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 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 Accep-
tance 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 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 Exhibits A-1 and A-2
hereto.
(d) Each Bank may, without the prior consent of the
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 assign-
ment 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 infor-
mation 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, 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
Collateral 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 Collateral Agent seeking relief from
such stay and the Borrower will cooperate with each Bank and the
Collateral Agent, in any manner requested by each Bank or the
Collateral Agent, in its efforts to obtain relief from any such
stay.
Section 9.15 Governing Law; Consent to Juris-
diction; 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 THE 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 ALLOWD 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. ANOTHER IN THIS SECTION
9.15 SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF 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 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
GRIFFON CORPORATION
By: Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: President
[SIGNATURES CONTINUE ON NEXT PAGE]
Commitment:
$36,000,000 NATWEST BANK N.A., individually and
in its capacity as Collateral Agent
By: Xxxxxxxxxxx Xxxxxxxxxx
Name: Xxxxxxxxxxx Xxxxxxxxxx
Title: Vice President
Lending Office for Prime Rate
Loans and Eurodollar Loans:
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
[SIGNATURES CONTINUE ON NEXT PAGE]
Commitment:
$24,000,000 CHEMICAL BANK
By: Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
Lending Office for Prime Rate
Loans and Eurodollar Loans:
0000 Xxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
