1
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
DATED AS OF JANUARY 7, ▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇.,
▇▇▇▇ ▇▇▇▇▇▇▇ HOLDING, INC.
THE LENDERS LISTED HEREIN,
AS LENDERS,
AND
UNION BANK OF CALIFORNIA, N.A.,
AS AGENT
================================================================================
2
▇▇▇▇ INDUSTRIES, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------------
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement . . . . . . . . . . . . . . 32
----------------------------------------------------------------------------------
1.3 Other Definitional Provisions and Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-------------------------------------------------------
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.1 Commitments; Making of Loans; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-----------------------------------
2.2 Interest on the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------------------
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
----
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments and Tender Period Revolving Loan
-----------------------------------------------------------------------------------------------------
Sublimit; General Provisions Regarding Payments; Application of Proceeds of Collateral and Payments Under
---------------------------------------------------------------------------------------------------------
Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-------------------
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
---------------
2.6 Special Provisions Governing LIBOR Rate Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
---------------------------------------------
2.7 Increased Costs; Taxes; Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
----------------------------------------
2.8 Obligation of Lenders and Issuing Lender to Mitigate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
----------------------------------------------------
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein . . . . . . . . . . . . . . . . 59
-----------------------------------------------------------------------------
3.2 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
---------------------
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 63
------------------------------------------------------------------
3.4 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
--------------------
3.5 Indemnification; Nature of Issuing Lender's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
--------------------------------------------------
3.6 Increased Costs and Taxes Relating to Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-------------------------------------------------------
3.7 Existing Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
--------------------------
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.1 Conditions to Tender Loans and Other Amounts Advanced on Closing Date . . . . . . . . . . . . . . . . . . . . 70
---------------------------------------------------------------------
4.2 Conditions to Term Loans and Revolving Loans Made on Merger Date . . . . . . . . . . . . . . . . . . . . . . . 76
----------------------------------------------------------------
4.3 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
-----------------------
4.4 Conditions to Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
-------------------------------
(i)
3
PAGE
----
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries . . . . . . . . . . . . . . . . 83
-----------------------------------------------------------------------------
5.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
--------------------------------
5.3 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
-------------------
5.4 No Material Adverse Effect; No Restricted Junior Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 86
---------------------------------------------------------
5.5 Title to Properties; Liens; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
----------------------------------
5.6 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
-------------------------
5.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
----------------
5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts . . . . . . . . . . . . . . . . . 87
----------------------------------------------------------------------------
5.9 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
-----------------------
5.10 Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
---------------------
5.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
----------------------
5.12 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
------------
5.13 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
------------------------
5.14 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
----------------
5.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
--------
5.16 Matters Relating to Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
------------------------------
5.17 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
------------------
5.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
----------
5.19 Existing Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
--------------------------
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
6.1 Financial Statements and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
--------------------------------------
6.2 Corporate Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
-------------------------
6.3 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
----------------------------------------------
6.4 Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
------------------------------------
6.5 Inspection Rights; Audits of Inventory and Accounts Receivable; Lender Meeting . . . . . . . . . . . . . . . . 98
------------------------------------------------------------------------------
6.6 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
--------------------------
6.7 Environmental Review, Disclosure, Etc.; Company's Actions Regarding Hazardous Materials Activities,
---------------------------------------------------------------------------------------------------
Environmental Claims and Violations of Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 98
---------------------------------------------------------
6.8 Execution of Subsidiary Guaranty and Personal Property Collateral Documents by Certain Subsidiaries and
-------------------------------------------------------------------------------------------------------
Future Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
-------------------
6.9 UCC Termination Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
--------------------------
6.10 Conduct of Business of Merger Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
---------------------------------
6.11 Conduct of Business of Milgray. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
------------------------------
6.12 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
------
6.13 Redemption of Existing Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
-----------------------------------
6.14 Flooring Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
-------------------
(ii)
4
PAGE
----
SECTION 7. COMPANY'S NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
------------
7.2 Liens and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
-------------------------
7.3 Investments; Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
---------------------------
7.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
----------------------
7.5 Restricted Junior Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
--------------------------
7.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
-------------------
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . 108
----------------------------------------------------------------
7.8 Consolidated Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
---------------------------------
7.9 Restriction on Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
---------------------
7.10 Sales and Lease-Backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
---------------------
7.11 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
-------------------------------
7.12 Transactions with Shareholders and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
---------------------------------------------
7.13 Disposal of Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
----------------------------
7.14 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
-------------------
7.15 Amendments or Waivers of Merger Agreement and Tender Agreement; Amendments of Documents Relating to
---------------------------------------------------------------------------------------------------
Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
-------------------------
7.16 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
-----------
7.17 Transaction Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
-----------------
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
8.1 Failure to Make Payments When Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
---------------------------------
8.2 Default in Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
---------------------------
8.3 Breach of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
---------------------------
8.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
------------------
8.5 Other Defaults Under Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
-----------------------------------
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
-----------------------------------------------------
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
---------------------------------------------------
8.8 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
-------------------------
8.9 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
-----------
8.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
----------------------
8.11 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
-----------------
8.12 Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation of Obligations . . . . . . . . . . . . . . 116
----------------------------------------------------------------------------------
8.13 Unwinding of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
-------------------
SECTION 9. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
-----------
9.2 Powers and Duties; General Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
-----------------------------------
9.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness . . . . . . . . . . . . . 119
-----------------------------------------------------------------------------------
9.4 Right to Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
------------------
(iii)
5
PAGE
----
9.5 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
---------------
9.6 Collateral Documents and Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
--------------------------------------------
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
10.1 Assignments and Participations in Loans and Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . 121
-------------------------------------------------------------
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
--------
10.3 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
---------
10.4 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
-------
10.5 Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
---------------
10.6 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
----------------------
10.7 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
-------------------------
10.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
-------
10.9 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
------------------------------------------------------
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
-----------------------------------------------------
10.11 Release of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
-------------------
10.12 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
-------------------------------
10.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
------------
10.14 Obligations Several; Independent Nature of Lenders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 130
----------------------------------------------------------
10.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
--------
10.16 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
--------------
10.17 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
----------------------
10.18 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
----------------------------------------------
10.19 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
--------------------
10.20 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
---------------
10.21 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
---------------------------
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
(iv)
6
EXHIBITS
I-A FORM OF NOTICE OF BORROWING (PRE-MERGER DATE)
I-B FORM OF NOTICE OF BORROWING (POST-MERGER DATE)
II-A FORM OF NOTICE OF CONVERSION/CONTINUATION (PRE-MERGER DATE)
II-B FORM OF NOTICE OF CONVERSION/CONTINUATION
(POST-MERGER DATE)
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF TENDER NOTE
V FORM OF TENDER PERIOD REVOLVING NOTE
VI FORM OF TERM NOTE
VII FORM OF REVOLVING NOTE
VIII FORM OF FINANCIAL STATEMENT AND COMPLIANCE CERTIFICATE
IX FORM OF BORROWING BASE CERTIFICATE
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF CERTIFICATE RE NON-BANK STATUS
XII FORM OF COMPANY SECURITY AGREEMENT
XIII FORM OF COMPANY PLEDGE AGREEMENT
XIV FORM OF COLLATERAL ACCOUNT AGREEMENT
XV FORM OF CLOSING DATE OPINION OF IRELL & ▇▇▇▇▇▇▇ LLP
XVI FORM OF CLOSING DATE OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
XVII FORM OF SUBSIDIARY SECURITY AGREEMENT
XVIII FORM OF SUBSIDIARY GUARANTY
XIX FORM OF FINANCIAL CONDITION CERTIFICATE
XX FORM OF SUBSIDIARY PLEDGE AGREEMENT
XXI FORM OF MERGER DATE OPINION OF IRELL & ▇▇▇▇▇▇▇ LLP
XXII FORM OF MERGER DATE OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
XXIII FORM OF LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
XXIV FORM OF LETTER AGREEMENT REGARDING PREPAYMENT OF EXISTING SENIOR
NOTES
(v)
7
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1B CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP
5.1 SUBSIDIARIES OF COMPANY; CAPITALIZATION
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.19 EXISTING LETTERS OF CREDIT
7.1 EXISTING INDEBTEDNESS OF MILGRAY
7.2 EXISTING LIENS
(vi)
8
▇▇▇▇ INDUSTRIES, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of January 7, 1997 and
entered into by and among ▇▇▇▇ INDUSTRIES, INC., a California corporation
("COMPANY"), ▇▇▇▇ ONTARIO HOLDING, INC., a California corporation and
wholly-owned subsidiary of Company ("ONTARIO SUBSIDIARY"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred
to herein as a "LENDER" and collectively as "LENDERS"), and UNION BANK OF
CALIFORNIA, N.A. ("UBOC"), as agent for Lenders (in such capacity, "AGENT").
R E C I T A L S
WHEREAS, Company has formed, and owns all of the outstanding
shares of capital stock of, Merger Sub (this and other capitalized terms used
in these Recitals without definition being used as defined in subsection 1.1)
for the purpose of acquiring all of the outstanding shares of common stock, par
value $0.25 per share, of Milgray Electronics, Inc., a New York corporation
("MILGRAY") (such common stock being the "MILGRAY COMMON STOCK");
WHEREAS, Merger Sub has offered to purchase all of the issued
and outstanding shares of Milgray Common Stock at a price not to exceed $14.77
per share pursuant to the Tender Offer;
WHEREAS, Company, Merger Sub and Milgray have entered into the
Merger Agreement pursuant to which, upon completion of the Tender Offer and,
with respect to clauses (i) and (ii) below, upon receipt of the approval by
holders of at least 66-2/3% of the outstanding shares of Milgray Common Stock
(if required by law):
(i) Merger Sub will merge with Milgray pursuant
to the Merger Agreement with Milgray being the surviving corporation
in such merger (such surviving corporation is sometimes referred to
herein as the "SURVIVING CORPORATION");
(ii) Each of the shares of Milgray Common Stock
outstanding immediately before the consummation of the Merger (other
than shares to be cancelled as described in clause (iii) below and
shares held by those who perfect appraisal rights under Section 623 of
the New York Business Corporation Law) will be converted into the
right to receive a cash payment;
9
(iii) Each of the shares of Milgray Common Stock
outstanding immediately before the consummation of the Merger held by
Merger Sub, Milgray or any of their respective direct or indirect
Subsidiaries (the "OTHER MILGRAY SHARES") shall be cancelled and
retired without payment of any consideration therefor;
(iv) As a result of the Merger, each of the shares
of the capital stock of Merger Sub outstanding immediately before the
consummation of the Merger will be converted into and become one fully
paid and nonassessable share of common stock of Surviving Corporation
(the "SURVIVING CORPORATION COMMON STOCK"); and
(v) Following the Merger, all of the outstanding
shares of Surviving Corporation Common Stock will be owned by Company;
WHEREAS, Company desires that Lender extend certain credit
facilities to Company to provide for (i) the payment of the consideration for
the Tendered Milgray Shares in an aggregate amount not exceeding $101,000,000;
(ii) the payment of Transaction Costs in an aggregate amount not exceeding
$6,000,000; (iii) the prepayment of the Existing Senior Notes of Company
(together with accrued interest and make-whole payments) in an amount not
exceeding $26,000,000; (iv) the repayment of all Indebtedness of Company
outstanding under the Existing Loan Agreement; (v) the payment of all
Indebtedness outstanding under the bank facilities of Milgray and its
Subsidiaries existing on or prior to the Merger Date; (vi) the working capital
requirements and general corporate purposes of Company and its Subsidiaries;
(vii) the issuance of Standby Letters of Credit and Commercial Letters of
Credit as described herein; and (viii) the other purposes described herein;
WHEREAS, Company desires to secure all of the Obligations
hereunder and under the other Loan Documents by granting to Agent, on behalf of
Lenders, (i) a First Priority Lien on all Accounts and Inventory of Company and
(ii) a pledge of all of the capital stock of all of the Subsidiaries of
Company; and
WHEREAS, the Subsidiary Guarantors have agreed to guarantee
the Obligations hereunder and under the other Loan Documents and to secure
their guaranties by granting to Agent, on behalf of Lenders, a First Priority
Lien on all their Accounts and Inventory;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders and
Agent agree as follows:
2
10
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the
following meanings:
"ACCOUNT" means (a) all of the present and future accounts,
contract rights, instruments, documents, chattel paper, general intangibles,
and other forms of obligations of, or owing to, Company or any of its
Subsidiaries, which, in each case, arise out of or in connection with the sale
or lease of Inventory by Company or any of its Subsidiaries or in respect of
the rendering of services by Company or any of its Subsidiaries, whether due or
to become due, whether now existing or hereafter arising and whether or not it
has been earned by performance, and (b) all present and future guarantees,
credit insurance and other security for such accounts, contract rights,
instruments, documents, chattel paper, general intangibles and other forms of
obligations.
"ACCOUNT DEBTOR" means each Person obligated in any way on an
Account.
"ADJUSTED LIBOR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a LIBOR Rate Loan,
the rate per annum obtained by dividing (i) the offered quotation (rounded
upward to the nearest 1/16 of one percent) to first class banks in the London
interbank market by UBOC for U.S. dollar deposits of amounts in same day funds
comparable to the principal amount of the LIBOR Rate Loan of UBOC for which the
Adjusted LIBOR Rate is then being determined (which principal amount shall be
deemed to be $1,000,000 in the event UBOC is not making, converting to or
continuing such a LIBOR Rate Loan) with maturities comparable to such Interest
Period as of approximately 9:00 a.m. (Los Angeles time) on such Interest Rate
Determination Date by (ii) a percentage equal to 100% minus the stated maximum
rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the
3
11
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor Agent
appointed pursuant to subsection 9.5.
"AGGREGATE AMOUNTS DUE" has the meaning assigned to that term
in subsection 10.5.
"AGREEMENT" means this Credit Agreement dated as of January 7,
1997, as it may be amended, supplemented or otherwise modified from time to
time.
"APPLICABLE LIBOR RATE MARGIN" means the following:
(i) if the Consolidated Leverage Ratio is greater than or
equal to 3.50 to 1.00, 1.50%;
(ii) if the Consolidated Leverage Ratio is less than 3.50
to 1.00 but greater than or equal to 3.00 to 1.00, 1.25%;
(iii) if the Consolidated Leverage Ratio is less than 3.00
to 1.00 but greater than or equal to 2.25 to 1.00, 1.00%;
(iv) if the Consolidated Leverage Ratio is less than 2.25
to 1.00 but greater than or equal to 1.50 to 1.00, 0.75%; and
(v) if the Consolidated Leverage Ratio is less than 1.50
to 1.00, 0.50%
"APPLIED AMOUNT" has the meaning assigned to that term in
subsection 2.4B(iv)(b).
"ASSET SALE" means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its wholly-owned
Subsidiaries of (i) any of the stock of any of Company's Subsidiaries, (ii)
substantially all of the assets of any division or line of business of Company
or any of its Subsidiaries, or (iii) any other assets (whether tangible or
intangible) of Company or any of its Subsidiaries other than (a) Inventory sold
in the ordinary course of business and (b) any such other assets to the extent
that the aggregate value of such assets sold in any Fiscal Year does not exceed
$5,000,000.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement
substantially in the form of Exhibit X annexed hereto.
4
12
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"BASE RATE" means, at any time, the per annum rate publicly
announced by UBOC from time to time at its head office as its "reference rate."
The "reference rate" is determined by UBOC from time to time as a means of
pricing credit extensions to some customers and is neither directly tied to any
external rate of interest or index nor necessarily the lowest rate of interest
charged by UBOC at any given time for any particular class of customers or
credit extensions.
"BASE RATE LOANS" means Loans bearing interest at the Base
Rate.
"BORROWING BASE" means an amount equal to the sum of the
following: (i) 85% of Eligible Accounts plus (ii) 50% of Eligible Inventory
less (iii) 75% of the aggregate principal amount of all Indebtedness of Company
and its Subsidiaries under any Flooring Agreements; provided that during the
period from the Closing Date to but excluding the Merger Date, the Borrowing
Base shall not include any Eligible Accounts or Eligible Inventory of Milgray
and its Subsidiaries.
"BORROWING BASE CERTIFICATE" means a certificate substantially
in the form of Exhibit IX annexed hereto delivered to Agent and Lenders by
Company pursuant to subsection 6.1(vi), with appropriate insertions, and all
related reports and supporting documentation as reasonably requested by Agent
or Requisite Lenders.
"▇▇▇▇▇▇▇▇" means ▇.▇. ▇▇▇▇▇▇▇▇ Co. (Texas), Inc., a Texas
corporation.
"BUSINESS DAY" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of California or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with the Adjusted
LIBOR Rate or any LIBOR Rate Loans, any day that is a Business Day described in
clause (i) above and that is also a day for trading by and between banks in
Dollar deposits in the London interbank market.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States of
5
13
America the obligations of which are backed by the full faith and credit of the
United States of America, in each case maturing within one year after such
date; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from Standard & Poor's Ratings Group ("S&P"), ▇▇▇▇▇'▇ Investors
Service, Inc. ("MOODY'S") or another nationally recognized rating agency; (iii)
commercial paper maturing no more than one year from the date of creation
thereof and having, at the time of the acquisition thereof, a rating of at
least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit
or bankers' acceptances maturing within one year after such date and issued or
accepted by any Lender or by any commercial bank organized under the laws of
the United States of America or any state thereof or the District of Columbia
that (a) is at least "adequately capitalized" (as defined in the regulations of
its primary Federal banking regulator) and (b) has Tier 1 capital (as defined
in such regulations) of not less than $100,000,000; (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $500,000,000, and (c) has the
highest rating obtainable from S&P, Moody's or another nationally recognized
rating agency; and (vi) shares of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Tax-Exempt California
Portfolio or a similar fund as approved by Agent.
"CERTIFICATE RE NON-BANK STATUS" means a certificate
substantially in the form of Exhibit XI annexed hereto delivered by a Lender to
Agent pursuant to subsection 2.7B(iii).
"CLOSING DATE" means the date on or before January 31, 1997,
on which the Tender Loans are made.
"CLOSING DATE LOAN DOCUMENTS" means, collectively, this
Agreement, the Company Security Agreement, the Company Pledge Agreement, the
Collateral Account Agreement, the Subsidiary Security Agreements, the
Subsidiary Guaranty, the Tender Notes and the Tender Period Revolving Notes,
which are to be executed and delivered on the Closing Date pursuant to
subsection 4.1.
"COLLATERAL" means, collectively, all of the property
(including capital stock) in which Liens are purported to be granted pursuant
to the Collateral Documents as security for the Obligations.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in
the Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account
Agreement executed and delivered by Company and Agent on the Closing Date,
substantially in the
6
14
form of Exhibit XIV annexed hereto, as such Collateral Account Agreement may
hereafter be amended, supplemented or otherwise modified from time to time.
"COLLATERAL DOCUMENTS" means, collectively, the Company Pledge
Agreement, the Subsidiary Pledge Agreements, the Company Security Agreement,
the Collateral Account Agreement, the Subsidiary Security Agreements and all
other instruments or documents delivered by any Loan Party pursuant to this
Agreement or any of the other Loan Documents in order to grant to Agent, on
behalf of Lenders, a Lien on any property of that Loan Party as security for
the Obligations.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or
similar instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or services
by Company or any of its Subsidiaries in the ordinary course of business of
Company or such Subsidiary.
"COMMITMENTS" means the commitments of Lenders to make Loans
as set forth in subsection 2.1A.
"COMPANY" has the meaning assigned to that term in the
introduction to this Agreement.
"COMPANY PLEDGE AGREEMENT" means Company Pledge Agreement
executed and delivered by Company on the Closing Date, substantially in the
form of Exhibit XIII annexed hereto, as such Company Pledge Agreement may
thereafter be amended, supplemented or otherwise modified from time to time.
"COMPANY SECURITY AGREEMENT" means Company Security Agreement
executed and delivered by Company on the Closing Date, substantially in the
form of Exhibit XII annexed hereto, as such Company Security Agreement may
thereafter be amended, supplemented or otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit VIII annexed hereto delivered to Agent and Lenders by
Company pursuant to subsection 6.1(iii).
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, the sum
of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on income, (iv)
total depreciation expense, (v) total amortization expense, (vi) other
extraordinary or non-recurring non-cash items reducing Consolidated Net Income,
and (vii) cash expenditures reducing net income not exceeding an aggregate
amount of $5,000,000 which are incurred during the Fiscal Years ending December
31, 1996, December 31, 1997 and December 31, 1998 in connection with
employee-related matters, compliance with ERISA requirements or the acquisition
of Milgray by Company, less other extraordinary or non-recurring non-cash items
increasing
7
15
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP and calculated
on a pro forma basis to give effect to the Merger and the acquisition of
Milgray by Company.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries; provided, that Consolidated Capital Expenditures shall not
include the Ontario Acquisition.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum
(without duplication) of the amounts for such period of (i) Consolidated
Interest Expense, (ii) Consolidated Scheduled Principal Payments, (iii)
provisions for taxes based on income, and (iv) any dividends or distributions
(other than dividends or distributions made in kind) made to shareholders of
Company in respect of any shares of capital stock of Company, all of the
foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP; provided that Consolidated Fixed Charges
shall be calculated as follows: (i) for the four-Fiscal Quarter ending March
31, 1997, such amount for the Fiscal Quarter ending on such date times four,
(ii) for the four-Fiscal Quarter period ending June 30, 1997, such amount for
the two-Fiscal Quarter period ending on such date times two, (iii) for the
four-Fiscal Quarter period ending September 30, 1997, such amount for the
three-Fiscal Quarter period ending on such date times 1 1/3, and (iv) for the
four-Fiscal Quarter period ending December 31, 1997 and any time thereafter,
such amount for such four-Fiscal Quarter period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest expense (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to Agent
and Lenders on or before the Closing Date.
"CONSOLIDATED LEVERAGE RATIO" means, as of any date of
determination, the ratio of (i) Consolidated Total Debt on such date to (ii)
Consolidated Adjusted EBITDA for the immediately preceding four-Fiscal Quarter
period ending prior to such date.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided that there shall be
8
16
excluded (i) the income (or loss) of any Person (other than a Subsidiary of
Company) in which any other Person (other than Company or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) except as to Milgray and
its Subsidiaries, the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary of Company or is merged into or consolidated with
Company or any of its Subsidiaries or that Person's assets are acquired by
Company or any of its Subsidiaries, (iii) the income of any Subsidiary of
Company to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary, (iv) any after-tax gains or losses attributable to Asset Sales or
returned surplus assets of any Pension Plan.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the
aggregate amount of all rents paid or payable by Company and its Subsidiaries
on a consolidated basis during such period under all Operating Leases to which
Company or any of its Subsidiaries is a party as lessee.
"CONSOLIDATED SCHEDULED PRINCIPAL PAYMENTS" means, for any
period, the aggregate amount of all scheduled repayments of principal by
Company and its Subsidiaries on a consolidated basis during such period under
all Indebtedness of Company or any of its Subsidiaries (including the principal
component of Capital Leases).
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all debt of Company
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) 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, or (iii) under Hedge Agreements. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty, endorsement
(otherwise 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, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligation of another through any agreement (contingent or otherwise) (x) to
purchase, repurchase or otherwise acquire
9
17
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (y) to maintain the solvency
or any balance sheet item, level of income or financial condition of another
if, in the case of any agreement described under subclauses (x) or (y) of this
sentence, the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal to
the amount of the obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement to which Company or any of its
Subsidiaries is a party.
"CUSTODIAN" means ▇▇▇▇▇▇ Trust Company of New York.
"DOLLAR," "DOLLARS" and the sign "$" mean the lawful money of
the United States of America.
"DOMESTIC ACCOUNT DEBTOR" means an Account Debtor which
maintains a place of business in the United States of America to which invoices
evidencing Accounts are sent.
"DOMESTIC SUBSIDIARY" means, with respect to any Person, any
Subsidiary of such Person incorporated in a jurisdiction of the United States
of America, Puerto Rico or Canada.
"EFFECTIVE TIME" means the date and time that the Merger
becomes effective in accordance with the terms of the Merger Agreement, with
the effect set forth in Section 906 of the New York Business Corporation Law.
"ELIGIBLE ACCOUNTS" means, at any date of determination, the
Dollar amount of all Accounts of Company and any of its wholly owned Domestic
Subsidiaries other than any Account:
(i) which does not represent a bona fide sale or
lease and delivery of goods by Company or any of its wholly-owned
Domestic Subsidiaries
10
18
in the ordinary course of business, or which is not for a liquidated
amount payable by the Account Debtor thereon on the terms set forth in
the invoice therefor;
(ii) which represents a sale on a ▇▇▇▇-and-hold,
guaranteed sale, sale and return, sale on approval, consignment,
repurchase or return basis;
(iii) which is evidenced by a promissory note or
other instrument or by chattel paper;
(iv) with respect to which more than 120 days have
elapsed since the date of the original invoice therefor;
(v) which is not evidenced by an invoice rendered
to the Account Debtor;
(vi) owed by an Account Debtor which is a
director, officer, employee or Affiliate of Company or any of its
Subsidiaries;
(vii) if the aggregate dollar amount of all
Accounts owed by the Account Debtor thereon exceeds 15% of the
aggregate amount of all Accounts at such time, but only to the extent
of such excess;
(viii) which is owed by an Account Debtor if more
than 25% of the aggregate of all Accounts owing by such Account Debtor
have, at the time of any determination of Eligible Accounts, remained
unpaid for more than 120 days since the date of the original invoice
therefor unless there is a bona fide dispute with respect to such
delinquent unpaid Accounts;
(ix) as to which any one or more of the following
events has occurred with respect to the Account Debtor on such
Account: the filing by or against the Account Debtor of a request or
petition in a proceeding that is then pending for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy,
insolvency, or similar laws of the United States of America, any state
or territory thereof, or any foreign jurisdiction, now or hereafter in
effect; the making of any general assignment by the Account Debtor for
the benefit of creditors in a proceeding that is then pending; the
appointment of a receiver or trustee for the Account Debtor or for any
of the assets of the Account Debtor, including the appointment of or
taking possession by a "custodian," as defined in the Bankruptcy Code
in a proceeding that is then pending; the institution by or against
the Account Debtor of any other type of insolvency proceeding (under
the bankruptcy laws of the United States of America or otherwise) or
of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs
of, the Account Debtor in a proceeding that is then pending;
11
19
the nonpayment generally by the Account Debtor of its debts as they
become due; or the cessation of the business of the Account Debtor as
a going concern;
(x) if Agent believes in its reasonable judgment
that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's
financial inability to pay;
(xi) on which Agent reasonably determines that it
does not have a First Priority Lien, free of Liens or other claims of
all other Persons except for Accounts on which there exists a Lien of
the type described in Section 7.2A(vii); and
(xii) which represents a rebilling to an Account
Debtor for a discount or other adjustment inappropriately applied to
an Account by such Account Debtor.
"ELIGIBLE ASSIGNEE" means (i) (a) a commercial bank organized
under the laws of the United States or any state thereof and having a combined
capital and surplus of at least $500,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States of
America or any state thereof and having a combined capital and surplus of at
least $500,000,000; (c) a commercial bank organized under the laws of any other
country or a political subdivision thereof and having a combined capital and
surplus of at least $500,000,000; provided that (x) such bank is acting through
a branch or agency located in the United States of America or (y) such bank is
organized under the laws of a country that is a member of the Organization for
Economic Cooperation and Development or a political subdivision of such
country; and (d) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies,
mutual funds and lease financing companies; and (ii) any Lender and any
Affiliate of any Lender; provided that no Affiliate of Company shall be an
Eligible Assignee and no Person, other than a Lender, who owns beneficially or
of record Securities representing more than 10% of the total outstanding
Securities of Milgray or Company shall be an Eligible Assignee.
"ELIGIBLE INVENTORY" means, at any time, the Dollar value
(valued at the lower of either cost (determined on either a first in, first out
or a weighted average basis) or fair market value, all in conformity with GAAP)
of all Inventory of Company and its wholly-owned Domestic Subsidiaries, other
than any Inventory:
(i) which is obsolete, not in good condition, not of
merchantable quality or not saleable in the ordinary course of
Company's and its Subsidiaries' business, or which is subject to
defects that would affect market value;
12
20
(ii) which is not held for sale by Company and its
Subsidiaries as Inventory in the ordinary course of business as
presently conducted by them;
(iii) which is Inventory in the possession of any Person
other than Company or one of its wholly-owned Subsidiaries other than
(x) Inventory which is located in "in-plant stores" on the premises of
another Person and is segregated from the Inventory of such Person and
subject to the control of Company or its Subsidiaries and (y)
Inventory in the possession of another Person (which Inventory is
segregated from all other goods held by such Person) that has entered
into a contract with Company or its Subsidiaries to assemble, process
or package such Inventory (or perform any such other "outside
processing" task) prior to sale by Company or its Subsidiaries;
provided, that no goods other than such Inventory shall be subject to
such assembly, processing or packaging;
(iv) on which Agent reasonably determines that it does not
have a First Priority Lien, free of Liens or other claims of all other
Persons except for Liens of the type described in Section 7.2A(vii);
(v) which is Inventory labeled with, or intended to be
sold under, a customer's name, or manufactured or configured to a
particular Person's specifications unless such Inventory is the
subject of a binding contract to purchase between the Company or any
of its Subsidiaries and such Person in form and substance reasonably
satisfactory to Agent;
(vi) which is not located within the United States of
America (excluding its territories or possessions), Puerto Rico or
Canada;
(vii) which is Inventory that the Agent reasonably
determines to be unacceptable due to age, type, category, quality or
quantity; and
(viii) which consists of supplies or packaging or shipping
materials.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or contributed to
by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice
of violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm
to health, safety, natural resources or the environment.
13
21
"ENVIRONMENTAL LAWS" means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents,
judgments, Governmental Authorizations, or any other requirements of
governmental authorities relating to (i) environmental matters, including those
relating to any Hazardous Materials Activity, (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, in any manner applicable to
Company or any of its Subsidiaries or any Facility, including the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the Oil
Pollution Act (33 U.S.C. Section 2701 et seq) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), each as amended
or supplemented, any analogous present or future state or local statutes or
laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is
a member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is
a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of
Company or any of its Subsidiaries shall continue to be considered an ERISA
Affiliate of Company or such Subsidiary within the meaning of this definition
with respect to the period such entity was an ERISA Affiliate of Company or
such Subsidiary and with respect to liabilities arising after such period for
which Company or such Subsidiary could be liable under the Internal Revenue
Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue
14
22
Code with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) the provision by the administrator
of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described in Section
4041(c) of ERISA; (iv) the withdrawal by Company, any of its Subsidiaries or
any of their respective ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan resulting in
liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan; (vi) the imposition of liability on Company, any of its Subsidiaries or
any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal of Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by Company, any of its Subsidiaries or any
of their respective ERISA Affiliates of notice from any Multiemployer Plan that
it is in reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA, or that it intends to terminate or has terminated under Section 4041A or
4042 of ERISA; (viii) the occurrence of an act or omission which could
reasonably be expected to give rise to the imposition on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines, penalties,
taxes or related charges under Chapter 43 of the Internal Revenue Code or under
Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of
any Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in connection with any
Employee Benefit Plan; (x) a determination by the Internal Revenue Service or a
judgment of a court that any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue Code)
fails to qualify under Section 401(a) of the Internal Revenue Code, if such
determination or judgment becomes final and non-appealable, (xi) the failure of
any trust forming part of any Pension Plan to qualify for exemption from
taxation under Section 501(a) of the Internal Revenue Code; or (xii) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXCHANGE ASSETS" has the meaning assigned to that term in
subsection 2.4B(iii)(a).
15
23
"EXCHANGE RATE" means, on any date when an amount expressed in
a currency other than Dollars is to be determined with respect to any Letter of
Credit, the nominal rate of exchange of the Issuing Lender in the New York
foreign exchange market for the purchase by the Issuing Lender (by cable
transfer) of such currency in exchange for Dollars at 12:00 Noon (New York
time) one Business Day prior to such date, expressed as a number of units of
such currency per one Dollar.
"EXISTING LETTERS OF CREDIT" means those certain letters of
credit issued for the benefit of Company or its Subsidiaries under the Existing
Loan Agreement and outstanding as of the Closing Date.
"EXISTING LOAN AGREEMENT" means that certain Second Amended
and Restated Loan Agreement dated as of August 13, 1992 between Company and
UBOC, including all amendments thereto.
"EXISTING NOTE PURCHASE AGREEMENTS" means those certain Note
Purchase Agreements each dated as of February 1, 1991 between Company and the
respective financial institutions signatory thereto pursuant to which the
Existing Senior Notes were issued, including all amendments thereto.
"EXISTING SENIOR NOTES" means Company's $50,000,000 initial
aggregate principal amount of 9.70% Senior Notes due February 1, 2001 issued by
Company pursuant to the terms and conditions described in the Existing Note
Purchase Agreements.
"FACILITIES" means any and all real property (including,
without limitation, all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by
Company or any of its Subsidiaries or any of their respective predecessors or
Affiliates.
"FINANCIAL PLAN" has the meaning assigned to that term in
subsection 6.1(xii).
"FIRST PRIORITY" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that such
Lien is the only Lien (other than Liens referred to in clauses (i) and (ii) of
the definition of "Permitted Encumbrances") to which such Collateral is
subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries ending on December 31 of each calendar year. For purposes of this
Agreement, any particular Fiscal Year shall be designated by reference to the
calendar year in which such Fiscal Year ends.
16
24
"FLOORING AGREEMENTS" means any agreements between Company or
its Subsidiaries and flooring lenders with respect to purchase money financing
arrangements covering Inventory held for resale by Company or any of its
Subsiaries.
"FUNDING AND PAYMENT OFFICE" means (i) the office of Agent
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or (ii) such
other office of Agent as may from time to time hereafter be designated as such
in a written notice delivered by Agent to Company and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL ACTS" has the meaning assigned to that term in
subsection 3.5A.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances", or any other term or expression
intended to define, list or classify substances by reason of properties harmful
to health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws); (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any
drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (iv) any flammable substances or explosives; (v) any radioactive
materials; (vi) any asbestos-containing materials; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any oil or dielectric
fluid containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the owners,
17
25
occupants or any Persons in the vicinity of any Facility or to the indoor or
outdoor environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current,
proposed or threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding,
presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest rates or
currency values, respectively.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (iv) any obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such obligations incurred under
ERISA and other employee benefit, retirement and compensation arrangements),
which purchase price is (a) due more than six months from the date of
incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument, and (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person. Unmatured Obligations under Interest
Rate Agreements and Currency Agreements constitute (x) in the case of Hedge
Agreements, Contingent Obligations, and (y) in all other cases, Investments,
and in neither case constitute Indebtedness.
"INDEMNIFIED LIABILITIES" has the meaning assigned to that
term in subsection 10.3.
"INDEMNITEE" has the meaning assigned to that term in
subsection 10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or necessary
for the conduct of the business of Company and its Subsidiaries as currently
conducted that are material to the condition (financial or otherwise), business
or operations of Company and its Subsidiaries, taken as a whole.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on
18
26
March 31, 1997, and (ii) with respect to any LIBOR Rate Loan, the last day of
each Interest Period applicable to such Loan; provided that in the case of each
Interest Period of longer than three months "INTEREST PAYMENT DATE" shall also
include each date that is three months, or an integral multiple thereof, after
the commencement of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement entered into between Company and one or more
Lenders.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter, and any
successor statute.
"INVENTORY" means, with respect to any Person as of any date
of determination, all of such Person's present and future inventory wherever
located (including, without limitation, all present and future goods,
merchandise and other personal property of such Person held for sale or lease),
raw materials, work in process, finished goods and materials and supplies of
any kind, nature or description (including, without limitation, packaging and
shipping materials) which are or might be used or consumed in such Person's
business or used in selling or finishing of such inventory, and all documents
of title or other similar documents representing the same. The foregoing
inventory and other property shall be included in this definition whether in
the actual, constructive or exclusive possession of such Person or in transit
to such Person or in the possession of carriers, forwarding agents, truckers,
warehousemen, vendors, selling agents, finishers, converters or other similar
third parties.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Company), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Company from any Person other than
Company or any of its Subsidiaries, of any equity Securities of such
Subsidiary, (iii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital
contribution by Company or any of its Subsidiaries to any other Person,
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business, or (iv) Interest Rate Agreements or Currency
Agreements not constituting Hedge Agreements. The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
19
27
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.
"ISSUING LENDER" means UBOC.
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial
Letters of Credit and Standby Letters of Credit issued or to be issued by the
Issuing Lender for the account of Company pursuant to subsection 3.1.
"LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Letters of Credit
(including, without limitation, the Ontario Letter of Credit) then outstanding
plus (ii) the aggregate amount of all drawings under Letters of Credit
(including, without limitation, the Ontario Letter of Credit) honored by the
Issuing Lender and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B). For purposes of this definition, any amount described in clause (i) or
(ii) of the preceding sentence which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such currency
as of the applicable date of determination.
"LIBOR RATE LOAN" means Loans bearing interest at rates
determined by reference to the Adjusted LIBOR Rate as provided in subsection
2.2A.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LOAN" or "LOANS" means one or more of the Tender Loans,
Tender Period Revolving Loans, Term Loans or Revolving Loans or any combination
thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters
of Credit (and any applications for, or reimbursement agreements or other
documents or certificates executed by Company in favor of the Issuing Lender
relating to, the Letters of Credit),
20
28
the Collateral Documents, the Subsidiary Guaranty, the Reimbursement Agreement
and the Ontario Guaranty.
"LOAN PARTY" means each of Company and any of Company's
Subsidiaries from time to time executing a Loan Document, and "LOAN PARTIES"
means all such Persons, collectively.
"MAJORITY HOLDERS" means, as of any date of determination, the
holders of at least 60% in principal amount of the Existing Senior Notes
outstanding on such date (exclusive of any Existing Senior Notes then held by
Company and any of its Subsidiaries or Affiliates).
"MARGIN DETERMINATION DATE" means the first day of the
calendar month following the delivery of each Compliance Certificate pursuant
to subsection 6.1(iii), commencing with the Compliance Certificate for the
Fiscal Quarter ended March 31, 1997.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon
the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company and its Subsidiaries, taken as a whole.
"MATERIAL CONTRACT" means any contract or other arrangement to
which Company or any of its Subsidiaries is a party (other than the Loan
Documents) for which breach, nonperformance, cancellation or failure to renew
could reasonably be expected to have a Material Adverse Effect.
"MERGER" means the merger of Merger Sub with and into Milgray
in accordance with the terms of the Merger Agreement with Milgray being the
surviving corporation in such Merger.
"MERGER AGREEMENT" means that certain Agreement and Plan of
Merger by and among Company, Merger Sub and Milgray dated as of November 26,
1996, as such agreement may be amended from time to time thereafter to the
extent permitted under subsection 7.15A.
"MERGER DATE" means the date that the Merger becomes effective
in accordance with the terms of the Merger Agreement.
"MERGER SUB" means ME Acquisition Sub, Inc., a New York
corporation and wholly-owned Subsidiary of Company.
21
29
"MILGRAY" means Milgray Electronics, Inc., a New York
corporation.
"MILGRAY COMMON STOCK" has the meaning assigned to that term
in the Preliminary Statements to this Agreement.
"MINIMUM SHARES" means 66-2/3% of the outstanding shares of
Milgray Common Stock, on a fully-diluted basis, required to be purchased by
Merger Sub in order to cause the Merger to occur.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is
a "multiemployer plan" as defined in Section 3(37) of ERISA.
"NET ASSET SALE PROCEEDS" means, with respect to any Asset
Sale, Cash payments (including any Cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) received from such Asset Sale, net of any bona fide
direct costs incurred in connection with such Asset Sale, including, without
limitation, (i) income taxes reasonably estimated to be actually payable within
two years of the date of such Asset Sale as a result of any gain recognized in
connection with such Asset Sale, (ii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) that is secured by a Lien on the stock or assets in question
and that is required to be repaid under the terms thereof as a result of such
Asset Sale and (iii) with respect to the sale of a business unit by Company or
any of its Subsidiaries, any payables or other accrued balance sheet
liabilities of such business unit retained by Company or any of its
Subsidiaries after the consummation of such sale.
"NET PROCEEDS AMOUNT" has the meaning assigned to that term in
subsection 2.4B(iii)(c).
"NET SECURITIES PROCEEDS" has the meaning assigned to that
term in subsection 2.4B(iii)(b).
"NON-U.S. LENDER" has the meaning assigned to that term in
subsection 2.7B(iii).
"NOTES" means one or more of the Tender Notes, Tender Period
Revolving Notes, Term Notes or Revolving Notes or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of Exhibit II annexed hereto delivered by Company to
Agent pursuant to subsection
22
30
2.2D with respect to a proposed conversion or continuation of the applicable
basis for determining the interest rate with respect to the Loans specified
therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of Exhibit III annexed hereto delivered by Company to
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents and by its
chief financial officer, its treasurer or its secretary.
"ONTARIO ACQUISITION" means the acquisition after the date
hereof by Ontario Subsidiary of real property and improvements consisting of a
warehouse in the City of Ontario, California as described in the Ontario
Purchase Agreement.
"ONTARIO GUARANTY" means the Guaranty executed and delivered
by Company in the form of Exhibit C to the Reimbursement Agreement,
guaranteeing all obligations of Ontario Subsidiary under the Reimbursement
Agreement, as such Ontario Guaranty may be amended, supplemented or otherwise
modified from time to time.
"ONTARIO LETTER OF CREDIT" means the Letter of Credit to be
issued by the Issuing Lender with Ontario Subsidiary as the account party, in
the form of Exhibit A to the Reimbursement Agreement, as such Ontario Letter of
Credit may be amended, supplemented or otherwise modified from time to time.
"ONTARIO PURCHASE AGREEMENT" means that certain Purchase and
Sale Agreement and Joint Escrow Instructions dated September 26, 1996 between
Company and ▇▇▇▇▇▇▇▇.
"ONTARIO SUBSIDIARY" has the meaning assigned to that term in
the introduction to this Agreement.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
23
31
"OTHER MILGRAY SHARES" has the meaning assigned to that term
in the Preliminary Statements to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or by ERISA and any such Lien relating to or imposed
in connection with any Environmental Claim):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time, required
by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens
of banks and rights of set-off, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other
Liens imposed by law, in each case incurred in the ordinary course of
business (a) for amounts not yet overdue or (b) for amounts that are
overdue and that (in the case of any such amounts overdue for a period
in excess of 5 days) are being contested in good faith by appropriate
proceedings, so long as (x) such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made
for any such contested amounts, and (y) in the case of a Lien with
respect to any portion of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral
on account of such Lien;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds, netting arrangements in
connection with cash management services provided to Company and its
Subsidiaries, and other similar obligations (exclusive of obligations
for the payment of borrowed money), so long as no foreclosure, sale or
similar proceedings have been commenced with respect to any portion of
the Collateral on account thereof;
(iv) any attachment or judgment Lien not
constituting an Event of Default under subsection 8.8;
24
32
(v) any (a) interest or title of a lessor or
sublessor under any lease, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or
(c) subordination of the interest of the lessee or sublessee under
such lease to any restriction or encumbrance referred to in the
preceding clause (b), so long as the holder of such restriction or
encumbrance agrees to recognize the rights of such lessee or sublessee
under such lease;
(vi) Liens arising from filing UCC financing
statements relating solely to leases permitted by this Agreement;
(vii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; and
(viii) a lease by Ontario Subsidiary to ▇▇▇▇▇▇▇▇ of
a portion of the property acquired by Ontario Subsidiary pursuant to
the Ontario Purchase Agreement.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies,
limited liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
(whether federal, state or local, domestic or foreign, and including political
subdivisions thereof) and agencies or other administrative or regulatory bodies
thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged
Collateral" as defined in Company Pledge Agreement.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default.
"PROCEEDINGS" has the meaning assigned to that term in
subsection 6.1(ix).
"PRO RATA SHARE" means, with respect to each Lender, the
percentage obtained by dividing (i) the sum of the Tender Loan Exposure of that
Lender plus the Term Loan Exposure of that Lender plus the Revolving Loan
Exposure of that Lender by (ii) the sum of the aggregate Tender Loan Exposure
of all Lenders plus the aggregate Term Loan Exposure of all Lenders plus the
aggregate Revolving Loan Exposure of all Lenders, as such percentage may be
adjusted by assignments permitted pursuant to subsection 10.1. The initial Pro
Rata Share of each Lender is set forth opposite the name of that Lender in
Schedule 2.1 annexed hereto.
25
33
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT AGREEMENT" means the Letter of Credit and
Reimbursement Agreement to be executed and delivered in connection with the
Ontario Acquisition by UBOC, Company and Ontario Subsidiary and pursuant to
which the Ontario Letter of Credit will be issued, substantially in the form of
Exhibit XXIII annexed hereto (with such changes as may be approved by Agent),
as such Reimbursement Agreement may be amended, supplemented or otherwise
modified from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELATED AGREEMENTS" means, collectively, the Tender Agreement
and the Merger Agreement.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, the abandonment or disposal
of any barrels, containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the air,
soil, surface water or groundwater.
"REQUISITE LENDERS" means Lenders having or holding more than
66-2/3% of the sum of the aggregate Tender Loan Exposure of all Lenders plus
the aggregate Term Loan Exposure of all Lenders plus the aggregate Revolving
Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means, with respect to any Person,
(i) any dividend or other distribution, direct or indirect, on account of any
shares of any class of stock of such Person now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock to the
holders of that class, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of such Person now or hereafter outstanding, (iii)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of
such Person now or hereafter outstanding, and (iv) any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Subordinated Indebtedness of such
Person.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection 2.1A(iv), and
"REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders in the
aggregate.
26
34
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means December
31, 2001.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
the event that Lender is the Issuing Lender, the aggregate Letter of Credit
Usage in respect of all Letters of Credit issued by that Lender (in each case
net of any participations purchased by other Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit.
"REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(iv).
"REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1D(iii)(b) on the Merger Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Revolving Loan Commitments and
Revolving Loans of any Lenders, in each case substantially in the form of
Exhibit VII annexed hereto, as they may be amended, supplemented or otherwise
modified from time to time.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (i) (a) the then fair saleable value of the property
of such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to such Person; (b)
such Person's capital is not unreasonably small in relation to its business or
any contemplated or undertaken transaction; and (c) such Person does not intend
to incur, or believe (nor should it reasonably believe) that it will incur,
debts beyond its ability to pay
27
35
such debts as they become due; and (ii) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries,
and (v) performance, payment, deposit or surety obligations of Company or any
of its Subsidiaries, in any case if required by law or governmental rule or
regulation or in accordance with custom and practice in the industry; provided
that Standby Letters of Credit may not be issued for the purpose of supporting
(a) trade payables or (b) any Indebtedness constituting "antecedent debt" (as
that term is used in Section 547 of the Bankruptcy Code) if the result is to
create a preference under Section 547 of the Bankruptcy Code.
"SUBORDINATED INDEBTEDNESS" means, with respect to any Person,
any Indebtedness of such Person subordinated in right of payment to the
Obligations pursuant to documentation containing maturities, amortization
schedules, covenants, defaults, remedies, subordination provisions and other
material terms in form and substance satisfactory to Agent and Requisite
Lenders.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, limited liability company, association, joint venture
or other business entity of which more than 50% of the total voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof. Unless otherwise specified herein, Milgray
shall be deemed a Subsidiary of Company from and after the Closing Date until
the effective time of the Merger.
"SUBSIDIARY GUARANTOR" means any Domestic Subsidiary of
Company that executes and delivers a counterpart of the Subsidiary Guaranty on
the Closing Date or from time to time thereafter pursuant to subsection 6.8.
28
36
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty executed
and delivered by (i) existing Domestic Subsidiaries of Company (other than
Milgray and its Domestic Subsidiaries) on the Closing Date, (ii) Surviving
Corporation and its Domestic Subsidiaries on the Merger Date and (iii)
additional Domestic Subsidiaries of Company from time to time in accordance
with subsection 6.8, substantially in the form of Exhibit XVIII annexed hereto,
as such Subsidiary Guaranty may thereafter be amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY PLEDGE AGREEMENT" means the Subsidiary Pledge
Agreement executed and delivered by Surviving Corporation on the Merger Date,
substantially in the form of Exhibit XX annexed hereto, as such Subsidiary
Pledge Agreement may thereafter be amended, supplemented or otherwise modified
from time to time.
"SUBSIDIARY SECURITY AGREEMENT" means each Subsidiary Security
Agreement executed and delivered by an existing Subsidiary Guarantor on the
Closing Date (or the Merger Date in the case of Surviving Corporation and its
Domestic Subsidiaries) or executed and delivered by any additional Subsidiary
Guarantor from time to time thereafter in accordance with subsection 6.8, in
each case substantially in the form of Exhibit XVII annexed hereto, as each
such Subsidiary Security Agreement may be thereafter amended, supplemented or
otherwise modified from time to time, and "SUBSIDIARY SECURITY AGREEMENTS"
means all such Subsidiary Security Agreements, collectively.
"SURVIVING CORPORATION" has the meaning assigned to that term
in the Preliminary Statements to this Agreement.
"SURVIVING CORPORATION COMMON STOCK" has the meaning assigned
to that term in the Preliminary Statements to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided that "TAX ON THE OVERALL INCOME" of a Person
shall be construed as a reference to a tax imposed by the jurisdiction in which
that Person is organized or in which that Person's principal office (and/or, in
the case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or,
in the case of a Lender, its lending office).
"TENDER AGREEMENT" means the Tender Agreement dated as of
November 26, 1996 by and among Company, Merger Sub and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
29
37
"TENDER LOAN COMMITMENT" means the commitment of a Lender to
make a Tender Loan to Company pursuant to subsection 2.1A(i) and "TENDER LOAN
COMMITMENTS" means such commitments of all Lenders in the aggregate.
"TENDER LOAN EXPOSURE" means, with respect to any Lender as of
any date of determination, (i) prior to the termination of the Tender Loan
Commitments, that Lender's Tender Loan Commitment and (ii) after the
termination of the Tender Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Tender Loans and the Tender Period
Revolving Loans of that Lender plus (b) in the event that Lender is the Issuing
Lender, the aggregate Letter of Credit Usage in respect of all Letters of
Credit issued by that Lender during the period beginning on the Closing Date
and ending on the Merger Date (in each case net of any participations purchased
by other Lenders in such Letters of Credit or any unreimbursed drawings
thereunder) plus (c) the aggregate amount of all participations purchased by
that Lender in any outstanding Letters of Credit or any unreimbursed drawings
under any Letters of Credit issued during the period beginning on the Closing
Date and ending on the Merger Date.
"TENDER LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(i).
"TENDER NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1D(i)(a) on the Closing Date and subsection
2.1D(ii) on the date of any second disbursement of Tender Loans and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignment of the Tender Loan Commitments or Tender
Loans of any Lenders, in each case substantially in the form of Exhibit IV
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"TENDER OFFER" means the offer to purchase for cash all of the
outstanding shares of Milgray Common Stock by Company pursuant to the Tender
Offer Materials.
"TENDER OFFER MATERIALS" means the Tender Offer Statement on
Schedule 14D-1 filed by Merger Sub on December 4, 1996 with the Securities and
Exchange Commission pursuant to Section 14(d)(1) of the Exchange Act, together
with all exhibits, supplements and amendments thereto and any other amendments
prior to the date hereof that relate only to any extension of time during which
the offer to purchase remains outstanding or to the results of the Tender Offer
and other amendments that are approved by Requisite Lenders.
"TENDER PERIOD REVOLVING FACILITY" means the loan facility
described in subsection 2.1A(ii).
"TENDER PERIOD REVOLVING FACILITY SUBLIMIT" means, on any date
of determination, the lesser of (x) $50,000,000, or (y) the aggregate of the
Tender Loan
30
38
Commitments minus the aggregate amount of the Tender Loans made under
subsection 2.1A(i).
"TENDER PERIOD REVOLVING LOANS" means the Loans made by
Lenders to Company pursuant to subsection 2.1A(ii).
"TENDER PERIOD REVOLVING NOTES" means (i) the promissory notes
of Company issued pursuant to subsection 2.1D(i)(b) on the Closing Date and
(ii) any promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignment of the Tender Period
Revolving Loans of any Lenders, in each case substantially in the form of
Exhibit V annexed hereto, as they may be amended, supplemented or otherwise
modified from time to time.
"TENDERED MILGRAY SHARES" means all shares of Milgray Common
Stock tendered to and purchased by Merger Sub pursuant to the Tender Offer.
"TERM LOAN COMMITMENT" means the commitment of a Lender to
make a Term Loan to Company pursuant to subsection 2.1A(iii), and "TERM LOAN
COMMITMENTS" means such commitments of all Lenders in the aggregate.
"TERM LOAN EXPOSURE" means, with respect to any Lender as of
any date of determination (i) prior to the funding of the Term Loans, that
Lender's Term Loan Commitment and (ii) after the funding of the Term Loans, the
outstanding principal amount of the Term Loan of that Lender.
"TERM LOAN MATURITY DATE" means December 31, 2001.
"TERM LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(iii).
"TERM NOTES" means (i) the promissory notes of Company issued
pursuant to subsection 2.1D(iii)(a) on the Merger Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Term Loan Commitments or Term Loans of any
Lenders, in each case substantially in the form of Exhibit VI annexed hereto,
as they may be amended, supplemented or otherwise modified from time to time.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the purpose of
reimbursing the Issuing Lender for any amount drawn under any Letter of Credit
but not yet so applied) plus (ii) the Letter of Credit Usage.
31
39
"TOTAL UTILIZATION OF TENDER PERIOD REVOLVING FACILITY" means,
as at any date of determination, the sum of (i) the aggregate principal amount
of all outstanding Tender Period Revolving Loans (other than Tender Period
Revolving Loans made for the purpose of reimbursing the Issuing Lender for any
amount drawn under any Letter of Credit but not yet so applied) plus (ii) the
Letter of Credit Usage during the period beginning on the Closing Date and
ending on the Merger Date.
"TRANSACTION COSTS" means the sum of all fees, costs and other
payable by Company or Merger Sub in connection with the transactions
contemplated by the Loan Documents, the Tender Offer Materials and the Related
Agreements.
"UBOC" has the meaning assigned to that term in the
introduction to this Agreement.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i) and (ii)
of subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation. Calculations in connection with the definitions,
covenants and other provisions of this Agreement shall be made in accordance
with accounting principles and policies in conformity with those used to
prepare the financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
A. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
B. References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided.
C. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to
limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference
32
40
thereto, but rather shall be deemed to refer to all other items or matters that
fall within the broadest possible scope of such general statement, term or
matter.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, each Lender hereby severally agrees to make the Loans
described in subsections 2.1A(i), 2.1A(ii), 2.1A(iii) and 2.1A(iv).
(i) Tender Loans. Each Lender severally agrees
to lend to Company on the Closing Date an amount not exceeding its Pro
Rata Share of the aggregate amount of the Tender Loan Commitments to
be used for the purposes identified in subsection 2.5A. The amount of
each Lender's Tender Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate amount of the Tender
Loan Commitments is $175,000,000; provided that the Tender Loan
Commitments of Lenders shall be adjusted to give effect to any
assignments of the Tender Loan Commitments pursuant to subsection
10.1B. Each Lender's Tender Loan Commitment shall expire immediately
and without further action on January 31, 1997 if the Tender Loans are
not made on or before that date. Except as provided in the next
paragraph and in subsection 2.1A(ii), Company may make only two
borrowings under the Tender Loan Commitments. Amounts borrowed under
this subsection 2.1A(i) and subsequently repaid or prepaid may not be
reborrowed. Anything contained in this Agreement to the contrary
notwithstanding, the Tender Loans shall be subject to the limitation
that in no event shall the aggregate principal amount of the Tender
Loans exceed the sum of (a) the consideration paid by Merger Sub to
purchase the Tendered Milgray Shares in an aggregate amount not to
exceed $101,000,000, (b) the Dollar amount required to repay all
amounts of principal and accrued interest outstanding under the
Existing Senior Notes (including any make-whole payments) in a total
amount not to exceed $26,000,000, and (c) all Transaction Costs paid
on or before the Closing Date in a total amount not to exceed
$6,000,000.
Subject to the foregoing limitation on the aggregate principal
amount of Tender Loans, Company may elect to request an additional
disbursement of the Tender Loans on a date that is not later than five
Business Days after the Closing Date in a total amount not exceeding
$26,000,000 for the purpose of paying all amounts of principal and
accrued interest outstanding under the Existing Senior Notes
(including any make-whole payments).
33
41
(ii) Tender Period Revolving Loans. Each Lender
severally agrees, subject to the limitations set forth below with
respect to the maximum amount of Tender Period Revolving Loans
permitted to be outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to but excluding
the Merger Date an amount not exceeding its Pro Rata Share of the
lesser of (a) the Tender Period Revolving Facility Sublimit, and (b)
the Borrowing Base then in effect to be used for the purposes
identified in subsection 2.5B. Except as expressly set forth herein,
the Tender Period Revolving Loans shall be subject to all of the terms
and provisions of this Agreement with respect to Revolving Loans and
Letters of Credit. The parties hereto acknowledge that $5,000,000 of
the Tender Period Revolving Loans made on the Closing Date shall
consist of a LIBOR Rate Loan made for the purpose of refinancing a
$5,000,000 loan made by UBOC under the Existing Loan Agreement and
that the Interest Period for such LIBOR Rate Loan shall continue until
its expiration on January 13, 1997.
The Tender Period Revolving Loans shall be subject to the
limitation that in no event shall the Total Utilization of Tender
Period Revolving Facility exceed the Tender Period Revolving Facility
Sublimit.
(iii) Term Loans. Each Lender severally agrees to
lend to Company on the Merger Date an amount not exceeding its Pro
Rata Share of the aggregate amount of the Term Loan Commitments to be
used for the purposes identified in subsection 2.5C with respect to
Term Loans. The amount of each Lender's Term Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate amount of the Term Loan Commitments is $50,000,000; provided
that the Term Loan Commitments of Lenders shall be adjusted to give
effect to any assignments of the Term Loan Commitments pursuant to
subsection 10.1B. Each Lender's Term Loan Commitment shall expire
immediately and without further action on the earlier of (a) January
31, 1997 if the Tender Loans are not made on or before that date and
(b) the date that is 75 calendar days after the Closing Date. Company
may make only one borrowing under the Term Loan Commitments. Amounts
borrowed under this subsection 2.1A(iii) and subsequently repaid or
prepaid may not be reborrowed.
(iv) Revolving Loans. Each Lender severally
agrees, subject to the limitations set forth below with respect to the
maximum amount of Revolving Loans permitted to be outstanding from
time to time, to lend to Company from time to time during the period
from the Merger Date to but excluding the Revolving Loan Commitment
Termination Date an amount not exceeding its Pro Rata Share of the
aggregate amount of the Revolving Loan Commitments to be used for the
purposes identified in subsection 2.5C with respect to Revolving
Loans. The original amount of each Lender's Revolving Loan Commitment
is set forth opposite its name on Schedule 2.1 annexed hereto and the
aggregate original
34
42
amount of the Revolving Loan Commitments is $200,000,000; provided
that the Revolving Loan Commitments of Lenders shall be adjusted to
give effect to any assignments of the Revolving Loan Commitments
pursuant to subsection 10.1B; and provided, further that the amount of
the Revolving Loan Commitments shall be reduced from time to time by
the amount of any reductions thereto made pursuant to subsections
2.4B(ii) and 2.4B(iii). Each Lender's Revolving Loan Commitment shall
expire on the Revolving Loan Commitment Termination Date and all
Revolving Loans and all other amounts owed hereunder with respect to
the Revolving Loans and the Revolving Loan Commitments shall be paid
in full no later than that date; provided that each Lender's Revolving
Loan Commitment shall expire immediately and without further action on
the earlier of (a) January 31, 1997 if the Tender Loans are not made
on or before that date and (b) the date that is 75 calendar days after
the Closing Date. Amounts borrowed under this subsection 2.1A(iv) may
be repaid and reborrowed to but excluding the Revolving Loan
Commitment Termination Date.
Anything contained in this Agreement (other than Section
10.11) to the contrary notwithstanding, the Revolving Loans and the
Revolving Loan Commitments shall be subject to the limitation that in
no event shall the Total Utilization of Revolving Loan Commitments at
any time exceed the lesser of (x) the Revolving Loan Commitments then
in effect and (y) the Borrowing Base then in effect.
B. BORROWING MECHANICS. Loans made on any Funding Date (other
than Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing the Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $1,000,000 in excess of that amount; provided that Loans
made on any Funding Date as LIBOR Rate Loans with a particular Interest Period
shall be in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount. Whenever Company desires that Lenders
make Loans it shall deliver to Agent a Notice of Borrowing no later than 9:00
A.M. (Los Angeles time) at least three Business Days in advance of the proposed
Funding Date (in the case of a LIBOR Rate Loan) or on the proposed Funding Date
(in the case of a Base Rate Loan); provided, that the Company may deliver to
Agent a Notice of Borrowing no later than 2:30 P.M. (Los Angeles time) on
January 7, 1997 requesting a LIBOR Rate Loan in respect of the Tender Loans or
the Tender Period Revolving Loans made on the Closing Date, which LIBOR Rate
Loan(s) will have an Interest Period ending on January 24, 1997; provided
further, that the Company may not request a LIBOR Rate Loan to be made during
the period beginning on January 18, 1997 and ending on January 23, 1997. The
Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be
a Business Day), (ii) the amount and type of Loans requested, (iii) whether
such Loans shall be Base Rate Loans or LIBOR Rate Loans, and (iv) in the case
of any Loans requested to be made as LIBOR Rate Loans, the initial Interest
Period requested therefor. Loans may be continued as or
35
43
converted into Base Rate Loans and LIBOR Rate Loans in the manner provided in
subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Company may give Agent telephonic notice by the required time of any
proposed borrowing under this subsection 2.1B; provided that such notice shall
be promptly confirmed in writing by delivery of a Notice of Borrowing to Agent
on or before the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Company or for otherwise acting in
good faith under this subsection 2.1B, and upon funding of Loans by Lenders in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected Loans hereunder.
Company shall notify Agent prior to the funding of any Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a recertification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for a LIBOR Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in
accordance therewith.
C. DISBURSEMENT OF FUNDS. All Loans under this Agreement shall
be made by Lenders simultaneously and proportionately to their respective Pro
Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender to make the
particular type of Loan requested be increased or decreased as a result of a
default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder. Promptly after receipt by Agent of a Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof), Agent shall
notify each Lender of the proposed borrowing. Each Lender shall make the
amount of its Loan available to Agent not later than 12:00 Noon (Los Angeles
time) on the applicable Funding Date, in same day funds in Dollars, at the
Funding and Payment Office. Except as provided in subsection 3.3B with respect
to Revolving Loans used to reimburse the Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it, upon satisfaction or waiver of
the conditions precedent specified in subsections 4.1 (in the case of Tender
Loans and Tender Period Revolving Loans made on the Closing Date), 4.2 (in the
case of Term Loans and Revolving Loans made on the Merger Date) and 4.3 (in the
case of all Loans), Agent shall make the proceeds of such Loans available to
Company on the applicable Funding Date by causing an amount of same day funds
in Dollars equal to the proceeds of
36
44
all such Loans received by Agent from Lenders to be credited to the account of
Company at the Funding and Payment Office.
Unless Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Agent the amount of such Lender's Loan requested on such Funding
Date, Agent may assume that such Lender has made such amount available to Agent
on such Funding Date and Agent may, in its sole discretion, but shall not be
obligated to, make available to Company a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent, at the customary rate
set by Agent for the correction of errors among banks for three Business Days
and thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Agent's demand therefor, Agent shall
promptly notify Company and Company shall immediately pay such corresponding
amount to Agent together with interest thereon, for each day from such Funding
Date until the date such amount is paid to Agent, at the rate payable under
this Agreement for Base Rate Loans. Nothing in this subsection 2.1C shall be
deemed to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Company may have against any Lender
as a result of any default by such Lender hereunder.
D. NOTES. Company shall execute and deliver (i) on the Closing
Date to each Lender (or to Agent for that Lender) (a) a Tender Note
substantially in the form of Exhibit IV annexed hereto to evidence that
Lender's Tender Loan, in the principal amount of that Lender's Tender Loan made
on the Closing Date and with other appropriate insertions, and (b) a Tender
Period Revolving Note substantially in the form of Exhibit V annexed hereto to
evidence that Lender's Tender Period Revolving Loan, in the principal amount of
that Lender's Tender Period Revolving Loan and with other appropriate
insertions; (ii) on the date of any second disbursement of the Tender Loans
pursuant to the second paragraph of Section 2.1A(i), a supplemental Tender Note
substantially in the form of Exhibit IV annexed hereto to evidence that
Lender's subsequent Tender Loan, in the principal amount of that Lender's
subsequent Tender Loan and with other appropriate insertions; (iii) on the
Merger Date to each Lender (or to Agent for that Lender) (a) a Term Note
substantially in the form of Exhibit VI annexed hereto to evidence that
Lender's Term Loan, in the principal amount of that Lender's Term Loan and with
other appropriate insertions, and (b) a Revolving Note substantially in the
form of Exhibit VII annexed hereto to evidence that Lender's Revolving Loans,
in the principal amount of that Lender's Revolving Loan Commitment and with
other appropriate insertions.
Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by Agent
as provided in subsection 10.1B(ii). Any request, authority or consent of any
person or entity who, at the time of making such
37
45
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, assignee or transferee of that
Note or of any Note or Notes issued in exchange therefor.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections
2.6 and 2.7, each Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Adjusted
LIBOR Rate. The applicable basis for determining the rate of interest with
respect to any Loan shall be selected by Company initially at the time a Notice
of Borrowing is given with respect to such Loan pursuant to subsection 2.1B,
and the basis for determining the interest rate with respect to any Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day a Loan is
outstanding with respect to which notice has not been delivered to Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the
Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the Base Rate; or
(b) if a LIBOR Rate Loan, then at the sum of the
Adjusted LIBOR Rate plus the Applicable LIBOR Rate Margin per annum.
The Applicable LIBOR Rate Margin shall be determined on the Margin
Determination Date by reference to the most recent Compliance Certificate
delivered by Company prior to such Margin Determination Date (without regard to
any subsequent corrections to reflect year-end audit adjustments); provided,
that until the occurrence of the first Margin Determination Date, the
Applicable LIBOR Rate Margin shall be 1.25%. The Applicable LIBOR Rate Margin
shall apply to all LIBOR Rate Loans for any Interest Period commencing during
the period from and including the Margin Determination Date to and excluding
the first day of the calendar month following the delivery of the next
Compliance Certificate; provided, however, that (x) if Company fails to deliver
any Compliance Certificate in a timely manner pursuant to subsection 6.1(iii),
or (y) upon the occurrence and during the continuation of any Event of Default,
the highest percentage per annum set forth in the definition of Applicable
LIBOR Rate Margin shall apply to all LIBOR Rate Loans for any Interest Period
commencing during the period from and including the first day of the calendar
month following the date on which such Compliance Certificate was required to
be delivered to and excluding the date on which Agent receives such Compliance
Certificate or during the continuation of such Event of Default, as the case
may be.
38
46
B. INTEREST PERIODS. In connection with each LIBOR Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that with respect to any LIBOR Rate Loans made (w) on the Closing Date, (x) on
the date that is not later than five Business Days after the Closing Date, in
the case of an additional disbursement of the Tender Loans for the purpose of
paying all amounts outstanding under the Existing Senior Notes, (y) on the
Merger Date if the Merger Date occurs on January 15, 1997 pursuant to Section
6.12, or (z) after the Closing Date and on or before January 17, 1997 as Tender
Period Revolving Loans, such Interest Period shall end on January 24, 1997;
provided further that:
(i) the initial Interest Period for any LIBOR
Rate Loan shall commence on the Funding Date in respect of such Loan,
in the case of a Loan initially made as a LIBOR Rate Loan, or on the
date specified in the applicable Notice of Conversion/ Continuation,
in the case of a Loan converted to a LIBOR Rate Loan;
(ii) in the case of immediately successive
Interest Periods applicable to a LIBOR Rate Loan continued as such
pursuant to a Notice of Conversion/Continuation, each successive
Interest Period shall commence on the day on which the next preceding
Interest Period expires;
(iii) if an Interest Period would otherwise expire
on a day that is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day; provided that, if any Interest
Period would otherwise expire on a day that is not a Business Day but
is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(iv) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (v) of this subsection 2.2B,
end on the last Business Day of a calendar month;
(v) (a) no Interest Period with respect to any
portion of the Tender Loans or the Tender Period Revolving Loans shall
extend beyond the date that is 75 calendar days after the Closing
Date, (b) no Interest Period with respect to any portion of the Term
Loans shall extend beyond the Term Loan Maturity Date and (c) no
Interest Period with respect to any portion of the Revolving Loans
shall extend beyond the Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any
portion of the Term Loans shall extend beyond a date on which Company
is required to make a
39
47
scheduled payment of principal of the Term Loans unless the sum of (a)
the aggregate principal amount of Term Loans that are Base Rate Loans
plus (b) the aggregate principal amount of Term Loans that are LIBOR
Rate Loans with Interest Periods expiring on or before such date
equals or exceeds the principal amount required to be paid on the Term
Loans on such date;
(vii) there shall be no more than ten Interest
Periods outstanding at any time;
(viii) in the event Company fails to specify an
Interest Period for any LIBOR Rate Loan in the applicable Notice of
Borrowing or Notice of Conversion/Continuation, Company shall be
deemed to have selected an Interest Period of one month; and
(ix) the Interest Period with respect to any LIBOR
Rate Loan made after the Closing Date and on or before January 17,
1997 shall expire on January 24, 1997.
C. INTEREST PAYMENTS. Subject to the provisions of subsection
2.2E, interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity). Interest on each Tender Loan and Tender Period Revolving Loan shall
also be payable in arrears on and to the earlier of (a) the date that is 75
calendar days after the Closing Date and (b) the Merger Date.
D. CONVERSION OR CONTINUATION. Subject to the provisions of
subsection 2.6, Company shall have the option (i) to convert at any time all or
any part of its outstanding LIBOR Rate Loans in an amount equal to $1,000,000
and integral multiples of $1,000,000 in excess of that amount to Base Rate
Loans so long as any LIBOR Rate Loans not so converted having an Interest
Period which ends on the date of such conversion shall be in an amount not less
than $5,000,000, (ii) to convert at any time all or any part of its outstanding
Base Rate Loans equal to $5,000,000 and integral multiples of $1,000,000 in
excess of that amount to LIBOR Rate Loans or (iii) upon the expiration of any
Interest Period applicable to a LIBOR Rate Loan, to continue all or any portion
of such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess
of that amount as a LIBOR Rate Loan; provided, however, that a LIBOR Rate Loan
may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Agent no later than 9:00 A.M. (Los Angeles time) on the proposed conversion
date (in the case of a conversion to a Base Rate Loan) and at least three
Business Days in advance of the proposed conversion/continuation date (in the
case of a conversion to, or a continuation of, a LIBOR Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the
40
48
proposed conversion/continuation date (which shall be a Business Day), (ii) the
amount and type of the Loan to be converted/continued, (iii) the nature of the
proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a LIBOR Rate Loan, the requested Interest Period, and (v) in
the case of a conversion to, or a continuation of, a LIBOR Rate Loan, that no
Potential Event of Default or Event of Default has occurred and is continuing.
In lieu of delivering the above-described Notice of Conversion/Continuation,
Company may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed conversion/
continuation date. Upon receipt of written or telephonic notice of any
proposed conversion/continuation under this subsection 2.2D, Agent shall
promptly transmit such notice by telefacsimile or telephone to each Lender.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of Company or for otherwise acting in good
faith under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected a conversion or continuation, as the case may be,
hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Conversion/Continuation for conversion to, or continuation
of, a LIBOR Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation in accordance
therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation
of any Event of Default, the outstanding principal amount of all Loans and, to
the extent permitted by applicable law, any interest payments thereon not paid
when due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans); provided that, in the case of LIBOR Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such LIBOR Rate Loans shall thereupon become Base
Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased
rates of interest provided for in this subsection 2.2E is not a
41
49
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be
computed (i) in the case of Base Rate Loans, on the basis of a 365-day or
366-day year, as the case may be, and (ii) in the case of LIBOR Rate Loans, on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a LIBOR Rate Loan, the date of conversion of such LIBOR Rate Loan to such
Base Rate Loan, as the case may be, shall be included, and the date of payment
of such Loan or the expiration date of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted to a LIBOR Rate Loan,
the date of conversion of such Base Rate Loan to such LIBOR Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees (1) for the period from and including the Closing Date to and
excluding the Merger Date equal to the average of the daily excess of the
Tender Period Revolving Facility Sublimit over the sum of (i) the aggregate
principal amount of outstanding Tender Period Revolving Loans plus (ii) the
Letter of Credit Usage, and (2) for the period from and including the Merger
Date to and excluding the Revolving Loan Commitment Termination Date equal to
the average of the daily excess of the Revolving Loan Commitments over the sum
of (i) the aggregate principal amount of outstanding Revolving Loans plus (ii)
the Letter of Credit Usage, in each case multiplied by (a) 0.375% per annum if
the Consolidated Leverage Ratio is greater than or equal to 3.00 to 1.00, or
(b) 0.25% per annum if the Consolidated Leverage Ratio is less than 3.00 to
1.00, such commitment fees to be calculated on the basis of a 360-day year and
the actual number of days elapsed and to be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing on the
first such date to occur after the Closing Date, and on the Revolving Loan
Commitment Termination Date.
B. OTHER FEES. Company agrees to pay to Agent the other fees set
forth in that certain letter agreement dated as of October 2, 1996 between
Company and Agent in the amounts and at the times specified in such letter
agreement.
42
50
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS
AND TENDER PERIOD REVOLVING LOAN SUBLIMIT; GENERAL PROVISIONS
REGARDING PAYMENTS; APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS
UNDER SUBSIDIARY GUARANTY.
A. SCHEDULED PAYMENTS OF TENDER LOANS, TENDER PERIOD REVOLVING
LOANS AND TERM LOANS.
(i) Scheduled Payment of Tender Loans and Tender
Period Revolving Loans. All Tender Loans and all Tender Period
Revolving Loans shall be paid in full on the earlier of (a) the date
that is 75 calendar days after the Closing Date and (b) the Merger
Date.
(ii) Scheduled Payments of Term Loans. Company
shall make principal payments on the Term Loans in installments on the
dates and in the amounts set forth below:
Scheduled Repayment
Date of Term Loans
------ -----------------------
March 31, 1997 $1,875,000
June 30, 1997 $1,875,000
September 30, 1997 $1,875,000
December 31, 1997 $1,875,000
March 31, 1998 $1,875,000
June 30, 1998 $1,875,000
September 30, 1998 $1,875,000
December 31, 1998 $1,875,000
March 31, 1999 $2,500,000
June 30, 1999 $2,500,000
September 30, 1999 $2,500,000
December 31, 1999 $2,500,000
March 31, 2000 $3,125,000
June 30, 2000 $3,125,000
September 30, 2000 $3,125,000
December 31, 2000 $3,125,000
March 31, 2001 $3,125,000
June 30, 2001 $3,125,000
September 30, 2001 $3,125,000
December 31, 2001 $3,125,000
43
51
; provided that the scheduled installments of principal of the Term
Loans set forth above shall be reduced in connection with any voluntary
or mandatory prepayments of the Term Loans in accordance with
subsection 2.4B(iv); and provided, further that the Term Loans and all
other amounts owed hereunder with respect to the Term Loans shall be
paid in full no later than the Term Loan Maturity Date, and the final
installment payable by Company in respect of the Term Loans on such
date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by Company under
this Agreement with respect to the Term Loans.
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN
COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon not
less than (a) three Business Days' prior written or telephonic notice,
in the case of LIBOR Rate Loans, and (b) by notice given on the date of
the proposed prepayment, in the case of Base Rate Loans, given to Agent
by 9:00 A.M. (Los Angeles time) on the date required and, if given by
telephone, promptly confirmed in writing to Agent (which original
written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time, subject to subsection 2.6D, prepay the outstanding Loans on
any Business Day in whole or in part in an aggregate minimum amount of
(x) $1,000,000 and integral multiples of $1,000,000 in excess of that
amount in the case of Base Rate Loans, and (y) $5,000,000 and integral
multiples of $1,000,000 in excess of that amount in the case of LIBOR
Rate Loans; provided that a LIBOR Rate Loan may only be prepaid on the
expiration of the Interest Period applicable thereto. Notice of
prepayment having been given as aforesaid, the principal amount of the
Loans specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall
be applied to prepay the Loans as specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan
Commitments and Tender Period Revolving Facility Sublimit. Company
may, upon not less than one Business Days' prior written or telephonic
notice confirmed in writing to Agent (which original written or
telephonic notice Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time terminate
in whole or permanently reduce in part, without premium or penalty, the
Revolving Loan Commitments or the Tender Period Revolving Facility
Sublimit, as the case may be, in an amount up to the amount by which
(a) the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments, or (b) the Tender Period Revolving Facility
Sublimit exceeds the Total Utilization of Tender Period Revolving
Facility, as the case may be, at the time of such proposed termination
or reduction; provided that any such partial reduction of the
44
52
Revolving Loan Commitments or the Tender Period Revolving Facility
Sublimit, as the case may be, shall be in an aggregate minimum amount
of $5,000,000 and integral multiples of $1,000,000 in excess of that
amount. Company's notice to Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or reduction of
the Revolving Loan Commitments or the Tender Period Revolving Facility
Sublimit, as the case may be, shall be effective on the date specified
in Company's notice and shall reduce the Revolving Loan Commitment of
each Lender and the commitment of each Lender to make Tender Period
Revolving Loans, as the case may be, proportionately to each Lender's
Pro Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions
of Revolving Loan Commitments and Tender Period Revolving Facility
Sublimit. The Loans shall be prepaid and/or the Tender Period Revolving
Facility Sublimit and/or the Revolving Loan Commitments shall be
permanently reduced in the amounts and under the circumstances set
forth below, all such prepayments and/or reductions to be applied as
set forth below or as more specifically provided in subsection
2.4B(iv):
(a) Prepayments and Reductions From Net
Asset Sale Proceeds. No later than the third Business Day
following the date of receipt by Company or any of its
Subsidiaries of any Net Asset Sale Proceeds in respect of any
Asset Sale, Company shall prepay the Loans and/or the Tender
Period Revolving Facility Sublimit and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount
equal to such Net Asset Sale Proceeds; provided, that if
Company notifies the Agent in writing no later than the day
following the date of receipt by Company or any of its
Subsidiaries of any Net Asset Sale Proceeds in respect of any
capital assets sold by Company or any of its Subsidiaries that
Company or such Subsidiary intends to replace such assets sold
with assets that are comparable in type and equal or superior
in quality (such comparable assets being the "EXCHANGE
ASSETS"), Company shall prepay the Loans and/or the Tender
Period Revolving Facility Sublimit and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount
equal to the excess of (1) the aggregate amount of such Net
Asset Sale Proceeds over (2) an amount equal to the amount of
cash expected to be expended by Company and its Subsidiaries to
acquire such Exchange Assets during the 180-day period
following the date of receipt by Company or any of its
Subsidiaries of such Net Asset Sale Proceeds. Any amounts not
expended by Company and its Subsidiaries within such 180-day
period shall be prepaid pursuant to clause (iv)(b) below.
Nothing contained in this clause (a) shall be construed to
permit any sale of assets prohibited by subsection 7.7.
45
53
(b) Prepayments and Reductions Due to
Issuance of Debt or Equity Securities. No later than the third
Business Day following the date of receipt by Company or any of
its Subsidiaries of the Cash proceeds (any such proceeds, net
of underwriting discounts and commissions and other reasonable
costs and expenses associated therewith, including, without
limitation, reasonable legal fees and expenses, being "NET
SECURITIES PROCEEDS") from the issuance of any debt (other than
Indebtedness permitted pursuant to subsection 7.1) or equity
Securities of Company or any of its Subsidiaries (other than
(w) proceeds received pursuant to the exercise of employee
stock options, (x) cash of any Person acquired by Company or
any of its Subsidiaries in exchange for equity Securities of
Company or any of its Subsidiaries, (y) proceeds received from
the sale of capital stock of Company pursuant to stock purchase
plans, or (z) proceeds received from the exercise of warrants
issued in connection with the Existing Senior Notes) after the
Closing Date, Company shall prepay the Loans and/or the Tender
Period Revolving Facility Sublimit and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount
equal to (1) 75% of such Net Securities Proceeds received from
such issuance of equity Securities and (2) 100% of such Net
Securities Proceeds received from such issuance of debt
Securities.
(c) Calculations of Net Proceeds Amounts;
Additional Prepayments and Reductions Based on Subsequent
Calculations. Concurrently with any prepayment of the Loans
and/or reduction of the Tender Period Revolving Facility
Sublimit and/or the Revolving Loan Commitments pursuant to
subsections 2.4B(iii)(a) and 2.4B(iii)(b), Company shall
deliver to Agent an Officers' Certificate demonstrating the
calculation of the amount (the "NET PROCEEDS AMOUNT") of the
applicable Net Asset Sale Proceeds or Net Securities Proceeds,
as the case may be, that gave rise to such prepayment and/or
reduction. In the event that Company shall subsequently
determine that the actual Net Proceeds Amount was greater than
the amount set forth in such Officers' Certificate, Company
shall promptly make an additional prepayment of the Loans
(and/or, if applicable, the Tender Period Revolving Facility
Sublimit and/or the Revolving Loan Commitments shall be
permanently reduced) in an amount equal to the amount of such
excess, and Company shall concurrently therewith deliver to
Agent an Officers' Certificate demonstrating the derivation of
the additional Net Proceeds Amount resulting in such excess.
(d) Prepayments Due to Reductions or
Restrictions of Revolving Loan Commitments and/or Tender Period
Revolving Facility Sublimit. Company shall (1) during the
period from the Closing Date to but excluding the Merger Date,
prepay the Tender Period
46
54
Revolving Loans to the extent necessary so that the Total
Utilization of Tender Period Revolving Facility does not at any
time exceed the lesser of (x) the Tender Period Revolving
Facility Sublimit then in effect and (y) the Borrowing Base
then in effect, and (2) during the period from and including
the Merger Date to and excluding the Revolving Loan Commitment
Termination Date, prepay the Revolving Loans to the extent
necessary so that the Total Utilization of Revolving Loan
Commitments does not at any time exceed the lesser of (x) the
Revolving Loan Commitments then in effect and (y) the Borrowing
Base then in effect.
(iv) Application of Prepayments and Unscheduled
Reductions of Revolving Loan Commitments.
(a) Application of Voluntary Prepayments
by Type of Loans and Order of Maturity. Any voluntary
prepayments pursuant to subsection 2.4B(i) shall be applied to
the Loans as specified by Company in the applicable notice of
prepayment; provided that in the event Company fails to specify
the Loans to which any such prepayment shall be applied, such
prepayment shall be applied (i) during the period from the
Closing Date to but excluding the Merger Date, first to repay
outstanding Tender Period Revolving Loans, if any, to the full
extent thereof, and second to repay outstanding Tender Loans,
if any, to the full extent thereof; and (ii) during the period
on and after the Merger date, first to repay outstanding
Revolving Loans to the full extent thereof, and second to repay
outstanding Term Loans to the full extent thereof in inverse
order of maturity.
(b) Application of Mandatory Prepayments
by Type of Loans. Any amount (the "APPLIED AMOUNT") required
to be applied as a mandatory prepayment of the Loans and/or a
reduction of the Tender Period Revolving Facility Sublimit
and/or the Revolving Loan Commitments pursuant to subsections
2.4B(iii)(a)-(d) shall be applied (1) during the period from
the Closing Date to but excluding the Merger Date, first to
prepay outstanding Tender Loans, if any, to the full extent
thereof, second, to the extent of any remaining portion of the
Applied Amount, to permanently reduce the Tender Period
Revolving Facility Sublimit by the amount thereof, and if the
Total Utilization of Tender Period Revolving Facility would
exceed the Tender Period Revolving Facility Sublimit as so
reduced, to repay outstanding Tender Period Revolving Loans and
thereafter to cash collateralize the Letters of Credit to the
full extent of such excess; and (2) during the period on and
after the Merger date, first to prepay outstanding Term Loans
to the full extent thereof in inverse order of maturity,
second, to the extent of any remaining portion of the Applied
Amount, to permanently reduce the Revolving Loan Commitments by
the amount thereof, and if the Total Utilization of Revolving
Loan
47
55
Commitments would exceed the Revolving Loan Commitments as so
reduced, to repay outstanding Revolving Loans to the full
extent of such excess and thereafter to cash collateralize the
Letters of Credit.
(c) Application of Prepayments to Base
Rate Loans and LIBOR Rate Loans. Considering Term Loans and
Revolving Loans being prepaid separately, any prepayment
thereof shall be applied first to Base Rate Loans to the full
extent thereof before application to LIBOR Rate Loans, in each
case in a manner which minimizes the amount of any payments
required to be made by Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by
Company of principal, interest, fees and other Obligations hereunder
and under the Notes shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition,
and delivered to Agent not later than 9:00 A.M. (Los Angeles time) on
the date due at the Funding and Payment Office for the account of
Lenders; funds received by Agent after that time on such due date shall
be deemed to have been paid by Company on the next succeeding Business
Day. Company hereby authorizes Agent to charge its accounts with Agent
in order to cause timely payment to be made to Agent of all principal,
interest, fees and expenses due hereunder (subject to sufficient funds
being available in its accounts for that purpose).
(ii) Application of Payments to Principal and
Interest. All payments in respect of the principal amount of any Loan
shall include payment of accrued interest on the principal amount being
repaid or prepaid, and all such payments (and, in any event, any
payments in respect of any Loan on a date when interest is due and
payable with respect to such Loan) shall be applied to the payment of
interest before application to principal.
(iii) Apportionment of Payments. Aggregate
principal and interest payments in respect of Loans shall be
apportioned among all outstanding Loans to which such payments relate,
in each case proportionately to Lenders' respective Pro Rata Shares.
Agent shall promptly distribute to each Lender, at its primary address
set forth below its name on the appropriate signature page hereof or at
such other address as such Lender may request, its Pro Rata Share of
all such payments received by Agent and the commitment fees of such
Lender when received by Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii),
if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if
any Affected Lender makes Base Rate Loans in lieu of its Pro Rata
48
56
Share of any LIBOR Rate Loans, Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any
payment to be made hereunder shall be stated to be due on a day that is
not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that
before disposing of any Note held by it, or any part thereof (other
than by granting participations therein), that Lender will make a
notation thereon of all Loans evidenced by that Note and all principal
payments previously made thereon and of the date to which interest
thereon has been paid; provided that the failure to make (or any error
in the making of) a notation of any Loan made under such Note shall not
limit or otherwise affect the obligations of Company hereunder or under
such Note with respect to any Loan or any payments of principal or
interest on such Note.
D. APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER
SUBSIDIARY GUARANTY
(i) Application of Proceeds of Collateral. Except
as provided in subsection 2.4B(iii)(a) with respect to prepayments from
Net Asset Sale Proceeds, all proceeds received by Agent in respect of
any sale of, collection from, or other realization upon all or any part
of the Collateral under any Collateral Document may, in the discretion
of Agent, be held by Agent as Collateral for, and/or (then or at any
time thereafter) applied in full or in part by Agent against, the
applicable Secured Obligations (as defined in such Collateral Document)
in the following order of priority:
(a) To the payment of all reasonable costs
and expenses of such sale, collection or other realization,
including reasonable compensation to Agent and its agents and
counsel, and all other expenses, liabilities and advances made
or incurred by Agent in connection therewith, and all amounts
for which Agent is entitled to indemnification under such
Collateral Document and all advances made by Agent thereunder
for the account of the applicable Loan Party, and to the
payment of all costs and expenses paid or incurred by Agent in
connection with the exercise of any right or remedy under such
Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
(b) thereafter, to the extent of any
excess of such proceeds, to the payment of all other such
Secured Obligations for the
49
57
ratable benefit of the holders thereof in a manner determined
by Requisite Lenders; and
(c) thereafter, to the extent of any
excess of such proceeds, to the payment to or upon the order of
such Loan Party or to whosoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may
direct.
(ii) Application of Payments Under Subsidiary
Guaranty All payments received by Agent under the Subsidiary Guaranty
shall be applied promptly from time to time by Agent in the following
order of priority:
(a) To the payment of the reasonable costs
and expenses of any collection or other realization under the
Subsidiary Guaranty, including reasonable compensation to Agent
and its agents and counsel, and all expenses, liabilities and
advances made or incurred by Agent in connection therewith, all
in accordance with the terms of this Agreement and the
Subsidiary Guaranty;
(b) thereafter, to the extent of any
excess of such payments, to the payment of all other Guarantied
Obligations (as defined in the Subsidiary Guaranty) for the
ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any
excess of such payments, to the payment to Company or the
applicable Subsidiary Guarantor or to whosoever may be lawfully
entitled to receive the same or as a court of competent
jurisdiction may direct.
2.5 USE OF PROCEEDS.
A. TENDER LOANS. The proceeds of the Tender Loans made on the
Closing Date shall be applied by Company, together with other funds, as
follows: (i) to provide the consideration for Merger Sub to purchase the
Tendered Milgray Shares, to pay the purchase price of any shares of Milgray
Common Stock that have been converted into the right to receive a cash payment
pursuant to the Merger Agreement and to pay the purchase price of any other
Shares of Milgray Common Stock purchased in any manner whatsoever, in an
aggregate amount not to exceed $101,000,000; (ii) to repay all amounts of
principal and accrued interest outstanding under the Existing Senior Notes
(including any make-whole payments due upon the repayment of such amounts) in
an amount not to exceed $26,000,000; and (iii) to pay Transaction Costs
incurred as of the Closing Date in an aggregate amount not to exceed
$6,000,000. The proceeds of the Tender Loans, if any, made after the Closing
Date pursuant to the second paragraph of Section 2.1A(i) shall be applied by
Company to repay all amounts of principal and accrued interest
50
58
outstanding under the Existing Senior Notes (including any make-whole payments
due upon the repayment of such amounts) in an amount not to exceed $26,000,000.
B. TENDER PERIOD REVOLVING LOANS. The proceeds of the Tender
Period Revolving Loans shall be applied by Company as follows: (i) to repay all
amounts of principal and accrued interest outstanding under the Existing Loan
Agreement (including any prepayment fee due upon the repayment of such
amounts); and (ii) for any other purposes described in the last sentence of
subsection 2.5C below with respect to the proceeds of Revolving Loans.
C. TERM LOANS AND REVOLVING LOANS. The proceeds of the Term Loans
and the Revolving Loans shall be applied by Company as follows: (i) to repay
the outstanding principal amount of the Tender Loans and the Tender Period
Revolving Loans; (ii) to provide additional consideration for Merger Sub to pay
the purchase price of any shares of Milgray Common Stock not purchased with the
proceeds of the Tender Loan in an aggregate amount (including amounts paid
pursuant to subsection 2.5A(i)) not to exceed $101,000,000; (iii) to repay
Indebtedness of Milgray under existing bank facilities on the Merger Date; and
(iv) to pay additional Transaction Costs incurred as of the Merger Date in an
aggregate amount (including amounts paid pursuant to subsection 2.5A(iii)) not
to exceed $6,000,000. The proceeds of the Revolving Loans may also be applied
by Company for working capital requirements and general corporate purposes of
Company and its Subsidiaries.
D. MARGIN REGULATIONS. No portion of the proceeds of any
borrowing under this Agreement shall be used by Company or any of its
Subsidiaries in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board or to violate the Exchange Act, in each case as in
effect on the date or dates of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS.
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to LIBOR Rate
Loans as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as
practicable after 9:00 A.M. (Los Angeles time) on each Interest Rate
Determination Date, Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the LIBOR Rate Loans for which an interest rate is
then being determined for the applicable Interest Period and shall promptly
give notice thereof (in writing or by telephone confirmed in writing) to
Company and each Lender.
51
59
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event
that Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any LIBOR Rate Loans, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted LIBOR Rate, Agent shall on
such date give notice (by telefacsimile or by telephone confirmed in writing)
to Company and each Lender of such determination, whereupon (i) no Loans may be
made as, or converted to, LIBOR Rate Loans until such time as Agent notifies
Company and Lenders that the circumstances giving rise to such notice no longer
exist and (ii) any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF LIBOR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Agent) that the making,
maintaining or continuation of its LIBOR Rate Loans (i) has become unlawful as
a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the London interbank market or the position of
such Lender in that market, then, and in any such event, such Lender shall be
an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile or
by telephone confirmed in writing) to Company and Agent of such determination
(which notice Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Loans as, or to convert Loans
to, LIBOR Rate Loans shall be suspended until such notice shall be withdrawn by
the Affected Lender, (b) to the extent such determination by the Affected
Lender relates to a LIBOR Rate Loan then being requested by Company pursuant to
a Notice of Borrowing or a Notice of Conversion/Continuation, the Affected
Lender shall make such Loan as (or convert such Loan to, as the case may be) a
Base Rate Loan, (c) the Affected Lender's obligation to maintain its
outstanding LIBOR Rate Loans (the "AFFECTED LOANS") shall be terminated at the
earlier to occur of the expiration of the Interest Period then in effect with
respect to the Affected Loans or when required by law, and (d) the Affected
Loans shall automatically convert into Base Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the extent a determination by
an Affected Lender as described above relates to a LIBOR Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Agent
52
60
of such rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Agent shall
promptly transmit to each other Lender). Except as provided in the immediately
preceding sentence, nothing in this subsection 2.6C shall affect the obligation
of any Lender other than an Affected Lender to make or maintain Loans as, or to
convert Loans to, LIBOR Rate Loans in accordance with the terms of this
Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST
PERIODS. Company shall compensate each Lender, upon written request by that
Lender (which request shall set forth the basis for requesting such amounts),
for all reasonable losses, expenses and liabilities (including, without
limitation, any interest paid by that Lender to lenders of funds borrowed by it
to make or carry its LIBOR Rate Loans and any loss, expense or liability
sustained by that Lender in connection with the liquidation or reemployment of
such funds) which that Lender may sustain: (i) if for any reason (other than a
default by that Lender) a borrowing of any LIBOR Rate Loan does not occur on a
date specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any LIBOR Rate Loan does not
occur on a date specified therefor in a Notice of Conversion/Continuation or a
telephonic request for conversion or continuation, (ii) if any prepayment
(including, without limitation, any prepayment pursuant to subsection 2.4B(i))
or other principal payment or any conversion of any of its LIBOR Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its LIBOR Rate Loans is not made on any
date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its LIBOR Rate
Loans when required by the terms of this Agreement.
E. BOOKING OF LIBOR RATE LOANS. Any Lender may make, carry or
transfer LIBOR Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender
F. ASSUMPTIONS CONCERNING FUNDING OF LIBOR RATE LOANS.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant LIBOR Rate Loans through the purchase of a LIBOR deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted LIBOR Rate in an amount equal to the amount of such LIBOR Rate Loan
and having a maturity comparable to the relevant Interest Period and through
the transfer of such LIBOR deposit from an offshore office of that Lender to a
domestic office of that Lender in the United States of America; provided,
however, that each Lender may fund each of its LIBOR Rate Loans in any manner
it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this subsection 2.6 and under
subsection 2.7A.
G. LIBOR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not
53
61
elect to have a Loan be made or maintained as, or converted to, a LIBOR Rate
Loan after the expiration of any Interest Period then in effect for that Loan
and (ii) subject to the provisions of subsection 2.6D, any Notice of Borrowing
or Notice of Conversion/Continuation given by Company with respect to a
requested borrowing or conversion/continuation that has not yet occurred shall
be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable
lending office) to any additional Tax (other than any franchise Tax or
Tax on the overall income of such Lender) with respect to this
Agreement or any of its obligations hereunder or any payments to such
Lender (or its applicable lending office) of principal, interest, fees
or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any
reserve (including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit, compulsory
loan, FDIC insurance or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, or advances or
loans by, or other credit extended by, or any other acquisition of
funds by, any office of such Lender (other than any such reserve or
other requirements with respect to LIBOR Rate Loans that are reflected
in the definition of Adjusted LIBOR Rate); or
(iii) imposes any other condition (other than with
respect to a Tax matter) on or affecting such Lender (or its applicable
lending office) or its obligations hereunder or the London interbank
market;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining Loans hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending office)
with respect thereto; then, in any such case, Company shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an
54
62
increased rate of, or a different method of calculating, interest or otherwise
as such Lender in its sole discretion shall determine) as may be necessary to
compensate such Lender for any such increased cost or reduction in amounts
received or receivable hereunder. Such Lender shall deliver to Company (with a
copy to Agent) a written statement, setting forth in reasonable detail the
basis for calculating the additional amounts owed to such Lender under this
subsection 2.7A, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums
payable by Company under this Agreement and the other Loan Documents
shall (except to the extent required by law) be paid free and clear of,
and without any deduction or withholding on account of, any Tax (other
than a Tax on the overall income of any Lender) imposed, levied,
collected, withheld or assessed by or within the United States of
America or any political subdivision in or of the United States of
America or any other jurisdiction from or to which a payment is made by
or on behalf of Company or by any federation or organization of which
the United States of America or any such jurisdiction is a member at
the time of payment.
(ii) Grossing-Up of Payments. If Company or any
other Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by Company to
Agent or any Lender under any of the Loan Documents:
(a) Company shall notify Agent of any such
requirement or any change in any such requirement as soon as
Company becomes aware of it;
(b) Company shall pay any such Tax before
the date on which penalties attach thereto, such payment to be
made (if the liability to pay is imposed on Company) for its
own account or (if that liability is imposed on Agent or such
Lender, as the case may be) on behalf of and in the name of
Agent or such Lender;
(c) the sum payable by Company in respect
of which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure
that, after the making of that deduction, withholding or
payment, Agent or such Lender, as the case may be, receives on
the due date a net sum equal to what it would have received had
no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum
from which it is required by law to make any deduction or
withholding, and within 30 days
55
63
after the due date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver to Agent
evidence satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof
to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each
other Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the rate
of such deduction, withholding or payment from that in effect at the
date of this Agreement or at the date of such Assignment Agreement, as
the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding
Tax.
(a) Each Lender that is organized under
the laws of any jurisdiction other than the United States or
any state or other political subdivision thereof (for purposes
of this subsection 2.7B(iii), a "NON-US LENDER") shall deliver
to Agent for transmission to Company, on or prior to the
Closing Date (in the case of each Lender listed on the
signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in
the case of each other Lender), and at such other times as may
be necessary in the determination of Company or Agent (each in
the reasonable exercise of its discretion), (x) two original
copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is
not subject to deduction or withholding of United States
federal income tax with respect to any payments to such Lender
of principal, interest, fees or other amounts payable under any
of the Loan Documents or (y) if such Lender is not a "bank" or
other Person described in Section 881(c)(3) of the Internal
Revenue Code and cannot deliver either Internal Revenue Service
Form 1001 or 4224 pursuant to clause (x) above, a Certificate
re Non-Bank Status together with two original copies of
Internal Revenue Service Form W-8 (or any successor form),
properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued
thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax
with respect to any payments to such Lender of interest payable
under any of the Loan Documents.
56
64
(b) Each Lender required to deliver any
forms, certificates or other evidence with respect to United
States federal income tax withholding matters pursuant to
subsection 2.7B(iii)(a) hereby agrees, from time to time after
the initial delivery by such Lender of such forms, certificates
or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that
such Lender shall promptly (x) deliver to Agent for
transmission to Company two new original copies of Internal
Revenue Service Form 1001 or 4224, or a Certificate re Non-Bank
Status and two original copies of Internal Revenue Service Form
W-8, as the case may be, properly completed and duly executed
by such Lender, together with any other certificate or
statement of exemption required in order to confirm or
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
payments to such Lender under the Loan Documents or (y) notify
Agent and Company of its inability to deliver any such forms,
certificates or other evidence.
(c) Company shall not be required to pay
any additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to satisfy
the requirements of clause (a) or (b)(x) of this subsection
2.7B(iii); provided that if such Lender shall have satisfied
the requirements of subsection 2.7B(iii)(a) on the Closing Date
(in the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender),
nothing in this subsection 2.7B(iii)(c) shall relieve Company
of its obligation to pay any additional amounts pursuant to
clause (c) of subsection 2.7B(ii) in the event that, as a
result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such
Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after
the date hereof of any law, rule or regulation (or any provision thereof)
regarding capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office) with any guideline,
request or directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder
57
65
with respect to the Loans or the Letters of Credit to a level below that which
such Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business
Days after receipt by Company from such Lender of the statement referred to in
the next sentence, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to Company (with
a copy to Agent) a written statement, setting forth in reasonable detail the
basis of the calculation of such additional amounts, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDER TO MITIGATE.
Each Lender and the Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or the Issuing Lender responsible
for administering the Loans or Letters of Credit of such Lender or the Issuing
Lender, as the case may be, becomes aware of the occurrence of an event or the
existence of a condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender or the Issuing Lender to receive
payments under subsection 2.7 or subsection 3.6, it will, to the extent not
inconsistent with the internal policies of such Lender or the Issuing Lender
and any applicable legal or regulatory restrictions, use reasonable efforts (i)
to make, issue, fund or maintain the Commitments of such Lender or the affected
Loans or Letters of Credit of such Lender or the Issuing Lender through another
lending or letter of credit office of such Lender or the Issuing Lender, or
(ii) take such other measures as such Lender or the Issuing Lender may deem
reasonable, if as a result thereof the circumstances which would cause such
Lender to be an Affected Lender would cease to exist or the additional amounts
which would otherwise be required to be paid to such Lender or the Issuing
Lender pursuant to subsection 2.7 or subsection 3.6 would be materially reduced
and if, as determined by such Lender or the Issuing Lender in its sole
discretion, the making, issuing, funding or maintaining of such Commitments or
Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or the Issuing Lender will not be obligated to utilize such other
lending or letter of credit office pursuant to this subsection 2.8 unless
Company agrees to pay all incremental expenses incurred by such Lender or the
Issuing Lender as a result of utilizing such other lending or letter of credit
office as described in clause (i) above. A certificate as to the amount of any
such expenses payable by Company pursuant to this subsection 2.8 (setting forth
in reasonable detail the basis for requesting such amount) submitted by such
Lender or the Issuing Lender to Company (with a copy to Agent) shall be
conclusive absent manifest error.
58
66
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to Company requesting that
Lenders make Revolving Loans pursuant to subsection 2.1A(iv), Company may
request, in accordance with the provisions of this subsection 3.1, (x) as to
Letters of Credit issued under the Tender Period Revolving Facility, from time
to time during the period from the Closing Date to but excluding the Merger
Date, and (y) as to all other Letters of Credit issued hereunder, from time to
time during the period from the Merger Date to but excluding the Revolving Loan
Commitment Termination Date, that the Issuing Lender issue Letters of Credit
for the account of Company for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit. Subject to the
terms and conditions of this Agreement and in reliance upon the representations
and warranties of Company herein set forth, the Issuing Lender shall issue such
Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and the Issuing
Lender shall not issue):
(i) any Letter of Credit if, after giving effect
to such issuance, (A) the Total Utilization of Tender Period Revolving
Facility would exceed the Tender Period Revolving Facility Sublimit or
(B) the Total Utilization of Revolving Loan Commitments would exceed
the lesser of (x) the Revolving Loan Commitments then in effect and (y)
the Borrowing Base then in effect;
(ii) any Letter of Credit if, after giving effect
to such issuance, the Letter of Credit Usage would exceed $6,000,000
plus the outstanding amount of the Ontario Letter of Credit;
(iii) any Standby Letter of Credit having an
expiration date later than the earlier of (a) the Revolving Loan
Commitment Termination Date and (b) the date which is one year from the
date of issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent the Issuing Lender
from agreeing that a Standby Letter of Credit will automatically be
extended for one or more successive periods not to exceed one year each
unless the Issuing Lender elects not to extend for any such additional
period; and provided, further that the Issuing Lender shall elect not
to extend such Standby Letter of Credit if it has knowledge that an
Event of Default has occurred and is continuing (and has not been
waived in accordance with subsection 10.6) at the time the Issuing
Lender must elect whether or not to allow such extension; or
(iv) any Commercial Letter of Credit having an
expiration date later than the earlier of (a) the date which is 30 days
prior to the Revolving Loan Commitment Termination Date and (b) the
date which is 180 days from the date of issuance of such Commercial
Letter of Credit.
59
67
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires
the issuance of a Letter of Credit, it shall deliver to Agent a Notice
of Issuance of Letter of Credit substantially in the form of Exhibit
III annexed hereto (including Part A of the Issuing Lender's standard
application for a letter of credit and the signature page to such Part
A, it being understood that Part B of such application shall not be
applicable) no later than 9:00 A.M., Los Angeles time) at least five
Business Days (in the case of Standby Letters of Credit) or five
Business Days (in the case of Commercial Letters of Credit), or in each
case such shorter period as may be agreed to by the Issuing Lender in
any particular instance, in advance of the proposed date of issuance.
The Notice of Issuance of Letter of Credit shall specify (a) the
proposed date of issuance (which shall be a Business Day), (b) whether
the Letter of Credit is to be a Standby Letter of Credit or a
Commercial Letter of Credit, (c) the face amount of the Letter of
Credit, (d) in the case of a Letter of Credit which Company requests to
be denominated in a currency other than Dollars, the currency in which
Company requests such Letter of Credit to be issued, (e) the expiration
date of the Letter of Credit, (f) the name and address of the
beneficiary, and (g) either the verbatim text of the proposed Letter of
Credit or the proposed terms and conditions thereof, including a
precise description of any documents to be presented by the beneficiary
which, if presented by the beneficiary prior to the expiration date of
the Letter of Credit, would require the Issuing Lender to make payment
under the Letter of Credit; provided that the Issuing Lender, in its
reasonable discretion, may require changes in the text of the proposed
Letter of Credit or any such documents.
No Standby Letter of Credit (other than the
Ontario Letter of Credit) shall require payment against a conforming
draft to be made thereunder on a date earlier than (x) one Business Day
after the date on which such draft is presented if such presentation is
made before 9:00 A.M. (in the time zone of the Issuing Lender), or (y)
two Business Days after the date on which such draft is presented if
such presentation is made after 9:00 A.M. (in the time zone of the
Issuing Lender). No Commercial Letter of Credit shall require payment
against a conforming draft to be made thereunder on a date earlier than
(x) three Business Days after the date on which such draft is presented
if such presentation is made before 9:00 A.M. (in the time zone of the
Issuing Lender), or (y) four Business Days after the date on which such
draft is presented if such presentation is made after 9:00 A.M. (in the
time zone of the Issuing Lender).
Company shall notify the Issuing Lender prior
to the issuance of any Letter of Credit in the event that any of the
matters to which Company is required to certify in the applicable
Notice of Issuance of Letter of Credit is no longer true and correct as
of the proposed date of issuance of such Letter of Credit, and upon the
issuance of any Letter of Credit Company shall be deemed to
60
68
have re-certified, as of the date of such issuance, as to the matters
to which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit.
(ii) Issuance of Letter of Credit. Upon
satisfaction or waiver (in accordance with subsection 10.6) of the
conditions set forth in subsection 4.4, the Issuing Lender shall issue
the requested Letter of Credit in accordance with the Issuing Lender's
standard operating procedures.
(iii) Notification to Lenders. Upon the issuance of
any Letter of Credit the Issuing Lender shall promptly notify Agent and
each other Lender of such issuance, which notice shall be accompanied
by a copy of such Letter of Credit, and shall notify each Lender of the
amount of such Lender's respective participation in such Letter of
Credit, determined in accordance with subsection 3.1C.
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts with respect to
Letters of Credit issued hereunder or in replacement of any Existing Letters of
Credit (it being understood that the fees payable by Company in respect of
Existing Letters of Credit not replaced by Letters of Credit issued hereunder
will remain as set forth in the terms pursuant to which such Existing Letters
of Credit were originally issued):
(i) with respect to each Standby Letter of Credit,
(a) a fronting fee, payable directly to the Issuing Lender for its own
account, equal to 0.25% per annum of the daily amount available to be
drawn under such Standby Letter of Credit and (b) a letter of credit
fee, payable to Agent for the account of Lenders, equal to the
Applicable LIBOR Rate Margin per annum of the daily amount available to
be drawn under such Standby Letter of Credit, each such fronting fee or
letter of credit fee to be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing on the
first such date to occur after the Closing Date and on the Revolving
Loan Commitment Termination Date, and computed on the basis of a
360-day year for the actual number of days; provided that, so long as
no Potential Event of Default or Event of Default has occurred and is
continuing, no fronting fee shall be payable in respect of any
61
69
Standby Letter of Credit issued in connection with the Ontario
Acquisition and the fees with respect thereto shall be as set forth in
the Reimbursement Agreement;
(ii) with respect to each Commercial Letter of
Credit, (a) an issuance fee in an amount equal to one-eighth of one
percent (1/8 of 1%) of the face amount of such Commercial Letter of
Credit, with the minimum issuance fee being an amount in accordance
with the Issuing Lender's standard schedule for such charges in effect
at the time of such issuance, payable to Issuing Lender upon the
issuance of such Commercial Letter of Credit, (b) in the case of a
sight draft presented to Issuing Lender, a negotiation commission in an
amount equal to one-fourth of one percent (1/4 of 1%) of the face
amount of such draft, with the minimum such commission being an amount
in accordance with the Issuing Lender's standard schedule for such
charges in effect at the time of such presentation, payable to Issuing
Lender upon the giving of notice by the Issuing Lender to Company that
Issuing Lender has paid such draft, and (c) in the case of any
amendment requested by Company with respect to an outstanding
Commercial Letter of Credit (other than an amendment that increases the
face amount of such outstanding Commercial Letter of Credit, the fee
with respect to which shall be computed in the same manner as an
issuance fee under clause (a) above with respect to such incremental
amount, with the minimum fee being an amount in accordance with the
Issuing Lender's standard schedule for such charges in effect at the
time of such amendment), an amendment fee in an amount in accordance
with the Issuing Lender's standard schedule for such charges in effect
at the time of such amendment, payable to Issuing Lender upon the
issuance of such amendment;
(iii) with respect to the issuance, cancellation,
amendment or transfer of each Letter of Credit and each payment of a
drawing made thereunder (without duplication of the fees payable under
clauses (i) or (ii) above), documentary and processing charges and any
other out-of-pocket costs and expenses incurred in connection
therewith, payable directly to the Issuing Lender for its own account
in accordance with the Issuing Lender's standard schedule for such
charges in effect at the time of such issuance, amendment, transfer or
payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) or (ii) of this
subsection 3.2, any amount which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such currency
as of the applicable date of determination. The Applicable LIBOR Rate Margin
shall be determined on the Margin Determination Date by reference to the most
recent Compliance Certificate delivered by Company prior to such Margin
Determination Date (without regard to any subsequent corrections to reflect
year-end audit adjustments). The Applicable LIBOR Rate Margin shall apply to
all Letters of Credit for the period from and including the Margin
Determination Date to and excluding the first day of the calendar month
following the
62
70
delivery of the next Compliance Certificate; provided, however, that (x) if
Company fails to deliver any Compliance Certificate in a timely manner pursuant
to subsection 6.1(iii), or (y) upon the occurrence and during the continuation
of any Event of Default, the highest percentage per annum set forth in the
definition of Applicable LIBOR Rate Margin shall apply for the period from and
including the first day of the calendar month following the date on which such
Compliance Certificate was required to be delivered to and excluding the date
on which Agent receives such Compliance Certificate or during the continuation
of such Event of Default, as the case may be. Promptly upon receipt by Agent
of any amounts described in clauses (i)(b) or (ii)(b) of this subsection 3.2,
Agent shall distribute to each Lender its Pro Rata Share of such amounts.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine
the documents delivered under such Letter of Credit with reasonable care so as
to ascertain whether they appear on their face to be in accordance with the
terms and conditions of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF
CREDIT. In the event the Issuing Lender has determined to honor a drawing
under a Letter of Credit issued by it, the Issuing Lender shall immediately
notify Company and Agent, and Company shall reimburse the Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars (which amount, in
the case of a drawing under a Letter of Credit which is denominated in a
currency other than Dollars, shall be calculated by reference to the applicable
Exchange Rate) and in same day funds equal to the amount of such honored
drawing; provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless Company shall have notified Agent and the Issuing
Lender prior to 9:00 A.M. (Los Angeles time) on the date such drawing is
honored that Company intends to reimburse the Issuing Lender for the amount of
such honored drawing with funds other than the proceeds of Revolving Loans,
Company shall be deemed to have given a timely Notice of Borrowing to Agent
requesting Lenders to make Revolving Loans that are Base Rate Loans on the
Reimbursement Date in an amount in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate)
equal to the amount of such honored drawing and (ii) subject to satisfaction or
waiver of the conditions specified in subsection 4.3B, Lenders shall, on the
Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount
of such honored drawing, the proceeds of which shall be applied directly by
Agent to reimburse the Issuing Lender for the amount of such honored drawing;
and provided, further that if for any reason proceeds of Revolving Loans are
not received by the Issuing Lender on the Reimbursement Date in an amount equal
to the amount of such honored drawing, Company shall reimburse the Issuing
Lender, on demand, in an amount in same
63
71
day funds equal to the excess of the amount of such honored drawing over the
aggregate amount of such Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Revolving Loans on the terms and conditions set forth in
this Agreement, and Company shall retain any and all rights it may have against
any Lender resulting from the failure of such Lender to make such Revolving
Loans under this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER LETTERS
OF CREDIT.
(i) Payment by Lenders. In the event that Company
shall fail for any reason to reimburse the Issuing Lender as provided
in subsection 3.3B in an amount (calculated, in the case of a drawing
under a Letter of Credit denominated in a currency other than Dollars,
by reference to the applicable Exchange Rate) equal to the amount of
any drawing honored by the Issuing Lender under a Letter of Credit
issued by it, the Issuing Lender shall promptly notify each other
Lender of the unreimbursed amount of such honored drawing and of such
other Lender's respective participation therein based on such Lender's
Pro Rata Share. Each Lender shall make available to the Issuing Lender
an amount equal to its respective participation, in Dollars and in same
day funds, at the office of the Issuing Lender specified in such
notice, not later than 12:00 Noon (Los Angeles time) on the first
business day (under the laws of the jurisdiction in which such office
of the Issuing Lender is located) after the date notified by the
Issuing Lender. In the event that any Lender fails to make available
to the Issuing Lender on such business day the amount of such Lender's
participation in such Letter of Credit as provided in this subsection
3.3C, the Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the rate
customarily used by the Issuing Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate.
Nothing in this subsection 3.3C shall be deemed to prejudice the right
of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by the Issuing Lender in respect of which
payment was made by such Lender constituted gross negligence or willful
misconduct on the part of the Issuing Lender.
(ii) Distribution to Lenders of Reimbursements
Received From Company. In the event the Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or
any portion of any drawing honored by the Issuing Lender under a Letter
of Credit issued by it, the Issuing Lender shall distribute to each
other Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such honored drawing such other Lender's Pro
Rata Share of all payments subsequently received by the Issuing
64
72
Lender from Company in reimbursement of such honored drawing when such
payments are received. Any such distribution shall be made to a Lender
at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Lender may
request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company
agrees to pay to the Issuing Lender, with respect to drawings honored
under any Letters of Credit issued by it, interest on the amount paid
by the Issuing Lender in respect of each such honored drawing from the
date such drawing is honored to but excluding the date such amount is
reimbursed by Company (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate
equal to (a) for the period from the date such drawing is honored to
but excluding the Reimbursement Date, the rate then in effect under
this Agreement with respect to Revolving Loans that are Base Rate Loans
and (b) thereafter, a rate which is 2% per annum in excess of the rate
of interest otherwise payable under this Agreement with respect to
Revolving Loans that are Base Rate Loans. Interest payable pursuant to
this subsection 3.3D(i) shall be computed on the basis of a 360-day
year for the actual number of days elapsed in the period during which
it accrues and shall be payable on demand or, if no demand is made, on
the date on which the related drawing under a Letter of Credit is
reimbursed in full.
(ii) Distribution of Interest Payments by Issuing
Lender. Promptly upon receipt by the Issuing Lender of any payment of
interest pursuant to subsection 3.3D(i) with respect to a drawing
honored under a Letter of Credit issued by it, (a) the Issuing Lender
shall distribute to each other Lender, out of the interest received by
the Issuing Lender in respect of the period from the date such drawing
is honored to but excluding the date on which the Issuing Lender is
reimbursed for the amount of such drawing (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B), the amount that such other Lender would have been
entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored under such
Letter of Credit, and (b) in the event the Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all
or any portion of such honored drawing, the Issuing Lender shall
distribute to each other Lender which has paid all amounts payable by
it under subsection 3.3C(i) with respect to such honored drawing such
other Lender's Pro Rata Share of any interest received by the Issuing
Lender in respect of that portion of such honored drawing so reimbursed
by other Lenders for the period from the date on which the Issuing
Lender was so reimbursed by other Lenders to but excluding the date on
which such portion of such honored drawing is reimbursed by Company.
Any such distribution shall be made to a Lender at its primary address
set forth below its
65
73
name on the appropriate signature page hereof or at such other address
as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of Company to reimburse the Issuing Lender for
drawings honored under the Letters of Credit issued by it and to repay any
Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations
of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, set-off, defense
or other right which Company or any Lender may have at any time against
a beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), the Issuing Lender or
other Lender or any other Person or, in the case of a Lender, against
Company, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between Company or one of its Subsidiaries and
the beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the Issuing Lender under any Letter
of Credit against presentation of a draft or other document which does
not substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a
Potential Event of Default shall have occurred and be continuing;
66
74
provided, in each case, that payment by the Issuing Lender under the applicable
Letter of Credit shall not have constituted gross negligence or willful
misconduct of the Issuing Lender under the circumstances in question (as
determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless the Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by the Issuing
Lender, other than as a result of (a) the gross negligence or willful
misconduct of the Issuing Lender as determined by a final judgment of a court
of competent jurisdiction or (b) subject to the following clause (ii), the
wrongful dishonor by the Issuing Lender of a proper demand for payment made
under any Letter of Credit issued by it or (ii) the failure of the Issuing
Lender to honor a drawing under any such Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority (all such acts or omissions
herein called "GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDER'S DUTIES. As between Company and the
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by the Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, the Issuing Lender shall not be responsible for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (iii) failure of the beneficiary
of any such Letter of Credit to comply fully with any conditions required in
order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond
the control of the Issuing Lender, including without limitation any
Governmental Acts, and none of the above shall affect or impair, or prevent the
vesting of, any of the Issuing Lender's rights or powers hereunder.
67
75
In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5B,
any action taken or omitted by the Issuing Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put the Issuing Lender
under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against the
Issuing Lender for any liability arising out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that the
Issuing Lender or Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental
authority, in each case that becomes effective after the date hereof, or
compliance by the Issuing Lender or Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force
of law):
(i) subjects the Issuing Lender or Lender (or its
applicable lending or letter of credit office) to any additional Tax
(other than any Tax on the overall income of the Issuing Lender or
Lender) with respect to the issuing or maintaining of any Letters of
Credit or the purchasing or maintaining of any participations therein
or any other obligations under this Section 3, whether directly or by
such being imposed on or suffered by the Issuing Lender;
(ii) imposes, modifies or holds applicable any
reserve (including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit, compulsory
loan, FDIC insurance or similar requirement in respect of any Letters
of Credit issued by the Issuing Lender or participations therein
purchased by any Lender; or
(iii) imposes any other condition (other than with
respect to a Tax matter) on or affecting the Issuing Lender or Lender
(or its applicable lending or letter of credit office) regarding this
Section 3 or any Letter of Credit or any participation therein;
68
76
and the result of any of the foregoing is to increase the cost to the Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by the Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to the Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate the Issuing
Lender or Lender for any such increased cost or reduction in amounts received
or receivable hereunder. The Issuing Lender or Lender shall deliver to Company
a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to the Issuing Lender or Lender under
this subsection 3.6, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
3.7 EXISTING LETTERS OF CREDIT.
Notwithstanding anything to the contrary herein, as of the
Closing Date, all Existing Letters of Credit shall be deemed in all respects to
be Letters of Credit issued by the Issuing Lender hereunder and shall be
subject to all of the terms and provisions of this Agreement, including all
terms and provisions applicable to Letters of Credit under this Agreement;
provided, that the fees described in Section 3.2 with respect to Letters of
Credit shall only apply to Existing Letters of Credit to the extent that
Letters of Credit are actually issued hereunder in replacement of such Existing
Letters of Credit. Each Lender agrees that its obligations with respect to
Letters of Credit pursuant to subsection 3.1C, 3.3C and 3.4 shall, as of the
Closing Date, include the Existing Letters of Credit.
3.8 ONTARIO LETTER OF CREDIT.
The Ontario Letter of Credit shall be deemed to be a Standby
Letter of Credit issued by the Issuing Lender hereunder; provided that all
terms and provisions with respect to the Ontario Letter of Credit (including,
without limitation, with respect to fees payable in connection therewith) set
forth in the Reimbursement Agreement shall apply to the Ontario Letter of
Credit notwithstanding anything to the contrary provided herein; provided
further, that if an Event of Default has occurred and is continuing, the
fronting fee described in Section 3.2(i) hereof shall be payable to Issuing
Lender during the continuation of such Event of Default in respect of the
Ontario Letter of Credit. Each Lender agrees that its obligations with respect
to the Letters of Credit pursuant to subsections 3.1C, 3.3C and 3.4 shall
include the Ontario Letter of Credit.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of
Letters of Credit hereunder are subject to the satisfaction of the following
conditions:
69
77
4.1 CONDITIONS TO TENDER LOANS AND OTHER AMOUNTS ADVANCED ON CLOSING DATE.
The obligations of Lenders to make the Tender Loans and the
Tender Period Revolving Loans and to deem Existing Letters of Credit to be
Letters of Credit issued hereunder pursuant to Section 3.7 hereof are, in
addition to the conditions precedent specified in subsection 4.3, subject to
prior or concurrent satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date, Company
shall, and shall cause each Subsidiary Guarantor (other than Milgray and its
Subsidiaries) to, deliver to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following with respect to Company or such Subsidiary Guarantor, as the case
may be, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of the Certificate or
Articles of Incorporation of such Person, together with a good standing
certificate from the Secretary of State of its jurisdiction of
incorporation and each other state in which such Person is qualified as
a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such jurisdictions, each dated
a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified
as of the Closing Date by such Person's corporate secretary or an
assistant secretary;
(iii) Resolutions of the Board of Directors of such
Person approving and authorizing the execution, delivery and
performance of the Closing Date Loan Documents and the Related
Agreements to which it is a party, and approving and authorizing the
consummation of the Tender Offer (in the case of Company and Merger
Sub) and the Merger (in the case of Company and Merger Sub) in the
manner contemplated by the Tender Offer Materials, certified as of the
Closing Date by the corporate secretary or an assistant secretary of
such Person as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of the
officers of such Person executing the Closing Date Loan Documents and
the Related Agreements to which it is a party;
(v) Executed originals of the Closing Date Loan
Documents to which such Person is a party; and
(vi) Such other documents as Agent may reasonably
request.
70
78
B. CAPITAL STRUCTURE AND OWNERSHIP. The capital structure and
ownership of Company and its Subsidiaries, before and immediately after giving
effect to the Tender Offer and after giving effect to the Merger, shall be as
set forth on Schedule 4.1B annexed hereto.
C. MILGRAY DOCUMENTS. On or before the Closing Date, Company
shall, or shall cause Milgray to, deliver to Lenders (or to Agent for Lenders
with sufficient originally executed copies, where appropriate, for each Lender
and its counsel) the following with respect to Milgray, each dated the Closing
Date:
(i) Certified copies of the Certificate or
Articles of Incorporation of Milgray, together with a good standing
certificate from the Secretary of State of its jurisdiction of
incorporation and each other state in which Milgray is qualified as a
foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such jurisdictions, each dated
a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of Milgray, certified as
of the Closing Date by its corporate secretary or an assistant
secretary;
(iii) Resolutions of the Board of Directors of
Milgray approving and authorizing the execution, delivery and
performance of the Merger Agreement, and approving and authorizing the
consummation of the Merger in the manner contemplated by the Tender
Offer Materials, certified as of the Closing Date by the corporate
secretary or an assistant secretary of Milgray as being in full force
and effect without modification or amendment; and
(iv) Signature and incumbency certificates of the
officers of Milgray executing the Merger Agreement.
D. TENDERED MILGRAY SHARES. Company shall have delivered to Agent
(a) a certificate of Custodian certifying to the number of Tendered Milgray
Shares, and (b) an Officers' Certificate of Company certifying that the
Tendered Milgray Shares purchased with the proceeds of the Tender Loans
represent, in the aggregate, not less than the Minimum Shares.
E. MAXIMUM CONSIDERATION FOR TENDERED MILGRAY SHARES. Agent shall
have received evidence satisfactory to it that the aggregate consideration paid
by Merger Sub on the Closing Date to purchase the Tendered Milgray Shares, any
shares of Milgray Common Stock that have been converted into the right to
receive a cash payment pursuant to the Merger Agreement and any other shares of
Milgray Common Stock acquired in any manner whatsoever, does not exceed
$101,000,000.
71
79
F. MAXIMUM TRANSACTION COSTS. Agent shall have received evidence
satisfactory to it that the Transaction Costs incurred as of the Closing Date
do not exceed $6,000,000.
G. TENDER OFFER MATERIALS AND RELATED AGREEMENTS.
(i) Tender Offer Materials. Agent shall have
received a copy of all Tender Offer Materials and other documents in
connection therewith filed with the Securities and Exchange Commission
and the Tender Offer Materials shall be reasonably satisfactory in form
and substance to Agent and Requisite Lenders. The Tender Offer shall
have been consummated in all respects in accordance with the Tender
Offer Materials.
(ii) Related Agreements. Agent shall have received
a fully executed or conformed copy of the Tender Agreement and the
Merger Agreement and any documents executed in connection therewith,
and the Tender Agreement and the Merger Agreement shall each be
reasonably satisfactory in form and substance to Agent and Requisite
Lenders.
(iii) Related Agreements in Full Force and Effect.
Each Related Agreement shall be in full force and effect and no
provision thereof shall have been modified or waived in any respect
determined by Agent to be material, in each case without the consent of
Agent and Requisite Lenders, such consent not to be unreasonably
withheld.
(iv) Officers' Certificates. Agent shall have
received an Officers' Certificate from Milgray to the effect that the
representations and warranties of Milgray in the Merger Agreement are
true, correct and complete in all material respects on and as of the
Closing Date to the same extent as though made on and as of that date.
Agent shall have received Officers' Certificates from each of the
parties to the Merger Agreement to the effect that (a) the Merger
Agreement is in full force and effect and no provision thereof has been
modified or waived in any respect without the consent of Agent and
Requisite Lenders and (b) each such Person has complied with all
agreements and conditions contained in the Merger Agreement and any
agreements or documents referred to therein required to be performed or
complied with by each of them on or before the Closing Date and none of
such Persons are in default in their performance or compliance with any
of the terms or provisions thereof.
(v) No Material Litigation. There shall be no
material litigation pending which challenges the Tender Offer or the
Merger in any respect.
H. FORM U-1. Delivery to Agent of properly completed Form U-1
executed by Company.
72
80
I. MATTERS RELATING TO EXISTING INDEBTEDNESS OF COMPANY AND ITS
SUBSIDIARIES.
(i) Termination of Existing Credit Agreements and
Related Liens. On the Closing Date, Company and its Subsidiaries shall
have (a) repaid in full all Indebtedness outstanding under the Existing
Loan Agreement (except with respect to any Existing Letters of Credit),
(b) terminated any commitments to lend or make other extensions of
credit thereunder and (c) taken all action necessary to terminate or
release all Liens securing Indebtedness or other obligations of Company
and its Subsidiaries thereunder, in each case on terms satisfactory to
Agent.
(ii) Redemption of Existing Senior Notes. Company
shall have given irrevocable notice providing for the redemption within
five Business Days of the Closing Date of all of the Existing Senior
Notes for aggregate consideration, including accrued interest,
make-whole amounts and premiums, if any, not to exceed $26,000,000.
(iii) No Other Indebtedness. There shall be no
existing Indebtedness of Company or its Subsidiaries outstanding on the
Closing Date other than Indebtedness permitted under Section 7.1.
J. SECURITY INTERESTS IN PROPERTY CONSTITUTING COLLATERAL. Agent
shall have received evidence satisfactory to it that Company and Subsidiary
Guarantors (other than Milgray and its Subsidiaries) shall have taken or caused
to be taken all such actions, executed and delivered or caused to be executed
and delivered all such agreements, documents and instruments, and made or
caused to be made all such filings and recordings (other than the filing or
recording of items described in clauses (iii) and (iv) below) that may be
necessary or, in the opinion of Agent, desirable in order to create in favor of
Agent, for the benefit of Lenders, a valid and (upon such filing and recording)
perfected First Priority security interest in all the property of Company and
such Subsidiary Guarantors constituting Collateral. Such actions shall
include, without limitation, the following:
(i) Schedules to Collateral Documents. Delivery
to Agent of accurate and complete schedules to all of the applicable
Collateral Documents;
(ii) Stock Certificates. Delivery to Agent of
certificates (which certificates shall be accompanied by irrevocable
undated stock powers, duly endorsed in blank and otherwise satisfactory
in form and substance to Agent) representing all capital stock of
Subsidiary Guarantors pledged by Company pursuant to the Company Pledge
Agreement;
73
81
(iii) Lien Searches and UCC Termination Statements.
Delivery to Agent of (a) the results of a recent search, by a Person
satisfactory to Agent, of all effective UCC financing statements and
fixture filings and all judgment and tax lien filings which may have
been made with respect to any personal or mixed property of Company and
Subsidiary Guarantors (other than Milgray and its Subsidiaries),
together with copies of all such filings disclosed by such search, and
(b) UCC termination statements duly executed by IBM Credit Corporation
for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements listing IBM Credit
Corporation as the secured party; provided, that such UCC termination
statements may be delivered after the Closing Date in accordance with
Section 6.9; and
(iv) UCC Financing Statements. Delivery to Agent
of UCC financing statements duly executed by Company and Subsidiary
Guarantors (other than Milgray) with respect to any property of such
Persons constituting Collateral, for filing in all jurisdictions as may
be necessary or, in the opinion of Agent, desirable to perfect the
security interests created in such Collateral pursuant to the
Collateral Documents.
K. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS; EXPIRATION
OF WAITING PERIODS, ETC. Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Tender Offer and the Merger, the
other transactions contemplated by the Loan Documents and the Related
Agreements, and the continued operation of the business conducted by Milgray
and its Subsidiaries in substantially the same manner as conducted prior to the
consummation of the Tender Offer and the Merger, and each of the foregoing
shall be in full force and effect, in each case other than those the failure to
obtain or maintain which, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. All applicable
waiting periods shall have expired without any action being taken or threatened
by any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Tender Offer or the Merger or the financing thereof.
No action, request for stay, petition for review or rehearing, reconsideration,
or appeal with respect to any of the foregoing shall be pending, and the time
for any applicable agency to take action to set aside its consent on its own
motion shall have expired.
L. PRO FORMA BALANCE SHEET. On or before the Closing Date,
Lenders shall have received from Company a pro forma consolidated balance sheet
of Company and its Subsidiaries as at November 30, 1996 utilizing the
historical cost basis of accounting as adjusted for the pro forma effects of
the Merger, including the consummation of the Tender Offer and the Merger, the
related financings and the other transactions contemplated by the Loan
Documents, the Tender Offer Materials and the Related Agreements, which pro
forma balance sheet shall show a consolidated net worth of not less than
$120,000,000.
74
82
M. NO MATERIAL ADVERSE EFFECT. Since September 30, 1996 there
shall have occurred (i) no material adverse effect upon the business,
operations, properties, assets, liabilities, condition (financial or otherwise)
or prospects of Company and its Subsidiaries taken as a whole; and (ii) no
material adverse effect upon the business, operations, properties, assets,
liabilities, condition (financial or otherwise) or prospects of Milgray and its
Subsidiaries taken as a whole, except as set forth in Schedule 3.8(a) of the
Merger Agreement.
N. SOLVENCY ASSURANCES. On the Closing Date, Agent and Lenders
shall have received a Financial Condition Certificate dated the Closing Date,
substantially in the form of Exhibit XIX annexed hereto.
O. OPINION OF COUNSEL TO LOAN PARTIES. Lenders and their
respective counsel shall have received originally executed copies of a written
opinion of Irell & ▇▇▇▇▇▇▇ LLP, counsel to Company, in form and substance
satisfactory to Agent and Lenders, dated as of the Closing Date and setting
forth substantially the matters in the opinions designated in Exhibit XXI
annexed hereto.
P. OPINION OF AGENT'S COUNSEL. Lenders and their respective
counsel shall have received originally executed copies of a written opinion of
O'Melveny & ▇▇▇▇▇ LLP, counsel to Agent, substantially in the form of Exhibit
XVI annexed hereto, dated as of the Closing Date.
Q. FEES. Company shall have paid to Agent, for distribution (as
appropriate) to Agent and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
R. DUE DILIGENCE. The results of Agent's continuing financial,
legal, tax and accounting due diligence investigations with respect to Milgray
and its Subsidiaries, the Tender Offer, the Merger and the other transactions
contemplated hereby shall be satisfactory in all respects to Agent, and any
supplemental business or financial due diligence that Agent reasonably
determines has become necessary shall not have disclosed information not
previously disclosed to Agent which causes the results of such investigations
to not be satisfactory to Agent in all material respects. Agent shall have
received any information reasonably necessary to conduct its continuing due
diligence. Agent shall have received a copy of any fairness opinion rendered
to the board of directors of Milgray in connection with the Tender Offer and
the Merger.
S. COMPLETION OF COLLATERAL AUDITS; OTHER INFORMATION. On or
before the Closing Date, (i) Agent (or an independent auditor satisfactory to
Agent) shall have completed audits of the Inventory and Accounts of (x) Company
and its Subsidiaries and (y) Milgray and its Subsidiaries, and Agent and
Requisite Lenders shall be satisfied with the results of such audits, and (ii)
Agent shall have received such other reports and information concerning such
Inventory and Accounts as Agent may request, all of which shall be in form and
substance satisfactory to Agent and Requisite Lenders.
75
83
T. BORROWING BASE CERTIFICATE. Company shall have delivered a
Borrowing Base Certificate as of November 30, 1996 and the Total Utilization of
Tender Period Revolving Facility, after giving effect to Tender Period
Revolving Loans to be made on the Closing Date and Letters of Credit that are
outstanding or to be issued on the Closing Date, shall be less than or equal to
the Borrowing Base then in effect.
U. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.
Company shall have delivered to Agent an Officers' Certificate, in form and
substance reasonably satisfactory to Agent, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that
such representations and warranties were true, correct and complete in all
material respects on and as of such earlier date) and that Company shall have
performed in all material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by it on or
before the Closing Date except as otherwise disclosed to and agreed to in
writing by Agent and Requisite Lenders.
V. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby
and all documents incidental thereto not previously found acceptable by Agent,
acting on behalf of Lenders, and its counsel shall be satisfactory in form and
substance to Agent and such counsel, and Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents
as Agent may reasonably request.
W. LETTER AGREEMENT REGARDING PREPAYMENT OF EXISTING SENIOR NOTES.
Company shall deliver to Agent a letter agreement substantially in the form of
Exhibit XXIV attached hereto signed by Majority Holders consenting to the
prepayment by the Company of all amounts of principal and accrued interest
under the Existing Senior Notes (including any make-whole payments) on a date
not later than five Business Days after the Closing Date.
4.2 CONDITIONS TO TERM LOANS AND REVOLVING LOANS MADE ON MERGER DATE.
The obligations of Lenders to make the Term Loans and any
Revolving Loans to be made on the Merger Date (which shall be January 15, 1997
if so determined in accordance with Section 6.12) are, in addition to the
conditions precedent specified in subsection 4.3, subject to the prior or
concurrent satisfaction of the following conditions:
A. MILGRAY DOCUMENTS. On or before the Merger Date, Company
shall, or shall cause Surviving Corporation and its Domestic Subsidiaries to,
as the case may be, deliver to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Merger Date:
76
84
(i) Certified copies of the Certificate or
Articles of Incorporation of each of Surviving Corporation and its
Domestic Subsidiaries, together with a good standing certificate from
the Secretary of State of its jurisdiction of incorporation and each
other state in which Surviving Corporation or any of its Domestic
Subsidiaries is qualified as a foreign corporation to do business and,
to the extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Merger Date;
(ii) Copies of the Bylaws of each of Surviving
Corporation and its Domestic Subsidiaries, certified as of the Merger
Date by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of
Surviving Corporation and its Domestic Subsidiaries approving and
authorizing the execution, delivery and performance of, as the case may
be, a Subsidiary Security Agreement, the Subsidiary Guaranty and a
Subsidiary Pledge Agreement, each certified as of the Merger Date by
the corporate secretary or an assistant secretary of such Person as
being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the
officers of Surviving Corporation, its Domestic Subsidiaries and
Company executing, as the case may be, a Subsidiary Security Agreement,
the Subsidiary Guaranty, a Subsidiary Pledge Agreement, the Revolving
Notes and the Term Notes;
(v) Originals of the Revolving Notes and Term
Notes executed by Company;
(vi) Originals of a Subsidiary Security Agreement
and the Subsidiary Guaranty, executed by Surviving Corporation and each
of its Domestic Subsidiaries;
(vii) Originals of a Subsidiary Pledge Agreement
executed by Surviving Corporation; and
(viii) Such other documents as Agent may reasonably
request.
B. SATISFACTION OF CONDITIONS IN SUBSECTION 4.1; TENDER LOANS. On
or before the Merger Date, all conditions precedent set forth in subsection 4.1
shall have been satisfied or waived in writing by Requisite Lenders and (unless
the Closing Date is also the Merger Date as determined in accordance with
Section 6.12) Lenders shall have made the Tender Loans.
77
85
C. REFINANCING OF TENDER LOANS AND TENDER PERIOD REVOLVING LOANS.
Concurrently with the making of the Term Loans and Revolving Loans to be made
on the Merger Date, the Tender Loans, the Tender Period Revolving Loans, and
all accrued interest thereon shall be repaid in full. Letters of Credit issued
under the Tender Period Revolving Facility (including Existing Letters of
Credit deemed to be Letters of Credit issued by the Issuing Lender pursuant to
Section 3.7) and in effect on the Merger Date shall continue in effect and
shall be deemed on and after the Merger Date to be Letters of Credit issued
pursuant to clause (y) of Section 3.1A.
D. RELATED AGREEMENTS. The Merger Agreement and each other
Related Agreement shall be in full force and effect and no provision thereof
shall have been modified or waived in any respect determined by Agent to be
material, in each case without the consent of Agent and Requisite Lenders.
E. CONSUMMATION OF MERGER.
(i) All conditions to the Merger set forth in the
Merger Agreement shall have been satisfied or the fulfillment of any
such conditions shall have been waived with the consent of Agent and
Requisite Lenders;
(ii) the Merger shall have become effective in
accordance with the terms of the Merger Agreement and Section 906 of
the New York Business Corporation Law;
(iii) Agent shall have received satisfactory
evidence of the filing of the documents with the New York Department of
State effecting the Merger on the Merger Date;
(iv) the aggregate cash consideration for the
shares of Milgray Common Stock to be acquired in any manner whatsoever
in connection with the Tender Offer and the Merger shall not exceed
$101,000,000;
(v) Transaction Costs incurred as of the Merger
Date (including any such amounts incurred on or before the Closing
Date) shall not exceed $6,000,000; and
(vi) Agent shall have received an Officers'
Certificate of Company to the effect set forth in clauses (i)-(v)
above.
F. CAPITAL STRUCTURE AND OWNERSHIP. The capital structure and
ownership of Company and its Subsidiaries, before and immediately after giving
effect to the Tender Offer and after giving effect to the Merger, shall be as
set forth on Schedule 4.1B annexed hereto.
78
86
G. SECURITY INTERESTS IN PROPERTY OF SURVIVING CORPORATION AND ITS
DOMESTIC SUBSIDIARIES CONSTITUTING COLLATERAL. Agent shall have received
evidence satisfactory to it that Company, Surviving Corporation and Surviving
Corporation's Domestic Subsidiaries, as the case may be, shall have taken or
caused to be taken all such actions, executed and delivered or caused to be
executed and delivered all such agreements, documents and instruments, and made
or caused to be made all such filings and recordings (other than the filing or
recording of items described in clauses (iii), (iv) and (v) below) that may be
necessary or, in the opinion of Agent, desirable in order to create in favor of
Agent, for the benefit of Lenders, a valid and (upon such filing and recording)
perfected First Priority security interest in all the property of Surviving
Corporation and its Domestic Subsidiaries constituting Collateral on and after
the Merger Date. Such actions shall include, without limitation, the
following:
(i) Amendment to Collateral Documents. Delivery
to Agent of a pledge amendment to Company Pledge Agreement regarding
all the capital stock of Surviving Corporation to be pledged by Company
pursuant to the Company Pledge Agreement;
(ii) Stock Certificates. Delivery to Agent of
certificates (which certificates shall be accompanied by irrevocable
undated stock powers, duly endorsed in blank and otherwise satisfactory
in form and substance to Agent) representing all the capital stock of
(a) Surviving Corporation to be pledged by Company pursuant to the
Company Pledge Agreement, and (b) any Domestic Subsidiaries of
Surviving Corporation to be pledged by Surviving Corporation pursuant
to a Subsidiary Pledge Agreement;
(iii) Lien Searches and UCC Termination Statements.
Delivery to Agent of (a) the results of a recent search, by a Person
satisfactory to Agent, of all effective UCC financing statements and
fixture filings and all judgment and tax lien filings which may have
been made with respect to any personal or mixed property of Surviving
Corporation and its Domestic Subsidiaries, together with copies of all
such filings disclosed by such search, and (b) UCC termination
statements duly executed by all applicable Persons for filing in all
applicable jurisdictions as may be necessary to terminate any effective
UCC financing statements or fixture filings disclosed in such search
(other than any such financing statements or fixture filings in respect
of Liens permitted to remain outstanding pursuant to the terms of this
Agreement); and
(iv) UCC Financing Statements. Delivery to Agent
of UCC financing statements duly executed by each applicable Loan Party
with respect to any property of Surviving Corporation and its Domestic
Subsidiaries constituting Collateral, for filing in all jurisdictions
as may be necessary or, in the opinion of Agent, desirable to perfect
the security interests created in such Collateral pursuant to the
Collateral Documents.
79
87
H. MATTERS RELATING TO EXISTING INDEBTEDNESS OF SURVIVING
CORPORATION AND ITS SUBSIDIARIES.
(i) Termination of Existing Credit Agreements and
Related Liens; Existing Letters of Credit. On the Merger Date, Company
shall have, or shall have caused Milgray and its Subsidiaries to have,
(i) repaid in full all Indebtedness outstanding under any bank
facilities of Milgray and its Subsidiaries existing on or prior to the
Merger Date, (ii) terminated any commitments to lend or make other
extensions of credit under such bank facilities, and (iii) taken all
action necessary to release all Liens securing Indebtedness or other
obligations of Surviving Corporation and its Subsidiaries thereunder,
in each case on terms satisfactory to Agent.
(ii) Existing Indebtedness to Remain Outstanding.
Agent shall have received an Officers' Certificate of Company stating
that, after giving effect to the transactions described in this
subsection 4.2H, the aggregate amount of outstanding Indebtedness of
Surviving Corporation and its Subsidiaries shall not exceed $1,000,000
in respect of certain mortgage Indebtedness and equipment financing
Indebtedness described in Schedule 7.1 annexed hereto. The terms and
conditions of all such outstanding Indebtedness shall be in form and in
substance satisfactory to Agent.
I. OPINIONS OF COUNSEL TO LOAN PARTIES. Lenders and their
respective counsel shall have received originally executed copies of a written
opinion of Irell & ▇▇▇▇▇▇▇ LLP, counsel to Company, in form and substance
satisfactory to Agent and Lenders, dated as of the Merger Date and setting
forth substantially the matters in the opinions designated in Exhibit XXI
annexed hereto.
J. OPINIONS OF AGENT'S COUNSEL. Lenders shall have received
originally executed copies of a written opinion of O'Melveny & ▇▇▇▇▇ LLP,
counsel to Agent, substantially in the form of Exhibit XXII annexed hereto,
dated as of the Merger Date.
K. BORROWING BASE CERTIFICATE. Company shall have delivered a
Borrowing Base Certificate as of the end of the most recent month prior to the
Merger Date and the Total Utilization of Revolving Loan Commitments, after
giving effect to Revolving Loans to be made on the Merger Date and Letters of
Credit that are outstanding or to be issued on the Merger Date, shall be less
than or equal to the Borrowing Base then in effect.
L. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.
Company shall have delivered to Agent an Officers' Certificate, in form and
substance satisfactory to Agent, to the effect that the representations and
warranties in Section 5 hereof are true, correct and complete in all material
respects on and as of the Merger Date to the same extent as though made on and
as of that date (or, to the extent such representations and warranties
specifically relate to an earlier date, that such representations and
warranties
80
88
were true, correct and complete in all material respects on and as of such
earlier date) and that Company shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before the Merger Date except as
otherwise disclosed to and agreed to in writing by Agent and Requisite Lenders.
M. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby
and all documents incidental thereto not previously found acceptable by Agent,
acting on behalf of Lenders, and its counsel shall be satisfactory in form and
substance to Agent and such counsel, and Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents
as Agent may reasonably request.
4.3 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date
are subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed
Notice of Borrowing, in each case signed by the chief executive officer, the
chief financial officer or the treasurer of Company or by any executive officer
of Company designated by any of the above-described officers on behalf of
Company in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained
herein and in the other Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date to the
same extent as though made on and as of that date, except to the extent
such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of such
earlier date;
(ii) No event shall have occurred and be continuing
or would result from the consummation of the borrowing contemplated by
such Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Each Loan Party shall have performed in all
material respects all agreements and satisfied all conditions which
this Agreement provides shall be performed or satisfied by it on or
before that Funding Date;
81
89
(iv) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or
restrain any Lender from making the Loans to be made by it on that
Funding Date;
(v) The making of the Loans requested on such
Funding Date shall not violate any law including, without limitation,
Regulation G, Regulation T, Regulation U or Regulation X of the Board
of Governors of the Federal Reserve System; and
(vi) There shall not be pending or, to the
knowledge of Company, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Company
or any of its Subsidiaries or any property of Company or any of its
Subsidiaries that has not been disclosed by Company in writing pursuant
to subsection 5.6 or 6.1(ix) prior to the making of the last preceding
Loans (or, in the case of the initial Loans, prior to the execution of
this Agreement), and there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in
the opinion of Agent or of Requisite Lenders, would be expected to have
a Material Adverse Effect; and no injunction or other restraining order
shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief
as a result of, the transactions contemplated by this Agreement or the
making of Loans hereunder.
4.4 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder is subject to
the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the Tender Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Agent shall have received, in accordance with the provisions of subsection
3.1B(i), an originally executed Notice of Issuance of Letter of Credit, in each
case signed by the chief executive officer, the chief financial officer or the
treasurer of Company or by any executive officer of Company designated by any
of the above-described officers on behalf of Company in a writing delivered to
Agent, together with all other information specified in subsection 3.1B(i) and
such other documents or information as the Issuing Lender may reasonably
require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.3B shall be satisfied to the
same extent as if the issuance of such
82
90
Letter of Credit were the making of a Loan and the date of issuance of such
Letter of Credit were a Funding Date.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce the Issuing Lender to issue Letters of Credit and to
induce other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date
and on the date of issuance of each Letter of Credit, that the following
statements are true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Loan Party has all requisite corporate
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents and the Related Agreements to which it is a party and to carry out
the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Company is qualified to do
business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged
only in the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Company are
identified in Schedule 5.1 annexed hereto as such Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xviii). The capital stock of each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto (as so supplemented) is duly
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto (as so supplemented) is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation set forth therein, has all requisite
corporate power and authority to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted, and is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in
each case
83
91
except where failure to be so qualified or in good standing or a lack of such
corporate power and authority has not had and will not have a Material Adverse
Effect.
E. CAPITALIZATION. As of the Closing Date, Schedule 5.1 annexed
hereto correctly sets forth the ownership interest of Company and each of its
Subsidiaries in each of the Subsidiaries of Company identified therein.
Schedule 5.1 correctly sets forth, as of the Closing Date, the authorized
classes of capital stock of Company and each of its Subsidiaries, the par value
of each share of such class, the number of authorized shares of each such
class, and the number of outstanding shares of each such class. As of the
Closing Date, no other class of capital stock of Company or its Subsidiaries is
outstanding. The capital stock of Company and its Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable.
F. REPURCHASE OBLIGATIONS, ETC.. Neither Company nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and
performance of the Loan Documents and the Related Agreements have been duly
authorized by all necessary corporate action on the part of each of Company and
its Subsidiaries that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to
Company or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Company or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (other than a
breach under the Existing Note Purchase Agreements arising on or after the
Closing Date as a result of the borrowings contemplated by this Agreement, the
Ontario Acquisition and the Merger, provided, that Company will pay all amounts
of principal and accrued interest outstanding under the Existing Senior Notes
and any make-whole payments required in connection therewith no later than five
Business Days after the Closing Date), (iii) result in or require the creation
or imposition of any Lien upon any of the properties or assets of Company or
any of its Subsidiaries (other than any Liens created under any of the Loan
Documents in favor of Agent on behalf of Lenders), or (iv) require any approval
of stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, except
84
92
for such approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance
by Loan Parties of the Loan Documents and the Related Agreements to which they
are parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body, except for the effectiveness of the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ filing with respect
to the Merger, which filing has been made and is effective.
D. BINDING OBLIGATION. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each Loan Party that is a
party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Agent, at Agent's request,
the following financial statements and information: (i) the audited
consolidated balance sheet of Company and its Subsidiaries as at December 31,
1995 and the related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for the Fiscal Year then ended;
(ii) the unaudited consolidated balance sheet of Company and its Subsidiaries
as at September 30, 1996 and the related unaudited consolidated statements of
income, stockholders' equity and cash flows of Company and its Subsidiaries for
the Fiscal Quarter then ended; and (iii) the audited consolidated balance sheet
of Milgray and its Subsidiaries as at September 30, 1996 and the related
consolidated statements of income, stockholders' equity and cash flows of
Milgray and its Subsidiaries for the fiscal year of Milgray then ended. All
such statements were prepared in conformity with GAAP and fairly present, in
all material respects, the financial position (on a consolidated basis) of the
entities described in such financial statements as at the respective dates
thereof and the results of operations and cash flows (on a consolidated basis)
of the entities described therein for each of the periods then ended, subject,
in the case of any such unaudited financial statements, to changes resulting
from audit and normal year-end adjustments. Neither Company nor Milgray had as
of the relevant dates of such financial statements any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company, Milgray or any of their Subsidiaries.
85
93
5.4 NO MATERIAL ADVERSE EFFECT; NO RESTRICTED JUNIOR PAYMENTS.
Since September 30, 1996, no event or change has occurred that
has caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect. Neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so except as permitted by
subsection 7.5.
5.5 TITLE TO PROPERTIES; LIENS; LEASES.
A. TITLE TO PROPERTIES; LIENS. Company and its Subsidiaries have
(i) good, sufficient and legal title to (in the case of fee interests in real
property), (ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to (in the case of
all other personal property), all of their respective properties and assets
reflected in the financial statements referred to in subsection 5.3 or in the
most recent financial statements delivered pursuant to subsection 6.1, in each
case except for assets disposed of since the date of such financial statements
in the ordinary course of business or as otherwise permitted under subsection
7.7. Except as permitted by this Agreement, all such properties and assets are
free and clear of Liens.
B. LEASES. Each lease of real property under which Company is a
lessee is accounted for as an operating lease in conformity with GAAP.
5.6 LITIGATION; ADVERSE FACTS.
Except as set forth on Schedule 5.6 annexed hereto, there are
no actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or,
to the knowledge of Company, threatened against or affecting Company or any of
its Subsidiaries or any property of Company or any of its Subsidiaries and
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. Neither Company nor any of its Subsidiaries (i)
is in violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to
any final judgments, writs, injunctions, decrees, rules or regulations of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.
86
94
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all tax
returns and reports of Company and its Subsidiaries required to be filed by any
of them have been timely filed, and all taxes shown on such tax returns to be
due and payable and all assessments, fees and other governmental charges upon
Company and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid when
due and payable. Company knows of no proposed tax assessment against Company
or any of its Subsidiaries which is not being actively contested by Company or
such Subsidiary in good faith and by appropriate proceedings; provided that
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
CONTRACTS.
A. Neither Company nor any of its Subsidiaries is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect,
of such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all
the Material Contracts in effect on the Closing Date. Except as described on
Schedule 5.8, all such Material Contracts are in full force and effect and no
material defaults currently exist thereunder.
5.9 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
87
95
5.10 SECURITIES ACTIVITIES.
A. Neither Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. After giving effect to the Merger, not more than 25% of the
value of the assets (either of Company only or of Company and its Subsidiaries
on a consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or
subject to any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating to Indebtedness
and within the scope of subsection 8.2, will be Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. No ERISA Event has occurred or is reasonably expected to occur.
B. Except to the extent required under Section 4980B of the
Internal Revenue Code, no Employee Benefit Plan provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employee of Company, any of its Subsidiaries or any of their respective
ERISA Affiliates.
C. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $50,000.
D. As of the most recent valuation date for each Multiemployer
Plan for which the actuarial report is available, the potential liability of
Company, its Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA), when aggregated with such potential liability for a complete withdrawal
from all Multiemployer Plans, based on information available pursuant to
Section 4221(e) of ERISA, does not exceed $50,000.
5.12 CERTAIN FEES.
No broker's or finder's fee or commission will be payable with
respect to this Agreement or any of the transactions contemplated hereby, and
Company hereby indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any such broker's or
finder's fees alleged to have been incurred in connection herewith or therewith
and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.
88
96
5.13 ENVIRONMENTAL PROTECTION.
(i) Neither Company nor any of its Subsidiaries
nor any of their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect;
(ii) Neither Company nor any of its Subsidiaries
has received any letter or request for information under Section 104 of
the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. Section 9604) or any comparable state law;
(iii) There are and, to Company's knowledge, have
been no conditions, occurrences, or Hazardous Materials Activities
which could reasonably be expected to form the basis of an
Environmental Claim against Company or any of its Subsidiaries that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect; and
(iv) Compliance with all current or reasonably
foreseeable future requirements pursuant to or under Environmental Laws
will not, individually or in the aggregate, have a reasonable
possibility of giving rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the
contrary, no event or condition has occurred or is occurring with respect to
Company or any of its Subsidiaries relating to any Environmental Law, any
Release of Hazardous Materials, or any Hazardous Materials Activity which
individually or in the aggregate has had or could reasonably be expected to
have a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 SOLVENCY.
Each Loan Party is and, upon the incurrence of any Obligations
by such Loan Party on any date on which this representation is made, will be,
Solvent.
89
97
5.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the Merger Date pursuant to subsections 4.1J, 4.2G
and 6.8 and (ii) the delivery to Agent of any Pledged Collateral not delivered
to Agent at the time of execution and delivery of the applicable Collateral
Document (all of which Pledged Collateral has been so delivered) are effective
to create in favor of Agent for the benefit of Lenders, as security for the
respective Secured Obligations (as defined in the applicable Collateral
Document in respect of any Collateral), a valid and perfected First Priority
Lien subject to Liens permitted in Section 7.2A on all of the Collateral, and
all filings and other actions necessary or desirable to perfect and maintain
the perfection and First Priority status of such Liens have been duly made or
taken and remain in full force and effect, other than the filing of any UCC
financing statements delivered to Agent for filing (but not yet filed) and the
periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan
Party of the Liens purported to be created in favor of Agent pursuant to any of
the Collateral Documents, (ii) the conditional assignment pursuant to any of
the Collateral Documents or (iii) the exercise by Agent of any rights or
remedies in respect of any Collateral (whether specifically granted or created
pursuant to any of the Collateral Documents or created or provided for by
applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been
filed in favor of Agent as contemplated by subsection 5.16A or in connection
with Liens permitted by this Agreement, no effective UCC financing statement,
fixture filing or other instrument similar in effect covering all or any part
of the Collateral is on file in any filing or recording office.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral
pursuant to the Collateral Documents does not violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information supplied to
Agent by or on behalf of any Loan Party with respect to any of the Collateral
(in each case taken as a whole with respect to any particular Collateral) is
accurate and complete in all material respects.
90
98
5.17 RELATED AGREEMENTS.
A. DELIVERY OF RELATED AGREEMENTS. Company has delivered to
Lenders complete and correct copies of each Related Agreement and of all
exhibits and schedules thereto.
B. WARRANTIES. Subject to the qualifications set forth therein,
each of the representations and warranties given by Company, Merger Sub and
Milgray in the Merger Agreement is true and correct in all material respects as
of the date hereof (or as of any earlier date to which such representation and
warranty specifically relates) and will be true and correct in all material
respects as of the Closing Date and the Merger Date (or such earlier date as
the case may be).
C. SURVIVAL. Notwithstanding anything in the Merger Agreement to
the contrary, the representations and warranties of Company set forth in
subsection 5.17B shall, solely for purposes of this Agreement, survive the
Closing Date and the Merger Date for the benefit of Lenders.
5.18 DISCLOSURE.
A. LOAN DOCUMENTS. No representation or warranty of Company or
any of its Subsidiaries contained in any Loan Document or Related Agreement or
in any other document, certificate or written statement furnished to Lenders by
or on behalf of Company or any of its Subsidiaries for use in connection with
the transactions contemplated by this Agreement contains any untrue statement
of a material fact or omits to state a material fact (known to Company, in the
case of any document not furnished by it) necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time
made, it being recognized by Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
As of the date hereof, there are no facts known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
B. TENDER OFFER MATERIALS. The Tender Offer Materials do not
contain any untrue statement of a material fact or omit to state a material
fact (known to Company or any of its Subsidiaries, in the case of any document
not furnished by it) necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which the same were
made.
91
99
5.19 EXISTING LETTERS OF CREDIT.
All Existing Letters of Credit are described on Schedule 5.19
annexed hereto.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all
of the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Agent (with sufficient copies
for each Lender):
(i) Quarterly Reports on Form 10-Q: as soon as
available and in any event within 45 days after the end of each Fiscal
Quarter, the Company's Quarterly Report on Form 10-Q;
(ii) Annual Report on Form 10-K: as soon as
available and in any event within 90 days after the end of each Fiscal
Year, (a) the Company's Annual Report on Form 10-K; and (b) in the case
of the consolidated financial statements included in such Form 10-K, a
report thereon of independent certified public accountants of
recognized national standing selected by Company and reasonably
satisfactory to Agent, which report shall express no doubts about the
ability of Company and its Subsidiaries to continue as a going concern,
and shall state without qualification that such consolidated financial
statements fairly present, in all material respects, the consolidated
financial position of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iii) Financial Statement and Compliance
Certificates: together with each delivery of financial statements of
Company and its Subsidiaries pursuant
92
100
to subdivisions (i) and (ii) above, a certificate of the chief
financial officer of Company substantially in the form of Exhibit VIII
annexed hereto;
(iv) Accountants' Certification: together with
each delivery of consolidated financial statements of Company and its
Subsidiaries pursuant to subdivision (ii) above, a written statement by
the independent certified public accountants giving the report thereon
(a) stating that their audit examination has included a review of the
terms of this Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their audit
examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to their attention, specifying
the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination,
and (c) stating that based on their audit examination nothing has come
to their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant
to subdivision (iii) above is not correct or that the matters set forth
in the Compliance Certificates delivered therewith pursuant to clause
(b) of subdivision (iii) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(v) Accountants' Reports: promptly upon receipt
thereof (unless restricted by applicable professional standards),
copies of all reports submitted to Company by independent certified
public accountants in connection with each annual, interim or special
audit of the financial statements of Company and its Subsidiaries made
by such accountants, including, without limitation, any management
letter submitted by such accountants to management in connection with
their annual audit;
(vi) Borrowing Base Certificate: within 20 days
after the end of each month, a completed Borrowing Base Certificate for
that month;
(vii) SEC Filings and Press Releases: promptly upon
their becoming available, copies of (a) all financial statements,
reports, notices and proxy statements sent or made available generally
by Company to its security holders or by any Subsidiary of Company to
its security holders other than Company or another Subsidiary of
Company, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses,
if any, filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Company or
any of its Subsidiaries to the
93
101
public concerning material developments in the business of Company or
any of its Subsidiaries;
(viii) Events of Default, etc.: promptly upon any
officer of Company obtaining knowledge (a) of any condition or event
that constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Agent) or taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person has given
any notice to Company or any of its Subsidiaries or taken any other
action with respect to a claimed default or event or condition of the
type referred to in subsection 8.2, (c) of any condition or event that
would be required to be disclosed in a current report filed by Company
with the Securities and Exchange Commission on Form 8-K (Items 1, 2, 4,
5 and 6 of such Form as in effect on the date hereof) if Company were
required to file such reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence of
such condition, event or change, or specifying the notice given or
action taken by any such Person and the nature of such claimed Event of
Default, Potential Event of Default, default, event or condition, and
what action Company has taken, is taking and proposes to take with
respect thereto;
(ix) Litigation or Other Proceedings: promptly
upon any officer of Company obtaining knowledge of (a) the institution
of, or non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company to
Lenders or (b) any material development in any Proceeding that, in any
case:
(1) if adversely determined, has a
reasonable possibility of giving rise to a Material Adverse
Effect; or
(2) seeks to enjoin or otherwise prevent
the consummation of, or to recover any damages or obtain relief
as a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(x) ERISA Events: promptly upon becoming aware of
the occurrence of or forthcoming occurrence of any ERISA Event, a
written notice specifying the nature thereof, what action Company, any
of its Subsidiaries or any of their respective ERISA Affiliates has
taken, is taking or proposes to take with
94
102
respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto;
(xi) ERISA Notices: with reasonable promptness,
copies of (a) each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) filed by Company, any of its Subsidiaries or
any of their respective ERISA Affiliates with the Internal Revenue
Service with respect to each Pension Plan; (b) all notices received by
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event;
and (c) copies of such other documents or governmental reports or
filings relating to any Employee Benefit Plan as Agent shall reasonably
request;
(xii) Financial Plans: as soon as practicable and
in any event no later than 30 days after the beginning of each Fiscal
Year, a consolidated plan and financial forecast for such Fiscal Year
(the "FINANCIAL PLAN" for such Fiscal Year), including, without
limitation, (a) forecasted consolidated balance sheets and forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Year, together with pro forma compliance
calculations for such Fiscal Year and an explanation of the assumptions
on which such forecasts are based, and (b) forecasted consolidated
statements of income and cash flows of Company and its Subsidiaries for
each quarter of such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based;
(xiii) Insurance: as soon as practicable and in any
event by the last day of each Fiscal Year, a report in form and
substance satisfactory to Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries;
(xiv) Board of Directors: with reasonable
promptness, written notice of any change in the Board of Directors of
Company;
(xv) Material Contracts: promptly, and in any
event within ten Business Days after any Material Contract of Company
or any of its Subsidiaries is terminated (other than by normal course
expiration) or amended in a manner that is materially adverse to
Company or such Subsidiary, as the case may be, or any new Material
Contract is entered into, a written statement describing such event
with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto;
(xvi) Environmental Audits and Reports: as soon as
practicable following receipt thereof by Company, copies of all
environmental audits and reports, whether prepared by personnel of
Company or any of its Subsidiaries or by independent consultants, with
respect to an Environmental Claim or any matter
95
103
governed by or arising under applicable Environmental Laws which, in
either case, could reasonably be expected to result in a Material
Adverse Effect;
(xvii) UCC Search Report: As promptly as practicable
after the date of delivery to Agent of any UCC financing statement
executed by any Loan Party pursuant to subsections 4.1J(iv), 4.2G(iv)
or 6.8A, copies of completed UCC searches evidencing the proper filing,
recording and indexing of all such UCC financing statements and listing
all other effective financing statements that name such Loan Party as
debtor, together with copies of all such other financing statements not
previously delivered to Agent by or on behalf of Company or such Loan
Party;
(xviii) New Subsidiaries: promptly upon any Person
becoming a Subsidiary of Company, a written notice setting forth with
respect to such Person (a) the date on which such Person became a
Subsidiary of Company and (b) all of the data required to be set forth
in Schedule 5.1 annexed hereto with respect to all Subsidiaries of
Company (it being understood that such written notice shall be deemed
to supplement Schedule 5.1 annexed hereto for all purposes of this
Agreement); and
(xix) Other Information: with reasonable
promptness, such other information and data with respect to Company or
any of its Subsidiaries as from time to time may be reasonably
requested by any Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and
will cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its corporate existence and all rights and franchises material
to its business; provided, however, that neither Company nor any of its
Subsidiaries shall be required to preserve any such right or franchise if the
Board of Directors of Company or such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
Company or such Subsidiary, as the case may be, and that the loss thereof is
not disadvantageous in any material respect to Company, such Subsidiary or
Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for
sums that have become due and payable and that by law have or may become a Lien
upon any of its properties or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided that no such charge or
96
104
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (i) such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (ii) in the case of a
charge or claim which has or may become a Lien against any of the Collateral,
such contest proceedings conclusively operate to stay the sale of any portion
of the Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with
any Person (other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
A. MAINTENANCE OF PROPERTIES. Company will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of Company and its Subsidiaries
(including, without limitation, all Intellectual Property) and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.
B. INSURANCE. Company will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by
corporations of established reputation engaged in similar businesses, in each
case in such amounts (giving effect to self-insurance), with such deductibles,
covering such risks and otherwise on such terms and conditions as shall be
customary for corporations similarly situated in the industry. Without
limiting the generality of the foregoing, Company will maintain or cause to be
maintained replacement value casualty insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts, with
such deductibles, and covering such risks as are at all times satisfactory to
Agent in its commercially reasonable judgment. Each such policy of insurance
shall (a) name Agent for the benefit of Lenders as an additional insured
thereunder as its interests may appear and (b) in the case of each business
interruption and casualty insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Agent, that names Agent for
the benefit of Lenders as the loss payee thereunder for any covered loss in
excess of $5,000,000 and provides for at least ten days prior written notice to
Agent of any material modification or cancellation of such policy.
97
105
6.5 INSPECTION RIGHTS; AUDITS OF INVENTORY AND ACCOUNTS RECEIVABLE; LENDER
MEETING.
A. INSPECTION RIGHTS. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
B. AUDITS OF INVENTORY AND ACCOUNTS RECEIVABLE. Company shall,
and shall cause each of its Subsidiaries to, permit any authorized
representatives designated by Agent to conduct audits from time to time of all
Inventory and Accounts of Loan Parties after the Closing Date, all upon
reasonable notice and at such reasonable times during normal business hours as
may reasonably be requested.
C. LENDER MEETING. Company will, upon the request of Agent or
Requisite Lenders, participate in a meeting of Agent and Lenders once during
each Fiscal Year to be held at Company's corporate offices (or at such other
location as may be agreed to by Company and Agent) at such time as may be
agreed to by Company and Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall comply, and shall cause each of its Subsidiaries
to comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including all Environmental Laws),
noncompliance with which could reasonably be expected to cause, individually or
in the aggregate, a Material Adverse Effect.
6.7 ENVIRONMENTAL REVIEW, DISCLOSURE, ETC.; COMPANY'S ACTIONS REGARDING
HAZARDOUS MATERIALS ACTIVITIES, ENVIRONMENTAL CLAIMS AND VIOLATIONS OF
ENVIRONMENTAL LAWS.
A. ENVIRONMENTAL REVIEW. Company agrees that Agent may, from time
to time and in its reasonable discretion, retain, at Company's expense, an
independent professional consultant to review any environmental audits,
investigations, analyses and reports relating to Hazardous Materials prepared
by or for Company.
98
106
B. ENVIRONMENTAL DISCLOSURE. Company will deliver to Agent (with
sufficient copies for each Lender):
(i) Environmental Audits and Reports. As soon as
practicable following receipt thereof, copies of all environmental
audits, investigations, analyses and reports of any kind or character,
whether prepared by personnel of Company or any of its Subsidiaries or
by independent consultants, governmental authorities or any other
Persons, with respect to significant environmental matters at any
Facility which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect or with respect to any
Environmental Claims which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions,
Etc. Promptly upon the occurrence thereof, written notice describing
in reasonable detail (a) any Release required to be reported to any
federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (b) any remedial action taken by Company
or any other Person in response to (x) any Hazardous Materials
Activities the existence of which has a reasonable possibility of
resulting in one or more Environmental Claims having, individually or
in the aggregate, a Material Adverse Effect, or (y) any Environmental
Claims that, individually or in the aggregate, have a reasonable
possibility of resulting in a Material Adverse Effect, and (c)
Company's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that could cause such
Facility or any part thereof to be subject to any material restrictions
on the ownership, occupancy, transferability or use thereof under any
Environmental Laws;
(iii) Written Communications Regarding Environmental
Claims, Releases, Etc. As soon as practicable following the sending or
receipt thereof by Company or any of its Subsidiaries, a copy of any
and all written communications with respect to (a) any Environmental
Claims that, individually or in the aggregate, have a reasonable
possibility of giving rise to a Material Adverse Effect, (b) any
Release required to be reported to any federal, state or local
governmental or regulatory agency, and (c) any request for information
from any governmental agency that suggests such agency is investigating
whether Company or any of its Subsidiaries may be potentially
responsible for any Hazardous Materials Activity which could reasonably
be expected to have a Material Adverse Effect;
(iv) Notice of Certain Proposed Actions Having
Environmental Impact. Prompt written notice describing in reasonable
detail (a) any proposed acquisition of stock, assets, or property by
Company or any of its Subsidiaries that could reasonably be expected to
(x) expose Company or any of its Subsidiaries to, or result in,
Environmental Claims that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or (y)
affect the ability
99
107
of Company or any of its Subsidiaries to maintain in full force and
effect all material Governmental Authorizations required under any
Environmental Laws for their respective operations and (b) any proposed
action to be taken by Company or any of its Subsidiaries to modify
current operations in a manner that could reasonably be expected to
subject Company or any of its Subsidiaries to any additional
obligations or requirements under any Environmental Laws that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; and
(v) Other Information. With reasonable
promptness, such other documents and information as from time to time
may be reasonably requested by Agent in relation to any matters
disclosed pursuant to this subsection 6.7.
C. COMPANY'S ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES,
ENVIRONMENTAL CLAIMS AND VIOLATIONS OF ENVIRONMENTAL LAWS. Company shall
promptly take, and shall cause each of its Subsidiaries promptly to take, (i)
any and all abatement, cleanup, removal, remediation or other response actions
necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials
Activity on, under or about any Facility that is in violation of any
Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim where failure to do so could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and (ii) any
and all actions necessary to (y) cure any violation of applicable Environmental
Laws by Company or its Subsidiaries that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and (z) make an
appropriate response to any Environmental Claim against Company or any of its
Subsidiaries and discharge any obligations it may have to any Person thereunder
where failure to do so could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
6.8 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS BY CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES.
A. EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY
COLLATERAL DOCUMENTS. In the event that any Person becomes a Domestic
Subsidiary of Company after the date hereof, Company will promptly notify Agent
of that fact and, at the request of Agent, cause such Subsidiary to execute and
deliver to Agent a counterpart of the Subsidiary Guaranty and a Subsidiary
Security Agreement and to take all such further actions and execute all such
further documents and instruments (including, without limitation, actions,
documents and instruments comparable to those described in subsections 4.1J and
4.2G) as may be necessary or, in the opinion of Agent, desirable to create in
favor of Agent, for the benefit of Lenders, a valid and perfected First
Priority Lien on all of the property assets of such Subsidiary described in the
applicable forms of Collateral Documents.
100
108
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company
shall deliver to Agent, together with such Loan Documents, (i) certified copies
of such Subsidiary's Certificate or Articles of Incorporation, together with a
good standing certificate from the Secretary of State of the jurisdiction of
its incorporation and each other state in which such Person is qualified as a
foreign corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of
such jurisdictions, each to be dated a recent date prior to their delivery to
Agent, (ii) a copy of such Subsidiary's Bylaws, certified by its corporate
secretary or an assistant secretary as of a recent date prior to their delivery
to Agent, (iii) a certificate executed by the secretary or an assistant
secretary of such Subsidiary as to (a) the fact that the attached resolutions
of the Board of Directors of such Subsidiary approving and authorizing the
execution, delivery and performance of such Loan Documents are in full force
and effect and have not been modified or amended and (b) the incumbency and
signatures of the officers of such Subsidiary executing such Loan Documents,
and (iv) if reasonably requested by Agent, a favorable opinion of counsel to
such Subsidiary, in form and substance satisfactory to Agent and its counsel,
as to (a) the due organization and good standing of such Subsidiary, (b) the
due authorization, execution and delivery by such Subsidiary of such Loan
Documents, (c) the enforceability of such Loan Documents against such
Subsidiary, (d) such other matters (including, without limitation, matters
relating to the creation and perfection of Liens in any Collateral pursuant to
such Loan Documents) as Agent may reasonably request, all of the foregoing to
be satisfactory in form and substance to Agent and its counsel.
6.9 UCC TERMINATION STATEMENTS.
Company shall use its best efforts to deliver to Agent all UCC
termination statements referenced in Section 4.1J(iii) and duly executed by IBM
Credit Corporation no later than 45 days after the Closing Date and in no event
shall such UCC termination statements be delivered later than 120 days after
the Closing Date.
6.10 CONDUCT OF BUSINESS OF MERGER SUB.
Until consummation of the Merger, Merger Sub will engage in
only those activities that are necessary or advisable to effect the Tender
Offer upon the terms set forth in the Tender Offer Materials, to effect the
Merger and to effect the transactions contemplated by this Agreement.
6.11 CONDUCT OF BUSINESS OF MILGRAY.
Until consummation of the Merger, Merger Sub will cause Milgray
and its Subsidiaries to conduct their respective businesses in a manner
consistent with their past practices, and to comply with the terms of the
Merger Agreement.
101
109
6.12 MERGER.
Company shall comply with, and cause Milgray to comply with,
all covenants set forth in the Merger Agreement applicable prior to the
consummation of the Merger. During the period prior to consummation of the
Merger, Company shall cause Merger Sub to retain the Minimum Shares. Company
shall cause the Merger to be consummated in accordance with the terms and
conditions of the Merger Agreement and the Tender Offer Materials and shall
cause each of the conditions set forth in subsection 4.2 to be fulfilled as
soon as practicable and, in any event, no later than 75 calendar days after the
Closing Date. In the event that the Tendered Milgray Shares to be purchased
concurrently with receipt of the proceeds of the Tender Loans on the Closing
Date shall represent, in the aggregate, not less than 90% of the outstanding
shares of Milgray Common Stock and, in any case, the number of shares of
Milgray Common Stock required to permit Company to cause the Merger to occur in
accordance with the terms of the Merger Agreement and Section 905 of the New
York Business Corporation Law, Company shall cause the Merger to occur under
Section 905 of the New York Business Corporation Law on January 15, 1997.
6.13 REDEMPTION OF EXISTING SENIOR NOTES.
Company shall redeem on a date which is not later than five
Business Days after the Closing Date all of the Existing Senior Notes for
aggregate consideration, including accrued interest, make-whole amounts and
premiums, if any, not to exceed $26,000,000.
6.14 FLOORING AGREEMENTS.
Company shall use its best efforts to remove all references to
accounts, contract rights, chattel paper, instruments, reserves, and general
intangibles from the collateral descriptions set forth in any security
agreements and financing statements filed pursuant to any Flooring Agreements.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all
of the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.
102
110
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or guaranty, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company may become and remain liable with
respect to the Obligations;
(ii) Milgray and its Subsidiaries may remain liable
with respect to its Indebtedness existing on the Closing Date until the
Merger Date;
(iii) Company and its Subsidiaries may become and
remain liable with respect to Contingent Obligations permitted by
subsection 7.4 and, upon any matured obligations actually arising
pursuant thereto, the Indebtedness corresponding to the Contingent
Obligations so extinguished;
(iv) Company and its Subsidiaries may become and
remain liable with respect to Indebtedness in respect of Capital Leases
permitted by subsection 7.9;
(v) Company may become and remain liable with
respect to Indebtedness to any of its wholly-owned Subsidiaries, and
any wholly-owned Subsidiary of Company may become and remain liable
with respect to Indebtedness to Company or any other wholly-owned
Subsidiary of Company; provided that (a) all such intercompany
Indebtedness shall be evidenced by promissory notes, (b) all such
intercompany Indebtedness owed by Company to any of its Subsidiaries
shall be subordinated in right of payment to the payment in full of the
Obligations pursuant to the terms of the applicable promissory notes or
an intercompany subordination agreement, and (c) any payment by any
Subsidiary of Company under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to any of its
Subsidiaries for whose benefit such payment is made;
(vi) Milgray may remain liable with respect to
mortgage Indebtedness and equipment financing Indebtedness not
exceeding an aggregate amount of $1,000,000 and described in Schedule
7.1 annexed hereto;
(vii) Ontario Subsidiary may become and remain
liable with respect to Indebtedness of ▇▇▇▇▇▇▇▇ existing prior to the
consummation of the Ontario Acquisition and assumed by Ontario
Subsidiary in connection with the Ontario Acquisition and pursuant to
the terms of the Ontario Purchase Agreement;
103
111
(viii) Company and its Subsidiaries may become and
remain liable with respect to Indebtedness secured by Liens permitted
under Section 7.2A(iv);
(ix) Company and its Subsidiaries may become and
remain liable with respect to existing Indebtedness of a Person (or a
division or line of business of such Person) acquired in compliance
with Section 7.7(v) so long as such Indebtedness was not incurred in
contemplation of such acquisition;
(x) Company and its Subsidiaries may become and
remain liable with respect to Indebtedness secured by Liens permitted
under Section 7.2A(vii);
(xi) Company may remain liable with respect to
Indebtedness in respect of the Existing Senior Notes for a period of
five Business Days after the Closing Date; and
(xii) Company may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed $5,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind (including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens on the property of Milgray and its
Subsidiaries securing Indebtedness of Milgray and its Subsidiaries
existing on the Closing Date until the Merger Date;
(iii) Liens granted pursuant to the Collateral
Documents;
(iv) Other Liens securing Indebtedness in respect
of the purchase price of property acquired by Company or any of its
Subsidiaries in an aggregate amount not to exceed $5,000,000 at any
time outstanding; provided, that the principal amount of Indebtedness
secured by any such Lien shall at no time exceed an amount equal to
100% of the purchase price of such property so acquired;
104
112
(v) any Liens on the property acquired by Ontario
Subsidiary pursuant to the terms of the Ontario Purchase Agreement
existing prior to the date of the consummation of the Ontario
Acquisition or as a result of any refinancing of the Indebtedness
secured by such Liens on terms no more restrictive than those existing
prior to such refinancing;
(vi) Liens existing on the Closing Date and
securing Indebtedness of Company or its Subsidiaries and described in
Schedule 7.2 annexed hereto;
(vii) Liens created pursuant to Flooring Agreements
and securing Indebtedness in an aggregate amount not exceeding
$25,000,000; provided, that such Liens shall not extend to any assets
of Company or its Subsidiaries other than the Inventory being financed
pursuant to such Flooring Agreements and, with respect to the Flooring
Agreements existing on the Closing Date and any replacements thereof,
Accounts which are proceeds of such financed Inventory, subject to the
covenant set forth in Section 6.14, and such Flooring Agreements shall
be in form and substance satisfactory to Agent; and
(viii) Liens securing Indebtedness of Company or its
Subsidiaries permitted under Section 7.1(ix).
Notwithstanding the foregoing, prior to the Merger Date, Merger Sub may
directly or indirectly sell, assign, pledge or encumber any shares of Milgray
Common Stock owned by it that are in excess of the Minimum Shares (but only to
the extent of such excess) for cash and for fair market value.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness (including
Capital Leases permitted by subsection 7.9) or to be sold pursuant to an
executed agreement with respect to an Asset Sale, neither Company nor any of
its Subsidiaries shall enter into any agreement (other than an agreement
prohibiting only the creation of Liens securing Subordinated Indebtedness)
prohibiting the creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired.
105
113
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make or own any Investment in any Person, including
any Joint Venture, except:
(i) Company and its Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Merger Sub may acquire and own the Tendered
Milgray Shares;
(iii) Company and its Subsidiaries may make
intercompany loans to the extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make
Consolidated Capital Expenditures permitted by subsection 7.8;
(v) Company may make acquisitions permitted by
subsection 7.7(v);
(vi) Company and its Subsidiaries may make
Investments in split dollar life insurance policies in an aggregate
amount not exceeding $5,000,000; and
(vii) Company and its Subsidiaries may make and own
other Investments in an aggregate amount not to exceed at any time
$2,500,000.
7.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or become or remain liable with respect to
any Contingent Obligation, except:
106
114
(i) Subsidiaries of Company may become and remain
liable with respect to Contingent Obligations in respect of the
Subsidiary Guaranty;
(ii) Company may become and remain liable with
respect to Contingent Obligations in respect of Letters of Credit;
(iii) Company may become and remain liable with
respect to Contingent Obligations under Hedge Agreements required under
subsection 6.10;
(iv) Company may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of
Company or any of its Subsidiaries permitted by subsection 7.1; and
(v) Company and its Subsidiaries may become and
remain liable with respect to other Contingent Obligations; provided
that the maximum aggregate liability, contingent or otherwise, of
Company and its Subsidiaries in respect of all such Contingent
Obligations shall at no time exceed $2,500,000.
7.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Junior Payment; provided that Company may make regularly
scheduled payments of interest in respect of any Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject
to the subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued, as such indenture
or other agreement may be amended from time to time to the extent permitted
under subsection 7.15B.
7.6 FINANCIAL COVENANTS.
A. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense
for any four-Fiscal Quarter period ending on or after the Closing Date to be
less than 3.25:1.00; provided that for purposes of clause (ii) above
Consolidated Interest Expense shall be calculated as follows: (i) for the
four-Fiscal Quarter ending March 31, 1997, such amount for the Fiscal Quarter
ending on such date times four, (ii) for the four-Fiscal Quarter period ending
June 30, 1997, such amount for the two-Fiscal Quarter period ending on such
date times two, (iii) for the four-Fiscal Quarter period ending September 30,
1997, such amount for the three-Fiscal Quarter period ending on such date times
1 1/3, and (iv) for the four-Fiscal Quarter period ending December 31, 1997 and
any time thereafter, such amount for such four-Fiscal Quarter period.
107
115
B. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit
the ratio of (i) Consolidated Adjusted EBITDA minus Consolidated Capital
Expenditures other than Consolidated Capital Expenditures consisting of Capital
Leases (such Consolidated Capital Expenditures to be calculated on a pro forma
basis to give effect to the Merger and the acquisition of Milgray by Company)
to (ii) Consolidated Fixed Charges for any four-Fiscal Quarter period ending
during any of the periods set forth below to be less than the correlative ratio
indicated:
MINIMUM FIXED
PERIOD CHARGE COVERAGE RATIO
-------------------------------------------- ---------------------
Closing Date through 12/31/97 1.05:1.00
1/1/98 through 6/30/98 1.10:1.00
7/1/98 through 12/31/98 1.15:1.00
1/1/99 through 6/30/99 1.20:1.00
7/1/99 and thereafter 1.25:1.00
C. MAXIMUM CONSOLIDATED LEVERAGE RATIO. Company shall not permit
the ratio of (i) Consolidated Total Debt to (ii) Consolidated Adjusted EBITDA
for any four-Fiscal Quarter period ending during any of the periods set forth
below to exceed the correlative ratio indicated:
PERIOD MAXIMUM LEVERAGE RATIO
-------------------------------------------- ----------------------
Closing Date through 12/31/97 3.85:1.00
1/1/98 through 12/31/98 3.50:1.00
1/1/99 through 12/31/99 3.25:1.00
1/1/2000 through 12/31/2000 and thereafter 3.00:1.00
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Company shall not, and shall not permit any of its Subsidiaries
to, alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) Merger Sub may be merged into Milgray, any Subsidiary
of Company may be merged with or into Company or any wholly-owned
Subsidiary
108
116
Guarantor, or be liquidated, wound up or dissolved, or all or any part
of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to Company or any wholly-owned Subsidiary Guarantor;
provided that, in the case of such a merger, Company or such wholly
owned Subsidiary Guarantor shall be the continuing or surviving
corporation;
(ii) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may dispose of obsolete,
worn out or surplus property in the ordinary course of business;
(iv) Company and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof; provided
further that on and after the Closing Date Company shall not sell, and
shall not permit Merger Sub to sell, any shares of Milgray Common Stock
unless (i) such sale is for cash in an amount at least equal to the
fair market value of such shares of Milgray Common Stock at the time of
such sale, and (ii) after giving effect to such sale, Merger Sub shall
continue to own not less than 66-2/3% of the outstanding shares of
Milgray Common Stock on a fully-diluted basis;
(v) Company and its Subsidiaries may acquire the business,
property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business of any
Person; provided that, except for the acquisition of Milgray as
provided for herein, (a) the aggregate amount of cash and noncash
consideration (including any Indebtedness assumed by Company or its
Subsidiaries but excluding any equity Securities issued by Company in
connection with such transaction) paid by Company and its Subsidiaries
shall not exceed $25,000,000 for any single such acquisition or related
series of acquisitions, (b) the aggregate amount of cash and noncash
consideration (including any Indebtedness assumed by Company or its
Subsidiaries but excluding any equity Securities issued by Company in
connection with such transaction) paid by Company and its Subsidiaries
during the period beginning on the Closing Date and continuing
thereafter for all such acquisitions shall not exceed $50,000,000
(provided that the aggregate amount of cash and noncash consideration
(including any Indebtedness assumed by Company or its Subsidiaries but
excluding any equity Securities issued by Company in connection with
such transaction) paid by Company and its Subsidiaries during the
period beginning on the Closing Date and ending on the date that is 365
calendar days subsequent to the Closing Date shall not exceed
$20,000,000), (c) after giving effect to each such acquisition, Company
shall be in compliance with all provisions of subsection 7.6 on a pro
forma basis,
109
117
and (d) any business acquired in any such acquisition shall not be
materially different from the lines of business engaged in by Company
or its Subsidiaries as of the Closing Date.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Company shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated
below, in an aggregate amount in excess of the corresponding amount (the
"MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite
such Fiscal Year; provided that the Maximum Consolidated Capital Expenditures
Amount for any Fiscal Year shall be increased by an amount equal to the excess,
if any, of the Maximum Consolidated Capital Expenditures Amount as set forth in
the table below for the previous Fiscal Year over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year:
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
--------------------------------- ------------------------
Closing Date through 12/31/97 $20,000,000
1/1/98 through 12/31/98 $15,000,000
1/1/99 through 12/31/99 and thereafter $10,000,000
7.9 RESTRICTION ON LEASES.
Company shall not, and shall not permit any of its Subsidiaries
to, become liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any
Operating Lease (other than intercompany leases between Company and its
wholly-owned Subsidiaries), unless, immediately after giving effect to the
incurrence of liability with respect to such lease, the Consolidated Rental
Payments at the time in effect during the then current Fiscal Year or any
future period of 12 consecutive calendar months shall not exceed $15,000,000.
7.10 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, become or remain liable as lessee or as a guarantor
or other surety with respect to any lease, whether an Operating Lease or a
Capital Lease, of any property (whether real, personal or mixed), whether now
owned or hereafter acquired, (i) which Company or any of its Subsidiaries has
sold or transferred or is to sell or transfer to any other Person (other than
Company or any of its Subsidiaries) (other than an assignment of lease or
sublease of such property in the ordinary course of business) or (ii) which
Company or any of its Subsidiaries intends to use for substantially the same
purpose as any other property which has been or is to be sold or transferred by
Company or any of
110
118
its Subsidiaries to any Person (other than Company or any of its Subsidiaries)
in connection with such lease.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, sell Accounts with recourse, or sell Accounts at a
discount or otherwise sell for less than the face value thereof, any of its
notes or Accounts.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of
any such holder, on terms that are less favorable to Company or that
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such a holder or Affiliate; provided that the
foregoing restriction shall not apply to compensation, incentive and option
plans for directors, officers and employees as may be approved from time to
time by the Company's Board of Directors.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
Company shall not:
(i) directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock or other
equity Securities of any of its Subsidiaries, except (a) 100% of the
capital stock or other equity Securities of any Subsidiary of Company
in accordance with subsection 7.7(v) and (b) to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly
to sell, assign, pledge or otherwise encumber or dispose of any shares
of capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applicable law.
Notwithstanding the foregoing, prior to the Merger Date, Merger Sub may
directly or indirectly sell, assign, pledge or encumber shares of Milgray
Common Stock owned by it in excess of the Minimum Shares (but only to the
extent of such excess) for cash and for fair market value.
111
119
7.14 CONDUCT OF BUSINESS.
From and after the Closing Date, Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (i)
the businesses engaged in by Company, Milgray and their respective Subsidiaries
on the Closing Date and similar businesses and (ii) such other lines of
business as may be consented to by Requisite Lenders.
7.15 AMENDMENTS OR WAIVERS OF MERGER AGREEMENT AND TENDER AGREEMENT;
AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
A. AMENDMENTS OR WAIVERS OF MERGER AGREEMENT. Neither Company nor
any of its Subsidiaries will agree to any material amendment to, or waive any
of its material rights under, the Merger Agreement or the Tender Agreement, or
terminate or agree to terminate the Merger Agreement or the Tender Agreement,
after the Closing Date without in each case obtaining the prior written consent
of Requisite Lenders to such amendment, waiver or termination.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any
payment consistent with an amendment thereof or change thereto, if the effect
of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any covenants, change
any event of default or condition to an event of default with respect thereto
(other than to eliminate any such event of default or increase any grace period
related thereto), change the redemption, prepayment or defeasance provisions
thereof, change the subordination provisions thereof (or of any guaranty
thereof), or change any collateral therefor (other than to release such
collateral), or if the effect of such amendment or change, together with all
other amendments or changes made, is to increase materially the obligations of
the obligor thereunder or to confer any additional rights on the holders of
such Subordinated Indebtedness (or a trustee or other representative on their
behalf) which would be adverse to Company or Lenders.
7.16 FISCAL YEAR.
Company shall not change its Fiscal Year-end from December 31
of each calendar year.
7.17 TRANSACTION COSTS.
Company shall not pay aggregate Transaction Costs in excess of
$6,000,000.
112
120
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of
Default") shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of or
interest on any Loan when due, whether at stated maturity, by acceleration, by
notice of voluntary prepayment, by mandatory prepayment or otherwise; failure
by Company to pay when due any amount payable to the Issuing Lender in
reimbursement of any drawing under a Letter of Credit; or failure by Company to
pay any interest on any Loan or any fee or any other amount due under this
Agreement within five days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries
to pay when due any principal of or interest on or any other amount
payable in respect of one or more items of Indebtedness (other than
Indebtedness in respect of the Existing Senior Notes for a period of
five Business Days after the Closing Date and Indebtedness referred to
in subsection 8.1) or Contingent Obligations in either an individual or
aggregate principal amount of $5,000,000 or more, in each case beyond
the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its
Subsidiaries with respect to any other material term of (a) one or more
items of Indebtedness or Contingent Obligations in the individual or
aggregate principal amounts referred to in clause (i) above or (b) any
loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of
such breach or default is to cause, or to permit the holder or holders
of that Indebtedness or Contingent Obligation(s) (or a trustee on
behalf of such holder or holders) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior
to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice,
lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or
condition contained in subsection 2.5, 6.1(viii) (other than clause (c)
thereof), or 6.2, 6.12 or Section 7 of this Agreement; or
113
121
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement
made by Company or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) an officer of Company or such Loan Party becoming
aware of such default or (ii) receipt by Company and such Loan Party of notice
from Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises
shall enter a decree or order for relief in respect of Company or any
of its Subsidiaries in an involuntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal or state
law; or
(ii) an involuntary case shall be commenced against
Company or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Company or any of its Subsidiaries, or over all or
a substantial part of its property, shall have been entered; or there
shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries for
all or a substantial part of its property; or a warrant of attachment,
execution or similar process shall have been issued against any
substantial part of the property of Company or any of its Subsidiaries,
and any such event described in this clause (ii) shall continue for 60
days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Subsidiaries shall have
an order for relief entered with respect to it or commence a voluntary
case under the Bank-
114
122
ruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry
of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its
property; or Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or
(ii) Company or any of its Subsidiaries shall be
unable, or shall fail generally, or shall admit in writing its
inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this
clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar
process involving (i) in any individual case an amount in excess of $5,000,000
or (ii) in the aggregate at any time an amount in excess of $5,000,000 (in
either case not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of
any proposed sale thereunder); or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company
or any of its Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually
or in the aggregate results in or might reasonably be expected to result in
liability of Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in excess of $5,000,000 during the term of this Agreement; or there
shall exist an amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans with respect to
which assets exceed benefit liabilities), which exceeds $5,000,000; or
115
123
8.11 CHANGE IN CONTROL.
Any Person or any two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Exchange Act), directly or
indirectly, of Securities of Company (or other Securities convertible into such
Securities) representing 25% or more of the combined voting power of all
Securities of Company entitled to vote in the election of directors, other than
Securities having such power only by reason of the happening of a contingency;
or
8.12 INVALIDITY OF SUBSIDIARY GUARANTY; FAILURE OF SECURITY; REPUDIATION OF
OBLIGATIONS.
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms
hereof or thereof, the satisfaction in full of the Obligations or any other
termination of such Collateral Document in accordance with the terms hereof or
thereof) or shall be declared null and void, or Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any Collateral
purported to be covered thereby having a fair market value, individually or in
the aggregate, exceeding $1,000,000, in each case for any reason other than the
failure of Agent or any Lender to take any action within its control, or (iii)
any Loan Party shall contest the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability,
including without limitation with respect to future advances by Lenders, under
any Loan Document to which it is a party; or
8.13 UNWINDING OF MERGER.
The Merger shall be unwound, reversed or otherwise rescinded in
whole or in part for any reason or, prior to the Merger Date, any party to the
Merger Agreement shall take any action to terminate the Merger Agreement or
abandon the Merger;
THEN (i) upon the occurrence of any Event of Default described in subsection
8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on
the Loans, (b) an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of each Lender to make any Loan
and
116
124
the obligation of the Issuing Lender to issue any Letter of Credit hereunder
shall thereupon terminate, and (ii) upon the occurrence and during the
continuation of any other Event of Default, Agent shall, upon the written
request or with the written consent of Requisite Lenders, by written notice to
Company, declare all or any portion of the amounts described in clauses (a)
through (c) above to be, and the same shall forthwith become, immediately due
and payable, and the obligation of each Lender to make any Loan and the
obligation of the Issuing Lender to issue any Letter of Credit hereunder shall
thereupon terminate; provided that the foregoing shall not affect in any way
the obligations of Lenders under subsection 3.3C(i). In the event amounts
under this Agreement become due and payable as set forth above, Company shall
pay immediately to Agent for the benefit of the Lenders and Issuing Bank all
amounts owing or payable by it and its Subsidiaries under this Agreement and
the other Loan Documents and Company hereby acknowledges that it shall then
have the obligation to pay to Agent all such amounts. Such payment by Company
to Agent shall be deemed to have been made in discharge of Company's
obligations hereunder (to the extent of amounts received) and Agent shall
distribute such proceeds as provided herein.
Any amounts described in clause (b) above, when received by
Agent, shall be held by Agent pursuant to the terms of the Collateral Account
Agreement and shall be applied as therein provided.
SECTION 9. AGENT
9.1 APPOINTMENT.
UBOC is hereby appointed Agent hereunder and under the other Loan
Documents and each Lender hereby authorizes Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents.
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Agent and Lenders, and Company shall have no rights
as a third party beneficiary of any of the provisions thereof. In performing
its functions and duties under this Agreement, Agent shall act solely as an
agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for Company
or any of its Subsidiaries.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
▇. ▇▇▇▇▇▇; DUTIES SPECIFIED. Each Lender irrevocably authorizes
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Agent shall have only those duties and responsibilities
117
125
that are expressly specified in this Agreement and the other Loan Documents.
Agent may exercise such powers, rights and remedies and perform such duties by
or through its agents or employees. Agent shall not have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or
any other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Agent to Lenders or by or on behalf of
Company to Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Loan Documents or as to the use
of the proceeds of the Loans or the use of the Letters of Credit or as to the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwithstanding,
Agent shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts
thereof.
C. EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents
except to the extent caused by Agent's gross negligence or willful misconduct.
Agent shall be entitled to refrain from any act or the taking of any action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents or from the exercise of any power, discretion
or authority vested in it hereunder or thereunder unless and until Agent shall
have received instructions in respect thereof from Requisite Lenders (or such
other Lenders as may be required to give such instructions under subsection
10.6) and, upon receipt of such instructions from Requisite Lenders (or such
other Lenders, as the case may be), Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for
Company and its Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no
118
126
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and the Letters of
Credit, Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term "Lender" or "Lenders" or
any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity. Agent and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Company or any of its Affiliates as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Company for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of
Lenders or to provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter, and Agent shall not have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Agent, to the extent that Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in exercising its powers, rights and
remedies or performing its duties hereunder or under the other Loan Documents
or otherwise in its capacity as Agent in any way relating to or arising out of
this Agreement or the other Loan Documents; provided that no Lender shall be
liable for any portion of such
119
127
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent's gross negligence
or willful misconduct. If any indemnity furnished to Agent for any purpose
shall, in the opinion of Agent, be insufficient or become impaired, Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
9.5 SUCCESSOR AGENT.
Agent may resign at any time by giving 30 days' prior written
notice thereof to Lenders and Company, and Agent may be removed at any time
with or without cause by an instrument or concurrent instruments in writing
delivered to Company and Agent and signed by Requisite Lenders. Upon any such
notice of resignation or any such removal, Requisite Lenders shall have the
right, upon five Business Days' notice to Company, to appoint a successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Agent and the retiring or removed Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
9.6 COLLATERAL DOCUMENTS AND SUBSIDIARY GUARANTY.
Each Lender hereby further authorizes Agent, on behalf of and
for the benefit of Lenders, to enter into each Collateral Document as secured
party and to be the agent for and representative of Lenders under the
Subsidiary Guaranty and each Lender agrees to be bound by the terms of each
Collateral Document and the Subsidiary Guaranty; provided that Agent shall not
(i) enter into or consent to any material amendment, modification, termination
or waiver of any provision contained in any Collateral Document or the
Subsidiary Guaranty or (ii) release any Collateral (except as otherwise
expressly permitted or required pursuant to the terms of this Agreement or the
applicable Collateral Document), in each case without the prior consent of
Requisite Lenders (or, if required pursuant to subsection 10.6, all Lenders);
provided further, however, that, without further written consent or
authorization from Lenders, Agent may execute any documents or instruments
necessary to (a) release any Lien encumbering any item of Collateral that is
the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital
stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of Company) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding,
Company, Agent and each Lender hereby agree that (x) no Lender shall
120
128
have any right individually to realize upon any of the Collateral under any
Collateral Document or to enforce the Subsidiary Guaranty, it being understood
and agreed that all powers, rights and remedies under the Collateral Documents
and the Subsidiary Guaranty may be exercised solely by Agent for the benefit of
Lenders in accordance with the terms thereof, and (y) in the event of a
foreclosure by Agent on any of the Collateral pursuant to a public or private
sale, Agent or any Lender may be the purchaser of any or all of such Collateral
at any such sale and Agent, as agent for and representative of Lenders (but not
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Obligations as a credit on account of the purchase price for
any collateral payable by Agent at such sale.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have
the right at any time to (i) sell, assign or transfer to any Eligible Assignee,
or (ii) sell participations to any Person in, all or any part of its
Commitments or any Loan or Loans made by it or its Letters of Credit or
participations therein or any other interest herein or in any other Obligations
owed to it; provided that no such sale, assignment, transfer or participation
shall, without the consent of Company, require Company to file a registration
statement with the Securities and Exchange Commission or apply to qualify such
sale, assignment, transfer or participation under the securities laws of any
state; provided, further that no such sale, assignment or transfer described in
clause (i) above shall be effective unless and until an Assignment Agreement
effecting such sale, assignment or transfer shall have been accepted by Agent
as provided in subsection 10.1B(ii); provided, further that no such sale,
assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Revolving Loan Commitment
and the Revolving Loans of the Lender effecting such sale, assignment, transfer
or participation. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or
any granting of participations in, all or any part of its Commitments or the
Loans, the Letters of Credit or participations therein, or the other
Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each
Commitment, Loan, Letter of Credit or participation therein, or other
Obligation may (a) be assigned in any amount to another Lender, or to
an Affiliate of the assigning
121
129
Lender or another Lender, with the giving of notice to Company and Agent or (b)
be assigned in an aggregate amount of not less than $5,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments, Loans,
Letters of Credit and participations therein, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the consent of Company
and Agent (which consent of Company and Agent shall not be unreasonably
withheld or delayed); provided that any such assignment in accordance with
either clause (a) or (b) above shall effect a pro rata assignment of all
Commitments and Loans of the assigning Lender. To the extent of any such
assignment in accordance with either clause (a) or (b) above, the assigning
Lender shall be relieved of its obligations with respect to its Commitments,
Loans, Letters of Credit or participations therein, or other Obligations or the
portion thereof so assigned. The parties to each such assignment shall execute
and deliver to Agent, for its acceptance, an Assignment Agreement, together
with a processing fee of $2,500 and such forms, certificates or other evidence,
if any, with respect to United States federal income tax withholding matters as
the assignee under such Assignment Agreement may be required to deliver to
Agent pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery and
acceptance, from and after the effective date specified in such Assignment
Agreement, (y) 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 Agreement, shall have the rights and obligations of a Lender
hereunder and (z) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment Agreement, relinquish its rights (other than any rights which
survive the termination of this Agreement under subsection 10.9B) and be
released from its obligations under this Agreement (and, in the case of an
Assignment Agreement covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease
to be a party hereto; provided that, anything contained in any of the Loan
Documents to the contrary notwithstanding, if such Lender is the Issuing Lender
with respect to any outstanding Letters of Credit such Lender shall continue to
have all rights and obligations of the Issuing Lender with respect to such
Letters of Credit until the cancellation or expiration of such Letters of
Credit and the reimbursement of any amounts drawn thereunder). The Commitments
hereunder shall be modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender and, if any such assignment
occurs after the issuance of the Notes hereunder, the assigning Lender shall,
upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Notes to Agent for cancellation, and
thereupon new Notes shall be issued to the assignee and to the assigning
Lender, substantially in the form of Exhibit IV, Exhibit V, Exhibit VI or
Exhibit VII annexed hereto, as the case may be, with appropriate insertions, to
reflect the new Commitments and/or outstanding Term Loans, as the case may be,
of the assignee and the assigning Lender.
122
130
(ii) Acceptance by Agent. Upon its receipt of an
Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the
processing fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Agent pursuant to subsection 2.7B(iii)(a), Agent shall, if
Agent and Company have consented to the assignment evidenced thereby
(in each case to the extent such consent is required pursuant to
subsection 10.1B(i)), (a) accept such Assignment Agreement by executing
a counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Agent to such assignment) and (b) give
prompt notice thereof to Company. Agent shall maintain a copy of each
Assignment Agreement delivered to and accepted by it as provided in
this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of
any Loan allocated to such participation or (ii) a reduction of the principal
amount of or the rate of interest payable on any Loan allocated to such
participation, and all amounts payable by Company hereunder (including, without
limitation, amounts payable to such Lender pursuant to subsections 2.6D, 2.7
and 3.6) shall be determined as if such Lender had not sold such participation.
Company and each Lender hereby acknowledge and agree that, solely for purposes
of subsections 10.4 and 10.5, (a) any participation will give rise to a direct
obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 10.1, any Lender may assign and pledge all or any portion of its
Loans, the other Obligations owed to such Lender, and its Notes to any Federal
Reserve Bank 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 (i) no Lender shall, as between
Company and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such
Federal Reserve Bank be considered to be a "Lender" or be entitled to require
the assigning Lender to take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information
concerning Company and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to subsection 10.20.
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the
signature pages hereof hereby represents and warrants (i) that it is an
Eligible Assignee described in
123
131
clause (i) of the definition thereof; (ii) that it has experience and expertise
in the making of loans such as the Loans; and (iii) that it will make its Loans
for its own account in the ordinary course of its business and without a view
to distribution of such Loans within the meaning of the Securities Act or the
Exchange Act or other federal securities laws (it being understood that,
subject to the provisions of this subsection 10.1, the disposition of such
Loans or any interests therein shall at all times remain within its exclusive
control). Each Lender that becomes a party hereto pursuant to an Assignment
Agreement shall be deemed to agree that the representations and warranties of
such Lender contained in Section 2(c) of such Assignment Agreement are
incorporated herein by this reference.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including, without limitation,
any opinions requested by Lenders as to any legal matters arising hereunder)
and of Company's performance of and compliance with all agreements and
conditions on its part to be performed or complied with under this Agreement
and the other Loan Documents including, without limitation, with respect to
confirming compliance with environmental, insurance and solvency requirements;
(iii) the reasonable fees, expenses and disbursements of counsel to Agent
(including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents
and any consents, amendments, waivers or other modifications thereto and any
other documents or matters requested by Company; (iv) all the reasonable costs
and expenses of creating and perfecting Liens in favor of Agent on behalf of
Lenders pursuant to any Collateral Document, including, without limitation,
filing and recording fees, expenses and taxes, stamp or documentary taxes,
search fees, title insurance premiums, and reasonable fees, expenses and
disbursements of counsel to Agent and of counsel providing any opinions that
Agent or Requisite Lenders may request in respect of the Collateral Documents
or the Liens created pursuant thereto; (v) all the actual costs and reasonable
expenses (including, without limitation, the reasonable fees, expenses and
disbursements of any auditors, accountants or appraisers and any environmental
or other consultants, advisors and agents employed or retained by Agent or its
counsel) of obtaining and reviewing any environmental audits or reports
provided for under subsection 4.1C and any audits or reports provided for under
subsection 6.5B with respect to Inventory and Accounts of Company and its
Subsidiaries; (vi) the custody or preservation of any of the Collateral; (vii)
all other actual and reasonable costs and expenses incurred by Agent in
connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated
thereby; and (viii) after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys' fees (including allocated costs of
internal counsel) and costs of settlement, incurred by Agent and Lenders in
enforcing any Obligations of or in
124
132
collecting any payments due from any Loan Party hereunder or under the other
Loan Documents by reason of such Event of Default (including, without
limitation, in connection with the sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Subsidiary
Guaranty) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection
10.2, whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agent and Lenders, and the officers,
directors, employees, agents and affiliates of Agent and Lenders (collectively
called the "INDEMNITEES"), from and against any and all Indemnified Liabilities
(as hereinafter defined); provided that Company shall not have any obligation
to any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively,
any and all liabilities, obligations, losses, damages (including natural
resource damages), penalties, actions, judgments, suits, claims (including
Environmental Claims), costs (including the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous
Materials Activity), expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of (i) this Agreement or the other Loan Documents or
the Related Agreements or the transactions contemplated hereby or thereby
(including Lenders' agreement to make the Loans hereunder or the use or
intended use of the proceeds thereof or the issuance of Letters of Credit
hereunder or the use or intended use of any thereof, or any enforcement of any
of the Loan Documents (including any sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Subsidiary
Guaranty), (ii) the statements contained in the commitment letter delivered by
any Lender to Company with respect thereto, or (iii) any Environmental Claim or
any Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or
practice of Company or any of its Subsidiaries.
125
133
To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in this subsection 10.3 may be unenforceable in
whole or in part because they are violative of any law or public policy,
Company shall contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.
10.4 SET-OFF.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default each Lender is hereby authorized by Company
at any time or from time to time, without notice to Company or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or for the credit or
the account of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement, the Letters of
Credit and participations therein and the other Loan Documents, including, but
not limited to, all claims of any nature or description arising out of or
connected with this Agreement, the Letters of Credit and participations therein
or any other Loan Document, irrespective of whether or not (i) that Lender
shall have made any demand hereunder or (ii) the principal of or the interest
on the Loans or any amounts in respect of the Letters of Credit or any other
amounts due hereunder shall have become due and payable pursuant to Section 8
and although said obligations and liabilities, or any of them, may be
contingent or unmatured. Notwithstanding the foregoing, each Lender agrees to
give notice to Company promptly after any exercise by it of any such set off
right, provided that the failure to give any such notice shall not affect any
of Lenders' rights hereunder or otherwise.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment (other than a voluntary prepayment of Loans
made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, receive payment
or reduction of a proportion of the aggregate amount of principal, interest,
amounts payable in respect of Letters of Credit, fees and other amounts then
due and owing to that Lender hereunder or under the other Loan Documents
(collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which is greater
than the proportion received by any other Lender in respect of the Aggregate
Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Agent and each
126
134
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the
other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them;
provided that if all or part of such proportionately greater payment received
by such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of Company or otherwise, those purchases shall be
rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, and no consent to any departure by
Company therefrom, shall in any event be effective without the written
concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: increases the amount of any
of the Commitments or reduces the principal amount of any of the Loans;
increases the maximum amount of Letters of Credit; changes in any manner the
definition of "Pro Rata Share" or the definition of "Requisite Lenders";
changes in any manner any provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of all Lenders; postpones the
date or reduces the amount of any scheduled payment (but not prepayment) of
principal of any of the Loans; postpones the date on which any interest or any
fees are payable; decreases the interest rate borne by any of the Loans (other
than any waiver of any increase in the interest rate applicable to any of the
Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder;
increases the maximum duration of Interest Periods permitted hereunder; reduces
the amount or postpones the due date of any amount payable in respect of, or
extends the required expiration date of, any Letter of Credit; changes in any
manner the obligations of Lenders relating to the purchase of participations in
Letters of Credit; releases any Lien granted in favor of Agent with respect to
25% or more in aggregate fair market value of the Collateral; releases any
Subsidiary Guarantor from its obligations under the Subsidiary Guaranty other
than in accordance with the terms of the Loan Documents; or changes in any
manner the provisions contained in subsection 8.1 or this subsection 10.6 shall
be effective only if evidenced by a writing signed by or on behalf of all
Lenders. In addition, (i) any amendment, modification, termination or waiver
of any of the provisions contained in Section 4 shall be effective only if
evidenced by a writing signed by or on behalf of Agent and Requisite Lenders,
(ii) no amendment, modification, termination or waiver of any provision of any
Note shall be effective without the written concurrence of the Lender which is
the holder of that Note and (iii) no amendment,
127
135
modification, termination or waiver of any provision of Section 9 or of any
other provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of Agent shall be effective without the written
concurrence of Agent. Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Company in any case shall entitle Company to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company.
10.7 INDEPENDENCE OF COVENANTS.
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 would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in
writing and may be personally served or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered
in person or by courier service, upon receipt of telefacsimile or three
Business Days after depositing it in the United States mail with postage
prepaid and properly addressed; provided that notices to Agent shall not be
effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Agent, such other address as shall be
designated by such Person in a written notice delivered to the other parties
hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein
shall survive the execution and delivery of this Agreement and the making of
the Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of
128
136
Credit and the reimbursement of any amounts drawn thereunder, and the
termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
10.11 RELEASE OF SECURITY.
Notwithstanding anything to the contrary contained in this
Agreement (including any of the terms of Section 9.6 and 10.6 hereof), each of
Agent and Lenders hereby agree and consent, subject to the satisfaction of each
of the conditions described in the following sentence, to the execution by
Agent, on behalf of Lenders, of any documents or instruments necessary to
terminate or release all Liens granted by Company and its Subsidiaries in favor
of Agent pursuant to the Collateral Documents as security for the Obligations.
Such action shall be taken by Agent, on behalf of Lenders, upon the delivery by
Company (i) to each of Agent and Lenders of an Officers' Certificate certifying
and demonstrating in reasonable detail that Company has maintained a
Consolidated Leverage Ratio of not more than 2.00 to 1.00 for the immediately
preceding four-Fiscal Quarter period ending prior to the date of such Officers'
Certificate and (ii) to Agent of any documents or instruments, in form and
substance reasonably satisfactory to Agent, necessary to terminate or release
such Liens. Notwithstanding anything to the contrary contained in this
Agreement, upon the satisfaction of the conditions described in the foregoing
sentence, (x) the Borrowing Base shall no longer have any effect under this
Agreement or the other Loan Documents, (y) the limitations set forth in
Sections 2.1A(iv), 2.4B(iii)(d) and 3.1A(i) hereof with respect to the
Borrowing Base then in effect shall no longer apply for the purposes of the
making of Revolving Loans, the repayment thereof or the issuance of Letters of
Credit and (z) the Company shall no longer be required to deliver a Borrowing
Base Certificate under Section 6.1(vi).
10.12 MARSHALLING; PAYMENTS SET ASIDE.
Neither Agent nor any Lender shall be under any obligation to
marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Agent or Lenders (or to Agent for the benefit of
Lenders), or Agent or Lenders enforce any security interests or exercise their
rights of setoff, and such payment or payments or the
129
137
proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.
10.13 SEVERABILITY.
In case any provision in or obligation under this Agreement or
the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.14 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no
action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not
be necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.15 HEADINGS.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose or be given any substantive effect.
10.16 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING,
WITHOUT LIMITATION, SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF
CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
130
138
10.17 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders (it being understood
that Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF LOS ANGELES. BY
EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.18
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING
131
139
AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER CALIFORNIA CODE
OF CIVIL PROCEDURE SECTION 410.40 OR OTHERWISE.
10.19 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Agreement, and that each will continue to rely on this waiver in
their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SUBSECTION 10.19 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.20 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained
pursuant to the requirements of this Agreement which has been identified as
confidential by Company in accordance with such Lender's customary procedures
for handling confidential information of this nature and in accordance with
safe and sound banking practices, it being understood and agreed by Company
that in any event a Lender may make disclosures to Affiliates of such Lender or
disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by such
Lender of any Loans or any participations therein or disclosures required or
requested by any governmental agency or representative thereof or pursuant to
legal process; provided that, unless specifically prohibited by applicable law
or court order,
132
140
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure
of such information; and provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of
its Subsidiaries.
10.21 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Company and Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
133
141
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY:
▇▇▇▇ INDUSTRIES, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Notice Address:
▇▇▇▇ Industries, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
ONTARIO SUBSIDIARY:
▇▇▇▇ ONTARIO HOLDING, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Notice Address:
▇▇▇▇ Industries, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
S-1
142
LENDERS:
UNION BANK OF CALIFORNIA, N.A.,
individually and as Agent
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
NOTICE ADDRESS:
Union Bank of California, N.A.
Corporate Banking South
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. Floor
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
OPERATIONS NOTICE ADDRESSES:
Union Bank of California, N.A. Union Bank of California, N.A.
CPA Specialized Finance-LA Commercial Loan Operations
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇. Floor ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
LETTER OF CREDIT NOTICE ADDRESSES:
Union Bank of California, N.A. Union Bank of California, N.A.
CPA Specialized Finance-LA Int'l Services - Liability Control
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇. Floor ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
[FORM OF NOTICE OF BORROWING (PRE-MERGER DATE)]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of January
7, 1997 as amended, supplemented or otherwise modified to the date hereof (said
Credit Agreement, as so amended, supplemented or otherwise modified, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among ▇▇▇▇ Industries, Inc., a
California corporation ("COMPANY"), the financial institutions listed therein
as Lenders ("LENDERS"), and Union Bank of California, N.A., as Agent ("AGENT"),
this represents Company's request to borrow as follows:
1. Funding Date: ___________________, _________
2. Amount of borrowing: $__________________
3. Type of Loans: [ ] a. Tender Loans
[ ] b. Tender Period Revolving
Loans
4. Interest rate option: [ ] a. Base Rate Loan(s)
[ ] b. LIBOR Rate Loans with an
initial Interest Period of
____________ month(s) and
with a maturity date of
____________
The undersigned officer, to the best of his or her knowledge,
and Company certify that:
(i) The representations and warranties contained in the
Credit Agreement and the other Loan Documents are true, correct and
complete in all material respects on and as of the date hereof to the
same extent as though made on and as of the date hereof, except to the
extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties were
true, correct and complete in all material respects on and as of such
earlier date;
(ii) No event has occurred and is continuing or would
result from the consummation of the borrowing contemplated hereby that
would constitute an Event of Default or a Potential Event of Default;
and
I-A-1
144
(iii) Company has performed in all material respects all
agreements and satisfied all conditions which the Credit Agreement
provides shall be performed or satisfied by it on or before the date
hereof.
DATED: ____________________ ▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
▇-▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
[FORM OF NOTICE OF BORROWING (POST MERGER DATE]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of January
7, 1997 as amended, supplemented or otherwise modified to the date hereof (said
Credit Agreement, as so amended, supplemented or otherwise modified, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among ▇▇▇▇ Industries, Inc., a
California corporation ("COMPANY"), the financial institutions listed therein
as Lenders ("LENDERS"), and Union Bank of California, N.A., as Agent ("AGENT"),
this represents Company's request to borrow as follows:
1. Funding Date: ___________________, _________
2. Amount of borrowing: $___________________
3. Type of Loans: [ ] a. Term Loans
[ ] b. Revolving Loans
4. Interest rate option: [ ] a. Base Rate Loan(s)
[ ] b. LIBOR Rate Loans with an
initial Interest Period of
____________ month(s) and
with a maturity date of
___________
The undersigned officer, to the best of his or her knowledge,
and Company certify that:
(i) The representations and warranties contained in the
Credit Agreement and the other Loan Documents are true, correct and
complete in all material respects on and as of the date hereof to the
same extent as though made on and as of the date hereof, except to the
extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties were
true, correct and complete in all material respects on and as of such
earlier date;
(ii) No event has occurred and is continuing or would
result from the consummation of the borrowing contemplated hereby that
would constitute an Event of Default or a Potential Event of Default;
and
I-B-1
146
(iii) Company has performed in all material respects all
agreements and satisfied all conditions which the Credit Agreement
provides shall be performed or satisfied by it on or before the date
hereof.
DATED: ____________________ ▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
▇-▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇-▇
[FORM OF NOTICE OF CONVERSION/CONTINUATION (PRE-MERGER DATE)]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of January
7, 1997, as amended, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, supplemented or otherwise modified,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among ▇▇▇▇
Industries, Inc., a California corporation ("COMPANY"), the financial
institutions listed therein as Lenders, and Union Bank of California, N.A., as
Agent, this represents Company's request to convert or continue Loans as
follows:
1. Date of conversion/continuation: __________________, _______
2. Amount of Loans being converted/continued: $___________________
3. Type of Loans being [ ] a. Tender Loans
converted/continued: [ ] b. Tender Period Revolving Loans
4. Nature of conversion/continuation:
[ ] a. Conversion of Base Rate Loans to LIBOR Rate Loans
[ ] b. Conversion of LIBOR Rate Loans to Base Rate Loans
[ ] c. Continuation of LIBOR Rate Loans as such
5. If Loans are being continued as or converted to LIBOR Rate
Loans, the duration of the new Interest Period that commences
on the conversion/continuation date: _______________ month(s)
and with a maturity date of _________.
In the case of a conversion to or continuation of LIBOR Rate
Loans, the undersigned officer, to the best of his or her knowledge, and
Company certify that no Event of Default or Potential Event of Default has
occurred and is continuing under the Credit Agreement.
DATED: _____________________ ▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
II-A-1
148
EXHIBIT II-B
[FORM OF NOTICE OF CONVERSION/CONTINUATION (POST MERGER DATE)]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of January
7, 1997, as amended, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, supplemented or otherwise modified,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among ▇▇▇▇
Industries, Inc., a California corporation ("COMPANY"), the financial
institutions listed therein as Lenders, and Union Bank of California, N.A., as
Agent, this represents Company's request to convert or continue Loans as
follows:
1. Date of conversion/continuation: __________________, _______
2. Amount of Loans being converted/continued: $___________________
3. Type of Loans being [ ] a. Term Loans
[ ] b. Revolving Loans
4. Nature of conversion/continuation:
[ ] a. Conversion of Base Rate Loans to LIBOR Rate Loans
[ ] b. Conversion of LIBOR Rate Loans to Base Rate Loans
[ ] c. Continuation of LIBOR Rate Loans as such
5. If Loans are being continued as or converted to LIBOR Rate
Loans, the duration of the new Interest Period that commences
on the conversion/continuation date: _______________
month(s) and with a maturity date of ______________.
In the case of a conversion to or continuation of LIBOR Rate
Loans, the undersigned officer, to the best of his or her knowledge, and
Company certify that no Event of Default or Potential Event of Default has
occurred and is continuing under the Credit Agreement.
DATED: _____________________ ▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
▇▇-▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
[FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT]
NOTICE OF ISSUANCE OF LETTER OF CREDIT
Pursuant to that certain Credit Agreement dated as of January
7, 1997, as amended, supplemented or otherwise modified to the date hereof
(said Credit Agreement, as so amended, supplemented or otherwise modified,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), by and among ▇▇▇▇
Industries, Inc., a corporation ("COMPANY"), the financial institutions listed
therein as Lenders, and Union Bank of California, N.A., as Agent ("AGENT"),
this represents Company's request for the issuance of a Letter of Credit by
Agent as follows:
1. Date of issuance of Letter of Credit: ________________, ________
2. Type of Letter of Credit: [ ] a. Commercial Letter of Credit
[ ] b. Standby Letter of Credit
3. Face amount of Letter of Credit: $________________________
4. Expiration date of Letter of Credit: ________________, ________
5. Name and address of beneficiary:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
6. Attached hereto is Part A of Issuing Lender's standard
application for a letter of credit and the executed signature
page to such Part A (it being understood that Part B of such
application is not applicable)
The undersigned officer, to the best of his or her knowledge,
and Company certify that:
(i) The representations and warranties contained in the
Credit Agreement and the other Loan Documents are true, correct and
complete in all material respects on and as of the date hereof to the
same extent as though made on and as of the date hereof, except to the
extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties were
true, correct and complete in all material respects on and as of such
earlier date;
III-1
150
(ii) No event has occurred and is continuing or would
result from the issuance of the Letter of Credit contemplated hereby
that would constitute an Event of Default or a Potential Event of
Default; and
(iii) Company has performed in all material respects all
agreements and satisfied all conditions which the Credit Agreement
provides shall be performed or satisfied by it on or before the date
hereof.
DATED: ____________________ ▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
III-2
151
EXHIBIT IV
[FORM OF TENDER NOTE]
▇▇▇▇ INDUSTRIES, INC.
PROMISSORY NOTE DUE ____________, 199_
$[1] [2]
{Closing Date}
FOR VALUE RECEIVED, ▇▇▇▇ INDUSTRIES, INC., a California
corporation ("COMPANY"), promises to pay to the order of [3] ("PAYEE") or its
registered assigns on the earlier of (i) _______________, 199__ and (ii) the
Merger Date, the lesser of (x) [4] ($[1]) and (y) the unpaid principal amount
of all advances made by Payee to Company as Tender Loans under the Credit
Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of January 7, 1997 by and among Company, the
financial institutions listed therein as Lenders, and Union Bank of California,
N.A., as Agent (said Credit Agreement, as it may be amended, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
This Note is one of Company's "Tender Notes" in the aggregate
principal amount of $[5] and is issued pursuant to and entitled to the benefits
of the Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Term Loan evidenced
hereby was made and is to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment
__________________________________
[1] Insert amount of Lender's Tender Loan in numbers.
[2] Insert place of delivery of Note.
[3] Insert Lender's name in capital letters.
[4] Insert amount of Lender's Tender Loan in words.
[5] Insert aggregate amount of all Tender Loans in numbers.
IV-1
152
Agreement effecting the assignment or transfer of this Note shall have been
accepted by Agent as provided in subsection 10.1B(ii) of the Credit Agreement,
Company and Agent shall be entitled to deem and treat Payee as the owner and
holder of this Note and the Loan evidenced hereby. Payee hereby agrees, by its
acceptance hereof, that before disposing of this Note or any part hereof it
will make a notation hereon of all principal payments previously made hereunder
and of the date to which interest hereon has been paid; provided, however, that
the failure to make a notation of any payment made on this Note shall not limit
or otherwise affect the obligations of Company hereunder with respect to
payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING
SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.17 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to
IV-2
153
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
IV-3
154
EXHIBIT V
[FORM OF TENDER PERIOD REVOLVING NOTE]
▇▇▇▇ INDUSTRIES, INC.
PROMISSORY NOTE DUE ____________, 199_
$[1] [2]
{Closing Date}
FOR VALUE RECEIVED, ▇▇▇▇ INDUSTRIES, INC., a California
corporation ("COMPANY"), promises to pay to the order of [3] ("PAYEE") or its
registered assigns on the earlier of (i) _________________, 199__ and (ii) the
Merger Date, the lesser of (x) [4] ($[1]) and (y) the unpaid principal amount
of all advances made by Payee to Company as Tender Period Revolving Loans under
the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of January 7, 1997 by and among Company, the
financial institutions listed therein as Lenders, and Union Bank of California,
N.A., as Agent (said Credit Agreement, as it may be amended, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
This Note is one of Company's "Tender Period Revolving Notes"
in the aggregate principal amount of $___________ and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Tender Period Revolving Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment Agreement effecting the assignment
or transfer of this Note shall have been accepted by
__________________________________
[1] Insert amount of Lender's Tender Period Revolving Loans in numbers.
[2] Insert place of delivery of Note.
[3] Insert Lender's name in capital letters.
[4] Insert amount of Lender's Tender Period Revolving Loans in words.
V-1
155
Agent as provided in subsection 10.1B(ii) of the Credit Agreement, Company and
Agent shall be entitled to deem and treat Payee as the owner and holder of this
Note and the Loans evidenced hereby. Payee hereby agrees, by its acceptance
hereof, that before disposing of this Note or any part hereof it will make a
notation hereon of all principal payments previously made hereunder and of the
date to which interest hereon has been paid; provided, however, that the
failure to make a notation of any payment made on this Note shall not limit or
otherwise affect the obligations of Company hereunder with respect to payments
of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING
SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.17 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to
V-2
156
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
V-3
157
TRANSACTIONS
ON
TENDER PERIOD REVOLVING NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- ----------- ------------- --------------- --------------- -------
V-4
158
EXHIBIT VI
[FORM OF TERM NOTE]
▇▇▇▇ INDUSTRIES, INC.
PROMISSORY NOTE DUE ____________, 199_
$[1] [2]
{Closing Date}
FOR VALUE RECEIVED, ▇▇▇▇ INDUSTRIES, INC., a California
corporation ("COMPANY"), promises to pay to the order of [3] ("PAYEE") or its
registered assigns the principal amount of [4] ($[1]) in the installments
referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of January 7, 1997 by and among Company, the
financial institutions listed therein as Lenders, and Union Bank of California,
N.A., as Agent (said Credit Agreement, as it may be amended, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
Company shall make principal payments on this Note in
consecutive quarterly installments, commencing on March 31, 1997 and ending on
December 31, 2001. Each such installment shall be due on the date specified in
the Credit Agreement and in an amount determined in accordance with the
provisions thereof; provided that the last such installment shall be in an
amount sufficient to repay the entire unpaid principal balance of this Note,
together with all accrued and unpaid interest thereon.
This Note is one of Company's "Term Notes" in the aggregate
principal amount of $50,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Term Loan
evidenced hereby was made and is to be repaid.
__________________________________
[1] Insert amount of Lender's Term Loan in numbers.
[2] Insert place of delivery of Note.
[3] Insert Lender's name in capital letters.
[4] Insert amount of Lender's Term Loan in words.
VI-1
159
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment Agreement effecting the assignment
or transfer of this Note shall have been accepted by Agent as provided in
subsection 10.1B(ii) of the Credit Agreement, Company and Agent shall be
entitled to deem and treat Payee as the owner and holder of this Note and the
Loan evidenced hereby. Payee hereby agrees, by its acceptance hereof, that
before disposing of this Note or any part hereof it will make a notation hereon
of all principal payments previously made hereunder and of the date to which
interest hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise affect
the obligations of Company hereunder with respect to payments of principal of
or interest on this Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING
SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.17 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
VI-2
160
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as
a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title: _______________________
VI-3
161
EXHIBIT VII
[FORM OF REVOLVING NOTE]
▇▇▇▇ INDUSTRIES, INC.
PROMISSORY NOTE DUE ____________, 199_
$[1] [2]
{Closing Date}
FOR VALUE RECEIVED, ▇▇▇▇ INDUSTRIES, INC., a California
corporation ("COMPANY"), promises to pay to the order of [3] ("PAYEE") or its
registered assigns, on or before the Revolving Loan Commitment Termination Date
(as defined in the Credit Agreement referred to below), the lesser of (x) [4]
($[1]) and (y) the unpaid principal amount of all advances made by Payee to
Company as Revolving Loans under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, at the rates and at the
times which shall be determined in accordance with the provisions of that
certain Credit Agreement dated as of January 7, 1997 by and among Company, the
financial institutions listed therein as Lenders, and Union Bank of California,
N.A., as Agent (said Credit Agreement, as it may be amended, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
This Note is one of Company's "Revolving Notes" in the
aggregate principal amount of $200,000,000 and is issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Revolving Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Funding and Payment Office or at such other place as shall be designated
in writing for such purpose in accordance with the terms of the Credit
Agreement. Unless and until an Assignment
__________________________________
[1] Insert amount of Lender's Revolving Loan Commitment in numbers.
[2] Insert place of delivery of Note.
[3] Insert Lender's name in capital letters.
[4] Insert amount of Lender's Revolving Loan Commitment in words.
VII-1
162
Agreement effecting the assignment or transfer of this Note shall have been
accepted by Agent as provided in subsection 10.1B(ii) of the Credit Agreement,
Company and Agent shall be entitled to deem and treat Payee as the owner and
holder of this Note and the Loans evidenced hereby. Payee hereby agrees, by
its acceptance hereof, that before disposing of this Note or any part hereof it
will make a notation hereon of all principal payments previously made hereunder
and of the date to which interest hereon has been paid; provided, however, that
the failure to make a notation of any payment made on this Note shall not limit
or otherwise affect the obligations of Company hereunder with respect to
payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of
Company as provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING
SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance
of the principal amount of this Note, together with all accrued and unpaid
interest thereon, may become, or may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment
as provided in subsections 10.1 and 10.17 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligations of
Company, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and any endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to
VII-2
163
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
▇▇▇▇ INDUSTRIES, INC.
By: _________________________
Title: ______________________
VII-3
164
TRANSACTIONS
ON
REVOLVING NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- ----------- ------------- --------------- --------------- -------
VII-4
165
EXHIBIT VIII
[FORM OF FINANCIAL STATEMENT AND COMPLIANCE CERTIFICATE]
FINANCIAL STATEMENT AND COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) I am the duly elected Vice President and Chief
Financial Officer of ▇▇▇▇ Industries, Inc., a California corporation
("COMPANY").
(2) The attached financial statements for the fiscal
[quarter] [year] ended __________, have been prepared in accordance
with GAAP and fairly present, in all material respects, the financial
condition of Company and its Subsidiaries as of the dates indicated
and the results of their operations and their cash flows for the
periods indicated. In the case of quarterly financial statements, in
the opinion of management, all adjustments consisting of normal
recurring adjustments considered necessary for a fair presentation
have been included. The operating results for interim periods
presented are not necessarily indicative of results for the full
fiscal year.
(3) I have reviewed the terms of the Credit Agreement
dated as of January 7, 1997 as amended to the date hereof (said Credit
Agreement, as so amended, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined in this Certificate
(including Attachment No. 1 annexed hereto and made a part hereof)
being used in this Certificate as therein defined), by and among
Company, the financial institutions listed therein as Lenders, and
Union Bank of California, N.A., as Agent, and the terms of the other
Loan Documents, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements.
(4) The review described in paragraph (3) above did not
disclose, and I have no knowledge of, the existence of any condition
or event which constitutes an Event of Default or Potential Event of
Default during or at the end of the accounting period covered by the
attached financial statements or as of the date of this Certificate,
except for any such condition or event which no longer constitutes an
Event of Default or Potential Event of Default as of the date of this
Certificate and which was previously reported to the Lenders in
accordance with subsection 6.1(xi) of the Credit Agreement[, except as
set forth below].
[Set forth [below] [in a separate attachment to this
Certificate] are all exceptions to paragraph (4) above listing, in detail, the
nature of the condition or event, the
VIII-1
166
period during which it has existed and the action which Company has taken, is
taking, or proposes to take with respect to each such condition or event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________]
The foregoing certifications, together with the computations
set forth in Attachment No. 1 annexed hereto and made a part hereof and the
financial statements delivered with this Certificate in support hereof, are
made and delivered this __________ day of _____________, ____ pursuant to
subsections 6.1(i) (quarterly financial statements), 6.1(ii) (year-end
financial statements) and 6.1(iii) of the Credit Agreement.
▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Vice President and
Chief Financial Officer
VIII-2
167
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a
Compliance Certificate dated as of ____________, 199_ and pertains to the
period from ____________, 199_ to ____________, 199_. Subsection references
herein relate to subsections of the Credit Agreement.
SECTION 7.1 INDEBTEDNESS
1. Indebtedness permitted under subsection 7.1(viii): $___________
2. Maximum permitted under subsection 7.1(viii): $ 5,000,000
3. Indebtedness permitted under subsection 7.1(x): $___________
4. Maximum permitted under subsection 7.1(x): $ 25,000,000
5. Indebtedness permitted under subsection 7.1(xii): $___________
6. Maximum permitted under subsection 7.1(xii): $ 5,000,000
SECTION 7.3 INVESTMENTS
1. Investments permitted under subsection 7.3(vii): $___________
2. Maximum permitted under subsection 7.3(vii): $ 2,500,000
SECTION 7.4 CONTINGENT OBLIGATIONS
1. Contingent Obligations permitted under
subsection 7.4(v): $___________
2. Maximum permitted under subsection 7.4(v): $ 2,500,000
SECTION 7.6A MINIMUM INTEREST COVERAGE RATIO (for the four-Fiscal
Quarter period ending _____________, 199_)
1. Consolidated Net Income: $___________
2. Consolidated Interest Expense: $___________
▇▇▇▇-▇
▇▇▇
▇. Provisions for taxes based on income: $___________
4. Total depreciation expense: $___________
5. Total amortization expense: $___________
6. Other extraordinary or non-recurring non-cash
items reducing Consolidated Net Income: $___________
7. Cash expenditures reducing net income not
exceeding an aggregate amount of $5,000,000
which are incurred during the Fiscal Years
ending 12/31/96, 12/31/97 and 12/31/98 in
connection with employee-related matters,
compliance with ERISA requirements or the
acquisition of Milgray by Company $___________
8. Other extraordinary or non-recurring non-cash
items increasing Consolidated Net Income: $___________
9. Consolidated Adjusted EBITDA
(1+2+3+4+5+6+7-8): $___________
10. Consolidated Interest Expense (calculated as
set forth in the proviso in subsection 7.6A): $___________
11. Interest Coverage Ratio (9):(10): ____:1.00
12. Minimum ratio required under subsection 7.6A: 3.25:1.00
SECTION 7.6B MINIMUM FIXED CHARGE COVERAGE RATIO (for the four-Fiscal
Quarter period ending _____________, 199_)
1. Consolidated Adjusted EBITDA (E.9 above): $___________
2. Consolidated Capital Expenditures other than
Consolidated Capital Expenditures consisting
of Capital Leases (calculated on a pro-forma
basis to give effect to the acquisition of
Milgray by Company): $___________
3. Consolidated Interest Expense (calculated as
set forth in the definition of Consolidated
Fixed Charges): $___________
▇▇▇▇-▇
▇▇▇
▇. Consolidated Scheduled Principal Payments
(calculated as set forth in the definition of
Consolidated Fixed Charges): $___________
5. Provisions for taxes based on income
(calculated as set forth in the definition of
Consolidated Fixed Charges): $___________
6. Dividends or distributions made to
shareholders of Company in respect of shares
of capital stock of Company (calculated as
set forth in the definition of Consolidated
Fixed Charges): $___________
7. Consolidated Fixed Charges (3+4+5+6): $___________
8. Fixed Charge Coverage Ratio (1-2):(7): ____:1.00
9. Minimum ratio required under subsection 7.6B: ____:1.00
SECTION 7.6C MAXIMUM CONSOLIDATED LEVERAGE RATIO (as of _____________,
199_)
1. Consolidated Total Debt: $___________
2. Consolidated Adjusted EBITDA (E.9 above): $___________
3. Leverage Ratio (1):(2): ____:1.00
4. Maximum ratio permitted under subsection 7.6C: ____:1.00
SECTION 7.7(V) ACQUISITIONS
1. Aggregate amount of cash and non-cash
consideration (including any Indebtedness $___________
assumed by Company or its Subsidiaries but
excluding any equity Securities issued by
Company in connection with such transaction)
paid by Company and its Subsidiaries during
the period beginning on the Closing Date and
ending on the date 365 calendar days subsequent
to the Closing Date:
2. Maximum permitted under subsection 7.7(v): $ 20,000,000
VIII-5
170
3. Aggregate amount of cash and non-cash
consideration (including any Indebtedness $___________
assumed by Company or its Subsidiaries but
excluding any equity Securities issued by
Company in connection with such transaction)
paid by Company and its Subsidiaries after the
Closing Date in one or more transactions for
acquisitions permitted under subsection 7.7(v):
4. Maximum permitted under subsection 7.7(v): $ 50,000,000
5. Aggregate amount of cash and non-cash
consideration (including any Indebtedness $___________
assumed by Company or its Subsidiaries but
excluding any equity Securities issued by
Company in connection with such transaction)
paid by Company and its Subsidiaries after the
Closing Date for any single acquisition
transaction or related series of such
transactions:
6. Maximum permitted under subsection 7.7(v): $ 25,000,000
SECTION 7.8 CONSOLIDATED CAPITAL EXPENDITURES
1. Consolidated Capital Expenditures for Fiscal
Year-to-date: $___________
2. Maximum amount of Consolidated Capital
Expenditures permitted under subsection 7.8
for Fiscal Year: $___________
SECTION 7.9 LEASES
1. Consolidated Rental Payments in effect during
current Fiscal Year or any future period of
12 consecutive calendar months: $___________
2. Maximum permitted under subsection 7.9: $___________
VIII-6
171
EXHIBIT IX
[FORM OF BORROWING BASE CERTIFICATE]
BORROWING BASE CERTIFICATE
Pursuant to that certain Credit Agreement dated as of January
7, 1997, 1996, as amended, supplemented or otherwise modified to the date
hereof (said Credit Agreement, as so amended, supplemented or otherwise
modified, being the "CREDIT AGREEMENT", the terms defined therein and not
otherwise defined in this Certificate (including Attachment No. 1 annexed
hereto) being used in this Certificate as therein defined), by and among ▇▇▇▇
Industries, Inc., a California corporation ("COMPANY"), the financial
institutions listed therein as Lenders, and Union Bank of California, N.A., as
Agent, Company hereby submits this Borrowing Base Certificate, together with
the computations in the Attachment annexed hereto, which sets forth the
Company's current calculations of the Borrowing Base.
The undersigned officer and Company certify that (i) the
computations set forth in Attachment No. 1 annexed hereto have been computed in
good faith by Company in accordance with the terms of the Credit Agreement and,
to the best of Company's knowledge, are true, accurate and complete as of the
date hereof; (ii) no item included in the calculation of the Borrowing Base
presently fails to qualify for such inclusion pursuant to the terms and
conditions of the Credit Agreement and (iii) all Inventory included in the
calculation of Eligible Inventory set forth in Attachment No. 1 annexed hereto
which is Inventory in the possession of any Person other than Company or one of
its wholly-owned Subsidiaries is (x) segregated from the Inventory of such
Person and subject to the control of Company or its Subsidiaries, in the case
of Inventory described in clause (iii)(x) of the definition of Eligible
Inventory set forth in the Credit Agreement, or (y) segregated from all other
goods held by such Person in the case of Inventory described in clause (iii)(y)
of the definition of Eligible Inventory set forth in the Credit Agreement.
DATED: ▇▇▇▇ INDUSTRIES, INC.
By:___________________________________
Title:________________________________
▇▇-▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇ NO. 1
TO BORROWING BASE CERTIFICATE
The computations set forth in this Attachment No. 1 relate to
the Eligible Accounts and Eligible Inventory of ▇▇▇▇ Industries, Inc., as of
_______________, 199_.
A. ELIGIBLE ACCOUNTS
1.a Total Accounts $___________
1.b Less:
(i) Unauthentic Accounts $___________
(ii) Conditional Accounts $___________
(iii) Chattel Accounts $___________
(iv) Past Due Accounts $___________
(v) Non-Invoiced Accounts $___________
(vi) Affiliate Accounts $___________
(vii) Concentrated Accounts $___________
(viii) Late-Payor Accounts $___________
(ix) Bankrupt Accounts $___________
(x) Impaired Accounts $___________
(xi) Unperfected Accounts $___________
(xii) Rebilling Accounts $___________
1.c Total Exclusions $___________
1.d Eligible Accounts $___________
1.e 85% of Eligible Accounts $___________
B. ELIGIBLE INVENTORY
1.a Total Inventory $___________
1.b Less:
(i) Obsolete and Unmerchantable $___________
(ii) Inventory Not Held for Sale $___________
(iii) Inventory Not in Possession $___________
(iv) Unperfected Inventory $___________
(v) Labelled or Custom Inventory $___________
(vi) Foreign Inventory $___________
(vii) Unacceptable Inventory $___________
(viii) Supplies/Packaging/Shipping $___________
IX-2
173
1.c Total Exclusions $___________
1.d Eligible Inventory (1.a - 1.c) $___________
1.e 50% of Eligible Inventory $___________
C. 75% of the aggregate principal amount of all
obligations of Company and its
Subsidiaries under Flooring
Agreements $___________
D. TOTAL AMOUNT OF ELIGIBLE ACCOUNTS
AND ELIGIBLE INVENTORY INCLUDABLE IN
THE BORROWING BASE (A.1.E + B.L.E - C) $___________
IX-3
174
EXHIBIT X
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "AGREEMENT") is entered into by
and between the parties designated as Assignor ("ASSIGNOR") and Assignee
("ASSIGNEE") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "SCHEDULE OF
TERMS") and relates to that certain Credit Agreement described in the Schedule
of Terms (said Credit Agreement, as amended, supplemented or otherwise modified
to the date hereof and as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
IN CONSIDERATION of the agreements, provisions and covenants
herein contained, the parties hereto hereby agree as follows:
SECTION 1. ASSIGNMENT AND ASSUMPTION.
(a) Effective upon the Settlement Date specified in Item 4
of the Schedule of Terms (the "SETTLEMENT DATE"), Assignor hereby sells and
assigns to Assignee, without recourse, representation or warranty (except as
expressly set forth herein), and Assignee hereby purchases and assumes from
Assignor, that percentage interest in all of Assignor's rights and obligations
as a Lender arising under the Credit Agreement and the other Loan Documents
with respect to Assignor's Commitments and outstanding Loans, if any, which
represents, as of the Settlement Date, the percentage interest specified in
Item 3 of the Schedule of Terms of all rights and obligations of Lenders
arising under the Credit Agreement and the other Loan Documents with respect to
the Commitments and any outstanding Loans (the "ASSIGNED SHARE"). Without
limiting the generality of the foregoing, the parties hereto hereby expressly
acknowledge and agree that any assignment of all or any portion of Assignor's
rights and obligations relating to Assignor's Commitments shall include (i) in
the event Assignor is an Issuing Lender with respect to any outstanding Letters
of Credit (any such Letters of Credit being "ASSIGNOR LETTERS OF CREDIT"), the
sale to Assignee of a participation in the Assignor Letters of Credit and any
drawings thereunder as contemplated by subsection 3.1C of the Credit Agreement
and (ii) the sale to Assignee of a ratable portion of any participations
previously purchased by Assignor pursuant to said subsection 3.1C with respect
to any Letters of Credit other than the Assignor Letters of Credit.
(b) In consideration of the assignment described above,
Assignee hereby agrees to pay to Assignor, on the Settlement Date, the
principal amount of any outstanding Loans included within the Assigned Share,
such payment to be made by wire
X-1
175
transfer of immediately available funds in accordance with the applicable
payment instructions set forth in Item 5 of the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of
the Schedule of Terms correctly sets forth the amount of the Commitments, the
outstanding Loans and the Pro Rata Share of such Commitments and Loans
corresponding to the Assigned Share.
(d) Assignor and Assignee hereby agree that, upon giving
effect to the assignment and assumption described above, (i) Assignee shall be
a party to the Credit Agreement and shall have all of the rights and
obligations under the Loan Documents, and shall be deemed to have made all of
the covenants and agreements contained in the Loan Documents, arising out of or
otherwise related to the Assigned Share, and (ii) Assignor shall be absolutely
released from any of such obligations, covenants and agreements assumed or made
by Assignee in respect of the Assigned Share. Assignee hereby acknowledges and
agrees that the agreement set forth in this Section 1(d) is expressly made for
the benefit of Company, Agent, Assignor and the other Lenders and their
respective successors and permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm
their understanding and intent that (i) this Agreement shall effect the
assignment by Assignor and the assumption by Assignee of Assignor's rights and
obligations with respect to the Assigned Share, (ii) any other assignments by
Assignor of a portion of its rights and obligations with respect to the
Commitments and any outstanding Loans shall have no effect on the Commitments
and the Pro Rata Share corresponding to the Assigned Share as set forth in the
Schedule of Terms or on the interest of Assignee in any outstanding Loans
corresponding thereto, and (iii) from and after the Settlement Date, Agent
shall make all payments under the Credit Agreement in respect of the Assigned
Share (including all payments of principal and accrued but unpaid interest,
commitment fees and letter of credit fees with respect thereto) (A) in the case
of any such interest and fees that shall have accrued prior to the Settlement
Date, to Assignor, and (B) in all other cases, to Assignee; provided that
Assignor and Assignee shall make payments directly to each other to the extent
necessary to effect any appropriate adjustments in any amounts distributed to
Assignor and/or Assignee by Agent under the Loan Documents in respect of the
Assigned Share in the event that, for any reason whatsoever, the payment of
consideration contemplated by Section 1(b) occurs on a date other than the
Settlement Date.
SECTION 2. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Assignor represents and warrants that it is the legal
and beneficial owner of the Assigned Share, free and clear of any adverse
claim.
(b) Assignor shall not be responsible to Assignee for the
execution, effectiveness, genuineness, validity, enforceability, collectibility
or sufficiency of any of the Loan Documents or for any representations,
warranties, recitals or statements made
X-2
176
therein or made in any written or oral statements or in any financial or other
statements, instruments, reports or certificates or any other documents
furnished or made by Assignor to Assignee or by or on behalf of Company or any
of its Subsidiaries to Assignor or Assignee in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall Assignor be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or
as to the use of the proceeds of the Loans or the use of the Letters of Credit
or as to the existence or possible existence of any Event of Default or
Potential Event of Default.
(c) Assignee represents and warrants that it is an
Eligible Assignee; that it has experience and expertise in the making of loans
such as the Loans; that it has acquired the Assigned Share for its own account
in the ordinary course of its business and without a view to distribution of
the Loans within the meaning of the Securities Act or the Exchange Act or other
federal securities laws (it being understood that, subject to the provisions of
subsection 10.1 of the Credit Agreement, the disposition of the Assigned Share
or any interests therein shall at all times remain within its exclusive
control); and that it has received, reviewed and approved a copy of the Credit
Agreement (including all Exhibits and Schedules thereto).
(d) Assignee represents and warrants that it has received
from Assignor such financial information regarding Company and its Subsidiaries
as is available to Assignor and as Assignee has requested, that it has made its
own independent investigation of the financial condition and affairs of Company
and its Subsidiaries in connection with the assignment evidenced by this
Agreement, and that it has made and shall continue to make its own appraisal of
the creditworthiness of Company and its Subsidiaries. Assignor shall have no
duty or responsibility, either initially or on a continuing basis, to make any
such investigation or any such appraisal on behalf of Assignee or to provide
Assignee with any other credit or other information with respect thereto,
whether coming into its possession before the making of the initial Loans or at
any time or times thereafter, and Assignor shall not have any responsibility
with respect to the accuracy of or the completeness of any information provided
to Assignee.
(e) Each party to this Agreement represents and warrants
to the other party hereto that it has full power and authority to enter into
this Agreement and to perform its obligations hereunder in accordance with the
provisions hereof, that this Agreement has been duly authorized, executed and
delivered by such party and that this Agreement constitutes a legal, valid and
binding obligation of such party, enforceable against such party in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity.
X-3
177
SECTION 3. MISCELLANEOUS.
(a) Each of Assignor and Assignee hereby agrees from time
to time, upon request of the other such party hereto, to take such additional
actions and to execute and deliver such additional documents and instruments as
such other party may reasonably request to effect the transactions contemplated
by, and to carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated, except by an instrument in writing
signed by the party (including, if applicable, any party required to evidence
its consent to or acceptance of this Agreement) against whom enforcement of
such change, waiver, discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile
or telex, or three Business Days after depositing it in the United States mail
with postage prepaid and properly addressed. For the purposes hereof, the
notice address of each of Assignor and Assignee shall be as set forth on the
Schedule of Terms or, as to either such party, such other address as shall be
designated by such party in a written notice delivered to the other such party.
In addition, the notice address of Assignee set forth on the Schedule of Terms
shall serve as the initial notice address of Assignee for purposes of
subsection 10.8 of the Credit Agreement.
(d) In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING
SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective successors and
assigns.
(g) This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple
X-4
178
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
(h) This Agreement shall become effective upon the date
(the "EFFECTIVE DATE") upon which all of the following conditions are
satisfied: (i) the execution of a counterpart hereof by each of Assignor and
Assignee, (ii) the execution of a counterpart hereof by Company and Agent as
evidence of their consent hereto to the extent required under subsection
10.1B(i) of the Credit Agreement, (iii) the receipt by Agent of the processing
and recordation fee referred to in subsection 10.1B(i) of the Credit Agreement,
(iv) in the event Assignee is a Non-US Lender (as defined in subsection
2.7B(iii)(a) of the Credit Agreement), the delivery by Assignee to Agent of
such forms, certificates or other evidence with respect to United States
federal income tax withholding matters as Assignee may be required to deliver
to Agent pursuant to said subsection 2.7B(iii)(a), (v) the execution of a
counterpart hereof by Agent as evidence of its acceptance hereof in accordance
with subsection 10.1B(ii) of the Credit Agreement, and (vi) the receipt by
Agent of originals or telefacsimiles of the counterparts described above and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
X-5
179
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, such execution being made as of the Effective Date
in the applicable spaces provided on the Schedule of Terms.
X-6
180
SCHEDULE OF TERMS
1. Borrower: ▇▇▇▇ Industries, Inc.
2. Name and Date of Credit Agreement: Credit Agreement dated as of
January 7, 1997 by and among ▇▇▇▇ Industries, Inc., the financial
institutions listed therein as Lenders, and Union Bank of California,
N.A., as Agent.
3. Amounts:
(a) Aggregate Commitments of all Lenders: $________
(b) Aggregate outstanding Loans: $________
(c) Assigned Share/Pro Rata Share: _____%
(d) Amount of Assigned Share of Commitments: $________
(e) Amount of Assigned Share of Loans: $________
4. Settlement Date: ____________, 199_
5. Payment Instructions:
ASSIGNOR: ASSIGNEE:
---------------------------- ----------------------------
---------------------------- ----------------------------
Attention: ----------------- Attention: -----------------
Reference: ----------------- Reference: -----------------
6. Notice Addresses:
ASSIGNOR: ASSIGNEE:
---------------------------- ----------------------------
---------------------------- ----------------------------
---------------------------- ----------------------------
7. Signatures:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
[Consented to in accordance with subsection [Consented to and] accepted in
10.1B(i) of the Credit Agreement] accordance with subsection[s] [
10.1B(i) and] 10.1B(ii)
of the Credit Agreement
▇▇▇▇ INDUSTRIES, INC. UNION BANK OF CALIFORNIA, N.A.,
as Agent
By: By:
------------------- -------------------
Title: ] Title:
----------------- ----------------
X-7
181
EXHIBIT XI
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Credit Agreement dated as of
January 7, 1997 (said Credit Agreement, as amended, supplemented or otherwise
modified to the date hereof, being the "CREDIT AGREEMENT") by and among ▇▇▇▇
Industries, Inc., a California corporation, the financial institutions listed
therein as Lenders, and Union Bank of California, N.A., as Agent. Pursuant to
subsection 2.7B(iii) of the Credit Agreement, the undersigned hereby certifies
that it is not a "bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By: ____________________
Title: _________________
XI-1
182
EXHIBIT XII
[FORM OF COMPANY SECURITY AGREEMENT]
COMPANY SECURITY AGREEMENT
This COMPANY SECURITY AGREEMENT (this "AGREEMENT") is dated as of
January __, 1997 and entered into by and between ▇▇▇▇ INDUSTRIES, INC., a
California corporation ("GRANTOR"), and UNION BANK OF CALIFORNIA, N.A., as agent
for and representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement referred to
below and any Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit Agreement
dated as of January 7, 1997 (said Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Grantor pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Grantor.
B. Grantor may from time to time enter into one or more Interest Rate
Agreements (collectively, the "LENDER INTEREST RATE AGREEMENTS") with one or
more Lenders (in such capacity, collectively, "INTEREST RATE EXCHANGERS") in
accordance with the terms of the Credit Agreement, and it is desired that the
obligations of Grantor under the Lender Interest Rate Agreements, including the
obligation of Grantor to make payments thereunder in the event of early
termination thereof, together with all obligations of Grantor under the Credit
Agreement and the other Loan Documents, be secured hereunder.
C. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and to induce Interest Rate Exchangers to enter into the Lender
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Grantor hereby agrees
with Secured Party as follows:
XII-1
183
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns to Secured Party,
and hereby grants to Secured Party a security interest in, all of Grantor's
right, title and interest in and to the following, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located (the "COLLATERAL"):
(a) all inventory in all of its forms (including (i) all goods held by
Grantor for sale or lease or to be furnished under contracts of service or so
leased or furnished, (ii) all raw materials, work in process, finished goods,
and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in Grantor's business, (iii) all goods in which
Grantor has an interest in mass or a joint or other interest or right of any
kind, and (iv) all goods which are returned to or repossessed by Grantor) and
all accessions thereto and products thereof (all such inventory, accessions and
products being the "INVENTORY") and all negotiable documents of title (including
warehouse receipts, dock receipts and bills of lading) issued by any Person
covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");
(b) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any kind
and all rights in, to and under all security agreements, leases and other
contracts securing or otherwise relating to any such accounts, contract rights,
chattel paper, documents, instruments, general intangibles or other obligations
(any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "ACCOUNTS", and
any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");
(c) all trademarks, tradenames, tradesecrets, business names, patents,
patent applications, licenses, copyrights, registrations and franchise rights,
and all goodwill associated with any of the foregoing; and
(d) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and liabilities of
every nature of Grantor now or hereafter existing under or
XII-2
184
arising out of or in connection with the Credit Agreement and the other Loan
Documents and the Lender Interest Rate Agreements and all extensions or renewals
thereof, whether for principal, interest (including interest that, but for the
filing of a petition in bankruptcy with respect to Grantor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, payments
for early termination of Lender Interest Rate Agreements, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender or
Interest Rate Exchanger as a preference, fraudulent transfer or otherwise and
all obligations of every nature of Grantor now or hereafter existing under this
Agreement (all such obligations of Grantor being the "SECURED OBLIGATIONS").
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Secured Party of any
of its rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Secured Party shall not have any obligation or liability under any contracts
and agreements included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or duties of
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants as follows:
(a) Ownership of Collateral. Except for the security interest created
by this Agreement and the Liens permitted under Section 7.2A of the Credit
Agreement, Grantor owns the Collateral free and clear of any Lien.
(b) Location of Inventory. All of the Inventory is, as of the date
hereof, located at the places specified in Schedule I annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory (other than in respect of
(i) Inventory with an aggregate value not in excess of $1,000,000 or (ii)
Inventory which, in the ordinary course of business, is in transit either (A)
from a supplier to Grantor, (B) between the locations specified in Schedule I
hereto, or (C) to customers of Grantor).
▇▇▇-▇
▇▇▇
(▇) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Accounts and all originals of all chattel paper that evidence Accounts is,
and has been for the four month period preceding the date hereof, located at
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Grantor
has not in the past done, and does not now do, business under any name other
than ▇▇▇▇ Industries, Inc. (including any trade-name or fictitious business
name).
(e) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Secured Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
SECTION 5. FURTHER ASSURANCES.
(a) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Grantor will: (i) ▇▇▇▇
conspicuously each item of chattel paper included in the Accounts, each Related
Contract and, at the request of Secured Party, each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to Secured
Party, indicating that such Collateral is subject to the security interest
granted hereby, (ii) at the request of Secured Party, deliver and pledge to
Secured Party hereunder all promissory notes and other instruments (including
checks) and all original counterparts of chattel paper constituting Collateral,
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Secured Party, (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby, (iv) at any
reasonable time, upon request by Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, and (v) at Secured Party's request, appear in and defend any
action or proceeding that may affect Grantor's title to or Secured Party's
security interest in all or any part of the Collateral.
(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
XII-4
186
(c) Grantor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Secured Party may reasonably
request, all in reasonable detail.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name, identity or
corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any change in
Grantor's chief place of business, chief executive office or residence or the
office where Grantor keeps its records regarding the Accounts and all originals
of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to acquire rights
in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith; provided that
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgement, writ or warrant of attachment entered or filed against Grantor or any
of the Collateral as a result of the failure to make such payment.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY. Grantor shall:
(a) keep the Inventory at the locations therefor specified on Schedule
I annexed hereto or, with written notice to Secured Party as soon as practicable
and, in any event, within 30 days after the placing of Inventory in a location
not listed on Schedule I, at such other locations in jurisdictions where all
action that may be necessary or desirable, or that Secured Party may request, in
order to perfect and protect any security interest granted or purported to be
granted hereby, or to enable Secured Party to exercise and enforce its rights
and remedies hereunder, with respect to such Inventory shall have been taken
within ten days of the giving of the notice referred to above;
(b) keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, Grantor's cost therefor and
(where applicable) the current list prices for the Inventory;
XII-5
187
(c) if any Inventory is in possession or control of any of Grantor's
agents or processors, if the aggregate book value of all such Inventory exceeds
$1,000,000, and in any event upon the occurrence of an Event of Default (as
defined in the Credit Agreement) or the occurrence of an Early Termination Date
(as defined in a Master Agreement or an Interest Rate Swap Agreement or Interest
Rate and Currency Exchange Agreement in the form prepared by the International
Swap and Derivatives Association Inc. or a similar event under any similar swap
agreement) under any Lender Interest Rate Agreement (either such occurrence
being an "EVENT OF DEFAULT" for purposes of this Agreement), instruct such agent
or processor to hold all such Inventory for the account of Secured Party and
subject to the instructions of Secured Party; and
(d) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable Documents of
Title covering (i) Inventory with an aggregate value not in excess of $1,000,000
or (ii) Inventory which, in the ordinary course of business, is in transit
either (A) from a supplier to Grantor, (B) between the locations specified in
Schedule I hereto, or (C) to customers of Grantor), deliver such Negotiable
Document of Title to Secured Party.
SECTION 8. INSURANCE. Grantor shall, at its own expense, maintain
insurance with respect to the Inventory in accordance with the terms of the
Credit Agreement.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.
(a) Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Accounts and
Related Contracts, and all originals of all chattel paper that evidence
Accounts, at the location therefor specified in Section 4 or, upon 30 days'
prior written notice to Secured Party, at such other location in a jurisdiction
where all action that may be necessary or desirable, or that Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder, with respect to such Accounts and
Related Contracts shall have been taken. Grantor will hold and preserve such
records and chattel paper and will permit representatives of Secured Party at
any time during normal business hours to inspect and make abstracts from such
records and chattel paper, and Grantor agrees to render to Secured Party, at
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Promptly upon the request of Secured
Party, Grantor shall deliver to Secured Party complete and correct copies of
each Related Contract.
(b) Grantor shall, for not less than one year from the date on which
such Account arose, maintain (i) complete records of each Account, including
records of all payments received and credits granted, and (ii) all documentation
relating thereto.
XII-6
188
(c) Except as otherwise provided in this subsection (c), Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
Grantor under the Accounts and Related Contracts. In connection with such
collections, Grantor may take (and, at Secured Party's direction, shall take)
such action as Grantor or Secured Party may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
however, that Secured Party shall have the right at any time, upon the
occurrence and during the continuation of an Event of Default and upon written
notice to Grantor of its intention to do so, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to Secured Party
and to direct such account debtors or obligors to make payment of all amounts
due or to become due to Grantor thereunder directly to Secured Party, to notify
each Person maintaining a lockbox or similar arrangement to which account
debtors or obligors under any Accounts have been directed to make payment to
remit all amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other arrangement
directly to Secured Party and, upon such notification and at the expense of
Grantor, to enforce collection of any such Accounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as Grantor might have done. After receipt by Grantor of the notice from
Secured Party referred to in the proviso to the preceding sentence, (i) all
amounts and proceeds (including checks and other instruments) received by
Grantor in respect of the Accounts and the Related Contracts shall be received
in trust for the benefit of Secured Party hereunder, shall be segregated from
other funds of Grantor and shall be forthwith paid over or delivered to Secured
Party in the same form as so received (with any necessary endorsement) to be
held as cash Collateral and applied as provided by Section 18, and (ii) Grantor
shall not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
SECTION 10. LICENSE OF PATENTS, TRADEMARKS, COPYRIGHTS, ETC. Grantor
hereby assigns, transfers and conveys to Secured Party, effective upon the
occurrence of any Event of Default, the nonexclusive right and license to use
all trademarks, tradenames, copyrights, patents or technical processes owned or
used by Grantor that relate to the Collateral and any other collateral granted
by Grantor as security for the Secured Obligations, together with any goodwill
associated therewith, all to the extent necessary to enable Secured Party to
use, possess and realize on the Collateral and to enable any successor or assign
to enjoy the benefits of the Collateral. This right and license shall inure to
the benefit of all successors, assigns and transferees of Secured Party and its
successors, assigns and transferees, whether by voluntary conveyance, operation
of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license is granted free of charge, without requirement
that any monetary payment whatsoever be made to Grantor.
XII-7
189
SECTION 11. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
or
(b) except for the security interest created by this Agreement or as
expressly permitted with respect to Collateral under Section 7.2A of the Credit
Agreement, create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person.
SECTION 12. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Upon the
occurrence of an Event of Default, Grantor hereby irrevocably appoints Secured
Party as Grantor's attorney-in-fact, with full authority in the place and stead
of Grantor and in the name of Grantor, Secured Party or otherwise, from time to
time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Secured Party pursuant to Section 8;
(b) to ask for, demand, collect, ▇▇▇ for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of Secured Party with respect
to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of Grantor to Secured Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or
XII-8
190
otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantor's expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
Grantor might do.
SECTION 13. SECURED PARTY MAY PERFORM. If Grantor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement in order to protect Secured Party's interests in
the Collateral, and the expenses of Secured Party incurred in connection
therewith shall be payable by Grantor under subsection 10.2 of the Credit
Agreement.
SECTION 14. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 15. REMEDIES. If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Collateral), and also
may (a) require Grantor to, and Grantor hereby agrees that it will at its
expense and upon request of Secured Party forthwith, assemble all or part of the
Collateral as directed by Secured Party and make it available to Secured Party
at a place to be designated by Secured Party that is reasonably convenient to
both parties, (b) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process, (c) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Secured Party deems appropriate, (d) take possession of Grantor's
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of Grantor's equipment for the purpose of
completing any work in process, taking any actions described in the preceding
clause (c) and collecting any Secured Obligation, and (e) without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable. Secured Party or any Lender or Interest Rate
XII-9
191
Exchanger may be the purchaser of any or all of the Collateral at any such sale
and Secured Party, as agent for and representative of Lenders and Interest Rate
Exchangers (but not any Lender or Lenders or Interest Rate Exchanger or Interest
Rate Exchangers in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Secured Party at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right on the part of Grantor, and Grantor hereby waives (to the extent permitted
by applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Grantor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale,
even if Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
SECTION 16. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral shall be applied as provided in subsection 2.4D of the Credit
Agreement.
SECTION 17. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Grantor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise.
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest
XII-10
192
granted hereby shall terminate and all rights to the Collateral shall revert to
Grantor. Upon any such termination Secured Party will, at Grantor's expense,
execute and deliver to Grantor such documents as Grantor shall reasonably
request to evidence such termination.
SECTION 18. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement. Agent shall act upon instructions from the
Lenders as provided in the Credit Agreement, it being understood that Interest
Rate Exchangers are beneficiaries of this Agreement but shall not have the right
to direct the actions of Agent or vote with respect to actions to be taken by
Agent until such time as all Loans outstanding under the Credit Agreement have
been repaid.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 19. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Grantor therefrom, shall in any event be effective unless the same shall be
XII-11
193
in writing and signed by Secured Party and, in the case of any such amendment or
modification, by Grantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 20. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement.
SECTION 21. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 22. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 23. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF
CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of California are
used herein as therein defined.
SECTION 24. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XII-12
194
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
▇▇▇▇ INDUSTRIES, INC.
By: ____________________
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Agent, as Secured Party
By: ____________________
Title:
S-1
195
SCHEDULE I
TO SECURITY AGREEMENT
Locations of Inventory:
196
EXHIBIT XIII
[FORM OF COMPANY PLEDGE AGREEMENT]
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "AGREEMENT") is dated as of
January __, 1997 and entered into by and between ▇▇▇▇ INDUSTRIES, INC., a
California corporation ("PLEDGOR"), and UNION BANK OF CALIFORNIA, N.A., as agent
for and representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement referred to
below and any Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of the shares of stock
(the "PLEDGED SHARES") described in Schedule I annexed hereto and issued by the
corporations named therein.
B. Secured Party and Lenders have entered into a Credit Agreement
dated as of January 7, 1997 (said Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Pledgor pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Pledgor.
C. Pledgor may from time to time enter into one or more Interest Rate
Agreements (collectively, the "LENDER INTEREST RATE AGREEMENTS") with one or
more Lenders (in such capacity, collectively, "INTEREST RATE EXCHANGERS") in
accordance with the terms of the Credit Agreement, and it is desired that the
obligations of Pledgor under the Lender Interest Rate Agreements, including the
obligation of Pledgor to make payments thereunder in the event of early
termination thereof, together with all obligations of Pledgor under the Credit
Agreement and the other Loan Documents, be secured hereunder.
D. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
XIII-1
197
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and to induce Interest Rate Exchangers to enter into the Lender
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees
with Secured Party as follows:
SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges and assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares and any interest of Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights;
(c) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Pledgor (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such shares,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares, securities, warrants,
options or other rights; and
(d) to the extent not covered by clauses (a) through (c) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of this
Agreement, the term "PROCEEDS" includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
proceeds of any
XIII-2
198
indemnity or guaranty payable to Pledgor or Secured Party from time to time with
respect to any of the Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents and the Lender Interest Rate Agreements and all extensions or renewals
thereof, whether for principal, interest (including interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, payments
for early termination of Lender Interest Rate Agreements, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender or
Interest Rate Exchanger as a preference, fraudulent transfer or otherwise, and
all obligations of every nature of Pledgor now or hereafter existing under this
Agreement (all such obligations of Pledgor being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party. Upon the occurrence and during the continuance of an Event of
Default (as defined in the Credit Agreement) or the occurrence of an Early
Termination Date (as defined in a Master Agreement or an Interest Rate Swap
Agreement or Interest Rate and Currency Exchange Agreement in the form prepared
by the International Swap and Derivatives Association Inc. or a similar event
under any similar swap agreement) under any Lender Interest Rate Agreement
(either such occurrence being an "EVENT OF DEFAULT" for purposes of this
Agreement), Secured Party shall have the right, without notice to Pledgor, to
transfer to or to register in the name of Secured Party or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights
specified in Section 7(a). In addition, Secured Party shall have the right at
any time to exchange certificates or instruments representing or evidencing
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
XIII-3
199
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Shares have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute
all of the issued and outstanding shares of stock of each issuer thereof, and
there are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and
beneficial owner of the Pledged Collateral free and clear of any Lien except for
the security interest created by this Agreement.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
ETC. Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement, or (iii) permit any
issuer of Pledged Shares to merge or consolidate unless all the outstanding
capital stock of the surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; and
(b) (i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock or other securities of each issuer of Pledged Shares, and (iii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all shares of stock of any Person (other than Milgray) that, after the
date of this Agreement, becomes, as a result of any occurrence, a direct
Domestic Subsidiary of Pledgor; provided, that Pledgor will pledge all issued
and outstanding shares of stock of Milgray on the Merger Date (and not before).
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may
XIII-4
200
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral. Without limiting the generality of the foregoing, Pledgor will: (i)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Secured
Party's request, appear in and defend any action or proceeding that may affect
Pledgor's title to or Secured Party's security interest in all or any part of
the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Secured Party a Pledge Amendment, duly executed by Pledgor, in substantially
the form of Schedule II annexed hereto (a "PLEDGE AMENDMENT"), in respect of the
additional Pledged Shares to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Secured Party to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be considered
Pledged Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional Pledged Shares pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Credit Agreement; provided, however, that Pledgor shall not exercise or
refrain from exercising any such right if Secured Party shall have notified
Pledgor that, in Secured Party's judgment, such action would have a
material adverse effect on the value of the Pledged Collateral or any part
thereof; and provided, further, that, subject to the next following
sentence, Pledgor shall give Secured Party at least five Business Days'
prior written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right. It is understood,
however, that neither (A) the voting by Pledgor of any Pledged Shares for
or Pledgor's consent to the election of directors at a regularly scheduled
annual or other meeting of stockholders or with respect to incidental
matters at any such meeting nor (B) Pledgor's consent to or approval of any
action otherwise permitted under this Agreement and the Credit Agreement
shall be deemed
XIII-5
201
inconsistent with the terms of this Agreement or the Credit Agreement
within the meaning of this Section 7(a)(i), and no notice of any such
voting or consent need be given to Secured Party;
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged
Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Secured Party, be segregated from the other property or
funds of Pledgor and be forthwith delivered to Secured Party as Pledged
Collateral in the same form as so received (with all necessary
indorsements); and
(iii) Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment
orders and other instruments as Pledgor may from time to time reasonably
request for the purpose of enabling Pledgor to exercise the voting and
other consensual rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or interest
payments which it is authorized to receive and retain pursuant to paragraph
(ii) above.
(b) Upon the occurrence and during the continuation of an Event of
Default:
(i) upon written notice from Secured Party to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease,
and all such rights shall thereupon become vested in Secured Party who
shall thereupon have the sole right to exercise such voting and other
consensual rights;
▇▇▇▇-▇
▇▇▇
(▇▇) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends and interest
payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this
Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor and shall forthwith be paid
over to Secured Party as Pledged Collateral in the same form as so received
(with any necessary indorsements).
(c) In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request and (ii) without limiting
the effect of the immediately preceding clause (i), Pledgor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including giving or withholding written
consents of shareholders, calling special meetings of shareholders and voting at
such meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence of an
Event of Default and which proxy shall only terminate upon the payment in full
of the Secured Obligations.
SECTION 8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of Pledgor;
(b) to ask, demand, collect, ▇▇▇ for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
XIII-7
203
(c) to receive, endorse and collect any instruments made payable to
Pledgor representing any dividend, principal or interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same; and
(d) to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of any of
the Pledged Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Pledged Collateral.
SECTION 9. SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 14(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Pledged Collateral, it being understood that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Pledged Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
(a) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Pledged Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Pledged Collateral), and Secured Party
may also in its sole discretion, without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or
XIII-8
204
times and at such price or prices and upon such other terms as Secured Party may
deem commercially reasonable, irrespective of the impact of any such sales on
the market price of the Pledged Collateral. Secured Party or any Lender or
Interest Rate Exchanger may be the purchaser of any or all of the Pledged
Collateral at any such sale and Secured Party, as agent for and representative
of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or
Interest Rate Exchanger or Interest Rate Exchangers in its or their respective
individual capacities unless Requisite Lenders shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Pledged Collateral
sold at any such public sale, to use and apply any of the Secured Obligations as
a credit on account of the purchase price for any Pledged Collateral payable by
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor hereby waives (to the extent permitted by applicable law) all rights
of redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Pledged Collateral are insufficient to pay all the Secured
Obligations, Pledgor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable than those obtainable through
a public sale without such restrictions (including a public offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances and the registration rights granted to
Secured Party by Pledgor pursuant to Section 12, Pledgor agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that Secured Party shall have no obligation to engage in public sales
and no obligation to delay the sale of any Pledged Collateral for
XIII-9
205
the period of time necessary to permit the issuer thereof to register it for a
form of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it.
(c) If Secured Party determines to exercise its right to sell any or
all of the Pledged Collateral, upon written request, Pledgor shall and shall
cause each issuer of any Pledged Shares to be sold hereunder from time to time
to furnish to Secured Party all such information as Secured Party may request in
order to determine the number of shares and other instruments included in the
Pledged Collateral which may be sold by Secured Party in exempt transactions
under the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
SECTION 12. REGISTRATION RIGHTS. If Secured Party shall determine to
exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 11, Pledgor agrees that, upon request of Secured Party (which request
may be made by Secured Party in its sole discretion), Pledgor will, at its own
expense:
(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
Secured Party, advisable to register such Pledged Collateral under the
provisions of the Securities Act and to cause the registration statement
relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of
Secured Party, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Secured Party;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement which will satisfy the provisions
of Section 11(a) of the Securities Act;
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(e) bear all costs and expenses, including reasonable attorneys' fees,
of carrying out its obligations under this Section 12.
XIII-10
206
Pledgor further agrees that a breach of any of the covenants contained
in this Section 12 will cause irreparable injury to Secured Party, that Secured
Party has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 12 shall be
specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.
Nothing in this Section 12 shall in any way alter the rights of Secured Party
under Section 11.
SECTION 13. APPLICATION OF PROCEEDS. All proceeds received by Secured
Party in respect of any sale of, collection from, or other realization upon all
or any part of the Pledged Collateral shall be applied as provided in subsection
2.4D of the Credit Agreement.
SECTION 14. INDEMNITY AND EXPENSES. Without limiting the generality of
subsections 10.2 and 10.3 of the Credit Agreement, in the event of any public
sale described in Section 12, Pledgor agrees to indemnify and hold harmless
Secured Party, and each Lender and each Interest Rate Exchanger and each of
their respective directors, officers, employees and agents from and against any
loss, fee, cost, expense, damage, liability or claim, joint or several, to which
any such Persons may become subject or for which any of them may be liable,
under the Securities Act or otherwise, insofar as such losses, fees, costs,
expenses, damages, liabilities or claims (or any litigation commenced or
threatened in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or other such
document published or filed in connection with such public sale, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse Secured Party and such other Persons for any legal or other expenses
reasonably incurred by Secured Party and such other Persons in connection with
any litigation, of any nature whatsoever, commenced or threatened in respect
thereof (including any and all fees, costs and expenses whatsoever reasonably
incurred by Secured Party and such other Persons and counsel for Secured Party
and such other Persons in investigating, preparing for, defending against or
providing evidence, producing documents or taking any other action in respect
of, any such commenced or threatened litigation or any claims asserted). This
indemnity shall be in addition to any liability which Pledgor may otherwise have
and shall extend upon the same terms and conditions to each Person, if any, that
controls Secured Party or such Persons within the meaning of the Securities Act.
SECTION 15. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of
XIII-11
207
all outstanding Letters of Credit, (b) be binding upon Pledgor, its successors
and assigns, and (c) inure, together with the rights and remedies of Secured
Party hereunder, to the benefit of Secured Party and its successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Pledged Collateral
shall revert to Pledgor. Upon any such termination Secured Party will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Secured Party, of such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 16. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Pledged Collateral), solely in accordance with
this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or
XIII-12
208
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
SECTION 17. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 18. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
provided in subsection 10.8 of the Credit Agreement.
SECTION 19. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF
CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement, terms
used in Articles 8 and 9 of the Uniform Commercial Code in the State of
California are used herein as therein defined.
SECTION 22. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which
XIII-13
209
when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XIII-14
210
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
▇▇▇▇ INDUSTRIES, INC.
By: __________________________
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Agent, as Secured Party
By: __________________________
Title:
S-1
211
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated
as of January __, 1997 between ▇▇▇▇ Industries, Inc., as Pledgor, and Union Bank
of California, N.A., as Secured Party.
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- ---------
I-1
212
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 199__, is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated January __, 1997, between the undersigned and Union Bank
of California, N.A., as Secured Party (the "PLEDGE AGREEMENT," capitalized terms
defined therein being used herein as therein defined), and that the Pledged
Shares listed on this Pledge Amendment shall be deemed to be part of the Pledged
Shares and shall become part of the Pledged Collateral and shall secure all
Secured Obligations.
▇▇▇▇ INDUSTRIES, INC.
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- ---------
II-1
213
EXHIBIT XIV
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated as of
January __, 1997 and entered into by and between ▇▇▇▇ INDUSTRIES, INC., a
California corporation ("PLEDGOR"), and UNION BANK OF CALIFORNIA, N.A., as agent
for and representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement referred to
below and any Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit Agreement
dated as of January 7, 1997 (said Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Pledgor pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Pledgor.
B. Pledgor may from time to time enter into one or more Interest Rate
Agreements (collectively, the "LENDER INTEREST RATE AGREEMENTS") with one or
more Lenders (in such capacity, collectively, "INTEREST RATE EXCHANGERS") in
accordance with the terms of the Credit Agreement, and it is desired that the
obligations of Pledgor under the Lender Interest Rate Agreements, including
without limitation the obligation of Pledgor to make payments thereunder in the
event of early termination thereof, together with all obligations of Pledgor
under the Credit Agreement and the other Loan Documents, be secured hereunder.
C. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and to induce Interest Rate Exchanges to enter into the Lender
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees
with Secured Party as follows:
XIV-1
214
SECTION 1. CERTAIN DEFINITIONS. The following terms used in this
Agreement shall have the following meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all interest, cash,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Collateral, and (iv) to the extent not covered by clauses (i) through
(iii) above, all proceeds of any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account established
and maintained by Secured Party pursuant to Section 2(a).
"SECURED OBLIGATIONS" means all obligations and liabilities of every
nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and the Lender
Interest Rate Agreements and all extensions or renewals thereof, whether for
principal, interest (including interest that, but for the filing of a petition
in bankruptcy with respect to Pledgor, would accrue on such obligations),
reimbursement of amounts drawn under Letters of Credit, payments for early
termination of Lender Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party, any Lender or
any Interest Rate Exchanger as a preference, fraudulent transfer or otherwise,
and all obligations of every nature of Pledgor now or hereafter existing under
this Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
(a) Secured Party is hereby authorized to establish and maintain at
its office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as a blocked
account in the name of Secured Party and under the sole dominion and control of
Secured Party, a restricted deposit account designated as "▇▇▇▇ Industries
Collateral Account".
(b) The Collateral Account shall be operated in accordance with the
terms of this Agreement.
(c) All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
▇▇▇-▇
▇▇▇
(▇) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. DEPOSITS OF CASH COLLATERAL.
(a) All deposits of funds in the Collateral Account shall be made by
wire transfer (or, if applicable, by intra-bank transfer from another account of
Pledgor) of immediately available funds, in each case addressed as set forth in
a notice from Secured Party to Pledgor regarding the establishment of such
Collateral Account. Pledgor shall, promptly after initiating a transfer of funds
to the Collateral Account, give notice to Secured Party by telefacsimile of the
date, amount and method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding under the Credit Agreement, Pledgor shall deliver funds in such an
amount for deposit in the Collateral Account in accordance with Section 3(a). If
for any reason the aggregate amount delivered by Pledgor for deposit in the
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Pledgor shall be apportioned among all
outstanding Letters of Credit for purposes of this Section 3(b) in accordance
with the ratio of the maximum amount available for drawing under each such
Letter of Credit (as to such Letter of Credit, the "MAXIMUM AVAILABLE AMOUNT")
to the Aggregate Available Amount. Upon any drawing under any outstanding Letter
of Credit in respect of which Pledgor has deposited in the Collateral Account
any amounts described above, Secured Party shall apply such amounts to reimburse
the Issuing Lender for the amount of such drawing. In the event of cancellation
or expiration of any Letter of Credit in respect of which Pledgor has deposited
in the Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Secured
Party shall apply the amount then on deposit in the Collateral Account in
respect of such Letter of Credit (less, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) first, to the payment of any amounts payable to Secured Party
pursuant to Section 13, second, to the extent of any excess, to the cash
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit in respect of which Pledgor has failed to pay all or a portion
of the amounts described above (such cash collateralization to be apportioned
among all such Letters of Credit in the manner described above), third, to the
extent of any further excess, to the payment of any other outstanding Secured
Obligations in such order as Secured Party shall elect, and fourth, to the
extent of any further excess, to the payment to whomsoever shall be lawfully
entitled to receive such funds.
XIV-3
216
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS. Pledgor hereby
pledges and assigns to Secured Party, and hereby grants to Secured Party a
security interest in, all of Pledgor's right, title and interest in and to the
Collateral as collateral security for the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT;
INTEREST ON AMOUNTS IN THE COLLATERAL ACCOUNT.
(a) Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement.
(b) To the extent permitted under Regulation Q of the Board of
Governors of the Federal Reserve System, any cash held in the Collateral Account
shall bear interest at the standard rate paid by Secured Party to its customers
for deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12, any interest
earned on deposits of cash in the Collateral Account in accordance with Section
5(b) shall be deposited directly in, and held in the Collateral Account.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of transfer
thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
(b) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except as may have been taken by or
at the direction of Pledgor).
(c) Perfection. The pledge and assignment of the Collateral pursuant
to this Agreement creates a valid and perfected first priority security interest
in the Collateral, securing the payment of the Secured Obligations.
▇▇▇-▇
▇▇▇
(▇) Other Information. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Pledgor with respect to the
Collateral is accurate and complete in all respects.
SECTION 7. FURTHER ASSURANCES. Pledgor agrees that from time to time,
at the expense of Pledgor, Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
Pledgor will: (a) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may request, in order to perfect and preserve
the security interests granted or purported to be granted hereby and (b) at
Secured Party's request, appear in and defend any action or proceeding that may
affect Pledgor's beneficial title to or Secured Party's security interest in all
or any part of the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Pledgor agrees that it will not
(a) sell, assign (by operation of law or otherwise) or otherwise dispose of any
of the Collateral or (b) create or suffer to exist any Lien upon or with respect
to any of the Collateral, except for the security interest under this Agreement.
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Upon the
occurrence of an Event of Default, Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to
time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including to file one or more financing or
continuation statements, or amendments thereto, relative to all or any part of
the Collateral without the signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement in order to protect Secured Party's interest in
the Collateral, and the expenses of Secured Party incurred in connection
therewith shall be payable by Pledgor under Section 13.
SECTION 11. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral, it being understood that Secured Party shall
have no responsibility for (a) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Collateral) to preserve rights against any parties with
respect
XIV-5
218
to any Collateral or (b) taking any necessary steps to collect or realize upon
the Secured Obligations or any guarantee therefor, or any part thereof, or any
of the Collateral. Secured Party shall be deemed to have exercised reasonable
care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property of like kind.
SECTION 12. REMEDIES. Subject to the provisions of Section 3(b),
Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies otherwise available to it, all the rights and remedies
of a secured party on default under the Uniform Commercial Code as in effect in
any relevant jurisdiction (the "CODE") (whether or not the Code applies to the
affected Collateral).
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof.
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise.
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Pledgor. Upon any
such termination Secured Party shall, at Pledgor's expense, execute and deliver
to Pledgor such documents as Pledgor shall reasonably request to evidence such
termination and Pledgor shall be entitled to the return, upon its request and at
its
XIV-6
219
expense, against receipt and without recourse to Secured Party, of such of the
Collateral as shall not have been otherwise applied pursuant to the terms
hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums
held by Secured Party hereunder (which shall be deposited in a new Collateral
Account established and maintained by such successor Secured Party), together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Agent's
resignation or removal hereunder as Secured Party, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 17. NOTICES. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given shall
be in
XIV-7
220
writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile or
telex, or five Business Days after depositing it in the United States mail with
postage prepaid and properly addressed. For the purposes hereof, the address of
each party hereto shall be as provided in subsection 10.8 of the Credit
Agreement.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 19. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF
CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of California are
used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
XIV-8
221
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 17, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any action against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Secured Party to bring proceedings against Pledgor in the courts of any
other jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all- encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Pledgor and Secured Party each acknowledge that this
waiver is a material inducement for Pledgor and Secured Party to enter into a
business relationship, that Pledgor and Secured Party have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Pledgor and Secured Party
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XIV-9
222
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
▇▇▇▇ INDUSTRIES, INC.
By: __________________________________
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Agent, as Secured Party
By: __________________________________
Title:
S-1
223
EXHIBIT XV
[FORM OF CLOSING DATE OPINION OF IRELL & ▇▇▇▇▇▇▇ LLP]
(begins on next page)
XV-1
224
[I R E L L & M A N E L L A L L P LETTERHEAD]
January 8, 1997
Union Bank of California, N.A., as Lender
and Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇ Industries, Inc., a California
corporation (the "COMPANY"), ▇▇▇▇ Ontario Holding, Inc., a California
corporation ("ONTARIO SUBSIDIARY"), and each corporation listed on the
signature pages of the Subsidiary Guaranty referred to below (such corporations
being collectively the "DOMESTIC SUBSIDIARIES" and individually a "DOMESTIC
SUBSIDIARY", and together with the Company and Ontario Subsidiary, collectively
the "LOAN PARTIES" and individually a "LOAN PARTY") in connection with the
transactions contemplated by the Credit Agreement dated as of the date hereof
(the "CREDIT AGREEMENT") among the Company, certain banks, financial
institutions and other institutional lenders party thereto as Lenders, Union
Bank of California, N.A. ("UBOC"), as Agent, and we have acted as counsel to
the Company, the Domestic Subsidiaries and Ontario Subsidiary in connection
with the Merger (as defined in the Credit Agreement). Capitalized terms used
but not defined herein shall have the meanings ascribed thereto in the Credit
Agreement or, where not defined in the Credit Agreement, in the Collateral
Documents (as defined below). References in this opinion to the "CALIFORNIA
U.C.C." are to the Uniform Commercial Code currently in effect in the State of
California.
For the purpose of rendering this opinion, we have reviewed the
following documents:
(a) the Credit Agreement;
(b) the Tender Notes and the Tender Period Revolving Notes to the
order of the respective Lenders;
(c) the Collateral Account Agreement;
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 2
(d) the Company Security Agreement;
(e) the Company Pledge Agreement;
(f) the Subsidiary Guaranty;
(g) the Subsidiary Security Agreements;
(h) the Subsidiary Pledge Agreement;
(i) executed copies of financing statements ("FINANCING
STATEMENTS") naming the Loan Parties as debtors and the Agent
as a secured party, which will be filed in the office of the
Secretary of State of California (the "FILING OFFICE");
(j) the Merger Agreement;
(k) the Tender Agreement;
(l) the articles or certificates of incorporation of each "LOAN
PARTY" (as defined below) and all amendments thereto (each
Loan Party's "CHARTER"); and
(m) the by-laws of each Loan Party and all amendments thereto
(such Loan Party's "BYLAWS").
For purposes of this opinion: (i) the documents listed in clauses (a)
through (i) above are referred to herein as the "CLOSING DATE LOAN DOCUMENTS;"
(ii) the documents listed in clauses (d), (e), (f), (h) and (i) above are
referred to herein as the "COLLATERAL DOCUMENTS;" (iii) the documents listed in
clauses (k) and (1) above are referred to herein as the "RELATED AGREEMENTS;"
(iv) the Closing Date Loan Documents and the Related Documents are collectively
referred to herein as the "DOCUMENTS."
We have also reviewed the records of the corporate proceedings of each
of the Loan Parties in relation to the Documents, and the transactions
contemplated thereby, and such other matters of fact and law and documents as
we have deemed necessary or relevant as a basis for this opinion. In our
review, we have assumed, without investigation, the legal capacity of all
natural persons signing documents in their respective individual capacities,
the genuineness of all
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 3
signatures not witnessed by us on or before the Closing Date or at the time of
the execution of the Related Documents, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, photostatic or telecopied copies, and
the authenticity of the originals of such copies. In addition, we have
examined, relied upon and assumed to be complete and correct the
representations and warranties contained in the Documents and in certificates
delivered to you in connection therewith as to matters of fact (other than
facts constituting conclusions of law) and the covenants contained in the
Documents as to the application of the proceeds of the Tender Loans or the
Tender Period Revolving Loans.
Our opinions expressed herein are limited to the laws of the State of
California, and the federal law of the United States, in each case to the
extent not specifically excluded herein and as in effect on the date hereof,
and we do not express herein any opinion as to any other laws. In addition to
all other qualifications and limitations set forth in this letter with respect
to our opinions expressed herein, no opinion is expressed herein with respect
to the antitrust laws of the State of California or the United States (other
than the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇")).
Based upon the foregoing, and subject to the assumptions, limitations,
qualifications and exceptions set forth herein, we are of the opinion that:
1. Each Loan Party is a corporation duly incorporated, validly
existing and in good standing under the laws of its respective state of
incorporation. Each Loan Party has the corporate power and authority to enter
into the Closing Date Loan Documents and the Related Agreements to which it is
a party, to perform its obligations thereunder and to issue the Tender Notes
(in the case of the Company) and the Tender Period Revolving Notes (in the case
of the Company).
2. The execution, delivery and performance by each Loan Party of
the Closing Date Loan Documents and Related Documents to which it is a party
and the issuance and payment of the Tender Notes (in the case of the Company)
and the Tender Period Revolving Notes (in the case of the Company) have been
duly authorized by all necessary corporate action on the part
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 4
of such Loan Party, and each of the Closing Date Loan Documents and the Related
Agreements to which such Loan Party is a party has been duly executed and
delivered by such Loan Party.
3. The Closing Date Loan Documents and the Related Agreements to
which each Loan Party is a party constitute legally valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms.
4. The execution and delivery of, and performance of its
respective obligations under, the Closing Date Loan Documents and the Related
Agreements to which a Loan Party is a party, and the issuance and payment of
the Tender Notes (in the case of the Company) and the Tender Period Revolving
Notes (in the case of the Company) do not and will not (i) violate such Loan
Party's Charter or Bylaws, (ii) violate, breach, or result in a default under
any other material agreement of such Loan Party known to us (other than the
Existing Senior Notes, the repayment of which is contemplated to be made
following the Closing Date in accordance with Section 2.1A(i) of the Credit
Agreement), or (iii) breach or otherwise violate any existing obligation of
such Loan Party under any order, judgment or decree known to us of any
California or federal court or governmental authority binding on such Loan
Party, or (iv) result in the creation of any Lien upon any of the properties or
assets of such Loan Party under any agreement or order referred to in clauses
(ii) and (iii) above (other than Liens created pursuant to the Credit
Agreement).
5. The execution and delivery by a Loan Party of, and performance
of its respective obligations under, the Closing Date Loan Documents and the
Related Agreements to which it is a party do not violate any California or
federal statute or regulation that we have, in the exercise of customary
professional diligence, recognized as applicable to such Loan Party or
to transactions of the type contemplated by the Closing Date Loan Documents and
the Related Agreements to which such Loan Party is a party.
6. No order, consent, permit or approval of any California or
federal governmental authority that we have, in the exercise of customary
professional diligence, recognized as applicable to a Loan Party or to
transactions of the type contemplated by the Closing Date Loan Documents and
the
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 5
Related Agreements to which such Loan Party is a party is required on the part
of such Loan Party for the execution and delivery of, and performance of its
respective obligations under, the Closing Date Loan Documents and the Related
Agreements to which it is a party.
7. Neither the extension of credit nor the use of proceeds
provided in the Credit Agreement will violate Regulation G, T, U, or X of the
Board of Governors of the Federal Reserve System.
8. Neither the Company nor any of the Subsidiary Guarantors is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
9. Neither the Company nor any of the Subsidiary Guarantors is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
10. It is not necessary in connection with the execution and
delivery of the Tender Notes and the Tender Period Revolving Notes to Lenders
to register such Notes or the Loans under the Securities Act of 1933, as
amended, or to qualify any indenture in respect thereof under the Trust
Indenture Act of 1939, as amended.
11. Each of the Company Security Agreement and the Subsidiary
Security Agreements creates in favor of Agent a security interest in such of
the Collateral (as defined in the Company Security Agreement and the Subsidiary
Security Agreements, as the case may be) as is of a type in which a security
interest can be created under Division 9 of the California U.C.C.
12. Upon the filing of each UCC-1 Financing Statements with the
Office of the Secretary of State of the State of California (the "CALIFORNIA
FILING OFFICE"), Agent will have a perfected security interest in the
Collateral described therein of the Loan Party that signed such UCC-1 Financing
Statement, but only to the extent a security interest in such Collateral can be
perfected under the California U.C.C. by the filing of a financing statement
with the Filing Office.
229
Union Bank of California, N.A.,
as Agent and Lender
January 8, 1997
Page 6
13. Assuming that the California U.C.C. exclusively governs the
perfection of the security interests in the Pledged Securities (as defined
below), the Company Pledge Agreement, together with delivery of the
certificates representing the shares of stock identified on Schedule I to the
Company Pledge Agreement (the "PLEDGED SECURITIES") to the Agent in the State
of California, create in favor of the Agent a perfected security interest under
the California U.C.C. in the Pledged Securities, and assuming that the Agent
and the Lenders acquire their respective interests in the Pledged Securities in
good faith, and neither the Agent nor any of the Lenders has notice of any
adverse claim (within the meaning of Division 8 of the California U.C.C.),
Agent will hold such Pledged Securities free of any adverse claim.
14. To the best of our knowledge, (i) there are no actions, suits
or proceedings pending or threatened against the Company or any of its
Subsidiaries which have a significant likelihood of materially and adversely
affecting either the ability of the Company to perform its obligations under
any of the Closing Date Loan Documents and the Related Agreements or the
financial condition or operations of the Company and its Subsidiaries, taken as
a whole, and (ii) there are no actions, suits or proceedings pending against
the Company or any of its Subsidiaries that seek to enjoin the Merger.
15. Upon payment for and delivery of the Tendered Milgray Shares
in accordance with the Tender Agreement and the Tender Offer Materials,
assuming Merger Sub is acquiring them in good faith without notice of any
adverse claim, Merger Sub will own the Tendered Milgray Shares free and clear
of any adverse claim.
The opinions set forth above are subject to and limited by the
following:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws and legal and equitable principles relating
to, limiting or affecting the enforcement of creditors' rights generally
including, without limitation, preferences and fraudulent conveyances and
distributions by a corporation to its stockholders;
(b) the discretion of any court of competent jurisdiction
in awarding equitable remedies (regardless of
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 7
whether considered in a proceeding in equity or at law), including, but not
limited to, specific performance or injunctive relief;
(c) we note that a California court might not permit the exercise
or attempted exercise of any right or remedy provided in the Credit Agreement,
any Related Document or any of the Collateral Documents if such exercise or
attempted exercise is deemed to be in breach of the covenant of good faith and
fair dealing implied under California law to exist in all agreements, or if the
party seeking to exercise same fails to act in a reasonable manner or fails to
fulfill any duty imposed by statute or by legal or equitable principles;
(d) the effect of Section 1670.5 of the California Civil Code,
which provides that if a court as a matter of law finds a contract or any
clause of a contract to have been "unconscionable" at the time it was made, the
court may refuse to enforce the contract or clause, as the case may be, or the
court may enforce the remainder of the contract without the "unconscionable"
clause so as to avoid an "unconscionable" result (we advise you that, in our
view, a court properly applying said Section 1670.5 should conclude that said
Section 1670.5 is inapplicable to transactions negotiated at arm's-length
between commercially sophisticated parties represented by experienced outside
counsel, such as the transactions contemplated by the Loan Documents and the
Related Documents);
(e) the unenforceability under certain circumstances of provisions
waiving vaguely or broadly stated rights or unknown future rights and of
provisions stating that rights or remedies are not exclusive, that every right
or remedy is cumulative and may be exercised in addition to or with any other
right or remedy, or that the election of some particular remedy or remedies
does not preclude recourse to one or more others;
(f) the unenforceability under certain circumstances of provisions
imposing an increase in interest rate upon delinquency in payment or the
occurrence of a default;
(g) the effect of Section 1717 of the California Civil Code,
which, in essence specifies that, where a contract
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 8
provides that attorneys' fees and costs incurred to enforce that contract shall
be awarded to one of the parties, then the party who is determined to be the
prevailing party shall be entitled to reasonable attorneys' fees and costs,
whether or not such party is the party specified in the contract as the party
entitled to attorneys' fees and costs;
(h) the effect of Section 9504(3) of the California U.C.C., which
requires that a secured party act in good faith and in a commercially
reasonable manner in any sale or lease of collateral;
(i) in the case of Collateral consisting of proceeds, the
perfection of a security interest therein is limited to the extent set forth in
Section 9306 of the California U.C.C.;
(j) we note that the California U.C.C. sets forth certain actions
required to be taken by a secured party to maintain the continuity of
perfection of a security interest and we express no opinion herein as to the
applicability, effect or satisfaction by or on behalf of the Lender Parties of
those requirements with respect to any security interest provided for in any of
the Loan Documents;
(k) with respect to the Subsidiary Guaranty, we advise you of
California statutory provisions and case law to the effect that, in
certain circumstances, a surety may be exonerated if the creditor materially
alters the original obligation of the principal without the consent of the
surety, elects remedies for default that impair the subrogation rights of the
surety against the principal, or otherwise takes any action that materially
prejudices the surety. See, e.g., Cal. Civ. Code Section 2810; Union Bank ▇.
▇▇▇▇▇▇▇, 265 Cal. App. 2d 40, 71 Cal. ▇▇▇▇. ▇ (1968); Sumitomo Bank ▇.
▇▇▇▇▇▇▇, 70 Cal. 2d 81, 447 P.2d 956, 73 Cal. Rptr. 564 (1968). However,
there is also authority to the effect that a surety may validly waive such
rights if the waivers are expressly set forth in the agreement creating the
suretyship obligation. ▇▇▇▇▇▇▇ v. Bank of America, 145 Cal. App. 3d 204, 193
Cal. Rptr. 322 (1983). While we believe that the explicit waivers of such
rights contained in the Subsidiary Guaranty should be enforceable (see
California Civil Code Sections 2856 and 3268), we express no opinion with
respect to the effect of: (i) any modification to or amendment of the
obligations of any Loan Party, as principal, that materially increases
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 9
such obligations; (ii) any election of remedies by the Agent or any other
Lender following the occurrence of an Event of Default; or (iii) any other
action by the Agent or any other Lender that materially prejudices any Person
in its capacity as such surety under a Subsidiary Guaranty; nor do we express
any opinion with respect to the meaning or scope of such explicit waivers as
are contained in the Subsidiary Guaranty;
(l) we express no opinion on the enforceability of the waiver of
jury trial contained in any of the Loan Documents or the Related Documents;
(m) the effect of Sections 1668 and 2773 of the California Civil
Code, and judicially created rules of public policy under federal and
California law, limiting the extent to which indemnity agreements and
exculpatory clauses will be enforced;
(n) we express no opinion concerning the enforceability or effect
of various provisions of the Loan Documents purporting to appoint the Agent or
any of the Lenders as the attorney-in-fact of any of the Loan Parties;
(o) the effect of Section 2889 of the California Civil Code, which
provides, among other things, that all contracts in restraint of the right of
redemption from a lien are void; and
(p) we note that certain provisions in the Loan Documents purport
to require the Loan Parties to enforce the terms of all agreements affecting or
pertaining to the Collateral and the obligations of the other parties thereto
arising thereunder. Such provisions may be unenforceable to the extent that
they purport to require the Loan Parties to enforce provisions which may not be
enforceable under applicable law; and
In rendering the opinions expressed herein, we have assumed with your
permission that no agreements or understandings exist between you and any third
parties which would modify, supplement or amend any Loan Document or which
would subordinate, modify, release or terminate the Lien granted to the Agent
for the benefit of the Lenders pursuant to any Collateral Document in whole or
in part.
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 10
Whenever our opinion herein with respect to the existence or
nonexistence of facts is qualified by the phrase "TO OUR KNOWLEDGE", or any
similar phrase implying a limitation on the basis of knowledge, such phrase
means only that the individual attorneys in this firm who devoted substantive
attention to the transactions contemplated by the Loan Documents and/or the
Related Documents do not have actual knowledge that the facts as stated herein
are untrue. Unless otherwise expressly stated herein, such persons have not
undertaken any investigation to determine the existence or nonexistence of such
facts, and no inference as to the extent of their knowledge should be drawn
from the fact of their representation of the Loan Parties in this or any other
instance.
In rendering this opinion, we have assumed that each of the Loan
Parties has an interest sufficient for a security interest to attach to all
property covered by the Collateral Documents covering such party's property.
We have made no examination and express no opinion as to title to any property
now or hereafter constituting a part of the Collateral.
In rendering this opinion, to the extent that the obligations of the
Loan Parties under the Loan Documents, or the enforcement thereof, may be
dependent upon such matters, we have assumed without investigation that: (a)
pursuant to due authorization, each Lender has duly and validly executed the
Loan Documents to be executed by it and that such Loan Documents are legal,
valid and binding obligations of such Lender, enforceable against it in
accordance with their respective terms; and (b) for the purpose of the opinion
rendered in paragraph 3 above insofar as such sentence covers the California
usury laws, each Lender (as well as any other person, firm or entity to whom
any interest or right in any of the Loans, including any undivided interest
therein granted as a participation, is assigned) is an exempt lender under the
California usury laws.
In rendering this opinion, to the extent that the obligations of the
Loan Parties under the Related Documents, or the enforcement thereof, may be
dependent upon such matters, we have assumed without investigation that
pursuant to due authorization, each party to any of the Related Documents other
than a Loan Party (an "OTHER PARTY") has duly and validly executed the Related
Documents to be executed by it and that such Related Documents are legal, valid
and
▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇.,
as Agent and Lender
January 8, 1997
Page 11
binding obligations of such Other Party, enforceable against it in accordance
with their respective terms.
This opinion is rendered only to you pursuant to Section 4.1(O) of,
and is solely for your benefit in connection with the transactions contemplated
by, the Credit Agreement. This opinion may not be relied upon by any other
person for any other purpose or in any other context without our prior written
consent; provided, however that you may furnish this opinion to an Eligible
Assignee in connection with a proposed assignment of an interest or grant of a
participation in the Commitments.
Very truly yours,
/s/ Irell & ▇▇▇▇▇▇▇ LLP
--------------------------------
IRELL & ▇▇▇▇▇▇▇ LLP
235
EXHIBIT XVI
[FORM OF CLOSING DATE OPINION OF O'MELVENY & ▇▇▇▇▇ LLP]
[O'M&M Letterhead]
{Closing Date}
1 9 9 _
[file number]
[doc ID]
Union Bank of California, N.A.
[Address
of Agent]
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to ▇▇▇▇ Industries, Inc.
Ladies and Gentlemen:
We have acted as counsel to Union Bank of California, N.A., as Agent
(in such capacity, "Agent"), in connection with the preparation and delivery of
a Credit Agreement dated as of January __, 1997 (the "Credit Agreement") among
▇▇▇▇ Industries, Inc., a California corporation ("Company"), the financial
institutions listed therein as lenders, and Agent and in connection with the
preparation and delivery of certain related documents. Capitalized terms used
herein and not otherwise defined have the same meanings as in the Credit
Agreement.
We have participated in various conferences with representatives of
Company and Agent and conferences and telephone calls with Irell & ▇▇▇▇▇▇▇ LLP,
counsel to Company, and with your representatives, during which the Credit
Agreement and related matters have been discussed, and we have also participated
in the meeting held on the date hereof (the "Closing") incident to the funding
of the Tender Loans and the Tender Period Revolving Loans made under the Credit
Agreement. We have reviewed the forms of the Credit Agreement and the exhibits
thereto, including the Tender Notes and the Tender Period Revolving Notes, and
the opinion of Irell &
XVI-1
236
Page 2 - [Agent] - [Date]
▇▇▇▇▇▇▇ LLP (the "Opinion") and the officers' certificates and other documents
delivered at the Closing. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals or copies and the due
authority of all persons executing the same, and we have relied as to factual
matters on the documents that we have reviewed.
Although we have not independently considered all of the matters
covered by the Opinion to the extent necessary to enable us to express the
conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form and that the Opinion
and the officers' certificates and other documents delivered in connection with
the execution and delivery of, and as conditions to the making of the Tender
Loans and the Tender Period Revolving Loans under, the Credit Agreement and the
Tender Notes and the Tender Period Revolving Notes are substantially responsive
to the requirements of the Credit Agreement.
Respectfully submitted,
XVI-2
237
EXHIBIT XVII
[FORM OF SUBSIDIARY SECURITY AGREEMENT]
SUBSIDIARY SECURITY AGREEMENT
This SUBSIDIARY SECURITY AGREEMENT (this "AGREEMENT") is dated as of
January __, 1997 and entered into by and between [INSERT NAME OF GRANTOR IN
CAPS], a _____________________ corporation, [INSERT NAME OF ADDITIONAL GRANTOR
IN CAPS], a ____________ corporation (each of the foregoing being hereinafter
referred to as "GRANTOR"), and UNION BANK OF CALIFORNIA, N.A., as agent for and
representative of (in such capacity herein called "SECURED PARTY") the financial
institutions ("LENDERS") party to the Credit Agreement referred to below and any
Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit Agreement
dated as of January 7, 1997 (said Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with ▇▇▇▇ Industries, Inc., California
corporation ("COMPANY"), pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
B. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "LENDER
INTEREST RATE AGREEMENTS") with one or more Lenders (in such capacity,
collectively, "INTEREST RATE EXCHANGERS").
C. Grantor has executed and delivered that certain Subsidiary Guaranty
dated as of January __, 1997 (said Subsidiary Guaranty, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the
"GUARANTY") in favor of Secured Party for the benefit of Lenders and any
Interest Rate Exchangers, pursuant to which Grantor has guarantied the prompt
payment and performance when due of all obligations of Company under the Credit
Agreement and the other Loan Documents and all obligations of Company under the
Lender Interest Rate Agreements, including the obligation of Company to make
payments thereunder in the event of early termination thereof.
D. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
XVII-1
238
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and to induce Interest Rate Exchangers to enter into the Lender
Interest Rate Agreements, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Grantor hereby agrees
with Secured Party as follows:
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns to Secured Party,
and hereby grants to Secured Party a security interest in, all of Grantor's
right, title and interest in and to the following, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located (the "COLLATERAL"):
(a) all inventory in all of its forms (including (i) all goods held by
Grantor for sale or lease or to be furnished under contracts of service or so
leased or furnished, (ii) all raw materials, work in process, finished goods,
and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in Grantor's business, (iii) all goods in which
Grantor has an interest in mass or a joint or other interest or right of any
kind, and (iv) all goods which are returned to or repossessed by Grantor) and
all accessions thereto and products thereof (all such inventory, accessions and
products being the "INVENTORY") and all negotiable documents of title (including
warehouse receipts, dock receipts and bills of lading) issued by any Person
covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");
(b) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any kind
and all rights in, to and under all security agreements, leases and other
contracts securing or otherwise relating to any such accounts, contract rights,
chattel paper, documents, instruments, general intangibles or other obligations
(any and all such accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other obligations being the "ACCOUNTS", and
any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");
(c) all trademarks, tradenames, tradesecrets, business names, patents,
patent applications, licenses, copyrights, registrations and franchise rights,
and all goodwill associated with any of the foregoing; and
(d) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS"
XVII-2
239
includes whatever is receivable or received when Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of every nature of Grantor now or hereafter existing under or
arising out of or in connection with the Guaranty and all extensions or renewals
thereof, whether for principal, interest (including interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise and all obligations of every nature
of Grantor now or hereafter existing under this Agreement (all such obligations
of Grantor being the "SECURED OBLIGATIONS").
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Secured Party of any
of its rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Secured Party shall not have any obligation or liability under any contracts
and agreements included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or duties of
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants as follows:
(a) Ownership of Collateral. Except for the security interest created
by this Agreement and the Liens permitted under Section 7.2A of the Credit
Agreement, Grantor owns the Collateral free and clear of any Lien.
XVII-3
240
(b) Location of Inventory. All of the Inventory is, as of the date
hereof, located at the places specified in Schedule I annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory (other than in respect of
(i) Inventory with an aggregate value not in excess of $1,000,000 or (ii)
Inventory which, in the ordinary course of business, is in transit either (A)
from a supplier to Grantor, (B) between the locations specified in Schedule I
hereto, or (C) to customers of Grantor).
(d) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Accounts and all originals of all chattel paper that evidence Accounts is,
and has been for the four month period preceding the date hereof, located at the
address(es) set forth with respect to Grantor on Schedule I annexed hereto.
Grantor has not in the past done, and does not now do, business under any other
name (including any trade-name or fictitious business name).
(e) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Secured Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
SECTION 5. FURTHER ASSURANCES.
(a) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Grantor will: (i) ▇▇▇▇
conspicuously each item of chattel paper included in the Accounts, each Related
Contract and, at the request of Secured Party, each of its records pertaining to
the Collateral, with a legend, in form and substance satisfactory to Secured
Party, indicating that such Collateral is subject to the security interest
granted hereby, (ii) at the request of Secured Party, deliver and pledge to
Secured Party hereunder all promissory notes and other instruments (including
checks) and all original counterparts of chattel paper constituting Collateral,
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Secured Party, (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby, (iv) at any
reasonable time, upon request by Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, and (v) at Secured
XVII-4
241
Party's request, appear in and defend any action or proceeding that may affect
Grantor's title to or Secured Party's security interest in all or any part of
the Collateral.
(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Grantor. Grantor agrees that
a carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by Grantor shall be sufficient as a financing statement and may
be filed as a financing statement in any and all jurisdictions.
(c) Grantor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Secured Party may reasonably
request, all in reasonable detail.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name, identity or
corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any change in
Grantor's chief place of business, chief executive office or residence or the
office where Grantor keeps its records regarding the Accounts and all originals
of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to acquire rights
in or the use of any Collateral, use such value for such purposes; and
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to the
extent the validity thereof is being contested in good faith; provided that
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgement, writ or warrant of attachment entered or filed against Grantor or any
of the Collateral as a result of the failure to make such payment.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY. Grantor shall:
(a) keep the Inventory at the locations therefor specified on Schedule
I annexed hereto or, with written notice to Secured Party as soon as practicable
and, in any event, within 30 days after the placing of Inventory in a location
not listed in
XVII-5
242
Schedule I, at such other locations in jurisdictions where all action that may
be necessary or desirable, or that Secured Party may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby, or to enable Secured Party to exercise and enforce its rights and
remedies hereunder, with respect to such Inventory shall have been taken with
ten days of the giving of the notice referred to above;
(b) keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, Grantor's cost therefor and
(where applicable) the current list prices for the Inventory;
(c) if any Inventory is in possession or control of any of Grantor's
agents or processors, if the aggregate book value of all such Inventory exceeds
$1,000,000, and in any event upon the occurrence of an Event of Default (as
defined in the Credit Agreement) or the occurrence of an Early Termination Date
(as defined in a Master Agreement or an Interest Rate Swap Agreement or Interest
Rate and Currency Exchange Agreement in the form prepared by the International
Swap and Derivatives Association Inc. or a similar event under any similar swap
agreement) under any Lender Interest Rate Agreement (either such occurrence
being an "EVENT OF DEFAULT" for purposes of this Agreement), instruct such agent
or processor to hold all such Inventory for the account of Secured Party and
subject to the instructions of Secured Party; and
(d) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable Documents of
Title covering (i) Inventory with an aggregate value not in excess of $1,000,000
or (ii) Inventory which, in the ordinary course of business, is in transit
either (A) from a supplier to Grantor, (B) between the locations specified in
Schedule I hereto, or (C) to customers of Grantor), deliver such Negotiable
Document of Title to Secured Party.
SECTION 8. INSURANCE. Grantor shall, at its own expense, maintain
insurance with respect to the Inventory in accordance with the terms of the
Credit Agreement.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.
(a) Grantor shall keep its chief place of business and chief executive
office and the office where it keeps its records concerning the Accounts and
Related Contracts, and all originals of all chattel paper that evidence
Accounts, at the location therefor specified in Section 4 or, upon 30 days'
prior written notice to Secured Party, at such other location in a jurisdiction
where all action that may be necessary or desirable, or that Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder, with respect to such Accounts and
Related Contracts shall have been taken. Grantor will hold and preserve such
records and chattel paper and will permit representatives of Secured Party at
any time during normal
XVII-6
243
business hours to inspect and make abstracts from such records and chattel
paper, and Grantor agrees to render to Secured Party, at Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto. Promptly upon the request of Secured Party, Grantor shall
deliver to Secured Party complete and correct copies of each Related Contract.
(b) Grantor shall, for not less than one year from the date on which
such Account arose, maintain (i) complete records of each Account, including
records of all payments received and credits granted, and (ii) all documentation
relating thereto.
(c) Except as otherwise provided in this subsection (c), Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
Grantor under the Accounts and Related Contracts. In connection with such
collections, Grantor may take (and, at Secured Party's direction, shall take)
such action as Grantor or Secured Party may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
however, that Secured Party shall have the right at any time, upon the
occurrence and during the continuation of an Event of Default and upon written
notice to Grantor of its intention to do so, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to Secured Party
and to direct such account debtors or obligors to make payment of all amounts
due or to become due to Grantor thereunder directly to Secured Party, to notify
each Person maintaining a lockbox or similar arrangement to which account
debtors or obligors under any Accounts have been directed to make payment to
remit all amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other arrangement
directly to Secured Party and, upon such notification and at the expense of
Grantor, to enforce collection of any such Accounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as Grantor might have done. After receipt by Grantor of the notice from
Secured Party referred to in the proviso to the preceding sentence, (i) all
amounts and proceeds (including checks and other instruments) received by
Grantor in respect of the Accounts and the Related Contracts shall be received
in trust for the benefit of Secured Party hereunder, shall be segregated from
other funds of Grantor and shall be forthwith paid over or delivered to Secured
Party in the same form as so received (with any necessary endorsement) to be
held as cash Collateral and applied as provided by Section 18, and (ii) Grantor
shall not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
SECTION 10. LICENSE OF PATENTS, TRADEMARKS, COPYRIGHTS, ETC. Grantor
hereby assigns, transfers and conveys to Secured Party, effective upon the
occurrence of any Event of Default, the nonexclusive right and license to use
all trademarks, tradenames, copyrights, patents or technical processes owned or
used by Grantor that relate to the Collateral and any other collateral granted
by Grantor as security for the Secured Obligations, together with any goodwill
associated therewith, all to the extent necessary to enable Secured Party to
use, possess and realize on the Collateral and to
XVII-7
244
enable any successor or assign to enjoy the benefits of the Collateral. This
right and license shall inure to the benefit of all successors, assigns and
transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is
granted free of charge, without requirement that any monetary payment whatsoever
be made to Grantor.
SECTION 11. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
or
(b) except for the security interest created by this Agreement or as
expressly permitted with respect to Collateral under Section 7.2A of the Credit
Agreement, create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person.
SECTION 12. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Upon the
occurrence of an Event of Default, Grantor hereby irrevocably appoints Secured
Party as Grantor's attorney-in-fact, with full authority in the place and stead
of Grantor and in the name of Grantor, Secured Party or otherwise, from time to
time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Secured Party pursuant to Section 8;
(b) to ask for, demand, collect, ▇▇▇ for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of Secured Party with respect
to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in its
sole discretion, any such payments made by Secured Party to become obligations
of Grantor to Secured Party, due and payable immediately without demand;
XVII-8
245
(f) to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantor's expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
Grantor might do.
SECTION 13. SECURED PARTY MAY PERFORM. If Grantor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement in order to protect Secured Party's interest in
the Collateral, and the expenses of Secured Party incurred in connection
therewith shall be payable by Grantor under Section 17.
SECTION 14. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 15. REMEDIES. If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Collateral), and also
may (a) require Grantor to, and Grantor hereby agrees that it will at its
expense and upon request of Secured Party forthwith, assemble all or part of the
Collateral as directed by Secured Party and make it available to Secured Party
at a place to be designated by Secured Party that is reasonably convenient to
both parties, (b) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process, (c) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Secured Party deems appropriate, (d) take possession of Grantor's
premises or place custodians in exclusive control thereof, remain
XVII-9
246
on such premises and use the same and any of Grantor's equipment for the purpose
of completing any work in process, taking any actions described in the preceding
clause (c) and collecting any Secured Obligation, and (e) without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable. Secured Party or any Lender or Interest Rate Exchanger
may be the purchaser of any or all of the Collateral at any such sale and
Secured Party, as agent for and representative of Lenders and Interest Rate
Exchangers (but not any Lender or Lenders or Interest Rate Exchanger or Interest
Rate Exchangers in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Secured Party at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right on the part of Grantor, and Grantor hereby waives (to the extent permitted
by applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Grantor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale,
even if Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
SECTION 16. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral shall be applied as provided in subsection 2.4D of the Credit
Agreement.
SECTION 17. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Secured Party, and each Lender and
each Interest Rate Exchanger from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including enforcement of
this Agreement), except to
XVII-10
247
the extent such claims, losses or liabilities result solely from Secured Party's
or such Lender's or Interest Rate Exchanger's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Grantor to
perform or observe any of the provisions hereof.
SECTION 18. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Grantor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise.
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantor. Upon any
such termination Secured Party will, at Grantor's expense, execute and deliver
to Grantor such documents as Grantor shall reasonably request to evidence such
termination.
SECTION 19. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement. Agent shall act upon instructions from the
Lenders as provided in the Credit Agreement, it being understood that Interest
Rate Exchangers are beneficiaries of this Agreement but shall not have the right
to direct the actions of Agent or vote with respect to actions to be taken by
Agent until such time as all Loans outstanding under the Credit Agreement have
been repaid.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
XVII-11
248
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 20. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Grantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Grantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 21. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or five Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
SECTION 22. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this
XVII-12
249
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 23. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 24. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 25. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL
CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF CALIFORNIA. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
California are used herein as therein defined. The rules of construction set
forth in subsection 1.3 of the Credit Agreement shall be applicable to this
Agreement mutatis mutandis.
SECTION 26. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF
LOS ANGELES. BY EXECUTING AND DELIVERING THIS AGREEMENT, GRANTOR, FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION
23;
XVII-13
250
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GRANTOR IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 26 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40
OR OTHERWISE.
SECTION 27. WAIVER OF JURY TRIAL. GRANTOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all- encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Grantor and Secured Party each acknowledge that this
waiver is a material inducement for Grantor and Secured Party to enter into a
business relationship, that Grantor and Secured Party have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Grantor and Secured Party
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 27 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 28. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be
XVII-14
251
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
XVII-15
252
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF GRANTOR]
By: _________________________________
Title:
Notice Address: _____________________
_____________________
_____________________
UNION BANK OF CALIFORNIA, N.A.,
as Agent, as Secured Party
By: _________________________________
Title:
Notice Address: _____________________
_____________________
_____________________
S-1
253
SCHEDULE I
TO SUBSIDIARY SECURITY AGREEMENT
Locations of Inventory:
Locations of chief place of business, the chief executive office and the office
where records are kept regarding Accounts and chattel paper:
254
EXHIBIT XVIII
[FORM OF SUBSIDIARY GUARANTY]
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY is entered into as of January __, 1997 by THE
UNDERSIGNED (each a "GUARANTOR" and collectively, "GUARANTORS") in favor of and
for the benefit of UNION BANK OF CALIFORNIA, N.A., as agent for and
representative of (in such capacity herein called "GUARANTIED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement referred to
below and any Interest Rate Exchangers (as hereinafter defined), and, subject to
subsection 3.12, for the benefit of the other Beneficiaries (as hereinafter
defined).
RECITALS
▇. ▇▇▇▇ Industries, Inc., a California corporation ("COMPANY"), has
entered into that certain Credit Agreement dated as of January 7, 1997 with
Guarantied Party and Lenders (said Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT"; capitalized terms defined therein and not otherwise defined herein
being used herein as therein defined).
B. Pursuant to the Merger Agreement, Merger Sub merged with and into
Milgray, the surviving entity being Surviving Corporation.
C. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "LENDER
INTEREST RATE AGREEMENTS") with or one or more Lenders (in such capacity,
collectively, "INTEREST RATE EXCHANGERS") in accordance with the terms of the
Credit Agreement, and it is desired that the obligations of Company under the
Lender Interest Rate Agreements, including the obligation of Company to make
payments thereunder in the event of early termination thereof (all such
obligations being the "INTEREST RATE OBLIGATIONS"), together with all
obligations of Company under the Credit Agreement and the other Loan Documents,
be guarantied hereunder.
D. A portion of the proceeds of the Loans may be advanced to
Guarantors and thus the Guarantied Obligations (as hereinafter defined) are
being incurred for and will inure to the benefit of Guarantors (which benefits
are hereby acknowledged).
E. It is a condition precedent to the making of the initial Loans
under the Credit Agreement that Company's obligations thereunder be guarantied
by Guarantors.
XVIII-1
255
F. Guarantors are willing irrevocably and unconditionally to guaranty
such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Lenders and Guarantied Party to enter into the Credit
Agreement and to make Loans and other extensions of credit thereunder and to
induce Interest Rate Exchangers to enter into the Lender Interest Rate
Agreements, Guarantors hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Guaranty, the following
terms shall have the following meanings unless the context otherwise requires:
"BENEFICIARIES" means Guarantied Party, and Lenders and any
Interest Rate Exchangers.
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term in
subsection 2.1.
"GUARANTY" means this Subsidiary Guaranty dated as of January __,
1996, as it may be amended, supplemented or otherwise modified from
time to time.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means
payment in full of the Guarantied Obligations, including all
principal, interest, costs, fees and expenses (including reasonable
legal fees and expenses) of Beneficiaries as required under the Loan
Documents and the Lender Interest Rate Agreements.
1.2 INTERPRETATION.
(a) References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Guaranty unless
otherwise specifically provided.
(b) In the event of any conflict or inconsistency between the
terms, conditions and provisions of this Guaranty and the terms,
conditions and provisions of the Credit Agreement, the terms,
conditions and provisions of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS. Subject to the provisions
of subsection 2.2(a), Guarantors jointly and severally hereby irrevocably and
unconditionally guaranty the due and punctual payment in full of all Guarantied
Obligations when the same shall become due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
amounts that would become due but for
XVIII-2
256
the operation of the automatic stay under Section 362(a) of the Bankruptcy Code,
11 U.S.C. ss. 362(a)). The term "GUARANTIED OBLIGATIONS" is used herein in its
most comprehensive sense and includes:
(a) any and all Obligations of Company and any and all Interest
Rate Obligations, in each case now or hereafter made, incurred or
created, whether absolute or contingent, liquidated or unliquidated,
whether due or not due, and however arising under or in connection
with the Credit Agreement and the other Loan Documents and the Lender
Interest Rate Agreements, including those arising under successive
borrowing transactions under the Credit Agreement which shall either
continue the Obligations of Company or from time to time renew them
after they have been satisfied and including interest which, but for
the filing of a petition in bankruptcy with respect to Company, would
have accrued on any Guarantied Obligations, whether or not a claim is
allowed against Company for such interest in the related bankruptcy
proceeding; and
(b) those expenses set forth in subsection 2.9 hereof.
2.2 LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS. (a)
Anything contained in this Guaranty to the contrary notwithstanding, if any
Fraudulent Transfer Law (as hereinafter defined) is determined by a court of
competent jurisdiction to be applicable to the obligations of any Guarantor
under this Guaranty, such obligations of such Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "FRAUDULENT
TRANSFER LAWS"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (x) in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Guarantor hereunder and (y) under
any guaranty of Subordinated Indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this subsection 2.2(a),
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including any such
right of contribution under subsection 2.2(b).
(b) Guarantors under this Guaranty together desire to allocate among
themselves, in a fair and equitable manner, their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "FUNDING GUARANTOR") that exceeds
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a contri-
XVIII-3
257
bution from each of the other Guarantors in the amount of such other Guarantor's
Fair Share Shortfall (as defined below) as of such date, with the result that
all such contributions will cause each Guarantor's Aggregate Payments (as
defined below) to equal its Fair Share as of such date. "FAIR SHARE" means, with
respect to a Guarantor as of any date of determination, an amount equal to (i)
the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to
such Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with respect
to all Guarantors multiplied by (ii) the aggregate amount paid or distributed on
or before such date by all Funding Guarantors under this Guaranty in respect of
the obligations guarantied. "FAIR SHARE SHORTFALL" means, with respect to a
Guarantor as of any date of determination, the excess, if any, of the Fair Share
of such Guarantor over the Aggregate Payments of such Guarantor. "ADJUSTED
MAXIMUM AMOUNT" means, with respect to a Guarantor as of any date of
determination, the maximum aggregate amount of the obligations of such Guarantor
under this Guaranty, determined as of such date in accordance with subsection
2.2(a); provided that, solely for purposes of calculating the "Adjusted Maximum
Amount" with respect to any Guarantor for purposes of this subsection 2.2(b),
any assets or liabilities of such Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Guarantor. "AGGREGATE PAYMENTS" means, with respect to a Guarantor as of any
date of determination, an amount equal to (i) the aggregate amount of all
payments and distributions made on or before such date by such Guarantor in
respect of this Guaranty (including in respect of this subsection 2.2(b)) minus
(ii) the aggregate amount of all payments received on or before such date by
such Guarantor from the other Guarantors as contributions under this subsection
2.2(b). The amounts payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Guarantors of their obligations as set
forth in this subsection 2.2(b) shall not be construed in any way to limit the
liability of any Guarantor hereunder.
2.3 PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS. Subject to the
provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree,
in furtherance of the foregoing and not in limitation of any other right which
any Beneficiary may have at law or in equity against any Guarantor by virtue
hereof, that upon the failure of Company to pay any of the Guarantied
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)),
Guarantors will upon demand pay, or cause to be paid, in cash, to Guarantied
Party for the ratable benefit of Beneficiaries, an amount equal to the sum of
the unpaid principal amount of all Guarantied Obligations then due as aforesaid,
accrued and unpaid interest on such Guarantied Obligations (including interest
which, but for the filing of a petition in bankruptcy with respect to Company,
would have accrued on such Guarantied Obligations, whether or not a claim is
allowed against Company for such interest in the related bankruptcy proceeding)
and all other Guarantied Obligations then owed to Beneficiaries as aforesaid.
All such payments shall
XVIII-4
258
be applied promptly from time to time by Guarantied Party as provided in
subsection 2.4D of the Credit Agreement.
2.4 LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of
collectibility.
(b) Guarantied Party may enforce this Guaranty upon the occurrence
of an Event of Default under the Credit Agreement or the occurrence of
an Early Termination Date (as defined in a Master Agreement or an
Interest Rate Swap Agreement or Interest Rate and Currency Exchange
Agreement in the form prepared by the International Swap and
Derivatives Association Inc. or a similar event under any similar swap
agreement) under any Lender Interest Rate Agreement (either such
occurrence being an "EVENT OF DEFAULT" for purposes of this Guaranty)
notwithstanding the existence of any dispute between Company and any
Beneficiary with respect to the existence of such Event of Default.
(c) The obligations of each Guarantor hereunder are independent of
the obligations of Company under the Loan Documents or the Lender
Interest Rate Agreements and the obligations of any other guarantor
(including any other Guarantor) of the obligations of Company under
the Loan Documents or the Lender Interest Rate Agreements, and a
separate action or actions may be brought and prosecuted against such
Guarantor whether or not any action is brought against Company or any
of such other guarantors and whether or not Company is joined in any
such action or actions.
(d) Payment by any Guarantor of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or
abridge any Guarantor's liability for any portion of the Guarantied
Obligations which has not been paid. Without limiting the generality
of the foregoing, if Guarantied Party is awarded a judgment in any
suit brought to enforce any Guarantor's covenant to pay a portion of
the Guarantied Obligations, such judgment shall not be deemed to
release such Guarantor from its covenant to pay the portion of the
Guarantied Obligations that is not the subject of such suit, and such
judgment shall not, except to the extent satisfied by such Guarantor,
limit, affect, modify or abridge any other Guarantor's liability
hereunder in respect of the Guarantied Obligations.
(e) Any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any reduction,
limitation, impairment, discharge or
XVIII-5
259
termination of any Guarantor's liability hereunder, from time to time
may (i) renew, extend, accelerate, increase the rate of interest on,
or otherwise change the time, place, manner or terms of payment of the
Guarantied Obligations, (ii) settle, compromise, release or discharge,
or accept or refuse any offer of performance with respect to, or
substitutions for, the Guarantied Obligations or any agreement
relating thereto and/or subordinate the payment of the same to the
payment of any other obligations; (iii) request and accept other
guaranties of the Guarantied Obligations and take and hold security
for the payment of this Guaranty or the Guarantied Obligations; (iv)
release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration,
any security for payment of the Guarantied Obligations, any other
guaranties of the Guarantied Obligations, or any other obligation of
any Person (including any other Guarantor) with respect to the
Guarantied Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of such Beneficiary in respect of
this Guaranty or the Guarantied Obligations and direct the order or
manner of sale thereof, or exercise any other right or remedy that
such Beneficiary may have against any such security, in each case as
such Beneficiary in its discretion may determine consistent with the
Credit Agreement or the applicable Lender Interest Rate Agreement and
any applicable security agreement, including foreclosure on any such
security pursuant to one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of any Guarantor against Company or any security for the
Guarantied Obligations; and (vi) exercise any other rights available
to it under the Loan Documents or the Lender Interest Rate Agreements.
(f) This Guaranty and the obligations of Guarantors hereunder
shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guarantied Obligations),
including the occurrence of any of the following, whether or not any
Guarantor shall have had notice or knowledge of any of them: (i) any
failure or omission to assert or enforce or agreement or election not
to assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any
claim or demand or any right, power or remedy (whether arising under
the Loan Documents or the Lender Interest Rate Agreements, at law, in
equity or otherwise) with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of
or security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including provisions
relating to events of default) of the Credit Agreement, any of the
other Loan Documents, any of the Lender Interest Rate Agreements or
any agreement or instrument executed pursuant thereto, or of any other
guaranty or security for the Guarantied Obligations, in each case
whether or not in accordance with the terms of the Credit Agreement or
such Loan Document, such Lender Interest Rate Agreement
XVIII-6
260
or any agreement relating to such other guaranty or security; (iii)
the Guarantied Obligations, or any agreement relating thereto, at any
time being found to be illegal, invalid or unenforceable in any
respect; (iv) the application of payments received from any source
(other than payments received pursuant to the other Loan Documents or
any of the Lender Interest Rate Agreements or from the proceeds of any
security for the Guarantied Obligations, except to the extent such
security also serves as collateral for indebtedness other than the
Guarantied Obligations) to the payment of indebtedness other than the
Guarantied Obligations, even though any Beneficiary might have elected
to apply such payment to any part or all of the Guarantied
Obligations; (v) any Beneficiary's consent to the change,
reorganization or termination of the corporate structure or existence
of Company or any of its Subsidiaries and to any corresponding
restructuring of the Guarantied Obligations; (vi) any failure to
perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege or assert
against any Beneficiary in respect of the Guarantied Obligations,
including failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do
any other act or thing, which may or might in any manner or to any
extent vary the risk of any Guarantor as an obligor in respect of the
Guarantied Obligations.
2.5 WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the
benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition of
payment or performance by such Guarantor, to (i) proceed against
Company, any other guarantor (including any other Guarantor) of the
Guarantied Obligations or any other Person, (ii) proceed against or
exhaust any security held from Company, any such other guarantor or
any other Person, (iii) proceed against or have resort to any balance
of any deposit account or credit on the books of any Beneficiary in
favor of Company or any other Person, or (iv) pursue any other remedy
in the power of any Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including any
defense based on or arising out of the lack of validity or the
unenforceability of the Guarantied Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the
liability of Company from any cause other than payment in full of the
Guarantied Obligations;
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
▇▇▇▇▇-▇
▇▇▇
(▇) any defense based upon any Beneficiary's errors or omissions
in the administration of the Guarantied Obligations, except behavior
which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of such Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting such Guarantor's liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims,
and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security interest
or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Guaranty, notices of default under the Credit
Agreement, the Lender Interest Rate Agreements or any agreement or
instrument related thereto, notices of any renewal, extension or
modification of the Guarantied Obligations or any agreement related
thereto, notices of any extension of credit to Company and notices of
any of the matters referred to in subsection 2.4 and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded
by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.
2.6 CERTAIN CALIFORNIA LAW WAIVERS. As used in this subsection 2.6,
any reference to "the principal" includes Company, and any reference to "the
creditor" includes each Beneficiary. In accordance with Section 2856 of the
California Civil Code:
(a) each Guarantor agrees (i) to waive any and all rights of
subrogation and reimbursement against Company or against any
collateral or security granted by Company for any of the Guarantied
Obligations and (ii) to withhold the exercise of any and all rights of
contribution against any other guarantor of any of the Guarantied
Obligations and against any collateral or security granted by any such
other guarantor for any of the Guarantied Obligations until the
Guarantied Obligations shall have been paid in full and the
Commitments shall have terminated and all Letters of Credit shall have
expired or been cancelled, all as more fully set forth in subsection
2.7;
(b) each Guarantor waives any and all other rights and defenses
available to such Guarantor by reason of Sections 2787 to 2855,
inclusive, 2899 and 3433 of the California Civil Code, including any
and all rights or defenses such Guarantor may have by reason of
protection afforded to the principal with respect to any of the
Guarantied Obligations, or to any other guarantor (including any other
Guarantor) of any of the Guarantied Obligations with respect to any of
XVIII-8
262
such guarantor's obligations under its guaranty, in either case
pursuant to the antideficiency or other laws of the State of
California limiting or discharging the principal's indebtedness or
such guarantor's obligations, including Section 580a, 580b, 580d, or
726 of the California Code of Civil Procedure; and
(c) each Guarantor waives all rights and defenses arising out of
an election of remedies by the creditor, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security
for any Guarantied Obligation, has destroyed such Guarantor's rights
of subrogation and reimbursement against the principal by the
operation of Section 580d of the Code of Civil Procedure or otherwise;
and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with respect to security for an obligation of
any other guarantor (including any other Guarantor) of any of the
Guarantied Obligations, has destroyed such Guarantor's rights of
contribution against such other guarantor.
No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this subsection 2.6.
2.7 GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Each
Guarantor hereby waives any claim, right or remedy, direct or indirect, that
such Guarantor now has or may hereafter have against Company or any of its
assets in connection with this Guaranty or the performance by such Guarantor of
its obligations hereunder, in each case whether such claim, right or remedy
arises in equity, under contract, by statute (including, without limitation,
under California Civil Code Section 2847, 2848 or 2849), under common law or
otherwise and including (a) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against
Company, (b) any right to enforce, or to participate in, any claim, right or
remedy that any Beneficiary now has or may hereafter have against Company, and
(c) any benefit of, and any right to participate in, any collateral or security
now or hereafter held by any Beneficiary. In addition, until the Guarantied
Obligations shall have been indefeasibly paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been cancelled,
each Guarantor shall withhold exercise of any right of contribution such
Guarantor may have against any other guarantor (including any other Guarantor)
of the Guarantied Obligations (including any such right of contribution under
California Civil Code Section 2848 or under subsection 2.2(b)). Each Guarantor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification such Guarantor may have against Company or against any
collateral or security, and any rights of contribution such Guarantor may have
against any such other guarantor, shall be junior and subordinate to any rights
any Beneficiary may have against Company, to all right, title and interest any
Beneficiary may have in any such collateral or security, and to any right any
Beneficiary may have against such other guarantor. If any amount shall be paid
to any Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all Guarantied
Obligations shall
XVIII-9
263
not have been paid in full, such amount shall be held in trust
for Guarantied Party on behalf of Beneficiaries and shall forthwith be paid over
to Guarantied Party for the benefit of Beneficiaries to be credited and applied
against the Guarantied Obligations, whether matured or unmatured, in accordance
with the terms hereof.
2.8 SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of Company,
or any Guarantor now or hereafter held by any Guarantor is hereby subordinated
in right of payment to the Guarantied Obligations, and any such indebtedness of
Company to such Guarantor collected or received by such Guarantor after an Event
of Default has occurred and is continuing shall be held in trust for Guarantied
Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied
Party for the benefit of Beneficiaries to be credited and applied against the
Guarantied Obligations but without affecting, impairing or limiting in any
manner the liability of such Guarantor under any other provision of this
Guaranty.
2.9 EXPENSES. Guarantors jointly and severally agree to pay, or cause
to be paid, on demand, and to save Beneficiaries harmless against liability for,
any and all costs and expenses (including fees and disbursements of counsel and
allocated costs of internal counsel) incurred or expended by any Beneficiary in
connection with the enforcement of or preservation of any rights under this
Guaranty.
2.10 CONTINUING GUARANTY. This Guaranty is a continuing guaranty and
shall remain in effect until all of the Guarantied Obligations shall have been
paid in full and the Commitments shall have terminated and all Letters of Credit
shall have expired or been cancelled. Each Guarantor hereby irrevocably waives
any right (including any such right arising under California Civil Code Section
2815) to revoke this Guaranty as to future transactions giving rise to any
Guarantied Obligations.
2.11 AUTHORITY OF GUARANTORS OR COMPANY. It is not necessary for any
Beneficiary to inquire into the capacity or powers of any Guarantor or Company
or the officers, directors or any agents acting or purporting to act on behalf
of any of them.
2.12 FINANCIAL CONDITION OF COMPANY. Any Loans may be granted to
Company or continued from time to time, and any Lender Interest Rate Agreements
may be entered into from time to time, in each case without notice to or
authorization from any Guarantor regardless of the financial or other condition
of Company at the time of any such grant or continuation or at the time such
Lender Interest Rate Agreement is entered into, as the case may be. No
Beneficiary shall have any obligation to disclose or discuss with any Guarantor
its assessment, or any Guarantor's assessment, of the financial condition of
Company. Each Guarantor has adequate means to obtain information from Company on
a continuing basis concerning the financial condition of Company and its ability
to perform its obligations under the Loan Documents and the Lender Interest Rate
Agreements, and each Guarantor assumes the responsibility for being and keeping
informed of the financial condition of Company and of all circumstances bearing
upon the risk of nonpayment of the Guarantied Obligations. Each Guarantor hereby
waives and relinquishes any duty on the part of any Beneficiary to
XVIII-10
264
disclose any matter, fact or thing relating to the business, operations or
conditions of Company now known or hereafter known by any Beneficiary.
2.13 RIGHTS CUMULATIVE. The rights, powers and remedies given to
Beneficiaries by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Beneficiaries by virtue
of any statute or rule of law or in any of the other Loan Documents, any of the
Lender Interest Rate Agreements or any agreement between any Guarantor and any
Beneficiary or Beneficiaries or between Company and any Beneficiary or
Beneficiaries. Any forbearance or failure to exercise, and any delay by any
Beneficiary in exercising, any right, power or remedy hereunder shall not impair
any such right, power or remedy or be construed to be a waiver thereof, nor
shall it preclude the further exercise of any such right, power or remedy.
2.14 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY.
(a) So long as any Guarantied Obligations remain outstanding, no Guarantor
shall, without the prior written consent of Guarantied Party acting pursuant to
the instructions of Requisite Lenders, commence or join with any other Person in
commencing any bankruptcy, reorganization or insolvency proceedings of or
against Company. The obligations of Guarantors under this Guaranty shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company or by any
defense which Company may have by reason of the order, decree or decision of any
court or administrative body resulting from any such proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on any
portion of the Guarantied Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guarantied Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would have accrued on such
portion of the Guarantied Obligations if said proceedings had not been
commenced) shall be included in the Guarantied Obligations because it is the
intention of Guarantors and Beneficiaries that the Guarantied Obligations which
are guarantied by Guarantors pursuant to this Guaranty should be determined
without regard to any rule of law or order which may relieve Company of any
portion of such Guarantied Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay Guarantied Party, or allow the claim of
Guarantied Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied Obligations
are paid by Company, the obligations of Guarantors hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from any Beneficiary as a preference, fraudulent transfer
or otherwise, and any such payments which are so rescinded or recovered shall
constitute Guarantied Obligations for all purposes under this Guaranty.
XVIII-11
265
2.15 NOTICE OF EVENTS. As soon as any Guarantor obtains knowledge
thereof, such Guarantor shall give Guarantied Party written notice (unless
Company has already provided such written notice) of any condition or event
which has resulted in (a) a material adverse change in the financial condition
of any Guarantor or Company or (b) a breach of or noncompliance with any term,
condition or covenant contained herein or in the Credit Agreement, any other
Loan Document, any Lender Interest Rate Agreement or any other document
delivered pursuant hereto or thereto.
2.16 SET OFF. In addition to any other rights any Beneficiary may have
under law or in equity, if any amount shall at any time be due and owing by any
Guarantor to any Beneficiary under this Guaranty, such Beneficiary is authorized
at any time or from time to time, without notice (any such notice being hereby
expressly waived), to set off and to appropriate and to apply any and all
deposits (general or special, including indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness of such
Beneficiary owing to such Guarantor and any other property of such Guarantor
held by any Beneficiary to or for the credit or the account of such Guarantor
against and on account of the Guarantied Obligations and liabilities of such
Guarantor to any Beneficiary under this Guaranty.
2.17 DISCHARGE OF GUARANTY UPON SALE OF GUARANTOR. If all of the stock
of any Guarantor or any of its successors in interest under this Guaranty shall
be sold or otherwise disposed of (including by merger or consolidation) in an
Asset Sale not prohibited by subsection 7.7 of the Credit Agreement or otherwise
consented to by Requisite Lenders, the Guaranty of such Guarantor or such
successor in interest, as the case may be, hereunder shall automatically be
discharged and released without any further action by any Beneficiary or any
other Person effective as of the time of such Asset Sale; provided that, as a
condition precedent to such discharge and release, Guarantied Party shall have
received evidence satisfactory to it that arrangements satisfactory to it have
been made for delivery to Guarantied Party of the applicable Net Asset Sale
Proceeds.
SECTION 3. MISCELLANEOUS
3.1 SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this Guaranty
and the other Loan Documents and the Lender Interest Rate Agreements and any
increase in the Commitments under the Credit Agreement.
3.2 NOTICES. Any communications between Guarantied Party and any
Guarantor and any notices or requests provided herein to be given may be given
by mailing the same, postage prepaid, or by telex, facsimile transmission or
cable to each such party at its address set forth in the Credit Agreement, on
the signature pages hereof or to such other addresses as each such party may in
writing hereafter indicate. Any notice, request or demand to or upon Guarantied
Party or any Guarantor shall not be effective until received.
XVIII-12
266
3.3 SEVERABILITY. In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
3.4 AMENDMENTS AND WAIVERS. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective without the written
concurrence of Guarantied Party and, in the case of any such amendment or
modification, each Guarantor against whom enforcement of such amendment or
modification is sought. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
3.5 HEADINGS. Section and subsection headings in this Guaranty are
included herein for convenience of reference only and shall not constitute a
part of this Guaranty for any other purpose or be given any substantive effect.
3.6 APPLICABLE LAW; RULES OF CONSTRUCTION. THIS GUARANTY AND THE
RIGHTS AND OBLIGATIONS OF GUARANTORS AND BENEFICIARIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL
CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The rules of construction set forth in subsection 1.3 of the Credit
Agreement shall be applicable to this Guaranty mutatis mutandis.
3.7 SUCCESSORS AND ASSIGNS. This Guaranty is a continuing guaranty and
shall be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of Beneficiaries and their respective
successors and assigns. No Guarantor shall assign this Guaranty or any of the
rights or obligations of such Guarantor hereunder without the prior written
consent of all Lenders. Any Beneficiary may, without notice or consent, assign
its interest in this Guaranty in whole or in part. The terms and provisions of
this Guaranty shall inure to the benefit of any transferee or assignee of any
Loan, and in the event of such transfer or assignment the rights and privileges
herein conferred upon such Beneficiary shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof.
3.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF
LOS ANGELES. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GUARANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
XVIII-13
267
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 3.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
410.40] OR OTHERWISE.
3.9 WAIVER OF TRIAL BY JURY. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF
THE BENEFITS HEREOF, EACH BENEFICIARY EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each
Guarantor and, by its acceptance of the benefits hereof, each Beneficiary, each
(i) acknowledges that this waiver is a material inducement for such Guarantor
and Beneficiaries to enter into a business relationship, that such Guarantor and
Beneficiaries have already relied on this waiver in entering into this Guaranty
or accepting the benefits thereof, as the case may be, and that each will
continue to rely on this waiver in their related future dealings and (ii)
further warrants and represents that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED
XVIII-14
268
BY GUARANTIED PARTY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY.
In the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.
3.10 NO OTHER WRITING. This writing is intended by Guarantors and
Beneficiaries as the final expression of this Guaranty and is also intended as a
complete and exclusive statement of the terms of their agreement with respect to
the matters covered hereby. No course of dealing, course of performance or trade
usage, and no parol evidence of any nature, shall be used to supplement or
modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
3.11 FURTHER ASSURANCES. At any time or from time to time, upon the
request of Guarantied Party, Guarantors shall execute and deliver such further
documents and do such other acts and things as Guarantied Party may reasonably
request in order to effect fully the purposes of this Guaranty.
3.12 ADDITIONAL GUARANTORS. The initial Guarantors hereunder shall be
such of the Subsidiaries of Company as are signatories hereto on the date
hereof. From time to time subsequent to the date hereof, additional Subsidiaries
of Company may become parties hereto, as additional Guarantors (each an
"ADDITIONAL GUARANTOR"), by executing a counterpart of this Guaranty. Upon
delivery of any such counterpart to Agent, notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as
fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Guarantor hereunder, nor by any election of Agent not to cause any Subsidiary of
Company to become an Additional Guarantor hereunder. This Guaranty shall be
fully effective as to any Guarantor that is or becomes a party hereto regardless
of whether any other Person becomes or fails to become or ceases to be a
Guarantor hereunder.
3.13 COUNTERPARTS; EFFECTIVENESS. This Guaranty may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original for all purposes; but all such counterparts together shall
constitute but one and the same instrument. This Guaranty shall become effective
as to each Guarantor upon the execution of a counterpart hereof by such
Guarantor (whether or not a counterpart hereof shall have been executed by any
other Guarantor) and receipt by Guarantied Party of written or telephonic
notification of such execution and authorization of delivery thereof.
3.14 GUARANTIED PARTY AS AGENT.
(a) Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders and, by their acceptance of the benefits hereof, Interest
Rate Exchangers. Guarantied Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to
XVIII-15
269
take or refrain from taking any action, solely in accordance with this Guaranty
and the Credit Agreement.
(b) Guarantied Party shall at all times be the same Person that is
Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Guarantied Party under this Guaranty; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal
as Guarantied Party under this Guaranty; and appointment of a successor Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Guarantied Party under this Guaranty. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Guarantied Party under this Guaranty, and the retiring or
removed Guarantied Party under this Guaranty shall promptly (i) transfer to such
successor Guarantied Party all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Guarantied Party under this Guaranty, and (ii)
take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Guarantied Party of the rights created
hereunder, whereupon such retiring or removed Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
[Remainder of page intentionally left blank]
XVIII-16
270
IN WITNESS WHEREOF, each of the undersigned Guarantors has
caused this Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of the date first written above.
[NAME OF GUARANTOR]
By___________________________
Title________________________
Address:_____________________
[NAME OF GUARANTOR]
By___________________________
Title________________________
Address:_____________________
S-1
271
IN WITNESS WHEREOF, the undersigned Additional Guarantor has
caused this Guaranty to be duly executed and delivered by its officer thereunto
duly authorized as of ______________, 199_.
___________________________________
(Name of Additional Guarantor)
By___________________________
Title________________________
Address:_____________________
_____________________
_____________________
S-2
272
EXHIBIT XIX
[FORM OF FINANCIAL CONDITION CERTIFICATE]
FINANCIAL CONDITION CERTIFICATE
This FINANCIAL CONDITION CERTIFICATE (this "CERTIFICATE") is delivered
in connection with that certain Credit Agreement dated as of January 7, 1997
(the "CREDIT AGREEMENT") by and among ▇▇▇▇ Industries, Inc., a California
corporation ("COMPANY"), the financial institutions referred to therein as
Lenders ("LENDERS") and Union Bank of California, N.A., as Agent ("AGENT").
Capitalized terms used herein without definition have the same meanings as in
the Credit Agreement.
A. The Company hereby certifies that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is, and at all
pertinent times mentioned herein has been, the duly qualified and acting Vice
President and Chief Financial Officer of Company. In such capacity he has
participated in the management of the Company's financial affairs and is
familiar with its financial statements and those of its Subsidiaries. He has,
together with other of our officers, acted on our behalf in connection with the
evaluation and negotiation of the Tender Offer and the Merger and the
negotiation of the Credit Agreement, and is familiar with the terms and
conditions thereof.
B. ▇▇. ▇▇▇▇▇▇▇ has reviewed the contents of this Certificate, and has
conferred with counsel for Company for the purpose of discussing the meaning of
its contents.
C. In connection with preparing for the consummation of the Tender
Offer and the Merger transactions and financing contemplated by the Credit
Agreement (the "PROPOSED TRANSACTIONS"), ▇▇. ▇▇▇▇▇▇▇ has participated in the
preparation of, and has reviewed, pro forma projections of net income and cash
flows for the Company and its Subsidiaries for the fiscal years of the Company
ending December 31, 1996 through December 31, 2001, inclusive (the "PROJECTED
FINANCIAL STATEMENTS"). The Projected Financial Statements, attached hereto as
Exhibit A, give effect to the consummation of the Proposed Transactions and
assume that the debt obligations of the Company will be paid from the cash flow
generated by the operations of the Company and its Subsidiaries and other cash
resources. The Projected Financial Statements were prepared on the basis of
information available at September 30, 1996. There are no known facts that have
occurred since such date that would indicate that the Projected Financial
Statements are inaccurate in any material respect. The Projected Financial
Statements do not reflect (i) any potential changes in interest rates from those
assumed in the Projected Financial Statements, (ii) any potential material,
adverse changes in general business conditions, or (iii) any potential changes
in income tax laws.
D. ▇▇. ▇▇▇▇▇▇▇ has also participated in the preparation of, and has
reviewed, a pro forma summary balance sheet of the Company and its Subsidiaries
(the "PRO FORMA BALANCE SHEET") as of November 30, 1996, giving effect to the
Proposed
XIX-1
273
Transactions. The Pro Forma Balance Sheet is attached hereto as Exhibit B and
has been prepared utilizing the historical cost basis of accounting as adjusted
for the pro forma effects of the Proposed Transaction.
E. In connection with the preparation of the Projected Financial
Statements, ▇▇. ▇▇▇▇▇▇▇ has made such investigations and inquiries as he has
deemed necessary and prudent therefor and, specifically, has relied on
historical information with respect to revenues, expenses and other relevant
items supplied by the supervisory personnel of the Company and its Subsidiaries
directly responsible for the various operations involved. The assumptions upon
which the Projected Financial Statements are based are stated therein. Although
any assumptions and any projections by necessity involve uncertainties and
approximations, based on discussions with ▇▇. ▇▇▇▇▇▇▇ and other members of
management, there is no reason to believe that the assumptions on which the
Projected Financial Statements are based are not reasonable. Based thereon,
there is no reason to believe that the projections for the Company and its
Subsidiaries, taken as a whole, reflected in the Projected Financial Statements
do not provide reasonable estimations of future performance, subject, as stated
above, to the uncertainties and approximations inherent in any projections.
F. The Pro Forma Balance Sheet has been prepared in a manner that
reflects the reported value of the net tangible assets of the Company and its
Subsidiaries on a consolidated basis. For purposes of this Certificate, the
"reported value" of the net tangible assets is no less than the aggregate amount
which may be realized, after settlement of related liabilities, within a
reasonable time, either through collection of such assets or through sale of
such assets at the regular market value thereof, conceiving of the latter as the
amount which could be obtained for the property in question within such period
by a capable and diligent businessman from an interested buyer who is willing to
purchase under ordinary selling conditions.
G. Based on the foregoing, the Company hereby certifies as follows:
1. The Company is not now, nor will the incurrence of the
Obligations under the Credit Agreement and the incurrence of the other
obligations contemplated by the Proposed Transactions render the
Company "insolvent" as defined in this paragraph 1. For purposes of
this Certificate, "insolvent" means that the present reported value of
tangible assets is less than the amount that will be required to pay
the probable liability on existing debts as they become absolute and
matured. This conclusion expressed above is supported by the Pro Forma
Balance Sheet. Valuation of the Company on the basis thereof would
reflect the reported net tangible assets of the Company as $_______.
2. By the incurrence of the Obligations under the Credit Agreement
and the incurrence of the other obligations contemplated by the
Proposed Transactions, the Company does not intend, nor does it
believe that it will incur debts beyond its ability to pay as such
debts mature. This conclusion is based, in part, on the Projected
Financial Statements, which demonstrate that the Company
XIX-2
274
will have positive cash flow after paying the scheduled anticipated
indebtedness (including scheduled payments under the Credit Agreement,
the other obligations contemplated by the Proposed Transactions and
other permitted indebtedness).
3. The incurrence of the Obligations under the Credit Agreement
and the incurrence of the other obligations contemplated by the
Proposed Transactions is not expected to leave the Company with net
tangible assets constituting "unreasonably small capital." In reaching
this conclusion, the Company understands that "unreasonably small
capital" depends upon the nature of the particular business or
businesses conducted or to be conducted, and the above conclusion is
based on the needs and anticipated needs for capital of the businesses
conducted or anticipated to be conducted by Company and its
Subsidiaries in light of the Projected Financial Statements and
available credit capacity.
4. The Company has not executed the Credit Agreement or any
documents mentioned therein, or made any transfer or incurred any
obligations thereunder, with actual intent to hinder, delay or defraud
either present or future creditors.
It is understood that Agent and Lenders are relying on the receipt of
this Certificate in connection win the extension of credit to the Company
pursuant to the Credit Agreement.
The foregoing information is true and correct and this Certificate has
been signed, this ___ day of January, 1997.
▇▇▇▇ INDUSTRIES, INC.
By
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and
Chief Financial Officer
XIX-3
275
EXHIBIT XX
[FORM OF SUBSIDIARY PLEDGE AGREEMENT]
SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (this "AGREEMENT") is dated as of
January __, 1997 and entered into by and between [INSERT NAME OF PLEDGOR IN
CAPS], a corporation, [INSERT NAME OF ADDITIONAL PLEDGOR IN CAPS], a
____________ corporation (each of the foregoing being hereinafter referred to as
"PLEDGOR"), and UNION BANK OF CALIFORNIA, N.A., as agent for and representative
of (in such capacity herein called "SECURED PARTY") the financial institutions
("LENDERS") party to the Credit Agreement referred to below and any Interest
Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of the shares of stock
(the "PLEDGED SHARES") described in Part A of Schedule I annexed hereto and
issued by the corporations named therein.
B. Secured Party and Lenders have entered into a Credit Agreement
dated as of January 7, 1997 (said Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with ▇▇▇▇ Industries, Inc., a California
corporation ("COMPANY"), pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Company.
C. Company may from time to time enter, or may from time to time have
entered, into one or more Interest Rate Agreements (collectively, the "LENDER
INTEREST RATE AGREEMENTS") with one or more Lenders (in such capacity,
collectively, "INTEREST RATE EXCHANGERS").
D. Pledgor has executed and delivered that certain Subsidiary Guaranty
dated as of January __, 1997 (said Subsidiary Guaranty, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the
"GUARANTY") in favor of Secured Party for the benefit of Lenders and any
Interest Rate Exchangers, pursuant to which Pledgor has guarantied the prompt
payment and performance when due of all obligations of Company under the Credit
Agreement and all obligations of Company
XX-1
276
under the Lender Interest Rate Agreements, including the obligation of Company
to make payments thereunder in the event of early termination thereof.
E. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and to induce Interest Rate Exchangers to enter into Lender Interest
Rate Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges and assigns to
Secured Party, and hereby grants to Secured Party a security interest in, all of
Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing the Pledged
Shares and any interest of Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(b) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, stock of
any issuer of the Pledged Shares from time to time acquired by Pledgor in any
manner (which shares shall be deemed to be part of the Pledged Shares), the
certificates or other instruments representing such additional shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such additional
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional
shares, securities, warrants, options or other rights;
(c) all shares of, and all securities convertible into and warrants,
options and other rights to purchase or otherwise acquire, stock of any Person
that, after the date of this Agreement, becomes, as a result of any occurrence,
a direct Subsidiary of Pledgor (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such shares,
securities, warrants, options or other rights and any interest of Pledgor in the
entries on the books of any financial intermediary pertaining to such shares,
and all dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares, securities, warrants,
options or other rights; and
XX-2
277
(d) to the extent not covered by clauses (a) through (c) above, all
proceeds of any or all of the foregoing Pledged Collateral. For purposes of this
Agreement, the term "PROCEEDS" includes whatever is receivable or received when
Pledged Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
proceeds of any indemnity or guaranty payable to Pledgor or Secured Party from
time to time with respect to any of the Pledged Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Guaranty and all extensions or renewals
thereof, whether for principal, interest (including interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Pledgor now or hereafter existing under this Agreement (all such
obligations of Pledgor being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party. Upon the occurrence and during the continuation of an Event of
Default (as defined in the Credit Agreement) or the occurrence of an Early
Termination Date (as defined in a Master Agreement or an Interest Rate Swap
Agreement or Interest Rate and Currency Exchange Agreement in the form prepared
by the International Swap and Derivatives Association Inc. or a similar event
under any similar swap agreement) under any Lender Interest Rate Agreement
(either such occurrence being an "EVENT OF DEFAULT" for purposes of this
Agreement), Secured Party shall have the right, without notice to Pledgor, to
transfer to or to register in the name of Secured Party or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights
specified in Section 7(a). In
XX-3
278
addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Shares have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute
all of the issued and outstanding shares of stock of each issuer thereof, and
there are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and
beneficial owner of the Pledged Collateral free and clear of any Lien except for
the security interest created by this Agreement.
SECTION 5. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL;
ETC. Pledgor shall:
(a) not, except as expressly permitted by the Credit Agreement, (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement, or (iii) permit any
issuer of Pledged Shares to merge or consolidate unless all the outstanding
capital stock of the surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; and
(b) (i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to Pledgor, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock or other securities of each issuer of Pledged Shares, and (iii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all shares of stock of any Person that, after the date of this
Agreement, becomes, as a result of any occurrence, a direct Domestic Subsidiary
of Pledgor.
XX-4
279
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral. Without limiting the generality of the foregoing, Pledgor will: (i)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (ii) at Secured
Party's request, appear in and defend any action or proceeding that may affect
Pledgor's title to or Secured Party's security interest in all or any part of
the Pledged Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Secured Party a Pledge Amendment, duly executed by Pledgor, in substantially
the form of Schedule II annexed hereto (a "PLEDGE AMENDMENT"), in respect of the
additional Pledged Shares to be pledged pursuant to this Agreement. Pledgor
hereby authorizes Secured Party to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares listed on any Pledge Amendment
delivered to Secured Party shall for all purposes hereunder be considered
Pledged Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional Pledged Shares pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement or the
Credit Agreement; provided, however, that Pledgor shall not exercise or
refrain from exercising any such right if Secured Party shall have notified
Pledgor that, in Secured Party's judgment, such action would have a
material adverse effect on the value of the Pledged Collateral or any part
thereof; and provided, further, that, subject to the next following
sentence, Pledgor shall give Secured Party at least five Business Days'
prior written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right. It is under-
XX-5
280
stood, however, that neither (A) the voting by Pledgor of any Pledged
Shares for or Pledgor's consent to the election of directors at a regularly
scheduled annual or other meeting of stockholders or with respect to
incidental matters at any such meeting nor (B) Pledgor's consent to or
approval of any action otherwise permitted under this Agreement and the
Credit Agreement shall be deemed inconsistent with the terms of this
Agreement or the Credit Agreement within the meaning of this Section
7(a)(i), and no notice of any such voting or consent need be given to
Secured Party;
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged
Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Secured Party, be segregated from the other property or
funds of Pledgor and be forthwith delivered to Secured Party as Pledged
Collateral in the same form as so received (with all necessary
indorsements); and
(iii) Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment
orders and other instruments as Pledgor may from time to time reasonably
request for the purpose of enabling Pledgor to exercise the voting and
other consensual rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends, principal or interest
payments which it is authorized to receive and retain pursuant to paragraph
(ii) above.
(b) Upon the occurrence and during the continuation of an Event of
Default:
(i) upon written notice from Secured Party to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights which it would
XX-6
281
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease,
and all such rights shall thereupon become vested in Secured Party who
shall thereupon have the sole right to exercise such voting and other
consensual rights;
(ii) all rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends and interest
payments; and
(iii) all dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this
Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor and shall forthwith be paid
over to Secured Party as Pledged Collateral in the same form as so received
(with any necessary indorsements).
(c) In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request and (ii) without limiting
the effect of the immediately preceding clause (i), Pledgor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including giving or withholding written
consents of shareholders, calling special meetings of shareholders and voting at
such meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence of an
Event of Default and which proxy shall only terminate upon the payment in full
of the Secured Obligations.
SECTION 8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Pledged Collateral
without the signature of Pledgor;
XX-7
282
(b) to ask, demand, collect, ▇▇▇ for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable to
Pledgor representing any dividend, principal or interest payment or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same; and
(d) to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of any of
the Pledged Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Pledged Collateral.
SECTION 9. SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement in order to protect Secured Party's interests in
the Collateral, and the expenses of Secured Party incurred in connection
therewith shall be payable by Pledgor under Section 14(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Pledged Collateral, it being understood that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Pledged Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral, or (d) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value. Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property consisting of negotiable securities.
SECTION 11. REMEDIES.
(a) If any Event of Default shall have occurred and be continuing,
Secured Party may exercise in respect of the Pledged Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect
XX-8
283
in any relevant jurisdiction (the "CODE") (whether or not the Code applies to
the affected Pledged Collateral), and Secured Party may also in its sole
discretion, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange or broker's board or at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. Secured Party or any Lender or Interest
Rate Exchanger may be the purchaser of any or all of the Pledged Collateral at
any such sale and Secured Party, as agent for and representative of Lenders and
Interest Rate Exchangers (but not any Lender or Lenders or Interest Rate
Exchanger or Interest Rate Exchangers in its or their respective individual
capacities unless Requisite Lenders shall otherwise agree in writing), shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Pledged Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Pledged Collateral are insufficient to pay all the Secured
Obligations, Pledgor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of such
Pledged Collateral under the Securities Act and/or such state securities laws,
to limit purchasers to those who will agree, among other things, to acquire the
Pledged Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable than those obtainable through
a public sale without such restrictions (including a public offering made
pursuant to a
XX-9
284
registration statement under the Securities Act) and, notwithstanding such
circumstances and the registration rights granted to Secured Party by Pledgor
pursuant to Section 12, Pledgor agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to engage in public sales and no obligation to
delay the sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or
all of the Pledged Collateral, upon written request, Pledgor shall and shall
cause each issuer of any Pledged Shares to be sold hereunder from time to time
to furnish to Secured Party all such information as Secured Party may request in
order to determine the number of shares and other instruments included in the
Pledged Collateral which may be sold by Secured Party in exempt transactions
under the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
SECTION 12. REGISTRATION RIGHTS. If Secured Party shall determine to
exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 11, Pledgor agrees that, upon request of Secured Party (which request
may be made by Secured Party in its sole discretion), Pledgor will, at its own
expense:
(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
Secured Party, advisable to register such Pledged Collateral under the
provisions of the Securities Act and to cause the registration statement
relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of
Secured Party, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Secured Party;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement which will satisfy the provisions
of Section 11(a) of the Securities Act;
XX-10
285
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(e) bear all costs and expenses, including reasonable attorneys' fees,
of carrying out its obligations under this Section 12.
Pledgor further agrees that a breach of any of the covenants contained
in this Section 12 will cause irreparable injury to Secured Party, that Secured
Party has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 12 shall be
specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.
Nothing in this Section 12 shall in any way alter the rights of Secured Party
under Section 11.
SECTION 13. APPLICATION OF PROCEEDS. All proceeds received by Secured
Party in respect of any sale of, collection from, or other realization upon all
or any part of the Pledged Collateral shall be applied as provided in subsection
2.4D of the Credit Agreement.
SECTION 14. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party, and each Lender and
each Interest Rate Exchanger from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's or Interest Rate Exchanger's gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Secured Party hereunder, or (iv) the failure by Pledgor to perform or
observe any of the provisions hereof.
(c) In the event of any public sale described in Section 12, Pledgor
agrees to indemnify and hold harmless Secured Party, and each Lender and each
Interest Rate Exchanger and each of their respective directors, officers,
employees and agents from and against any loss, fee, cost, expense, damage,
liability or claim, joint or several, to which any such Persons may become
subject or for which any of them may be liable,
XX-11
286
under the Securities Act or otherwise, insofar as such losses, fees, costs,
expenses, damages, liabilities or claims (or any litigation commenced or
threatened in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or other such
document published or filed in connection with such public sale, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse Secured Party and such other Persons for any legal or other expenses
reasonably incurred by Secured Party and such other Persons in connection with
any litigation, of any nature whatsoever, commenced or threatened in respect
thereof (including any and all fees, costs and expenses whatsoever reasonably
incurred by Secured Party and such other Persons and counsel for Secured Party
and such other Persons in investigating, preparing for, defending against or
providing evidence, producing documents or taking any other action in respect
of, any such commenced or threatened litigation or any claims asserted). This
indemnity shall be in addition to any liability which Pledgor may otherwise have
and shall extend upon the same terms and conditions to each Person, if any, that
controls Secured Party or such Persons within the meaning of the Securities Act.
SECTION 15. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until the payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise.
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to Pledgor. Upon
any such termination Secured Party will, at Pledgor's expense, execute and
deliver to Pledgor such documents as Pledgor shall reasonably request to
evidence such termination and Pledgor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to Secured
Party, of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
SECTION 16. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders and, by their acceptance of the benefits hereof, Interest Rate
Exchangers. Secured Party shall be obligated, and shall have the right
hereunder, to make demands,
XX-12
287
to give notices, to exercise or refrain from exercising any rights, and to take
or refrain from taking any action (including the release or substitution of
Pledged Collateral), solely in accordance with this Agreement and the Credit
Agreement.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Secured Party of
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 17. AMENDMENTS; ETC. No amendment, modification, termination
or waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 18. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or, as to either
party, such other address as shall be designated by such party in a written
notice delivered to the other party hereto.
XX-13
288
SECTION 19. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 20. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 21. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 22. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL
CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF CALIFORNIA. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of California are used herein as therein defined. The rules of
construction set forth in subsection 1.3 of the Credit Agreement shall be
applicable to this Agreement mutatis mutandis.
SECTION 23. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF
LOS ANGELES. BY EXECUTING AND DELIVERING THIS AGREEMENT, PLEDGOR, FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
XX-14
289
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO PLEDGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION
18;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER PLEDGOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST PLEDGOR
IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 23 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40
OR OTHERWISE.
SECTION 24. WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Pledgor and Secured Party each acknowledge that this
waiver is a material inducement for Pledgor and Secured Party to enter into a
business relationship, that Pledgor and Secured Party have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Pledgor and Secured Party
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 24 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
XX-15
290
SECTION 25. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
XX-16
291
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF PLEDGOR]
By:__________________________
Title:
Notice Address: __________________________
__________________________
__________________________
UNION BANK OF CALIFORNIA, N.A.
as Agent, as Secured Party
By:__________________________
Title:
Notice Address: __________________________
__________________________
__________________________
S-1
292
SCHEDULE I
Attached to and forming a part of the Subsidiary Pledge
Agreement dated as of January __, 1997 between _______________, each as Pledgor,
and Union Bank of California, N.A., as Secured Party.
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- ---------
I-1
293
SCHEDULE II
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 199__, is delivered
pursuant to Section 6(b) of the Subsidiary Pledge Agreement referred to below.
The undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated January __, 1997, between the undersigned and Union Bank
of California, N.A., as Secured Party (the "SUBSIDIARY PLEDGE AGREEMENT,"
capitalized terms defined therein being used herein as therein defined), and
that the Pledged Shares listed on this Pledge Amendment shall be deemed to be
part of the Pledged Shares and shall become part of the Pledged Collateral and
shall secure all Secured Obligations.
[NAME OF PLEDGOR]
By: ___________________________
Title:
Class of Stock Certi- Par Number of
Stock Issuer Stock ficate Nos. Value Shares
------------ -------- ------------ ----- ---------
II-1
294
EXHIBIT XXI
[FORM OF MERGER DATE OPINION OF IRELL & ▇▇▇▇▇▇▇ LLP]
1. Each of Company, Surviving Corporation and the Domestic
Subsidiaries of Surviving Corporation (hereinafter the "Domestic Subsidiaries")
has been duly incorporated, and is validly existing in good standing under the
laws of its jurisdiction of incorporation, with corporate power to enter into a
Subsidiary Security Agreement, the Subsidiary Guaranty, a Subsidiary Pledge
Agreement, the Revolving Notes and the Term Notes (hereinafter, the "Merger Date
Closing Documents") to which it is a party, to perform its obligations
thereunder and to issue the Revolving Notes and the Term Notes (in the case of
Company).
2. The execution, delivery and performance of the Merger Date Loan
Documents to which Company, Surviving Corporation or any Domestic Subsidiary is
a party, and the issuance and payment of the Revolving Notes and the Term Notes
(in the case of Company) have been duly authorized by all necessary corporate
action on the part of Company, Surviving Corporation and each such Domestic
Subsidiary (as the case may be), and each of the Merger Date Loan Documents to
which Company, Surviving Corporation or any Domestic Subsidiary is a party has
been duly executed and delivered by Company, Surviving Corporation and each such
Domestic Subsidiary (as the case may be).
3. The Merger Date Loan Documents to which Company, Surviving
Corporation or any Domestic Subsidiary is a party constitute legally valid and
binding obligations of Company, Surviving Corporation and each such Domestic
Subsidiary (as the case may be), enforceable against Company, Surviving
Corporation and each such Domestic Subsidiary (as the case may be) in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally (including, without limitation, fraudulent conveyance laws) and
by general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or at law.
4. Company's, Surviving Corporation's and each Domestic Subsidiary's
execution and delivery of, and performance of their respective obligations
under, the Merger Date Loan Documents to which they are a party, and the
issuance and payment of the Revolving Notes and the Term Notes (in the case of
Company) do not and will not (i) violate Company's, Surviving Corporation's or
such Domestic Subsidiary's Articles or Certificate of Incorporation or Bylaws,
(ii) violate, breach, or result in a default under any other material agreement,
or (iii) breach or otherwise violate any existing obligation of Company,
Surviving Corporation or such Domestic Subsidiary under any order, judgment or
decree known to us of any California, New York or federal court or
governmental authority binding on Company, Surviving Corporation, or such
Domestic
XXI-1
295
Subsidiary, or (iv) result in the creation of any Lien upon any of the
properties or assets of Company, Surviving Corporation or any Domestic
Subsidiary under any agreement or order referred to in clauses (ii) and (iii)
above (other than Liens created pursuant to the Collateral Account Agreement).
5. The execution and delivery by Company, Surviving Corporation or any
Domestic Subsidiary of, and performance of their respective obligations under,
the Merger Date Loan Documents to which they are a party do not violate any
California, New York, or federal statute or regulation that we have, in the
exercise of customary professional diligence, recognized as applicable to
Company, Surviving Corporation or such Domestic Subsidiary or to transactions of
the type contemplated by the Merger Date Loan Documents to which they are a
party.
6. No order consent, permit or approval of any California, New York or
federal governmental authority that we have, in the exercise of customary
professional diligence, recognized as applicable to Company, Surviving
Corporation or any Subsidiary or to transactions of the type contemplated by the
Merger Date Loan Documents to which they are a party is required on the part of
Company, Surviving Corporation or any Domestic Subsidiary for the execution and
delivery of, and performance of their respective obligations under, the Merger
Date Loan Documents to which they are a party.
7. Neither Surviving Corporation nor any of the Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
8. Neither Surviving Corporation nor any of the Subsidiaries is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
9. It is not necessary in connection with the execution and delivery
of the Revolving Notes and the Term Notes to Lenders to register such Notes or
the Loans under the Securities Act of 1933, as amended, or to qualify any
indenture in respect thereof under the Trust Indenture Act of 1939, as amended.
10. Each of the Subsidiary Security Agreements executed by Surviving
Corporation or the Domestic Subsidiaries creates in favor of Agent a security
interest in such of the Collateral (as defined in the Subsidiary Security
Agreements, as the case may be) that is of a type in which a security interest
can be created under Article 9 of the Uniform Commercial Code as in effect in
the State of California (the "Uniform Commercial Code").
11. The Agent [has] [upon the filing of the UCC-1 Financing Statements
with the filing offices listed on Schedule ___ hereto (the "Filing Offices")
will have] a perfected security interest in Surviving Corporation's and each
Domestic Subsidiary's
XXI-2
296
interest in the Collateral described therein, to the extent a security interest
in such Collateral can be perfected by the filing of a financing statement with
the Filing Offices under the Uniform Commercial Code.
14. The Subsidiary Pledge Agreement, together with delivery of the
certificates representing the shares of stock identified on Schedule I to the
Subsidiary Pledge Agreement (the "Pledged Securities") to the Agent in the State
of California, create in favor of the Agent a perfected security interest under
the Uniform Commercial Code in the Pledged Securities free of adverse claims.
15. To the best of our knowledge after due inquiry, there are no
actions, suits or proceedings pending or threatened against Company, Surviving
Corporation or any of the Subsidiaries which have a significant likelihood of
materially and adversely affecting either the ability of Company, Surviving
Corporation or any Subsidiary to perform their respective obligations under any
of the Merger Date Loan Documents or the financial condition or operations of
Company and its Subsidiaries, taken as a whole.
16. Upon the filing of the Merger Agreement with the New York
Department of State in accordance with the Merger Agreement, (i) the Merger will
be validly consummated in accordance with the Merger Agreement and New York law,
and (ii) each outstanding share of common stock of Milgray will be converted as
provided in the Merger Agreement.
XXI-3
297
EXHIBIT XXII
[FORM OF MERGER DATE OPINION OF O'MELVENY & ▇▇▇▇▇ LLP]
[O'M&M Letterhead]
{Merger Date}
1 9 9 _
[file number]
[doc ID]
Union Bank of California, N.A.
[Address
of Agent]
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to ▇▇▇▇ Industries, Inc.
Ladies and Gentlemen:
We have acted as counsel to Union Bank of California, N.A., as Agent
(in such capacity, "Agent"), in connection with the preparation and delivery of
a Credit Agreement dated as of January __, 1997 (the "Credit Agreement") among
▇▇▇▇ Industries, Inc., a California corporation ("Company"), the financial
institutions listed therein as lenders, and Agent and in connection with the
preparation and delivery of certain related documents. Capitalized terms used
herein without definition have the same meanings as in the Credit Agreement.
We have participated in various conferences with representatives of
Company and Agent and conferences and telephone calls with Irell & ▇▇▇▇▇▇▇ LLP,
counsel to Company, and with your representatives, during which the Credit
Agreement and related matters have been discussed, and we have also participated
in the meeting held on the date hereof (the "Closing") incident to the funding
of the initial Revolving Loans and Term Loans made under the Credit Agreement.
We have reviewed the forms of the Credit Agreement and the exhibits thereto,
including the forms of the Revolving Notes and the Term Notes, and the opinion
of Irell & ▇▇▇▇▇▇▇ LLP (the "Opinion") and the officers' certificates and other
documents delivered at the Closing. We have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as
XXII-1
298
originals or copies and the due authority of all persons executing the same, and
we have relied as to factual matters on the documents that we have reviewed.
Although we have not independently considered all of the matters
covered by the Opinion to the extent necessary to enable us to express the
conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form and that the Opinion
and the officers' certificates and other documents delivered in connection with
the execution and delivery of, and as conditions to the making of the Revolving
Loans and the Term Loans under, the Credit Agreement and the Revolving Notes and
the Term Notes are substantially responsive to the requirements of the Credit
Agreement.
Respectfully submitted,
XXII-2
299
EXHIBIT XXIII
[FORM OF LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT]
(begins on the next page)
XXIII-1
300
================================================================================
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
Dated as of ________, 1997
among
▇▇▇▇ ONTARIO HOLDING, INC.,
▇▇▇▇ INDUSTRIES, INC.
and
UNION BANK OF CALIFORNIA, N.A.
covering
$9,000,000
Ontario Industrial Development Authority
Adjustable Tender Industrial Development Revenue Bonds
(▇.▇. ▇▇▇▇▇▇▇▇ & Co. - West Coast Project)
Series 1985
================================================================================
301
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------------
SECTION 1.02. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------------
SECTION 1.03. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------
SECTION 1.04. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT
SECTION 2.01. The Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------------
SECTION 2.02. Issuing the Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------------------
SECTION 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----
SECTION 2.04. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------
SECTION 2.05. Tender Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------
SECTION 2.06. Interest on Tender Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------------
SECTION 2.07. Prepayments; Reinstatement of Letter of Credit Amounts . . . . . . . . . . . . . . . . . . . . . 9
------------------------------------------------------
SECTION 2.08. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------
SECTION 2.09. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------
SECTION 2.10. Evidence of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------------------
SECTION 2.11. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------
SECTION 2.12. Extension of the Stated Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------------------
SECTION 2.13. Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------
ARTICLE III
CONDITIONS OF ISSUANCE
SECTION 3.01. Condition Precedent to Issuance of the Letter of Credit . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------------------------------
SECTION 3.02. Additional Conditions Precedent to Issuance of the Letter of Credit . . . . . . . . . . . . . . . 15
-------------------------------------------------------------------
ARTICLE IV
ii
302
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------------------------------------------
SECTION 4.02. Representations and Warranties of the Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------------------------------------------
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------------------------
SECTION 5.02. Negative Covenants of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------------
SECTION 5.03. Guarantor Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------------
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------------
SECTION 6.02. Upon an Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------------
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
---------------
SECTION 7.02. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------
SECTION 7.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------------------
SECTION 7.04. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------
SECTION 7.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------
SECTION 7.06. Liability of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------
SECTION 7.07. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------------------
SECTION 7.08. Binding Effect, Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------------------------------------
SECTION 7.09. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------
SECTION 7.10. CONSENT TO JURISDICTION: WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------------------------------
SECTION 7.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------
SECTION 7.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------
SECTION 7.13. Removal of Remarketing Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------------------------
SECTION 7.14. Prior Agreements Superseded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
---------------------------
iii
303
EXHIBITS
Exhibit A Form of Letter of Credit
Exhibit B Form of Pledge Agreement
Exhibit C Form of Guaranty
Exhibit D Description of Ontario Property
iv
304
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT is dated as
of January ___, 1997 and entered into between ▇▇▇▇ ONTARIO HOLDING, INC., a
California corporation (the "COMPANY"), UNION BANK OF CALIFORNIA, N.A., as
agent for and representative of the Lenders (as defined below) (in such
capacity, the "BANK"), and ▇▇▇▇ INDUSTRIES, INC., a California corporation and
wholly-owning parent of Company (the "GUARANTOR").
PRELIMINARY STATEMENTS:
(1) Ontario Industrial Development Authority (the
"ISSUER"), pursuant to an Indenture of Trust, dated as of April 1, 1985 (the
"INDENTURE"), between the Issuer and Mellon Bank, N.A., as trustee (the
"TRUSTEE"), has issued $9,000,000 in aggregate principal amount of the Issuer's
Adjustable Tender Industrial Development Revenue Bonds (▇.▇. ▇▇▇▇▇▇▇▇ & Co. -
West Coast Project) Series 1985 (the "BONDS").
(2) ▇.▇. ▇▇▇▇▇▇▇▇ & Co. - West Coast, a California
corporation ("▇▇▇▇▇▇▇▇ 1"), and the Issuer entered into a Loan Agreement, dated
as of April 1, 1985 (the "LOAN AGREEMENT"), under the terms of which the Issuer
lent the proceeds of the sale of the Bonds to ▇▇▇▇▇▇▇▇ 1 to provide funds to
finance the cost of the Project (as defined in the Loan Agreement). Effective
November 6, 1989, ▇.▇. ▇▇▇▇▇▇▇▇ Co. (Texas), Inc., a Texas corporation
("▇▇▇▇▇▇▇▇ 2"), merged with ▇▇▇▇▇▇▇▇ 1, with ▇▇▇▇▇▇▇▇ 2 being the surviving
corporation and ▇▇▇▇▇▇▇▇ 2 succeeded to all the rights, duties and obligations
of ▇▇▇▇▇▇▇▇ 1 under the Loan Agreement.
(3) Pursuant to that certain Purchase and Sale Agreement
and Joint Escrow Instructions dated September 26, 1996 (the "ASSET PURCHASE
AGREEMENT") between Guarantor and ▇▇▇▇▇▇▇▇ 2, the Company will purchase from
▇▇▇▇▇▇▇▇ 2 concurrently herewith certain improved real property located in the
City of Ontario, County of San Bernardino, and more particularly described on
Exhibit D attached hereto (the "ONTARIO PROPERTY"). Pursuant to the Asset
Purchase Agreement, the Company will succeed to all the rights, duties and
obligations of ▇▇▇▇▇▇▇▇ 2 under the Loan Agreement.
(4) Prior to the purchase by the Company of the Ontario
Property, certain payment obligations of ▇▇▇▇▇▇▇▇ 2 in connection with the
Bonds have been supported by a letter of credit issued by Barclays Bank Plc,
New York Branch (the "BARCLAYS LETTER OF CREDIT"). Concurrent with the
purchase by the Company of the Ontario Property and in order to replace the
Barclays Letter of Credit, the Company and the Guarantor have requested the
Bank to issue its irrevocable, transferable direct-pay letter of credit in
substantially the form of Exhibit A (such letter of credit as amended or
supplemented from time to time and any successor letter of credit as provided
for or contemplated in such letter
1
305
of credit or this Agreement being the "LETTER OF CREDIT"), in the amount of
$9,663,000 (the "COMMITMENT"), of which (a) $9,000,000 shall support the
payment of principal or portion of the purchase price corresponding to
principal of the Bonds, (b) $618,000 shall support the payment of interest or
portion of the purchase price corresponding to interest on the Bonds computed
at the assumed rate of 12% per annum, and (c) $45,000 shall support the payment
of the remarketing discount on the Bonds.
(5) The Guarantor and the Company have entered into a
Credit Agreement dated as of January 7, 1997 (as amended from time to time, the
"CREDIT AGREEMENT") with the Bank and certain financial institutions as lenders
(collectively, the "LENDERS"). The Letter of Credit provided for under this
Agreement shall be deemed a letter of credit outstanding under the Credit
Agreement and shall be included in Letter of Credit Usage as defined in the
Credit Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Bank to issue the Letter of Credit, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"ALTERNATE CREDIT FACILITY" has the meaning assigned to that
term in the Loan Agreement.
"AVAILABLE AMOUNT" in effect at any time means the maximum
amount available to be drawn at such time under the Letter of Credit,
the determination of such maximum amount to assume compliance with all
conditions for drawing and no reduction for (i) any amount drawn by an
Interest Draft (unless such amount is not reinstated), (ii) any amount
drawn by a Tender Draft, Discount Draft or Purchase Draft, or (iii)
any amount not available to be drawn because Bonds are held by or for
the account of the Company.
"BANK" has the meaning assigned to that term in the first
paragraph of this Agreement.
"BARCLAYS LETTER OF CREDIT" has the meaning assigned to that
term in Preliminary Statement (4).
2
306
"BASE RATE" means, at any time, the per annum rate publicly
announced by the Bank from time to time at its head office as its
"reference rate." The "reference rate" is determined by the Bank from
time to time as a means of pricing credit extensions to some customers
and is neither directly tied to any external rate of interest or index
nor necessarily the lowest rate of interest charged by the Bank at any
given time for any particular class of customers or credit extensions.
"BONDS" has the meaning assigned to that term in Preliminary
Statement (1).
"▇▇▇▇▇▇▇▇ 1" has the meaning assigned to that term in
Preliminary Statement (2).
"▇▇▇▇▇▇▇▇ 2" has the meaning assigned to that term in
Preliminary Statement (2).
"BUSINESS DAY" means a day of the year on which (i) commercial
banks in Los Angeles, California or the cities in which the principal
offices of the Trustee and the Remarketing Agent are located are not
required or authorized by law to close, and (ii) the New York Stock
Exchange is not closed.
"CODE" means the United States Internal Revenue Code of 1986.
"COMMITMENT" has the meaning assigned to that term in
Preliminary Statement (4).
"COMMITMENT TERMINATION DATE" has the meaning assigned to that
term in Section 2.01.
"COMPANY" has the meaning assigned to that term in the first
paragraph of this Agreement.
"CREDIT AGREEMENT" has the meaning assigned to that term in
Preliminary Statement (5).
"CREDIT TERMINATION DATE" means the date on which the Letter
of Credit expires in accordance with its terms, provided, however,
that for purposes of Section 2.03(a), "Credit Termination Date" shall
mean the date on which the Letter of Credit shall have been
surrendered to the Bank for cancellation and the Reimbursement
Obligations shall have been paid in full.
"DATE OF ISSUANCE" means the date on which the Letter of
Credit is issued.
"DEED OF TRUST" means _____.
3
307
"DEFAULT" means an Event of Default or any other event that
with notice or lapse of time or both would become an Event of Default.
"DEFAULT RATE" means a fluctuating interest rate equal to 2%
per annum above the Base Rate in effect from time to time.
"DETERMINATION OF TAXABILITY" means the occurrence of any
event that would require the redemption of the Bonds pursuant to
Section 3.01(g) of the Indenture no later than the 180th day after
such event.
"DISCOUNT DRAFT" has the meaning assigned to that term in the
Letter of Credit.
"EVENT OF DEFAULT" has the meaning assigned to that term in
Section 6.01.
"FINAL DRAFT" has the meaning assigned to that term in the
Letter of Credit.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting
principles set forth in opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GUARANTOR" has the meaning assigned to that term in the first
paragraph of this Agreement.
"GUARANTY" means the Guaranty in the form of Exhibit C hereto,
executed and delivered by the Guarantor.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with
respect to any lease of property (whether real, personal or mixed) by
such Person as lessee that, in conformity with GAAP, is accounted for
as a capital lease on the balance sheet of such Person, (iii) notes
payable and drafts accepted representing extensions of credit whether
or not representing obligations for borrowed money, (iv) any
obligation owed for all or any part of the deferred purchase price of
property or services, which purchase price is (a) due more than six
months from the date of incurrence of the obligation in respect
thereof or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any lien on any property or asset
owned or held by such Person regardless of whether the indebtedness
secured thereby shall have been assumed by such Person or is
nonrecourse to the credit of that Person.
4
308
"INDENTURE" has the meaning assigned to that term in
Preliminary Statement (1).
"INTEREST DRAFT" has the meaning assigned to that term in the
Letter of Credit.
"ISSUER" has the meaning assigned to that term in Preliminary
Statement (1).
"LENDERS" has the meaning assigned to that term in Preliminary
Statement (5).
"LETTER OF CREDIT" has the meaning assigned to that term in
Preliminary Statement (4).
"LOAN AGREEMENT" has the meaning assigned to that term in
Preliminary Statement (2).
"OBLIGATIONS" means (a) the obligations of the Company under
this Agreement (as it may hereafter be amended, modified, extended or
restated from time to time) with respect to the due and punctual
payment of (i) the principal amount of the Reimbursement Obligations,
when due, whether at maturity, by acceleration or otherwise, (ii) the
interest on the Reimbursement Obligations, when due, and (iii) any
costs and expenses of collection of the monetary obligations referred
to in this clause (a), and (b) the due and punctual payment and
performance of all other obligations of the Company under this
Agreement (as it may be amended, modified, extended or restated from
time to time) other than with respect to the payment of principal of
and interest on the Reimbursement Obligations, including, without
limitation, in respect of fees, indemnification and the like.
"OFFICIAL STATEMENT" means the Official Statement, dated April
24, 1985, relating to the initial offering and sale of the Bonds,
together with the documents incorporated therein by reference, and any
amendments thereof or supplements thereto.
"ONTARIO PROPERTY" has the meaning assigned to that term in
Preliminary Statement (3).
"PARTIAL REDEMPTION DRAFT" has the meaning assigned to that
term in the Letter of Credit.
"PERSON" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
government (or an agency or political subdivision thereof) or any
entity of any kind.
5
309
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of
__________, 1997, made by the Company to the Bank, on its behalf and
as agent for the Lenders under the Credit Agreement, and acknowledged
by the Trustee, in substantially the form of Exhibit B.
"PLEDGED BONDS" has the meaning assigned to that term in the
Pledge Agreement.
"PROJECT" has the meaning assigned to that term in Preliminary
Statement (2).
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"PURCHASE DRAFT" has the meaning assigned to that term in the
Letter of Credit.
"REIMBURSEMENT OBLIGATIONS" means the obligations of the
Company under Sections 2.04 and 2.05, including, without limitation,
the obligations of the Company with respect to the Tender Advances.
"RELATED DOCUMENTS" has the meaning assigned to that term in
Section 2.11.
"REMARKETING AGENT" means First Chicago Capital Markets, Inc.,
or its successor as Remarketing Agent, as appointed pursuant to the
Indenture and in accordance with Section 5.02(c).
"REMARKETING AGREEMENT" means the Remarketing Agent's
Agreement, dated as of June 1, 1993, between ▇▇▇▇▇▇▇▇ 2 and the
Remarketing Agent, and any similar agreement between any successor
Remarketing Agent and the Company, the terms of which are satisfactory
to the Bank.
"STATED TERMINATION DATE" means _______________, 199_ as the
same may be extended pursuant to Section 2.12.
"TENDER ADVANCE" has the meaning assigned to that term in
Section 2.05.
"TENDER DRAFT" has the meaning assigned to that term in the
Letter of Credit.
"TRUSTEE" has the meaning assigned to that term in Preliminary
Statement (1).
SECTION 1.02. Computation of Time Periods. In this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word
6
310
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistently applied, except as otherwise stated herein.
SECTION 1.04. Interpretation. The following rules shall
apply to the construction of this Agreement unless the context requires
otherwise: (a) the singular includes the plural and the plural, the singular;
(b) words importing any gender include the other genders; (c) references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute to which reference is made,
and all regulations adopted and publications promulgated pursuant to such
statutes; (d) references to "writing" include printing, photocopy, typing,
lithography and other means of reproducing words in a tangible visible form;
(e) the words "including, "includes" and "include" shall be deemed to be
followed by the words "without limitation"; (f) references to articles,
sections (or sub-divisions of sections), exhibits, appendices, annexes or
schedules are to those of this Agreement unless otherwise indicated; (g)
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to such instruments,
but only to the extent that such amendments and other modifications are
permitted or not limited by the terms of this Agreement; and (h) references to
Persons include their respective permitted successors and assigns.
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT
SECTION 2.01. The Letter of Credit. The Bank agrees, on
the terms and conditions hereinafter set forth, to issue and deliver the Letter
of Credit in favor of the Trustee at any time during the period from the date
hereof to ____________, 1998 (the "COMMITMENT TERMINATION DATE") in the amount
of the Commitment and expiring on or before the Stated Termination Date.
SECTION 2.02. Issuing the Letter of Credit. The Letter of
Credit shall be issued on at least five Business Days' notice from the Company
to the Bank specifying the proposed date of issuance. On the date specified by
the Company in such notice and upon fulfillment of the applicable conditions
set forth in Article III, the Bank will issue and deliver the Letter of Credit
to the Trustee. The Bank agrees that any and all payments made under the
Letter of Credit will be made with the Bank's own funds.
SECTION 2.03. Fees. (a) The Company agrees to pay to the
Bank for the account of the Lenders a Letter of Credit fee equal to the
Applicable Eurodollar Rate Margin (as defined in the Credit Agreement) per
annum, in each case on the Available
7
311
Amount from the Date of Issuance through and including the Credit Termination
Date, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year commencing on the first such date to occur after the
Date of Issuance and on the Credit Termination Date.
(b) The Company agrees to pay to the Bank for its own
account, upon each transfer of the Letter of Credit in accordance with its
terms, a transfer commission equal to $2,000.
(c) The Company agrees to pay to the Bank for its own
account, upon each drawing under the Letter of Credit by an Interest Draft,
Tender Draft or Discount Draft, a negotiation fee in an amount as determined in
accordance with the Bank's standard schedule for such charges in effect at the
time of such drawing.
(d) The Company agrees to pay to the Bank for the account
of the Lenders, upon each drawing under the Letter of Credit by a Partial
Redemption Draft, Purchase Draft or Final Draft, a fee equal to one quarter of
one percent (0.25%) of the principal amount of Bonds to be redeemed, paid or
purchased with the proceeds of any such Draft.
(e) The Company agrees to pay to the Bank for its own
account, upon the issuance of and each amendment to the Letter of Credit, a fee
in an amount as determined in accordance with the Bank's standard schedule for
such charges in effect at the time of such issuance or amendment.
(f) Any amount of fees payable by the Company to the Bank
that is not paid when due shall bear interest, from the date such amount of
fees was due until the date of payment in full, at the Default Rate, payable on
demand and on the date of payment in full.
(g) The parties hereto acknowledge that the fees payable
by the Company hereunder may be paid by the Guarantor and in such event the
Bank shall credit such payments to the obligations of the Company hereunder.
SECTION 2.04. Reimbursement. The Company hereby agrees to
pay to the Bank (a)(i) on the date that any amount is drawn under the Letter of
Credit pursuant to any Interest Draft, Discount Draft, Purchase Draft, Partial
Redemption Draft or Final Draft, a sum equal to such amount, (ii) on the date
that any amount is drawn under the Letter of Credit pursuant to any Tender
Draft for accrued and unpaid interest on the Bonds, a sum equal to such amount,
and (iii) on the date that any amount is drawn under the Letter of Credit
pursuant to a Tender Draft corresponding to principal of the Bonds, a sum equal
to such amount if the Guarantor has not paid to the Bank the amount of such
Draft on such date as set forth herein, plus (b) on demand, interest on any
amounts unpaid by the
8
312
Company when due under this Agreement (including, without limitation, under
clauses (a)(i), (ii) and (iii) above), whether at maturity, by acceleration, on
the date demanded or otherwise, including post-petition interest in any
proceeding under the United States Bankruptcy Code or other applicable
bankruptcy laws, from and including the date such amounts become due until
payment in full, whether before or after judgment, at the Default Rate.
Payment or acceptance of interest provided for herein is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of the Bank.
The parties hereto acknowledge that payment hereunder may be made directly by
the Guarantor to the Bank and in such event the Bank shall credit such payments
to the obligations of the Company hereunder.
SECTION 2.05. Tender Advances. If the Bank shall make any
payment of that portion of the purchase price corresponding to principal of the
Bonds drawn under the Letter of Credit pursuant to a Tender Draft, the
Guarantor shall, from the proceeds of Loans (as defined in the Credit
Agreement) requested by it pursuant to the Credit Agreement or from other funds
of the Guarantor, reimburse the Bank in full for the amount of such Tender
Draft, and such payment shall constitute an intercompany loan made by the
Guarantor to the Company on the date and in the amount of such payment, each
such intercompany loan being a "TENDER ADVANCE". The Company shall repay to
the Guarantor the unpaid principal amount of each Tender Advance on the
earliest of (i) such date as provided in Section 2.07(b), or (ii) the Credit
Termination Date. The Company may prepay such amount on an earlier date as
provided in Section 2.07(a). All such repayments or prepayments by the Company
of Tender Advances shall be made to the Bank and applied by the Bank to the
repayment of outstanding Loans of the Guarantor under the Credit Agreement
until all such Loans are paid in full and thereafter shall be paid over by the
Bank to the Guarantor.
SECTION 2.06. Interest on Tender Advances. The Company
shall pay interest to the Guarantor on the unpaid principal amount of each
Tender Advance from the date of such Tender Advance until such principal amount
is paid in full at the rates and times as agreed upon between the Company and
the Guarantor.
SECTION 2.07. Prepayments; Reinstatement of Letter of
Credit Amounts.
(a) The Company, upon same-day notice to the Bank
(stating the amount to be prepaid), may prepay the outstanding principal amount
of any Tender Advance in whole or in part, together with accrued interest to
the date of such prepayment on the amount prepaid.
(b) Simultaneously with the successful remarketing and
resale of Pledged Bonds, the Company shall prepay the then outstanding Tender
Advances relating to such Pledged Bonds, together with accrued interest to the
date of such prepayment on the
9
313
amount prepaid. The Company shall receive a credit against such prepayments in
the amount of the purchase price of Pledged Bonds delivered to the Bank by the
Remarketing Agent or otherwise. In addition, the Company shall, forthwith,
prepay or cause to be prepaid any Tender Advance, together with accrued and
unpaid interest thereon to the date of such prepayment, if the Remarketing
Agent or Trustee failed, for any reason, to use the proceeds of such Tender
Advance to pay or tender payment of the purchase price of a Bond when due and
such failure is continuing or any other Person shall assert that such Person
has a lien on or security interest in such Bond.
(c) Any prepayment to the Guarantor or to the Bank on
behalf of the Guarantor of the principal amount of Tender Advances shall be
accompanied by notice from the Company or its designee requesting the Bank to
release Pledged Bonds pursuant to Section 4 of the Pledge Agreement, and
specifying the principal amount thereof. Such notice may be given by telephone
(promptly confirmed in writing) but shall not be effective unless received by
the Bank prior to [____] A.M. (Los Angeles Time) on the day of the proposed
prepayment. The Bank shall not release any Pledged Bonds for sale or otherwise
until the Bank shall have received the amount of such prepayment. The Company
and the Guarantor each hereby authorizes the Bank to reinstate the Letter of
Credit at the times and in the manner specified in the Letter of Credit.
(d) Pledged Bonds pledged to secure any Tender Advances
shall be pledged to the Bank, for its benefit and as agent for the Lenders
under the Credit Agreement, in accordance with the Pledge Agreement.
SECTION 2.08. Increased Costs. If any law, regulation or
change in any law or regulation or in the interpretation thereof or any ruling,
decree, judgment, guideline, directive or recommendation (whether or not having
the force of law) by any regulatory body, court, central bank or any
administrative or governmental authority charged or claiming to be charged with
the administration hereof (including, without limitation, a request or
requirement that affects the manner in which the Bank allocates capital
resources to its commitments, including its obligations hereunder or under the
Letter of Credit) shall either (i) impose upon, modify, require, make or deem
applicable to the Bank or any of its participants any reserve requirement,
special deposit requirement, insurance assessment or similar requirement
against or affecting the Letter of Credit or (ii) subject the Bank or any of
its participants to any tax, charge, fee, deduction or withholding of any kind
whatsoever in connection with the Letter of Credit or change the basis of
taxation of the Bank or any of its participants (other than a change in the
rate of tax based on the overall net income of the Bank or such participant),
or (iii) impose any condition upon or cause in any manner the addition of any
supplement to or increase of any kind to the Bank's or any participant's
capital or cost base for issuing, maintaining, or participating in the Letter
of Credit that results in an increase in the capital requirement supporting the
Letter of Credit, or (iv) impose upon, modify, require, make or deem applicable
to the Bank or any of its participants any capital requirement, increased
capital requirement or similar requirement,
10
314
such as the deeming of the Letter of Credit to be an asset held by the Bank or
any of its participants for capital adequacy calculation or other purposes
(including, without limitation, a request or requirement that affects the
manner in which the Bank allocates capital resources to its commitments
including its obligations hereunder or under the Letter of Credit), and the
result of any events referred to in (i), (ii), (iii) or (iv) above shall be to
increase the costs in any way to the Bank or any participant of issuing,
maintaining, or participating in the Letter of Credit or reduce the amounts
payable by the Company hereunder or reduce the rate of return on capital, as a
consequence of the issuing or maintaining or participating in the Letter of
Credit, to a level below that which the Bank or its participants could have
achieved but for such events; then and in such event the Company shall,
promptly upon receipt of written notice to the Company by the Bank of such
increased costs and/or decreased benefits, pay to the Bank all such additional
amounts as, in the Bank's or any participant's sole good faith calculation as
allocated to the Letter of Credit or any participation therein, shall be
sufficient to compensate it for all such increased costs and/or decreased
benefits, all as certified by the Bank in said written notice to the Company.
Such certification shall be conclusive and binding on the parties hereto absent
manifest error. In determining such amount, the Bank or any participant may
use any reasonable averaging or attribution methods.
SECTION 2.09. Payments and Computations. [The Company
shall make each payment hereunder (a) representing reimbursement pursuant to
Section 2.04 to the Bank of drawings made under the Letter of Credit not
earlier than [____] P.M. (Los Angeles time) but before the close of business
(Los Angeles time), and (b) not later than [_____] P.M. (Los Angeles time) for
all other payments, on the day when due in lawful money of the United States of
America to the Bank (i) at its address referred to in Section 7.02 in same day
funds, or (ii) by federal funds transfer to the Bank's ABA Account No.
_____________ at the Federal Reserve Bank of ___________________ for credit to
_______________________, referencing Letter of Credit No. __________________.
The Company hereby authorizes the Bank, if and to the extent payment is not
made when due hereunder, to charge from time to time against any of the
Company's accounts with the Bank any amount so due. Computations of the Base
Rate, the Default Rate and of any fees or commissions hereunder shall be made
by the Bank on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed. Whenever any
payment to be made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest, fee or commission, as the case may be.]
SECTION 2.10. Evidence of Indebtedness. The Bank shall
maintain in accordance with its usual practice an account or accounts
evidencing the Indebtedness of the Company and the Guarantor resulting from
each drawing under the Letter of Credit and the amounts of principal, interest
and fees payable and paid from time to time hereunder. In any legal action or
proceeding in respect of this Agreement, the entries made in such
11
315
account or accounts shall be conclusive evidence of the existence and amounts
of the obligations of the Company and the Guarantor therein recorded.
SECTION 2.11. Obligations Absolute. The payment
obligations of the Company to the Bank under this Agreement and the other
Related Documents shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the Bonds, the Remarketing Agreement, the
Indenture, the Loan Agreement, the Pledge Agreement, the
Guaranty, the Credit Agreement, or any other agreement or
instrument relating thereto (collectively, the "RELATED
DOCUMENTS");
(ii) any amendment or waiver of or any consent to
departure from all or any of the Related Documents;
(iii) the existence of any claim, set-off, defense
or other right that the Company or any other Person may have
at any time against the Trustee or any other beneficiary, or
any transferee, of the Letter of Credit (or any Persons for
whom the Trustee, any such beneficiary or any such transferee
may be acting), the Bank, or any other Person, whether in
connection with this Agreement, the transactions contemplated
herein or in the Related Documents, or any unrelated
transaction;
(iv) any statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(v) payment by the Bank under the Letter of
Credit against presentation of a draft or certificate that
does not comply with the terms of the Letter of Credit; or
(vi) any other circumstances or happening
whatsoever, whether or not similar to any of the foregoing,
other than indefeasible payment in full of the payment
obligations of the Company to the Bank under this Agreement
and the other Related Documents;
provided, in each case, that payment by the Bank under the Letter of Credit
shall not have constituted gross negligence or willful misconduct of the Bank
under the circumstances in question (as determined by a final judgment of a
court of competent jurisdiction).
12
316
SECTION 2.12. Extension of the Stated Termination Date.
Not less than 90 days before the Stated Termination Date then in effect, the
Company may request the Bank in writing to extend the Stated Termination Date
for purposes of this Agreement and the Letter of Credit. Prior to or
simultaneously with any such request, the Company shall furnish the written
consent of the Guarantor to any such extension. If the Company shall make such
a request, the Bank shall, within 45 days after receipt of such request, notify
the Company, in writing, whether or not the Bank consents to such request and,
if the Bank does so consent, the conditions of such consent (including
conditions relating to the length of such extension, legal documentation and
pricing). If the Bank shall not so notify the Company, the Bank shall be
deemed not to have consented to such request.
SECTION 2.13. Deed of Trust. Notwithstanding anything to
the contrary contained herein or in any Related Document, the obligations of
the Guarantor hereunder shall not be secured by the Deed of Trust, it being
understood that the Deed of Trust secures only the obligations of the Company
hereunder and no other obligations of any party.
ARTICLE III
CONDITIONS OF ISSUANCE
SECTION 3.01. Condition Precedent to Issuance of the Letter
of Credit. The obligation of the Bank to issue the Letter of Credit is subject
to the condition precedent that the Bank shall have received on or before the
Date of Issuance the following, each dated such date, in form and substance
satisfactory to the Bank:
(a) Corporate Documents: With respect to each of the
Company and the Guarantor, (i) a copy of the Articles of Incorporation
of such Person, certified as of the Date of Issuance by the Secretary
or Assistant Secretary of such Person; (ii) a good standing
certificate from the Secretary of State of the State of California and
each other jurisdiction where such Person is qualified as a foreign
corporation to do business, dated no earlier than 10 days prior to the
Date of Issuance; (iii) a copy of the By-laws of such Person,
certified as of the Date of Issuance by the Secretary or an Assistant
Secretary of such Person as being complete, correct and in full force
and effect; and (iv) copies of the resolutions of the Board of
Directors of such Person evidencing authorization and approval of this
Agreement and any other Related Document to which such Person is a
party and the transactions contemplated thereby, certified by the
Secretary or an Assistant Secretary of such Person (which certificate
shall state that such resolutions are in full force and effect on the
Date of Issuance).
(b) Pledge Agreement and Guaranty: Originals of (i) the
Pledge Agreement executed by the Company and (ii) the Guaranty
executed by the Guarantor.
13
317
(c) Governmental Approvals: Originals (or copies
certified to be true copies by the Secretary or Assistant Secretary of
the Company or the Guarantor, as appropriate, or, in the case of the
Issuer, by an authorized officer of the Issuer) of all governmental
and regulatory approvals (including, without limitation, approvals or
orders of the Issuer) necessary for the Company, the Guarantor or the
Issuer with respect to this Agreement, the Bonds, and the transactions
contemplated hereby and thereby.
(d) Company Incumbency Certificate: A certificate of the
Secretary or an Assistant Secretary of the Company certifying the
names and true signatures of the officers of the Company authorized to
sign this Agreement, the Related Documents to which the Company is a
party and the other documents contemplated hereby and thereby.
(e) Guarantor Incumbency Certificates: A certificate of
the Secretary or an Assistant Secretary of the Guarantor certifying
the names and true signatures of the officers of the Guarantor
authorized to sign this Agreement and the other documents to be
delivered on behalf of such Guarantor in connection herewith.
(f) Company Counsel Opinion: An opinion of counsel to
the Company, addressed to and in form and substance satisfactory to
the Bank, as to such matters as the Bank may reasonably request.
(g) Guarantor Counsel Opinion: An opinion of counsel to
the Guarantor, addressed to and in form and substance satisfactory to
the Bank, as to such matters as the Bank shall reasonably request.
(h) Bond Counsel Opinions, Etc.: Opinions of [▇▇▇▇ &
Green], Bond Counsel, in connection with the transactions contemplated
hereby, addressed to and in form and substance satisfactory to the
Bank, and as to such other matters as the Bank may reasonably request.
(i) Reliance Letters: Reliance letters addressed to the
Bank with respect to each of the other opinions of counsel rendered in
connection with the transactions contemplated hereby.
(j) Indenture and Loan Agreement, Etc.: Certified copies
of the Indenture and the Loan Agreement and each other Related
Document, and such other documents or instruments delivered by the
Issuer, the Trustee, the Company or the Guarantor in connection with
the issuance of the Bonds or the transactions contemplated hereby, and
a certificate of the Trustee as to the cancellation of the Barclays
Letter of Credit and such other matters as the Bank may reasonably
request.
14
318
(k) Fees Payable: Payment by the Company to (i) the Bank
of any unpaid balance of the issuance fee payable pursuant to Section
2.03(e), and its costs and expenses pursuant to Section 7.07, and (ii)
O'Melveny & ▇▇▇▇▇ LLP, counsel to the Bank of their fees and
disbursements incurred in connection with this transaction.
(l) Title Policy: An ALTA extended coverage title
insurance policy issued by Chicago Title Insurance Company or other
title insurer reasonably satisfactory to the Bank.
(m) Environmental Report: A phase I environmental report
covering the Ontario Property in form and substance reasonably
satisfactory to the Bank.
(n) Amendment to Deed of Trust, etc.: An amendment to
the Deed of Trust listing the Bank as the beneficiary thereunder.
(o) Official Statement: An executed copy of the Official
Statement, as supplemented to the Date of Issuance.
(p) Such other documents, instruments, approvals (and, if
requested by the Bank, certified duplicates of executed copies
thereof) or opinions as the Bank may reasonably request.
SECTION 3.02. Additional Conditions Precedent to Issuance
of the Letter of Credit. The obligation of the Bank to issue the Letter of
Credit shall be subject to the further conditions precedent that on the Date of
Issuance that:
(a) the following statements shall be true and the Bank shall
have received certificates signed by an authorized officer of each of Company
and the Guarantor dated the Date of Issuance, stating that:
(i) The representations and warranties contained in
Sections 4.01 and 4.02 of this Agreement are correct on and as of the
Date of Issuance as though made on and as of such date; and
(ii) No event has occurred and is continuing, or would
result from the issuance of the Letter of Credit, that constitutes a
Default; and
(b) there shall have been no introduction of or change in
or in the interpretation of any law or regulation that would make it unlawful
or unduly burdensome for the Bank to issue the Letter of Credit, no outbreak or
escalation of hostilities or other calamity or crisis materially affecting the
free market for securities or the extension of credit by banks, no suspension
of or material limitation on trading on the New York Stock Exchange or any
other national securities exchange, no declaration of a general banking
15
319
moratorium by United States or California banking authorities, and no
establishment of any new restrictions on transactions in securities or on banks
materially affecting the free market for securities or the extension of credit
by banks.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Company. The Company represents and warrants as follows:
(a) The Company is a corporation duly formed, validly
existing and in good standing under the laws of the State of
California, and the Company is in good standing as a foreign
corporation and is authorized to do business in every jurisdiction
where such qualification or authorization is required, except where
the failure so to qualify would not have a material adverse effect on
the business, assets, operations, prospects or financial condition of
the Company. The Company has all requisite power and authority to
conduct its business, to own its properties, and to execute and
deliver and perform all of its obligations under this Agreement and
each of the Related Documents to which it is a party.
(b) The execution, delivery and performance by the
Company of this Agreement and the Related Documents to which the
Company is a party have been duly authorized by all necessary
corporate and, if required, stockholder action, and do not contravene
(i) any provision of the Articles of Incorporation or By-laws of the
Company, (ii) law, or (iii) any contractual restriction binding on or
affecting the Company, and do not result in or require the creation of
any lien, security interest or other charge or encumbrance (except as
provided in or contemplated by this Agreement or the Related
Documents) upon or with respect to any of the properties or assets of
the Company.
(c) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
the Company of this Agreement or any Related Document, except as have
been duly obtained or made and are in full force and effect.
(d) This Agreement and each of the Related Documents to
which the Company is a party are, or when delivered hereunder will be,
the legal, valid and binding obligations of the Company enforceable in
accordance with their respective terms.
16
320
(e) There is no pending or threatened action,
investigation or proceeding before any court, governmental agency or
arbitrator against or affecting the Company as to which there is a
reasonable possibility of an adverse determination and which, if
adversely determined could, individually or in the aggregate,
materially impair the ability of the Company to conduct business
substantially as now conducted, or materially and adversely affect the
financial condition or operations of the Company or the ability of the
Company to perform its obligations hereunder or under any of the
Related Documents or that purports to affect the legality, validity or
enforceability of this Agreement or any Related Document.
(f) There has been no material adverse change in the
business, assets, operations, prospects or financial condition of the
Company since its incorporation.
(g) In addition to the representations and warranties
contained in this Section 4.01, all statements contained in any
Related Document or in any agreement, document, instrument or
certificate delivered by or on behalf of the Company in connection
with the transactions contemplated hereby or thereby shall constitute
representations and warranties made by the Company hereunder.
(h) None of the Company, ▇▇▇▇▇▇▇▇ 1, ▇▇▇▇▇▇▇▇ 2 or any
other user of the Project has taken any action that, if taken, or has
omitted to take any action that, if not taken, would impair the
tax-exempt status of the Bonds.
(i) No Determination of Taxability has occurred.
(j) The Official Statement is, and any supplement or
amendment to the Official Statement shall be, accurate in all material
respects for the purposes for which its use is, or shall be,
authorized; and the Official Statement does not, and any such
supplement or amendment shall not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which
they are or were made, not misleading.
SECTION 4.02. Representations and Warranties of the
Guarantor. The Guarantor hereby represents and warrants as follows:
(a) Organization and Qualification. The Guarantor is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California.
(b) Authority and Authorization. The Guarantor has the
corporate power and authority to execute, deliver and carry out the
provisions of this Agreement and the Guaranty and to perform its
obligations hereunder and thereunder, and all such
17
321
action has been duly and validly authorized by all necessary corporate
proceedings on its part.
(c) Execution and Binding Effect. This Agreement and the
Guaranty have been duly and validly executed and delivered by the
Guarantor and constitute the legal, valid and binding obligations of
the Guarantor enforceable in accordance with the terms hereof and
thereof, except as the enforceability of this Agreement or the
Guaranty may be limited by bankruptcy, insolvency or other similar
laws of general application affecting the enforcement of creditors,
rights or by general principles of equity limiting the availability of
equitable remedies.
(d) Authorization and Filings. No authorization,
consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing with,
any governmental authority or any other entity is or will be necessary
or advisable in connection with the execution and delivery of this
Agreement or the Guaranty, consummation of the transactions
contemplated herein or therein, or performance of or compliance with
the terms and conditions hereof or thereof.
(e) Absence of Conflicts. Neither the execution and
delivery of this Agreement or the Guaranty nor consummation of the
transactions contemplated herein or therein, nor performance of or
compliance with the terms and conditions hereof or thereof will (i)
violate any law, regulation, rule, order, writ, injunction or decree
of any court or governmental authority, agency or instrumentality,
(ii) conflict with or result in a breach of or a default under the
Articles of Incorporation or By-laws of the Guarantor or any agreement
or instrument to which the Guarantor is a party or by which it or any
of its properties (now owned or hereafter acquired) may be subject or
bound or (iii) result in the creation or imposition of any security
interest, lien, charge or encumbrance of any nature whatsoever (other
than pursuant to the Credit Agreement) upon any property (now owned or
hereafter acquired) of the Guarantor.
(f) No Material Adverse Change. There has been no
material adverse change in the business, operations or financial
condition of the Guarantor since the date of the most recent financial
statements of the Guarantor.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company. So
long as a drawing is available under the Letter of Credit, or the Bank shall
have any Commitment hereunder, or the Company or the Guarantor shall have any
obligation to pay any amount
18
322
to the Bank hereunder or under the Guaranty, the Company agrees that it will,
unless the Bank shall otherwise consent in writing:
(a) Performance and Compliance with Other Covenants.
Perform and comply in all material respects, and subject to the
applicable grace periods, with each of the covenants, as in effect on
the Date of Issuance or as such covenants may thereafter be amended or
supplemented, set forth in the Loan Agreement and the other Related
Documents that are binding on it.
(b) Registration of Bonds. Cause all Bonds that it
acquires, or that it has had acquired for its account, to be
registered forthwith in accordance with the Indenture in the name of
the Company or, if acquired with the proceeds of any drawing under the
Letter of Credit, to be registered and delivered in accordance with
the Indenture and the Pledge Agreement.
(c) Reporting Requirements. Furnish or cause to be
furnished to the Bank the following:
(i) as soon as possible and in any event within
five days after the Company knows or has reason to know of the
occurrence of a Default, an officer's certificate of the
Company, setting forth details of such Default and the action
that the Company proposes to take with respect thereto; and
(ii) such other information respecting the
business, property or the condition or operations, financial
or otherwise, of the Company as the Bank may from time to time
reasonably request.
(d) Rating on the Bonds. Cause Standard & Poor's Rating
Group or ▇▇▇▇▇'▇ Investors Service, Inc. to maintain ratings on the Bonds
reflecting the support provided by the Letter of Credit.
SECTION 5.02. Negative Covenants of Company. So long as a
drawing is available under the Letter of Credit, or the Bank shall have any
Commitment hereunder, or the Company shall have any obligation to pay any
amount to the Bank hereunder, the Company agrees that it will not, without the
prior written consent of the Bank:
(a) Amendment of Any Related Document. Enter into or
consent to any amendment or modification of the Indenture, the Loan
Agreement, or any other Related Document, as in effect on the Date of
Issuance.
(b) Tax Status. Take any action or suffer any action to
be taken by others that will impair the tax-exempt status of the
Bonds.
19
323
(c) Appointment of Agents. Appoint, or consent to any
appointment of, a successor Remarketing Agent or Trustee.
(d) Alternate Credit Facility, Etc. Cause a Letter of
Credit (as defined in the Loan Agreement) not issued by the Bank or an
Alternate Credit Facility to be delivered to the Trustee or take any
action to terminate the Letter of Credit without payment in full to
the Bank of all obligations hereunder through the Credit Termination
Date, or take any action to cause an optional redemption of the Bonds,
or take any action to cause the Bonds to bear interest at a Term
Interest Rate if the related Term Interest Rate Period (as such terms
are defined in the Indenture) would end on or after the second
Business Day preceding the Stated Termination Date.
SECTION 5.03. Guarantor Covenants. So long as any
Obligations shall remain unpaid or the Bank shall have any liability or
commitment under the Letter of Credit, the Guarantor covenants to the Bank as
follows:
(a) Compliance with Credit Agreement. The Guarantor
shall comply with each provision of the Credit Agreement.
(b) Government Authorizations etc. The Guarantor shall
at all times obtain and maintain in force all authorizations,
consents, approvals, licenses, exemptions and other actions by, and
all registrations, qualifications, designations, declarations and
other filings with, any governmental authority or other entity
necessary or advisable in connection with the execution and delivery
of this Agreement, consummation of the transactions herein
contemplated, and performance of or compliance with the terms and
conditions hereof or to ensure the legality, validity, enforceability
and admissibility in evidence hereof.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. The occurrence of any of
the following events shall be an "EVENT OF DEFAULT" hereunder:
(a) The Company or the Guarantor shall fail to pay any
amount payable hereunder or under any of the Related Documents on the
date when due; or
(b) Any representation or warranty made or deemed made by
the Company or the Guarantor (or any of their respective officers)
herein or by the Company or the Guarantor (or any of their respective
officers) in connection with
20
324
this Agreement or any of the Related Documents shall prove to have
been false or misleading in any material respect when made or deemed
made; or
(c) The Company or the Guarantor shall fail to perform or
observe any of the covenants and agreements contained in Section
5.01(c)(i), Section 5.02 or Section 5.03; or
(d) The Company or the Guarantor shall fail to perform or
observe any other term, covenant or agreement contained in this
Agreement on its part to be performed or observed and any such failure
shall remain unremedied for 15 days after the Company or the Guarantor
knows or has reason to know of such failure; or
(e) The Company shall fail to pay any principal of or
premium or interest on any Indebtedness (excluding Indebtedness under
this Agreement) when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; or any other
default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate,
or to permit the acceleration of, the maturity of such Indebtedness;
or any such Indebtedness shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(f) Any Event of Default shall have occurred under the
Credit Agreement; or
(g) The Company or the Guarantor shall generally not pay
its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Company or the Guarantor seeking to
adjudicate it as a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it and, if instituted
against the Company or the Guarantor, shall remain undismissed for a
period of 60 days or an "order for relief" as defined in the United
States Bankruptcy Reform Act of 1978, as amended, shall be rendered
prior to the expiration of that 60-day period; or any judgment, writ,
warrant of attachment or execution or similar process shall be issued
or levied against any substantial part of the property of the Company
or the Guarantor and shall not be
21
325
released, vacated or fully bonded within 30 days after its issue or
levy, or the Company or the Guarantor shall take any action to
authorize any of the actions set forth above in this subsection (g);
or
(h) One or more judgments, decrees or orders for the
payment of money in excess of $500,000 in the case of the Company
(which amount is not indisputably covered by insurance) in the
aggregate shall be rendered against the Company and either (i)
enforcement proceedings shall have been commenced by any creditor upon
any such judgment, decree or order, or (ii) there shall be any period
of 30 consecutive days during which a stay of enforcement of such
judgment, decree or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(i) An event shall have occurred that in the opinion of
the Bank materially adversely affects the financial condition,
business or operations of the Company, the Guarantor or the Project;
or
(j) This Agreement or the Guaranty shall at any time for
any reason cease to be valid and binding on the Company or the
Guarantor, as the case may be, or shall be declared to be null and
void, or the validity or enforceability thereof shall be contested by
the Company or the Guarantor, as the case may be, or a proceeding
shall be commenced by any governmental agency or authority having
jurisdiction over the Company or the Guarantor, as the case may be,
seeking to establish the invalidity or unenforceability thereof, or
the Company or the Guarantor, as the case may be, shall deny that it
has any or further liability or obligation under this Agreement or the
Guaranty; or
(k) Any event of default, however defined, under the Loan
Agreement, the Indenture or any other Related Document shall have
occurred and be continuing; or
(l) The Bonds for any reason shall be determined to be invalid
or a Determination of Taxability shall have occurred; or
(m) Any Related Document shall for any reason cease to be in
full force and effect.
SECTION 6.02. Upon an Event of Default. If any Event of
Default shall have occurred and be continuing the Bank may exercise any or all
of the following remedies: (i) if the Letter of Credit has not yet been
issued, terminate the obligation of the Bank to issue the Letter of Credit
hereunder, (ii) if the Letter of Credit has been issued, (a) notify the Trustee
in writing that an Event of Default has occurred and is continuing and of the
Bank's determination to terminate the Letter of Credit on an Event of Default
under Section 9.01(f) of the Indenture, resulting in an acceleration of the
Bonds pursuant to Section 9.01 of the Indenture or (b) notify the Trustee in
writing in accordance with the
22
326
Letter of Credit that an Event of Default has occurred and is continuing and
that the Letter of Credit will not be reinstated with respect to amounts drawn
by any Interest Draft, resulting in an acceleration of the Bonds pursuant to
Section 9.01 of the Indenture, whereupon in each instance specified in this
clause (ii) all Reimbursement Obligations and all other amounts payable
hereunder or in respect hereof shall automatically be forthwith due and
payable, without presentment, demand, protest or further notice of any kind
(including, without limitation, notice of intent to accelerate and notice of
acceleration), all of which are hereby expressly waived by the Company, (iii)
declare any unpaid Reimbursement Obligation not otherwise then due and payable
to be due and payable whereupon the same shall, without further action or
notice, be and be deemed to be due and payable for all purposes hereunder, (iv)
by written notice to the Company, require the Company to pay to the Bank in
immediately available funds an amount equal to the Available Amount (prior to
giving effect to any drawing on the Letter of Credit in connection with an
Event of Default) to be held as cash collateral for the Obligations (it being
agreed by the Bank that no such cash collateral shall be applied to the
Company's obligations to reimburse the Bank for a drawing under the Letter of
Credit until after the Bank has paid such Letter of Credit drawing), and/or (v)
proceed to enforce all other remedies available to it under this Agreement, the
Related Documents and applicable law and equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of
any provision of this Agreement, nor consent to any departure by the Company or
the Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Company, the Guarantor and the Bank and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including required
copies) and sent by receipted hand delivery (including Federal Express or other
receipted courier service), telex or regular mail, if to the Company, at its
address at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer; if to the Bank, at its address at
____________________________________________________________________,
Attention: _________________________; and if to the Trustee, at its address
specified in the Indenture, or, as to each party, at such other address as
shall be designated by such party in a written notice to the other party. All
such notices and communications shall, when delivered or telexed, be effective
when deposited with the courier, telexed or mailed respectively, addressed as
aforesaid, except that notices to the Bank pursuant to the provisions of
Article II shall not be effective until received by the Bank.
23
327
SECTION 7.03. No Waiver; Remedies. No failure on the part
of the Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 7.04. Right of Set-off. (a) Upon the occurrence
and during the continuance of any Event of Default, the Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Bank to or for the credit or the account of the Company or
the Guarantor against any and all of the obligations of the Company now or
hereafter existing under this Agreement, irrespective of whether or not the
Bank shall have made any demand hereunder and although such obligations may be
contingent or unmatured.
(b) The Bank agrees promptly to notify the Company or the
Guarantor, as appropriate, after any such set-off and application referred to
in subsection (a) above, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of the
Bank under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that the Bank may
have.
SECTION 7.05. Indemnification. The Company hereby
indemnifies and holds the Bank and its agents harmless from and against any and
all claims, damages, losses, liabilities, costs or expenses that the Bank may
incur or that may be claimed against the Bank by any person or entity:
(a) by reason of or in connection with the initial
offering and sale of the Bonds or the subsequent remarketing and
transfer from time to time of the Bonds, provided, however, that, in
the case of any action or proceeding alleging an inaccuracy in a
material respect, or an untrue statement, with respect to [information
supplied by and describing the Bank in Appendix B to the Supplement,
dated ___________, 199_, to the Official Statement] (the "Bank
Information"), or an omission or alleged omission to state therein a
material fact necessary to make the statements in the Bank
Information, in the light of the circumstances under which they were
made, not misleading, (i) indemnification by the Company pursuant to
this Section 8.05(a) shall be limited to the costs and expenses of the
Bank (including fees and expenses of the Bank's counsel) of defending
itself against such allegation, (ii) if in any such action or
proceeding it is finally determined that the Bank Information
contained an inaccuracy in a material respect or an untrue statement,
or omitted to state therein a material fact necessary to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading, then the Company shall not be
required to indemnify the Bank pursuant to this Section
24
328
8.05(a) for any claims, damages, losses, liabilities, costs or
expenses to the extent caused by such inaccuracy, untrue statement or
omission, and (iii) if any such action or proceeding shall be settled
by the Bank without there being a final determination to the effect
described in the preceding clause (ii), then the Company shall be
required to indemnify the Bank pursuant to this Section 8.05(a) only
if such action or proceeding is settled with the Company's consent; or
(b) by reason of or in connection with the execution,
delivery or performance of this Agreement, the Bonds, the Indenture,
the Loan Agreement, or any Related Document, or any transaction
contemplated thereby; or
(c) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to make payment under,
the Letter of Credit; provided, however, that the Company shall not be
required to indemnify the Bank pursuant to this Section 8.05(c) for
any claims, damages, losses, liabilities, costs or expenses to the
extent caused by the Bank's gross negligence or willful misconduct in
failing to make lawful payment under the Letter of Credit after the
presentation to it by the Trustee or a successor trustee under the
Indenture of a draft and certificate strictly complying with the terms
and conditions of the Letter of Credit.
Nothing in this Section 7.05 is intended to limit the Company's obligations
contained in Article II. Without prejudice to the survival of any other
obligation of the Company hereunder, the indemnities and obligations of the
Company contained in this Section 8.05 shall survive the payment in full of
amounts payable pursuant to Article II and the termination of the Letter of
Credit.
SECTION 7.06. Liability of the Bank. The Company assumes
all risks of the acts or omissions of the Trustee and any other beneficiary or
transferee of the Letter of Credit with respect to its use of the Letter of
Credit. Neither the Bank nor any of its officers or directors shall be liable
or responsible for: (a) the use that may be made of the Letter of Credit or
any acts or omissions of the Trustee and any other beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Bank against presentation of documents that do not comply with
the terms of the Letter of Credit, including failure of any documents to bear
any reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under the Letter
of Credit, except that the Company shall have a claim against the Bank, and the
Bank shall be liable to the Company, to the extent of any direct, as opposed to
consequential, damages suffered by the Company that the Company proves were
caused by the Bank's gross negligence or willful misconduct. In furtherance
and not in limitation of the foregoing, the Bank may accept documents that
appear on their face to be in order,
25
329
without responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 7.07. Costs, Expenses and Taxes. The Company
agrees to pay immediately when due all costs and expenses in connection with
the preparation, execution, delivery, filing, recording, and administration and
enforcement of or monitoring of compliance with this Agreement and the Related
Documents and any other documents that may be delivered in connection with this
Agreement or the transactions contemplated hereby, and any amendment to or
waiver or consent under this Agreement, the Letter of Credit or any Related
Document, including, without limitation, the reasonable fees and out-of-pocket
expenses of the Bank and of its counsel, with respect to advising the Bank as
to its rights and responsibilities under this Agreement, and all reasonable
costs and expenses (including counsel fees and expenses) in connection with (i)
the enforcement of this Agreement, the Related Documents and such other
documents that may be delivered in connection herewith or therewith or (ii) any
action or proceeding relating to a court order, injunction, or other process or
decree restraining or seeking to restrain the Bank from paying any amount under
the Letter of Credit. In addition, the Company shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the Related
Documents and such other documents, and agrees to save the Bank harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and fees.
SECTION 7.08. Binding Effect, Successors and Assigns. (a)
This Agreement shall become effective when it shall have been executed by the
Company, the Guarantor and the Bank and thereafter shall be binding upon and
inure to the benefit of the Company, the Guarantor and the Bank and their
respective successors and assigns, except that neither the Company nor the
Guarantor shall have the right to assign its rights or obligations hereunder or
any interest herein without the prior written consent of the Bank.
(b) Pursuant to the terms and conditions set forth in Section
10.1 of the Credit Agreement, the Bank may assign, or sell participations to
one or more banks or other entities in, all or a portion of its rights and
obligations under this Agreement; provided, however, that (i) the Bank's
obligations under this Agreement and the Letter of Credit shall remain
unchanged, (ii) the Bank shall remain solely responsible to the Company for the
performance of its obligations hereunder, and (iii) the participants or other
entities shall be entitled to the benefit of the cost protection provisions
contained in Section 2.08.
SECTION 7.09. Severability. Any provision of this
Agreement that is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or nonauthorization without
26
330
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.
SECTION 7.10. CONSENT TO JURISDICTION: WAIVER OF JURY
TRIAL. (A) EACH OF THE COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF CALIFORNIA, LOS
ANGELES COUNTY OR THE UNITED STATES OF AMERICA SITTING IN LOS ANGELES, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
RELATED DOCUMENTS, AND THE COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT. EACH OF THE COMPANY AND THE GUARANTOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. EACH
OF THE COMPANY AND THE GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO IT AT ITS ADDRESS SPECIFIED IN SECTION 7.02. EACH OF THE COMPANY AND
THE GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(B) NOTHING IN THIS SECTION 7.10 SHALL AFFECT THE RIGHT
OF THE BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE
COMPANY, THE GUARANTOR OR THEIR RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTIONS.
(C) EACH OF THE COMPANY, THE GUARANTOR AND THE BANK
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE
RELATED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.11. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.
SECTION 7.12. Headings. Section headings in this Agreement
are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose.
27
331
SECTION 7.13. Removal of Remarketing Agent. Upon the
written direction of the Bank to remove the Remarketing Agent stating the
reasons therefor, and after the Bank consults with the Company concerning the
reasons therefor, the Company hereby agrees to remove the Remarketing Agent and
to appoint such successor Remarketing Agent as shall be mutually acceptable to
the Bank and the Company.
SECTION 7.14. Prior Agreements Superseded. This Agreement
shall completely and fully supersede all prior undertakings or agreements, both
written and oral, between the Company, the Guarantor and the Bank relating to
the issuance of the Letter of Credit, including those contained in any
commitment letter between or among the Bank, the Company and the Guarantor
executed in anticipation of the issuance of the Letter of Credit.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
[▇▇▇▇ ONTARIO HOLDING, INC.]
By:
-----------------------------
Title:
▇▇▇▇ INDUSTRIES, INC.
By:
------------------------------
Title: Chief Financial Officer
UNION BANK OF CALIFORNIA, N.A.
By:
------------------------------
Title:
1
332
EXHIBIT A
[FORM OF LETTER OF CREDIT]
IRREVOCABLE LETTER OF CREDIT
No. ___________________
______________, 1997
Mellon Bank, N.A.,
as Trustee
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Attention: Corporate Trust Department
Ladies and Gentlemen:
We hereby establish, at the request and for the account of
_________________ (the "COMPANY"), in your favor, as Trustee under the
Indenture of Trust, dated as of April 1, 1985 (the "INDENTURE"), between
Ontario Industrial Development Authority (the "ISSUER") and you, pursuant to
which $9,000,000 in aggregate principal amount of the Issuer's Adjustable
Tender Industrial Development Revenue Bonds (▇.▇. ▇▇▇▇▇▇▇▇ & Co. - West Coast
Project) Series 1985 (the "BONDS") have been issued, our Irrevocable Letter of
Credit No. ________ in the amount of $9,663,000, of which up to $9,000,000 may
be drawn to pay principal or the portion of the purchase price corresponding to
principal on the Bonds, up to $618,000 may be drawn to pay accrued interest or
the portion of the purchase price corresponding to accrued interest on the
Bonds (as more fully described below), and up to $45,000 may be drawn to pay
the remarketing discount on the Bonds, effective immediately and expiring at 5
P.M. (Los Angeles time) on _________, 1998 (the "STATED TERMINATION DATE") or
earlier as hereinafter provided. All drawings under this Letter of Credit will
be paid with our own funds.
We hereby irrevocably authorize you to draw on us in an
aggregate amount not to exceed the amount of this Letter of Credit set forth
above and in accordance with the terms and conditions and subject to the
reductions in amount as hereinafter set forth, (1) in a single drawing (subject
to the provisions contained in the next following paragraph) by your draft
referring thereon to the number of this Letter of Credit, payable at sight on a
day of the year on which banks are not required or authorized to close in Los
Angeles,
Exhibit A - 1
333
California or in the city in which your principal office, or the principal
office of the Remarketing Agent (as defined in the Indenture), is located and
on which the New York Stock Exchange is not closed (a "Business Day"), and
accompanied by your written and completed certificate signed by you in
substantially the form of Annex A attached hereto (such draft accompanied by
such certificate being your "INTEREST DRAFT"), an amount not exceeding $618,000
representing 206 days of accrued interest on the Bonds, computed at an assumed
rate of 12% per annum and on the basis of a 360-day year; (2) in one or more
drawings by one or more of your drafts referring thereon to the number of this
Letter of Credit, payable at sight on a Business Day, and accompanied by your
written and completed certificate signed by you in substantially the form of
Annex B attached hereto (any such draft accompanied by such certificate being
your "TENDER DRAFT"), an aggregate amount not exceeding $9,618,000,
representing the purchase price of the Bonds; (3) in one or more drawings by
one or more of your drafts referring thereon to the number of this Letter of
Credit, payable at sight on a Business Day, and accompanied by your written and
completed certificate signed by you in substantially the form of Annex C
attached hereto (any such draft accompanied by such certificate being your
"PARTIAL REDEMPTION DRAFT"), an aggregate amount not exceeding $9,618,000,
representing principal and accrued interest on the Bonds; (4) in one or more
drawings by your drafts referring thereon to the number of this Letter of
Credit, payable at sight on a Business Day, and accompanied by your written and
completed certificate signed by you in substantially the form of Annex D hereto
(any such draft accompanied by such certificate being your "PURCHASE DRAFT") an
amount not exceeding $9,618,000, representing the purchase price of the Bonds;
(5) in one or more drawings by one or more of your drafts referring thereon to
the number of this Letter of Credit, payable at sight on a Business Day, and
accompanied by your written and completed certificate signed by you in
substantially the form of Annex E hereto (any such draft accompanied by such
certificate being your "DISCOUNT DRAFT"), an amount not exceeding $45,000
representing the remarketing discount on Bonds, and (6) in a single drawing by
your draft referring thereon to the number of this Letter of Credit, payable at
sight on a Business Day, and accompanied by your written and completed
certificate signed by you in substantially the form of Annex F attached hereto
(such draft accompanied by such certificate being your "FINAL DRAFT" and any
draft referred to in this paragraph being a "DRAFT"), an amount not exceeding
$9,618,000, representing principal and accrued interest on the Bonds.
If you shall draw on us by your Interest Draft under clause
(1) of the immediately preceding paragraph and you shall not have received from
us within fifteen (15) calendar days from the date of such drawing a written
notice to the effect that an Event of Default has occurred under the Letter of
Credit and Reimbursement Agreement dated as of ___________, 1997 (the
"REIMBURSEMENT AGREEMENT") among the Company, ▇▇▇▇ Industries, Inc., as
Guarantor (the "Guarantor"), and us, which notice states it is being sent
pursuant to Section 9.01(e) of the Indenture, and that we are not reinstating
your right to draw by your Interest Draft hereunder, your right to draw on us
in a single drawing by your Interest Draft under said clause (1) shall be
automatically reinstated and, effective the sixteenth (16th) calendar day from
the date of such drawing, you shall again be authorized
Exhibit A - 2
334
to draw on us by your Interest Draft in accordance with said clause (1). This
automatic reinstatement of your right to draw on us by your Interest Draft
shall be applicable to successive drawings by your Interest Drafts under clause
(1) of the immediately preceding paragraph so long as this Letter of Credit
shall not have terminated as set forth below. Upon our honoring any Tender
Draft or Purchase Draft presented by you hereunder, the amount available to be
drawn hereunder by you by any subsequent Interest Draft shall be automatically
decreased by the amount of any such Draft corresponding to accrued interest on
the Bonds, subject to reinstatement as provided in the next following
paragraph. Upon our honoring any Partial Redemption Draft presented by you
hereunder, the amount available to be drawn by you by any subsequent Interest
Draft shall be automatically and permanently decreased by an amount equal to
206 days' interest on the principal amount of Bonds to be redeemed with the
proceeds of such Partial Redemption Draft, computed at an assumed rate of 12%
per annum and on the basis of a 360-day year.
Upon our honoring any Tender Draft, Purchase Draft or Partial
Redemption Draft presented by you hereunder, the amount of this Letter of
Credit and the amounts available to be drawn hereunder by you by any subsequent
Tender Draft, Purchase Draft, Partial Redemption Draft and Final Draft shall be
automatically decreased by an amount equal to the amount of such Tender Draft
or Purchase Draft and, in the case of a drawing by your Partial Redemption
Draft, by an amount equal to the principal amount of Bonds to be redeemed with
the proceeds of such Partial Redemption Draft plus 206 days' interest on such
principal amount, computed at an assumed rate of 12% per annum and on the basis
of a 360-day year, subject to reinstatement (if any) as follows:
(i) with respect to amounts decreased on payment of any
Tender Draft or Purchase Draft, the amount of this Letter of Credit
shall be increased when and to the extent, but only when and to the
extent, that (a) we are reimbursed by or on behalf of the Company in
accordance with the Reimbursement Agreement for any amount drawn
hereunder by such Tender Draft or Purchase Draft, and (b) we give you
notice in writing of such reinstatement. Any amount received by us on
behalf of the Company from you in reimbursement of amounts drawn
hereunder by any Tender Draft or Purchase Draft shall, if accompanied
by your completed and signed certificate signed by you in
substantially the form of Annex G attached hereto, be applied to the
extent of the amount indicated therein to reimburse us for amounts
drawn hereunder by your Tender Drafts or Purchase Drafts; and
(ii) with respect to amounts decreased on payment of any
Partial Redemption Draft, the amount of this Letter of Credit shall
not be reinstated.
Upon our honoring any Discount Draft presented by you
hereunder, the amount of this Letter of Credit and the amount available to be
drawn by you hereunder by any subsequent Discount Draft shall be decreased by
an amount equal to the amount of such Discount Draft, subject to reinstatement
when and to the extent, but only when and
Exhibit A - 3
335
to the extent, that we are reimbursed for such amount and we give you written
notice of such reinstatement.
Pursuant to the terms of a Pledge Agreement, dated as of
___________, 1997 made by the Company to us, the Company has granted us a
security interest in Bonds purchased with the proceeds of any Tender Draft or
Purchase Draft, and we have designated you, as Trustee, to hold such Bonds on
our behalf. We hereby agree that our written notice to you to the effect that
we are reinstating the Letter of Credit with respect to amounts drawn hereunder
to purchase such Bonds shall constitute a release of our security interest in
such Bonds.
Funds from us under this Letter of Credit are available to you
against your Interest Drafts, your Tender Drafts, your Partial Redemption
Drafts, your Discount Drafts, your Purchase Drafts, and your Final Draft.
Drafts may be presented to us in the form of telecopy transmission c/o
_______________________, Attention: __________________ (telecopy no.
____________________) with prior telephone notice to such office (telephone no.
_____________________) (or such other numbers as we shall advise you in
writing) that such presentation is to be made by telecopy, and with original
executed Drafts, prominently marked to indicate that they are confirmations, to
follow thereafter. Each such Draft shall be dated the date of its
presentation, and each such Draft shall be presented to us c/o
_______________________ located at _________________________, Attention:
_________________ (or at any other office that may be designated by us by
written notice delivered to you at least three Business Days prior to a date on
which a drawing is made hereunder) on or before [____] A.M. (Los Angeles time),
or [____] A.M. (Los Angeles time) in the case of any Tender Draft, on the day
(which shall be a Business Day) of our making funds available to you hereunder.
If we receive any of your Drafts at such office, all in strict conformity with
the terms and conditions of this Letter of Credit, not later than [____] A.M.
(Los Angeles time) on a Business Day prior to the termination hereof, we will
honor the same by [___] P.M. (Los Angeles time) on the same day in accordance
with your payment instructions, provided that if any Tender Draft is so
received not later than [____] A.M. (Los Angeles time) on a Business Day prior
to termination hereof, we will honor the same by [___] P.M. (Los Angeles time)
on the same day in accordance with your payment instructions. If we receive
any of your Drafts at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, after [____] A.M. (Los Angeles time) (or
after [____] A.M. (Los Angeles time) in the case of any Tender Draft), on a
Business Day prior to the termination hereof, we will honor the same on the
next succeeding Business Day by [____] P.M. (Los Angeles time) in accordance
with your payment instructions. If requested by you, payment under this Letter
of Credit may be made by wire transfer of Federal Reserve Bank of
__________________ funds to your account in a bank on the Federal Reserve wire
system or by deposit of same day funds into a designated account that you
maintain with us.
Exhibit A - 4
336
Upon the earliest of (i) our honoring your Final Draft
presented hereunder, (ii) the date on which we receive a certificate signed by
you stating that the Company has provided and you have accepted a replacement
Letter of Credit or an Alternate Credit Facility in accordance with and as
defined in the Indenture that is effective on the date of such certificate and
that you are surrendering this Letter of Credit for termination, accompanied by
this Letter of Credit, (iii) the tenth (10th) Business Day following your
actual receipt of a notice in writing from us that an Event of Default has
occurred and is continuing under the Reimbursement Agreement, which notice
states that it is being sent pursuant to Section 9.01(f) of the Indenture, and
that the Letter of Credit will terminate on such 10th Business Day, and (v) the
Stated Termination Date, this Letter of Credit shall terminate.
This Letter of Credit is transferable in its entirety to any
transferee whom you certify to us has succeeded you as Trustee under the
Indenture, and may be successively transferred. Transfer of the available
balance under this Letter of Credit to such transferee shall be effected by the
presentation to us of this Letter of Credit accompanied by a certificate in
substantially the form of Annex H attached hereto. Upon such presentation we
shall forthwith transfer the same to your transferee or, if so requested by
your transferee, issue a letter of credit to your transferee with provisions
therein consistent with this Letter of Credit.
This Letter of Credit sets forth in full our undertaking, and
such undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to
herein (including, without limitation, the Bonds), except only the certificates
and the Drafts referred to herein which are hereby incorporated by reference;
and any such reference shall not be deemed to incorporate herein by reference
any document, instrument or agreement except for such certificates and such
Drafts.
This Letter of Credit shall be governed by the laws of the
State of California, including the Uniform Commercial Code as in effect in the
State of California, except that Articles 16 and 20(b) of the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, shall govern solely with respect to the
presentation of Drafts by telecopy transmission. Communications to us with
respect to this Letter of Credit other than presentations of Drafts and
certificates hereunder shall be in writing and shall be addressed to us c/o
_________________________________ at ____________________, Attention:
______________________ (or telecopied to ___________________ with originals
addressed to us in accordance with the foregoing to follow thereafter), with a
copy to us at ______________________________________, Attention:
____________________________________, specifically referring to the number of
this Letter of Credit. Communications to you with respect to this Letter of
Credit shall be
Exhibit A - 5
337
in writing and shall be addressed to you at your address set forth above,
specifically referring to the number of this Letter of Credit and the Bonds.
Very truly yours,
UNION BANK OF CALIFORNIA, N.A.
By _____________________________
Title:
Exhibit A - 6
338
Annex A
[Form of Certificate for Interest Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF UP TO 206
DAYS' INTEREST ON ONTARIO INDUSTRIAL DEVELOPMENT AUTHORITY ADJUSTABLE
TENDER INDUSTRIAL DEVELOPMENT REVENUE BONDS (▇.▇. ▇▇▇▇▇▇▇▇ & CO. -
WEST COAST PROJECT) SERIES 1985 (THE "BONDS")
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned
Trustee (the "TRUSTEE"), hereby certifies on behalf of the Trustee to Union
Bank of California, N.A. (the "BANK"), with reference to Irrevocable Letter of
Credit No. __________ (the "LETTER OF CREDIT", the terms defined therein and
not otherwise defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment of accrued and unpaid interest on the
Bonds on an Interest Payment Date under and as defined in the
Indenture (other than Bonds held of record by the Company, or by the
undersigned for the account of the Company pursuant to the Indenture),
which payment is due and payable on such Interest Payment Date or on
the immediately succeeding Business Day.
(3) [The Interest Draft accompanying this Certificate is
the first Interest Draft presented by the Trustee under the Letter of
Credit.(1) [The Interest Draft last presented by the Trustee under the
Letter of Credit was honored and paid by the Bank on
________________________, 19__, and the Trustee has not received a
notice within fifteen days of presentation of such Interest Draft from
the Bank that the Trustee's right to draw on the Letter of Credit by
an Interest Draft will not be reinstated.(2)
(4) The amount of the Interest Draft accompanying this
Certificate is $__________. It was computed in compliance with the
terms and conditions of the
__________________
(1) To be used in the Certificate relating to the first Interest Draft
only.
(2) To be used in each Certificate relating to each Interest Draft other
than the first Interest Draft.
Annex A - 1
339
Bonds and the Indenture and does not exceed the amount available to be
drawn by the Trustee under the Letter of Credit.
(5) The amount demanded hereby does not include any
amount in respect of the payment of interest on, or portion of
purchase price corresponding to interest on, Bonds being redeemed,
paid or purchased, respectively, on the Interest Payment Date to which
this drawing relates for which a drawing is being, or was, made by the
Trustee under the Letter of Credit pursuant to a Tender Draft, Partial
Redemption Draft, Purchase Draft or Final Draft.
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will deposit such amount in a
segregated account under the Indenture or will apply the same directly
to the payment when due of the interest amount owing on account of the
Bonds pursuant to the Indenture, (b) no portion of said amount shall
be applied by the undersigned for any other purpose, and (c) no
portion of said amount shall be commingled with other funds held by
the undersigned other than amounts drawn under the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the _____ day of _________, 19__.
_____________________________
as Trustee
By _________________________________
Name:
Title:
Annex A - 2
340
Annex B
[Form of Certificate for Tender Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF
AND UP TO 206 DAYS' INTEREST ON ONTARIO INDUSTRIAL DEVELOPMENT
AUTHORITY ADJUSTABLE TENDER INDUSTRIAL DEVELOPMENT REVENUE BONDS (▇.▇.
▇▇▇▇▇▇▇▇ & CO. - WEST COAST PROJECT) SERIES 1985 (THE "BONDS") IN
SUPPORT OF A TENDER
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned
Trustee (the "TRUSTEE"), hereby certifies on behalf of the Trustee to Union
Bank of California, N.A. (the "BANK"), with reference to Irrevocable Letter of
Credit No. ___________ (the "LETTER OF CREDIT", the terms defined therein and
not otherwise defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon a tender of all or less than
all of the Bonds that are Outstanding (as defined in the Indenture),
of the purchase price of such Bonds in an amount equal to the unpaid
principal amount of and up to 206 days' accrued and unpaid interest on
Bonds to be purchased as a result of such tender pursuant to the terms
of Section 2.02 of the Indenture (other than Bonds presently held of
record by the Company, or by the undersigned for the account of the
Company pursuant to the Indenture), which payment is due either on the
date on which this Certificate and the Tender Draft it accompanies are
being presented to the Bank or on the immediately succeeding Business
Day.
(3) The amount of the Tender Draft accompanying this
Certificate is equal to the sum of (i) $_______ being drawn in respect
of the payment of that portion of the purchase price corresponding to
unpaid principal on the Bonds (other than Bonds presently held of
record by the Company, or by the undersigned for the account of the
Company pursuant to the Indenture), and (ii) $_______ being drawn in
respect of the payment of that portion of the purchase price
corresponding to up to 206 days' accrued and unpaid interest on Bonds
to be purchased as a result of a tender.
Annex B - 1
341
(4) The Trustee shall hold the Bonds to be purchased with
the proceeds of this drawing in accordance with the Indenture and to
perfect the Banks security interest therein.
(5) The amount of the Tender Draft accompanying this
Certificate was computed in compliance with the terms and conditions
of the Bonds and the Indenture and does not exceed the amount
available to be drawn by the Trustee under the Letter of Credit. The
amount demanded hereby does not include any amount in respect of the
payment of interest, or portion of purchase price corresponding to
interest, on Bonds being purchased for which a drawing is being, or
was, made by the Trustee under the Letter of Credit by an Interest
Draft.
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will immediately cause the same
to be used for the payment when due of the portion of the purchase
price of Bonds corresponding to unpaid principal and accrued interest
in accordance with the Indenture, (b) no portion of said amount shall
be applied by the undersigned for any other purpose and (c) no portion
of said amount shall be commingled with other funds held by the
undersigned other than amounts drawn under the Letter of Credit.
The Trustee acknowledges that, pursuant to the terms of the
Letter of Credit, upon the Bank's honoring of the Tender Draft accompanying
this Certificate, the amount of the Letter of Credit and the amounts available
to be drawn by the Trustee thereunder by any subsequent Interest Draft, Tender
Draft, Purchase Draft, Partial Redemption Draft and Final Draft are
automatically decreased as set forth in the Letter of Credit, subject to
reinstatement, if any, as set forth therein.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the _____ day of __________, 19__.
_______________________________,
as Trustee
By____________________________
Name:
Title:
Annex B - 2
342
Annex C
[Form of Certificate for Partial Redemption Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF
AND UP TO 206 DAYS' INTEREST ON ONTARIO INDUSTRIAL DEVELOPMENT
AUTHORITY ADJUSTABLE TENDER INDUSTRIAL DEVELOPMENT REVENUE BONDS (▇.▇.
▇▇▇▇▇▇▇▇ & CO. - WEST COAST PROJECT) SERIES 1985 (THE "BONDS") UPON
PARTIAL REDEMPTION
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned
Trustee (the "TRUSTEE"), hereby certifies on behalf of the Trustee to Union
Bank of California, N.A. (the "BANK"), with reference to Irrevocable Letter of
Credit No. __________ (the "LETTER OF CREDIT", the terms defined therein and
not otherwise defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon redemption of less than all of
the Bonds that are Outstanding (as defined in the Indenture), of the
unpaid principal amount of, and up to 206 days, accrued and unpaid
interest on, the Bonds to be redeemed pursuant to Section 3.01(b),
(c), (d) or (f) of the Indenture (other than Bonds presently held of
record by the Company, or by the undersigned for the account of the
Company pursuant to the Indenture).
(3) The amount of the Partial Redemption Draft
accompanying this Certificate is equal to the sum of (i) $_________
being drawn in respect of the payment of unpaid principal of Bonds
(other than Bonds presently held of record by the Company, or by the
undersigned for the account of the Company pursuant to the Indenture),
to be redeemed, and (ii) $_________ being drawn in respect of the
payment of up to 206 days' accrued and unpaid interest on such Bonds.
(4) The amount of the Partial Redemption Draft
accompanying this Certificate was computed in accordance with the
terms and conditions of the Bonds and the Indenture and does not
exceed the amount available to be drawn by the Trustee under the
Letter of Credit. The amount being demanded hereby does not include
any amount in respect of the payment of interest on Bonds for which a
Annex C - 1
343
drawing has been, or is being, made by the Trustee under the Letter of
Credit by an Interest Draft.
(5) This Certificate and the Partial Redemption Draft it
accompanies are dated, and are being presented to the Bank on, the
date not more than one Business Day prior to the date on which the
unpaid principal amount of, and accrued and unpaid interest on, Bonds
to be redeemed are due and payable under the Indenture upon redemption
of less than all of the Bonds that are Outstanding (as defined in the
Indenture).
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of and accrued and unpaid
interest on the Bonds pursuant to the Indenture, (b) no portion of
said amount shall be applied by the undersigned for any other purpose
and (c) no portion of said amount shall be commingled with other funds
held by the undersigned other than amounts drawn under the Letter of
Credit.
The Trustee acknowledges that, pursuant to the terms of the
Letter of Credit, upon the Bank's honoring the Partial Redemption Draft
accompanying this Certificate, the amount of the Letter of Credit and the
amounts available to be drawn by the Trustee thereunder with respect to
principal and interest of the Bonds are automatically and permanently decreased
by an amount equal to the principal amount of Bonds that are the subject of
this drawing plus 206 days' interest on such principal amount of Bonds computed
at the rate of 12% per annum (based upon a 360 day year).
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ______ day of _____ , 19__.
__________________________________,
as Trustee
By _______________________________
Name:
Title:
Annex C - 2
344
Annex D
[Form of Certificate for Purchase Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF AN AMOUNT
EQUAL TO PRINCIPAL OF AND UP TO 206 DAYS' INTEREST ON ONTARIO
INDUSTRIAL DEVELOPMENT AUTHORITY ADJUSTABLE TENDER INDUSTRIAL
DEVELOPMENT REVENUE BONDS (▇.▇.▇▇▇▇▇▇▇▇ & CO. - WEST COAST PROJECT)
SERIES 1985 (THE "BONDS") IN SUPPORT OF PURCHASE IN LIEU OF REDEMPTION
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned
Trustee (the "TRUSTEE"), hereby certifies on behalf of the Trustee to Union
Bank of California, N.A. (the "BANK"), with reference to Irrevocable Letter of
Credit No. __________ (the "LETTER OF CREDIT", the terms defined therein and
not otherwise defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon a purchase in lieu of redemption
pursuant to Section 13.03(c) of the Indenture of Bonds that are Outstanding (as
defined in the Indenture) (other than Bonds presently held of record by the
Company, or by the undersigned for the account of the Company pursuant to the
Indenture), of the purchase price of such Bonds in an amount equal to the
unpaid principal amount of, and up to 206 days' accrued and unpaid interest on,
the Bonds to be so purchased, which payment is due on the Business Day on which
this Certificate and the Purchase Draft it accompanies are being presented to
the Bank or the immediately succeeding Business Day.
(3) The amount of the Purchase Draft accompanying this
Certificate is equal to the sum of (i) $_________________ being drawn in
respect of the payment of that portion of the purchase price corresponding to
unpaid principal of Bonds (other than Bonds presently held of record by the
Company, or by the undersigned for the account of the Company pursuant to the
Indenture) to be purchased, and (ii) $_____________ being drawn in respect of
that portion of the purchase price corresponding to the payment of up to 206
days' accrued and unpaid interest on such Bonds.
(4) The amount of the Purchase Draft accompanying this
Certificate was computed in compliance with the terms and conditions of the
Bonds and the Indenture and
Annex D - 1
345
does not exceed the amount available to be drawn by the Trustee under the
Letter of Credit. The amount demanded hereby does not include any amount in
respect of the payment of interest, or portion of purchase price corresponding
to interest, on Bonds being purchased for which a drawing is being, or was
made, by the Trustee under the Letter of Credit by an Interest Draft.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to the
payment of the portion of the purchase price corresponding to the principal
amount of, and interest accrued and unpaid on, the Bonds pursuant to the
Indenture, (b) no portion of said amount shall be applied by the undersigned
for any other purpose and (c) no portion of said amount shall be commingled
with other funds held by the undersigned other than amounts drawn under the
Letter of Credit.
(6) The Trustee shall hold the Bonds to be purchased with
the proceeds of this drawing under the Letter of Credit in accordance with the
Indenture and to perfect the Bank's security interest therein.
The Trustee acknowledges that, pursuant to the terms of the
Letter of Credit, upon the Bank's honoring of the Purchase Draft accompanying
this Certificate, the amount of the Letter of Credit and the amounts available
to be drawn by the Trustee thereunder by any subsequent Interest Draft, Tender
Draft, Purchase Draft, Redemption Draft and Final Draft are automatically
decreased as set forth in the Letter of Credit, subject to reinstatement, if
any, as set forth therein.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the _______ day of ___________, 19__.
__________________________________,
as Trustee
By _______________________________
Name:
Title:
Annex D - 2
346
Annex E
[Form of Certificate for Discount Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF DISCOUNT ON
ONTARIO INDUSTRIAL DEVELOPMENT AUTHORITY ADJUSTABLE TENDER INDUSTRIAL
DEVELOPMENT REVENUE BONDS (▇.▇. ▇▇▇▇▇▇▇▇ & CO. - WEST COAST PROJECT)
SERIES 1985 (THE "BONDS")
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned
Trustee (the "TRUSTEE"), hereby certifies on behalf of the Trustee to Union
Bank of California, N.A. (the "BANK"), with reference to Irrevocable Letter of
Credit No. __________ (the "LETTER OF CREDIT", the terms defined therein and
not otherwise defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment of a discount equal to the excess of
the principal amount of the Bonds tendered pursuant to Section 2.02 of
the Indenture over the amount to be received by the Trustee upon the
remarketing thereof as the portion of the purchase price corresponding
to the principal of such Bonds, which payment is due on the date on
which this Certificate and the Discount Draft it accompanies are being
presented to the Bank. None of such Bonds is held of record by the
Company or by the undersigned for the account of the Company pursuant
to the Indenture.
(3) The amount of the Discount Draft accompanying this
Certificate is $___________ and does not include any amount of
discount that is included in any other Discount Draft presented on the
date of this Certificate.
(4) The amount of the Discount Draft accompanying this
Certificate was computed in compliance with the terms and conditions
of the Bonds and the Indenture and does not exceed the amount
available to be drawn by the Trustee under the Letter of Credit.
Annex E - 1
347
The Trustee acknowledges that, pursuant to the terms of the
Letter of Credit, upon the Bank's honoring of the Discount Draft accompanying
this Certificate, the amount of the Letter of Credit and the amounts available
to be drawn by the Trustee thereunder by any subsequent Discount Draft are
automatically decreased by an amount equal to the amount set forth in paragraph
3 above, subject to reinstatement, if any, as set forth in the Letter of
Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the __________ day of ____________, 19__.
__________________________________,
as Trustee
By _______________________________
Name:
Title:
Annex E - 2
348
Annex F
[Form of Certificate for Final Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL OF
AND UP TO 206 DAYS' INTEREST ON ONTARIO INDUSTRIAL DEVELOPMENT
AUTHORITY ADJUSTABLE TENDER INDUSTRIAL DEVELOPMENT REVENUE BONDS (▇.▇.
▇▇▇▇▇▇▇▇ & CO. - WEST COAST PROJECT) SERIES 1985 (THE "BONDS") UPON
STATED OR ACCELERATED MATURITY OR OPTION OR MANDATORY REDEMPTION AS A
WHOLE
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer of the undersigned
Trustee (the "TRUSTEES"), hereby certifies on behalf of the Trustee to Union
Bank of California, N.A. (the "BANK"), with reference to Irrevocable Letter of
Credit No. ___________ (the "LETTER OF CREDIT", the terms defined therein and
not otherwise defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, either at stated maturity, upon
acceleration pursuant to Section 9.01 of the Indenture, or as a result
of a redemption as a whole pursuant to Section 3.01(a), (b), (c), (d),
(e), (f) or (g) of the Indenture, or a redemption in part pursuant to
Section 3.01(a) of the Indenture, of the unpaid principal amount of
and up to 206 days' accrued and unpaid interest on Bonds that are
"Outstanding" within the meaning of the Indenture (other than Bonds
presently held of record by the Company, or by the undersigned
pursuant to the Indenture).
(3) The amount of the Final Draft accompanying this
Certificate is equal to the sum of (i) $____________ being drawn in
respect of the payment of unpaid principal of Bonds (other than Bonds
presently held of record by the Company, or by the undersigned
pursuant to the Indenture) (ii) $____________ being drawn in respect
of the payment of up to 206 days' accrued and unpaid interest on such
Bonds.
(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and conditions
of the Bonds and the Indenture and does not exceed the amount
available to be drawn by the Trustee under the Letter of Credit. The
amount demanded hereby does not include any
Annex F - 1
349
amount in respect of the payment of interest on Bonds for which a
drawing is being, or was, made by the Trustee under the Letter of
Credit by an Interest Draft.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of, and accrued and
unpaid interest on, Bonds pursuant to the Indenture, (b) no portion of
said amount shall be applied by the undersigned for any other purpose
and (c) no portion of said amount shall be commingled with other funds
held by the undersigned other than amounts drawn under the Letter of
Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ______ day of _______________, 19__.
__________________________________,
as Trustee
By _______________________________
Name:
Title:
Annex F - 2
350
Annex G
[Form of Reimbursement Certificate for
Tender Draft or Purchase Draft]
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
Irrevocable Letter of Credit No.
The undersigned, a duly authorized officer or agent of the undersigned
Trustee (the "TRUSTEE"), hereby certifies on behalf of the Trustee to Union
Bank of California, N.A. (the "BANK"), with reference to Irrevocable Letter of
Credit No. __________ (the "LETTER OF CREDIT", the terms defined therein and
not otherwise defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The amount of $___________ being transferred to you
today by us on behalf of the Company is a payment made to reimburse
you, pursuant to the Letter of Credit and Reimbursement Agreement
dated as of ___________, 1997 (the "Reimbursement Agreement") among
the Company and the Bank, for amounts drawn under the Letter of Credit
by Tender Drafts or Purchase Drafts. The Trustee hereby requests that
you reinstate the Letter of Credit upon receipt of such payment in an
amount equal to the amount specified in paragraph (3) of the payment
so received and that you reinstate the interest portion of the Letter
of Credit with respect to amounts drawn to pay interest in connection
with the purchase of such Bonds.
(3) Of the amount referred to in paragraph (2),
$__________ represents the aggregate principal amount of Bonds resold
or to be resold on behalf of the Company.
(4) Of the amount referred to in paragraph (2),
$__________ represents accrued and unpaid interest on the Bonds.
Annex G - 1
351
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the __________ day of , 19__.
__________________________________,
as Trustee
By _______________________________
Name:
Title:
Annex G - 2
352
Annex H
[Form of Transfer Certificate]
INSTRUCTION TO TRANSFER
[Date]
Union Bank of California, N.A.
[Address]
Attention: _____________________________
Re: Your Irrevocable Letter of Credit No.
Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
_______________________________
[Name of Transferee]
_______________________________
[Address]
all rights of the undersigned beneficiary to draw under the above-captioned
Letter of Credit (the "LETTER OF CREDIT"). The transferee has succeeded the
undersigned as Trustee under the Indenture (as defined in the Letter of
Credit).
By this transfer, all rights of the undersigned beneficiary in
the Letter of Credit are transferred to the transferee and the transferee shall
hereafter have the sole rights as beneficiary thereof; provided, however, that
no right shall be deemed to have been transferred to the transferee until such
transfer complies with the requirements of the Letter of Credit pertaining to
transfers.
Annex H - 1
353
The Letter of Credit is returned herewith and in accordance
therewith we ask that this transfer be effective and that you transfer the
Letter of Credit to our transferee or that, if so requested by the Transferee,
you issue a new irrevocable letter of credit in favor of the transferee with
provisions consistent with the Letter of Credit.
Very truly yours,
__________________________________,
as predecessor Trustee
By _______________________________
Name:
Title:
Annex H - 2
354
EXHIBIT B
[FORM OF PLEDGE AGREEMENT]
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of ____________, 1997 and made
by ▇▇▇▇ ONTARIO HOLDING, INC., a California corporation (the "PLEDGOR"), to
UNION BANK OF CALIFORNIA, N.A., for its benefit and as agent for the Lenders
under the Credit Agreement (as defined in the Reimbursement Agreement
referenced below) (the "BANK"), as contemplated by the Letter of Credit and
Reimbursement Agreement, dated as of _________________, 1997 (said Agreement,
as it may hereafter be amended or otherwise modified from time to time, being
the "REIMBURSEMENT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined), among the Pledgor and the
Bank.
PRELIMINARY STATEMENTS:
(1) Ontario Industrial Development Authority (the
"ISSUER"), pursuant to the Indenture, has issued $9,000,000 in aggregate
principal amount of its Adjustable Tender Industrial Development Revenue Bonds
(▇.▇. ▇▇▇▇▇▇▇▇ & Co. - West Coast Project) Series 1985 (the "BONDS"). Mellon
Bank, N.A., is the trustee under the Indenture (in such capacity, the
"TRUSTEE").
(2) The Indenture provides that under certain
circumstances Bonds tendered by the holders thereof shall be purchased with the
proceeds of drawings under the Letter of Credit issued by the Bank pursuant to
the Reimbursement Agreement (such Bonds being the "PLEDGED BONDS").
(3) It is a condition precedent to the obligation of the
Bank to issue the Letter of Credit that the Pledgor shall have executed and
delivered this Pledge Agreement to the Bank.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, receipt of which is hereby acknowledged, the
Pledgor hereby agrees with the Bank as follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the Bank,
for its benefit and as agent for the Lenders under the Credit Agreement, and
grants to the Bank, for its benefit and as agent for the Lenders under the
Credit Agreement, a security interest in, (i) all of the Pledgor's right, title
and interest in, to and under the Indenture, including, without limitation, the
Trust Estate described therein and all amounts on deposit in or credited to any
Fund or Account created under the Indenture (the "INDENTURE COLLATERAL") and
(ii) all
Exhibit B - 1
355
of the Pledgor's right, title and interest in and to the Pledged Bonds and the
certificates, if any, representing the Pledged Bonds, as the same may be from
time to time tendered by the holders thereof, and any interest of the Pledgor
in the entries on the books of any financial intermediary pertaining to the
Pledged Bonds, and all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Indenture Collateral and/or the Pledged Bonds,
and all proceeds of any and all of the foregoing (the "PLEDGED COLLATERAL").
SECTION 2. Security for Obligations. This Agreement and the
pledge and security interest granted by the Pledgor to the Bank hereunder
secures the payment and performance of all obligations of the Pledgor to the
Bank and the Guarantor now or hereafter existing under or in connection with
the Reimbursement Agreement and the Related Documents (including, without
limitation, with respect to any Tender Advances that have been made as set
forth in Section 2.05 of the Reimbursement Agreement) whether for principal,
interest, fees, expenses or otherwise, and whether direct or indirect, absolute
or contingent, or due or to become due, and all obligations of the Pledgor now
or hereafter existing under this Agreement (all such obligations of the Pledgor
being the "OBLIGATIONS").
SECTION 3. Delivery of Pledged Bonds. In connection with the
presentation of any Tender Draft or Purchase Draft, Pledged Bonds in aggregate
principal amount equal to the principal amount of such Tender Draft or Purchase
Draft shall be delivered to and held by the Trustee for the account of the
Pledgor in accordance with the Indenture and to perfect the Bank's security
interest therein (or if in book-entry form the appropriate entries will be made
on the books of a financial intermediary showing the interest of the Trustee on
behalf of the Pledgor and the Bank) and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to the Bank.
Pledged Bonds shall not be entitled to the benefits of, and shall not be
presented for payment under, the Letter of Credit.
SECTION 4. Release of Pledged Bonds. While the Letter of
Credit is in effect, the Pledgor hereby agrees that the Trustee shall not
release any of the Pledged Bonds:
(a) in connection with Pledged Bonds purchased with the
proceeds of any Tender Draft, until (i) the Bank is reimbursed in full pursuant
to Sections 2.04 or 2.05 of the Reimbursement Agreement with respect to such
Tender Draft drawing and (ii) the Bank has given the Trustee written notice of
the reinstatement of the Letter of Credit; and
(b) in connection with Pledged Bonds purchased with the
proceeds of any Purchase Draft, until the Bank (i) is reimbursed in full for
all amounts owed under the Reimbursement Agreement and (ii) has reinstated the
Letter of Credit with respect to such Pledged Bonds.
Exhibit B - 2
356
While the Letter of Credit is in effect, the Bank's written notice to the
Trustee to the effect that it is reinstating the Letter of Credit with respect
to amounts drawn thereunder to purchase Pledged Bonds shall constitute a
release by the Bank of its security interest in such Bonds.
SECTION 5. Representations and Warranties. The Pledgor
represents and warrants that:
(a) Upon delivery of the Pledged Bonds to the Bank or the
Trustee on behalf of the Bank in accordance with this Pledge Agreement and the
Indenture, the Pledgor will be the legal and beneficial owner of the Pledged
Bonds free and clear of any lien, security interest or encumbrance of any kind
or nature except for the security interest created by this Agreement, and on
the date of transfer to the Bank or the Trustee on behalf of the Bank of
Pledged Bonds described herein, neither the Issuer, the Remarketing Agent nor
the Trustee will have any right, title or interest in or to the Pledged Bonds.
(b) The Pledgor has, and on the date of delivery or
transfer to the Bank or the Trustee on behalf of the Bank of the Pledged Bonds
will have, full power and authority to pledge all of its right, title and
interest in and to the Pledged Bonds pursuant to this Pledge Agreement.
(c) Upon the delivery or transfer of the Pledged Bonds to
the Bank or the Trustee on behalf of the Bank, the pledge of the Pledged Bonds
pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Bonds securing the payment of the Obligations,
and is subject to no prior lien, security interest or encumbrance of any kind
or nature, or to any agreement of the Pledgor purporting to grant to any third
party a security interest in the property or assets of the Pledgor that would
include the Pledged Bonds.
(d) The Pledgor is the legal beneficial owner of the
Indenture Collateral free and clear of any lien, security interest or
encumbrance of any kind or nature except for the security interest and lien of
the Indenture with respect to the Indenture Collateral and the security
interest created by this Pledge Agreement.
(e) This Pledge Agreement has been duly authorized,
executed and delivered by the Pledgor and constitutes a legal, valid and
binding obligation of the Pledgor enforceable in accordance with its terms,
subject, however, to the application by a court of general principles of equity
and to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally.
(f) No authorization, approval, or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required either (i) for the
Exhibit B - 3
357
pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement or
(ii) for the execution, delivery or performance of this Agreement by the
Pledgor.
(g) The execution, delivery and performance of this
Pledge Agreement does not and will not violate any provision of any law or
regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of the Articles
of Incorporation or By-laws of the Pledgor, or of any mortgage, indenture,
lease, contract, or agreement to which the Pledgor is a party or which is
binding upon the Pledgor or upon any of its assets, and will not result in the
creation or imposition of any Lien on any of the assets of the Pledgor, except
as contemplated by the Reimbursement Agreement and hereby.
(h) There is no pending action or proceeding before any
court, governmental agency or arbitrator against or involving the Pledgor and
there is no threatened action or proceeding affecting the ▇▇▇▇▇▇▇ before any
court, governmental agency or arbitrator that, in any case, is likely to impair
the Pledgor's ability to perform its obligations under this Pledge Agreement.
SECTION 6. Affirmative Covenants. So long as the Letter of
Credit is in effect, or the Bank has any Commitment under the Reimbursement
Agreement, or the Pledgor shall have any obligation, contingent or otherwise,
to pay any amount to the Bank under the Reimbursement Agreement, the Pledgor
covenants and agrees that, unless the Bank shall otherwise consent in writing:
(a) Upon delivery or transfer of any Pledged Bond to the
Bank or the Trustee on behalf of the Bank, and payment of the proceeds of the
related Letter of Credit drawing, if any, to or for the account of the holder
who delivered such Bond pursuant to the Indenture, the Pledgor will own the
same free and clear of all liens, security interest or encumbrance of any kind
or nature, except for the lien and security interest provided for hereby.
(b) The Pledgor will defend the Bank's position as
pledgee of the Pledged Bonds against the claims and demands of all persons
whomsoever.
(c) The Pledgor will have like title to and right to
pledge any other property at any time hereafter pledged to the Bank as Pledged
Collateral hereunder and will likewise defend the Bank's right thereto and
security interest therein.
SECTION 7. Negative Covenant. So long as the Letter of
Credit is in effect, or the Bank has any obligation under the Reimbursement
Agreement, or the Pledgor shall have any obligation, contingent or otherwise,
to pay any amount to the Bank or the Guarantor under the Reimbursement
Agreement, the Pledgor will not, without the written consent of the Bank, sell,
assign, transfer, exchange, or otherwise dispose of, or grant any
Exhibit B - 4
358
option with respect to, the Pledged Bonds, nor will it create, incur or permit
to exist any affirmative pledge, lien, mortgage, hypothecation, security
interest, charge, option or any other affirmative encumbrance with respect to
any of the Pledged Bonds or Pledged Collateral, or any interest therein, or any
proceeds thereof, except for the lien and security interest provided for by
this Pledge Agreement and the Indenture and except to the extent Pledged Bonds
have been released from the lien of this Agreement pursuant to Section 4
hereof.
SECTION 8. Further Assurances. The Pledgor agrees that at
any time and from time to time, at the expense of the Pledgor, the Pledgor will
promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that the Bank may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Bank to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
SECTION 9. Voting Rights; Interest; Etc. (a) So long as no
Event of Default or event which, with the giving of notice or time elapse, or
both, would become an Event of Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise, or refrain
from exercising, any and all voting and other consensual rights
pertaining to the Pledged Bonds or any part thereof for any purpose
not inconsistent with the terms of this Agreement or the Reimbursement
Agreement; provided, however, that the Pledgor shall not exercise or
refrain from exercising any such right if, in the Bank's judgment,
such action would have a material adverse effect on the value of the
Pledged Bonds or any part thereof, and provided further, that the
Pledgor shall give the Bank at least two days' written notice prior to
such exercise or refrain from exercising of the manner in which it
intends to exercise, or the reasons for refraining from exercising,
any such right.
(ii) The Pledgor shall be entitled to receive and retain
any and all interest paid in respect of the Pledged Bonds, provided,
however, that any and all
(A) interest paid or payable other than in cash
in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Bonds, and
(B) cash paid, payable or otherwise distributed
in respect of principal of, or in redemption of, or in
exchange for, any Pledged Bonds,
shall be, and shall be forthwith delivered to the Bank to hold as,
Pledged Collateral and shall, if received by the Pledgor, be received
in trust for the benefit of the Bank, be segregated from the other
property or funds of the Pledgor, and be forthwith
Exhibit B - 5
359
delivered to the Bank as Pledged Collateral in the same form as so
received (with any necessary endorsement).
(iii) The Bank shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights which it
is entitled to exercise pursuant to paragraph (i) above and to receive
the interest payments which it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default or an event which, with the giving of notice or time elapse, or both,
would become an Event of Default:
(i) All rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 9(a)(i) and to receive the interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 9(a)(ii) shall cease, and all such rights shall
thereupon become vested in the Bank who shall thereupon have the sole
right to exercise such voting and other consensual rights and to
receive and hold as Pledged Collateral such interest payments.
(ii) All interest payments which are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section
9(b) shall be received in trust for the benefit of the Bank, shall be
segregated from other funds of the Pledgor and shall be forthwith paid
over to the Bank as Pledged Collateral in the same form as so received
(with any necessary endorsement).
SECTION 10. Bank Appointed Attorney-in-Fact. The Pledgor
hereby appoints the Bank the Pledgor's attorney-in-fact, said appointment being
coupled with an interest, with full authority in the place and stead of the
Pledgor upon the occurrence and during the continuance of an Event of Default,
and in the name of the Pledgor or otherwise, from time to time in the Bank's
discretion to take any action and to execute any instrument that the Bank may
deem necessary or advisable to assure that Pledged Bonds are pledged to the
Bank and the Pledgor's agreements and Obligations hereunder are performed and
satisfied, including, without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing any interest payment or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same. The Pledgor hereby agrees that the
Trustee and any other Person who receives written notice from the Bank of the
occurrence and continuance of an Event of Default shall have the right to rely
upon any such notice without any obligation or right to inquire as to whether
any such Event of Default actually exists and notwithstanding any notice from
or claim of the Pledgor to the contrary.
Exhibit B - 6
360
SECTION 11. Bank May Perform. If the Pledgor fails to
perform any agreement contained herein, the Bank, upon notice to the Pledgor,
may itself perform, or cause performance of, such agreement, and the reasonable
expenses of the Bank incurred in connection therewith shall be payable by the
Pledgor under Section 15.
SECTION 12. Reasonable Care. The Bank and the Trustee shall
be deemed to have exercised reasonable care in the custody and preservation of
the Pledged Collateral in their possession if the Pledged Collateral is
accorded treatment substantially equal to that which the Bank or the Trustee
accords its own property, it being understood that the Bank and Trustee shall
not have any responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Collateral, whether or not the Bank or Trustee has or is deemed
to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged Collateral.
SECTION 13. Sale of Collateral. (a) The Pledgor recognizes
that the Bank may be unable to effect a public sale of any or all of the
Pledged Bonds by reason of certain prohibitions contained in the Securities Act
of 1933, as amended, and applicable state securities laws, but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers who may be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale. The Bank shall be under no
obligation to delay a sale of any of the Pledged Bonds for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under applicable Federal securities laws, or under applicable
state securities laws, even if the issuer would agree to do so.
(b) The Pledgor agrees to do or cause to be done all such
other acts and things as may be necessary to make any sale or sales of any
portion or all of the Pledged Bonds contemplated by Section 14 hereof valid and
binding and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all courts,
arbitrators or governmental instrumentalities, domestic or foreign, having
jurisdiction over any such sale or sales, all at the Pledgor's expense. The
Pledgor further agrees that a breach of any of the covenants contained in this
Section 13 will cause irreparable injury to the Bank, that the Bank has no
adequate remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section shall be specifically
enforceable against the Pledgor and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred. The
Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Bank by reason of a breach of any of such
covenants and, consequently, agrees that, if the Bank shall ▇▇▇ for damages for
breach, the Pledgor shall pay, as liquidated damages and not as a
Exhibit B - 7
361
penalty, against release to it of the Pledged Bonds, an amount equal to the
principal amount of the Pledged Bonds, plus accrued interest as provided in the
Reimbursement Agreement on all amounts drawn under a Letter of Credit and
Tender Advances with respect to the Pledged Bonds, on the date the Bank shall
demand compliance with this Section.
SECTION 14. Remedies upon Default. If any Event of Default
shall have occurred and be continuing:
(a) The Bank may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code (the "UCC")
in effect in the State of California at that time, and the Bank may
also, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Bank's
offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Bank may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be
required by law at least ten days' notice to the Pledgor of the time
and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Bank
shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Bank may adjourn
any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by the Bank or on its behalf as Pledged
Collateral and all cash proceeds received by the Bank in respect of
any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral may, in the discretion of the Bank, be
held by the Bank or on its behalf as collateral for, and/or then or at
any time thereafter applied (after payment of any amounts payable to
the Bank pursuant to Section 15) in whole or in part by the Bank
against, all or any part of the Obligations in such order as the Bank
shall elect. Any surplus of such cash or cash proceeds held by the
Bank or on its behalf and remaining after payment and performance in
full of all the Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus promptly,
but in any event within two Business Days of the receipt thereof.
SECTION 15. Expenses. The Pledgor will upon demand pay to
the Bank the amount of any and all expenses, including the reasonable fees and
expenses of its counsel and of any agents, that the Bank may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any of
Exhibit B - 8
362
the rights of the Bank hereunder, or (iv) the failure by the Pledgor to perform
or observe any of the provisions hereof.
SECTION 16. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Bank and Pledgor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Notwithstanding the foregoing, no amendment hereto affecting the rights
or obligations of the Trustee hereunder shall be effective without the consent
of the Trustee. The Bank shall not by any act, delay, omission or otherwise be
deemed to have waived any of its rights or remedies hereunder and no waiver
shall be valid unless in writing, signed by the Bank, and then only to the
extent therein set forth. A waiver by the Bank of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Bank would otherwise have on any future occasion. No failure
to exercise nor any delay in exercising on the part of the Bank, any right,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may
be exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
SECTION 17. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic communication) and, if to the Pledgor, mailed, telecopied, telexed
or delivered to it, addressed to it at the address of the Pledgor specified in
the Reimbursement Agreement; if to the Bank, mailed, telecopied, telexed or
delivered to it, addressed to it at the address of the Bank specified in the
Reimbursement Agreement; if to the Trustee, mailed, telecopied, telexed or
delivered to it, addressed to it at the address of the Trustee specified in the
Indenture; or as to any party at such other address as shall be designated by
such party in a written notice to each other party complying as to delivery
with the terms of this Section. All such notices and other communications
shall, when mailed, telecopied, telexed or delivered, as the case may be, be
effective upon receipt.
SECTION 18. Continuing Security Interest. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) remain in full force and effect until payment and performance in full of
the Obligations, (ii) be binding upon the Pledgor, its successors and assigns,
and (iii) inure to the benefit of the Bank and its successors, transferees and
assigns. Upon the payment and performance in full of the Obligations, the
Pledgor shall be entitled to the return, upon its request and at its expense,
of such of the Pledged Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof.
Exhibit B - 9
363
SECTION 19. Severability. Any provision of this Pledge
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 20. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California. Unless otherwise defined herein or in the Reimbursement Agreement,
terms defined in Article 9 of the Uniform Commercial Code in effect from time
to time in the State of California are used herein as therein defined.
IN WITNESS WHEREOF, the Pledgor caused this Pledge Agreement
to be duly executed and delivered by its officers thereunto duly authorized as
of the date and year first above written.
___________________________, as Pledgor
By: ___________________________________
Title
Exhibit B - 10
364
ACKNOWLEDGEMENT OF TRUSTEE
MELLON BANK, N.A., as Trustee under the Indenture of Trust,
dated as of April 1, 1985, between Ontario Industrial Development Authority and
the Trustee, relating to $9,000,000 Ontario Industrial Development Authority
Adjustable Tender Industrial Development Revenue Bonds (▇.▇. ▇▇▇▇▇▇▇▇ & Co. -
West Coast Project) Series 1985 (the "BONDS"), hereby acknowledges receipt of a
copy of the Pledge Agreement, dated as of __________, 1997 (the "PLEDGE
AGREEMENT"), made by ▇▇▇▇ Ontario Holding, Inc. to Union Bank of California,
N.A. (the "BANK"), and the Bank's Irrevocable Letter of Credit No. ___________
(the "LETTER OF CREDIT"), and agrees to hold Bonds purchased with the proceeds
of drawings under the Letter of Credit and the Indenture Collateral described
in the Pledge Agreement in accordance with the Indenture and as agent and
bailee for the Bank to perfect the Bank's security interest therein.
MELLON BANK, N.A., as Trustee
By: ___________________________________
Title:
365
EXHIBIT C
[FORM OF GUARANTY]
GUARANTY
This GUARANTY is entered into as of January ___, 1997 by ▇▇▇▇
INDUSTRIES, INC., a California corporation ("GUARANTOR"), in favor of and for
the benefit of UNION BANK OF CALIFORNIA, N.A., as agent for and representative
of the Lenders (as defined in the Reimbursement Agreement described below) (in
such capacity, the "GUARANTIED PARTY"), and, subject to subsection 5.12, for
the benefit of the other Beneficiaries (as hereinafter defined).
RECITALS
A. [▇▇▇▇ ONTARIO HOLDING, INC.], a California
corporation and a wholly-owned subsidiary of Guarantor ("COMPANY"), has entered
into that certain Letter of Credit and Reimbursement Agreement dated as of
January ___, 1997 with Guarantied Party and Guarantors (said Letter of Credit
and Reimbursement Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "REIMBURSEMENT AGREEMENT";
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined).
B. It is a condition precedent to the issuance of the
Letter of Credit by Guarantied Party under the Reimbursement Agreement that
Company's obligations thereunder be guarantied by Guarantor.
C. Guarantor is willing irrevocably and unconditionally
to guaranty such obligations of Company.
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Guarantied Party to enter into the
Reimbursement Agreement and to issue the Letter of Credit thereunder, Guarantor
hereby agrees as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Guaranty, the
following terms shall have the following meanings unless the context otherwise
requires:
"BENEFICIARIES" means Guarantied Party and Lenders.
Exhibit C - 1
366
"GUARANTIED OBLIGATIONS" has the meaning assigned to that term
in subsection 2.1.
"GUARANTY" means this Guaranty dated as of January ___, 1997,
as it may be amended, supplemented or otherwise modified from time to
time.
"PAYMENT IN FULL", "PAID IN FULL" or any similar term means
payment in full of the Guarantied Obligations, including without
limitation all principal, interest, costs, fees and expenses
(including, without limitation, reasonable legal fees and expenses) of
Beneficiaries as required under the Reimbursement Agreement or the
Credit Agreement in connection with the Letter of Credit.
1.2 INTERPRETATION.
(a) References to "Sections" and "subsections" shall be
to Sections and subsections, respectively, of this Guaranty unless
otherwise specifically provided.
(b) In the event of any conflict or inconsistency between
the terms, conditions and provisions of this Guaranty and the terms,
conditions and provisions of the Reimbursement Agreement, the terms,
conditions and provisions of this Guaranty shall prevail.
SECTION 2. THE GUARANTY
2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS. Guarantor hereby
irrevocably and unconditionally guaranties, as primary obligor and not merely
as surety, the due and punctual payment in full of all Guarantied Obligations
when the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)). The term
"GUARANTIED OBLIGATIONS" is used herein in its most comprehensive sense and
includes:
(a) any and all Obligations of Company now or hereafter
made, incurred or created, whether absolute or contingent, liquidated
or unliquidated, whether due or not due, and however arising under or
in connection with the Reimbursement Agreement, and including interest
which, but for the filing of a petition in bankruptcy with respect to
Company, would have accrued on any Guarantied Obligations, whether or
not a claim is allowed against Company for such interest in the
related bankruptcy proceeding; and
(b) those expenses set forth in subsection 2.8 hereof.
Exhibit C - 2
367
2.2 PAYMENT BY GUARANTOR; APPLICATION OF PAYMENTS. Guarantor
hereby agrees, in furtherance of the foregoing and not in limitation of any
other right which any Beneficiary may have at law or in equity against
Guarantor by virtue hereof, that upon the failure of Company to pay any of the
Guarantied Obligations when and as the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
362(a)), Guarantor will upon demand pay, or cause to be paid, in cash, to
Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to
the sum of the unpaid principal amount of all Guarantied Obligations then due
as aforesaid, accrued and unpaid interest on such Guarantied Obligations
(including, without limitation, interest which, but for the filing of a
petition in bankruptcy with respect to Company, would have accrued on such
Guarantied Obligations, whether or not a claim is allowed against Company for
such interest in the related bankruptcy proceeding) and all other Guarantied
Obligations then owed to Beneficiaries as aforesaid. All such payments shall
be applied promptly from time to time by Guarantied Party:
First, to the payment of the costs and expenses of any
collection or other realization under this Guaranty, including
reasonable compensation to Guarantied Party and its agents and
counsel, and all expenses, liabilities and advances made or incurred
by Guarantied Party in connection therewith;
Second, to the payment of all other Guarantied Obligations;
and
Third, after payment in full of all Guarantied Obligations, to
the payment to Guarantor, or its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such payments.
2.3 LIABILITY OF GUARANTOR ABSOLUTE. Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations. In furtherance of the foregoing and without limiting
the generality thereof, Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and
not of collectibility.
(b) Guarantied Party may enforce this Guaranty upon the
occurrence of an Event of Default under the Reimbursement Agreement
notwithstanding the existence of any dispute between Company and any
Beneficiary with respect to the existence of such Event of Default.
Exhibit C - 3
368
(c) The obligations of Guarantor hereunder are
independent of the obligations of Company under the Reimbursement
Agreement and the obligations of any other guarantor of the
obligations of Company under the Reimbursement Agreement, and a
separate action or actions may be brought and prosecuted against
Guarantor whether or not any action is brought against Company or any
of such other guarantors and whether or not Company is joined in any
such action or actions.
(d) Guarantor's payment of a portion, but not all, of the
Guarantied Obligations shall in no way limit, affect, modify or
abridge Guarantor's liability for any portion of the Guarantied
Obligations which has not been paid. Without limiting the generality
of the foregoing, if Guarantied Party is awarded a judgment in any
suit brought to enforce Guarantor's covenant to pay a portion of the
Guarantied Obligations, such judgment shall not be deemed to release
Guarantor from its covenant to pay the portion of the Guarantied
Obligations that is not the subject of such suit.
(e) Any Beneficiary, upon such terms as it deems
appropriate, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any
reduction, limitation, impairment, discharge or termination of
Guarantor's liability hereunder, from time to time may (i) renew,
extend, accelerate, increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (ii) settle, compromise, release or discharge, or accept
or refuse any offer of performance with respect to, or substitutions
for, the Guarantied Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the
Guarantied Obligations and take and hold security for the payment of
this Guaranty or the Guarantied Obligations; (iv) release, surrender,
exchange, substitute, compromise, settle, rescind, waive, alter,
subordinate or modify, with or without consideration, any security for
payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with
respect to the Guarantied Obligations; (v) enforce and apply any
security now or hereafter held by or for the benefit of such
Beneficiary in respect of this Guaranty or the Guarantied Obligations
and direct the order or manner of sale thereof, or exercise any other
right or remedy that such Beneficiary may have against any such
security, in each case as such Beneficiary in its discretion may
determine consistent with the Reimbursement Agreement, the Credit
Agreement and any applicable security agreement, including foreclosure
on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or
remedy of Guarantor against Company or any security for the
Exhibit C - 4
369
Guarantied Obligations; and (vi) exercise any other rights available
to it under the Reimbursement Agreement.
(f) This Guaranty and the obligations of Guarantor
hereunder shall be valid and enforceable and shall not be subject to
any reduction, limitation, impairment, discharge or termination for
any reason (other than payment in full of the Guarantied Obligations),
including without limitation the occurrence of any of the following,
whether or not Guarantor shall have had notice or knowledge of any of
them: (i) any failure or omission to assert or enforce or agreement
or election not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy
(whether arising under the Reimbursement Agreement, at law, in equity
or otherwise) with respect to the Guarantied Obligations or any
agreement relating thereto, or with respect to any other guaranty of
or security for the payment of the Guarantied Obligations; (ii) any
rescission, waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of the
Reimbursement Agreement or any agreement or instrument executed
pursuant thereto, or of any other guaranty or security for the
Guarantied Obligations, in each case whether or not in accordance with
the terms of the Reimbursement Agreement or any agreement relating to
such other guaranty or security; (iii) the Guarantied Obligations, or
any agreement relating thereto, at any time being found to be illegal,
invalid or unenforceable in any respect; (iv) the application of
payments received from any source (other than payments received from
the proceeds of any security for the Guarantied Obligations, except to
the extent such security also serves as collateral for indebtedness
other than the Guarantied Obligations) to the payment of indebtedness
other than the Guarantied Obligations, even though any Beneficiary
might have elected to apply such payment to any part or all of the
Guarantied Obligations; (v) any Beneficiary's consent to the change,
reorganization or termination of the corporate structure or existence
of Company or any of its Subsidiaries and to any corresponding
restructuring of the Guarantied Obligations; (vi) any failure to
perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations; (vii) any
defenses, set-offs or counterclaims which Company may allege or assert
against any Beneficiary in respect of the Guarantied Obligations,
including but not limited to failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord
and satisfaction and usury; and (viii) any other act or thing or
omission, or delay to do any other act or thing, which may or might in
any manner or to any extent vary the risk of Guarantor as an obligor
in respect of the Guarantied Obligations.
Exhibit C - 5
370
2.4 WAIVERS BY GUARANTOR. Guarantor hereby waives, for the
benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition
of payment or performance by Guarantor, to (i) proceed against
Company, any other guarantor of the Guarantied Obligations or any
other Person, (ii) proceed against or exhaust any security held from
Company, any such other guarantor or any other Person, (iii) proceed
against or have resort to any balance of any deposit account or credit
on the books of any Beneficiary in favor of Company or any other
Person, or (iv) pursue any other remedy in the power of any
Beneficiary whatsoever;
(b) any defense arising by reason of the incapacity, lack
of authority or any disability or other defense of Company including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the cessation
of the liability of Company from any cause other than payment in full
of the Guarantied Obligations;
(c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger
in amount nor in other respects more burdensome than that of the
principal;
(d) any defense based upon any Beneficiary's errors or
omissions in the administration of the Guarantied Obligations, except
behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations
affecting Guarantor's liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that any Beneficiary
protect, secure, perfect or insure any security interest or lien or
any property subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the
Reimbursement Agreement or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the
Guarantied Obligations or any agreement related thereto, notices of
any extension of credit to Company and notices of any of the matters
referred to in subsection 2.3 and any right to consent to any thereof;
and
Exhibit C - 6
371
(g) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors
or sureties, or which may conflict with the terms of this Guaranty.
2.5 CERTAIN CALIFORNIA LAW WAIVERS. As used in this subsection
2.5, any reference to "the principal" includes Company, and any reference to
"the creditor" includes each Beneficiary. In accordance with Section 2856 of
the California Civil Code:
(a) Guarantor agrees (i) to waive any and all rights of
subrogation and reimbursement against Company or against any
collateral or security granted by Company for any of the Guarantied
Obligations and (ii) to withhold the exercise of any and all rights of
subrogation, reimbursement and contribution against Company, against
any other guarantor of any of the Guarantied Obligations and against
any collateral or security granted by any such other guarantor for any
of the Guarantied Obligations until the Guarantied Obligations shall
have been paid in full and the Letter of Credit shall have expired or
been cancelled, all as more fully set forth in subsection 2.6;
(b) Guarantor waives any and all other rights and
defenses available to Guarantor by reason of Sections 2787 to 2855,
inclusive, 2899 and 3433 of the California Civil Code, including
without limitation any and all rights or defenses Guarantor may have
by reason of protection afforded to the principal with respect to any
of the Guarantied Obligations, or to any other guarantor of any of the
Guarantied Obligations with respect to any of such guarantor's
obligations under its guaranty, in either case pursuant to the
antideficiency or other laws of the State of California limiting or
discharging the principal's indebtedness or such guarantor's
obligations, including without limitation Section 580a, 580b, 580d, or
726 of the California Code of Civil Procedure; and
(c) Guarantor waives all rights and defenses arising out
of an election of remedies by the creditor, even though that election
of remedies, such as a nonjudicial foreclosure with respect to
security for any Guarantied Obligation, has destroyed Guarantor's
rights of subrogation and reimbursement against the principal by the
operation of Section 580d of the Code of Civil Procedure or otherwise;
and even though that election of remedies by the creditor, such as
nonjudicial foreclosure with respect to security for an obligation of
any other guarantor of any of the Guarantied Obligations, has
destroyed Guarantor's rights of contribution against such other
guarantor.
No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this subsection
2.5.
Exhibit C - 7
372
2.6 GUARANTOR'S RIGHTS OF SUBROGATION, CONTRIBUTION, ETC.
Guarantor hereby waives any claim, right or remedy, direct or indirect, that
Guarantor now has or may hereafter have against Company or any of its assets in
connection with this Guaranty or the performance by Guarantor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or
otherwise and including without limitation (a) any right of subrogation,
reimbursement or indemnification that Guarantor now has or may hereafter have
against Company, (b) any right to enforce, or to participate in, any claim,
right or remedy that any Beneficiary now has or may hereafter have against
Company, and (c) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by any Beneficiary. In addition,
until the Guarantied Obligations shall have been indefeasibly paid in full and
the Letter of Credit shall have expired or been cancelled, Guarantor shall
withhold exercise of any right of contribution Guarantor may have against any
other guarantor of the Guarantied Obligations (including without limitation any
such right of contribution under California Civil Code Section 2848).
Guarantor further agrees that, to the extent the waiver or agreement to
withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification Guarantor may have against
Company or against any collateral or security, and any rights of contribution
Guarantor may have against any such other guarantor, shall be junior and
subordinate to any rights any Beneficiary may have against Company, to all
right, title and interest any Beneficiary may have in any such collateral or
security, and to any right any Beneficiary may have against such other
guarantor. If any amount shall be paid to Guarantor on account of any such
subrogation, reimbursement, indemnification or contribution rights at any time
when all Guarantied Obligations shall not have been paid in full, such amount
shall be held in trust for Guarantied Party on behalf of Beneficiaries and
shall forthwith be paid over to Guarantied Party for the benefit of
Beneficiaries to be credited and applied against the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms hereof. ]
2.7 SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of
Company now or hereafter held by Guarantor is hereby subordinated in right of
payment to the Guarantied Obligations, and any such indebtedness of Company to
Guarantor collected or received by Guarantor after an Event of Default has
occurred and is continuing shall be held in trust for Guarantied Party on
behalf of Beneficiaries and shall forthwith be paid over to Guarantied Party
for the benefit of Beneficiaries to be credited and applied against the
Guarantied Obligations but without affecting, impairing or limiting in any
manner the liability of Guarantor under any other provision of this Guaranty.
2.8 EXPENSES. Guarantor agrees to pay, or cause to be paid, on
demand, and to save Beneficiaries harmless against liability for, any and all
costs and expenses (including fees and disbursements of counsel and allocated
costs of internal counsel) incurred or
Exhibit C - 8
373
expended by any Beneficiary in connection with the enforcement of or
preservation of any rights under this Guaranty.
2.9 CONTINUING GUARANTY; TERMINATION OF GUARANTY. This Guaranty
is a continuing guaranty and shall remain in effect until all of the Guarantied
Obligations shall have been paid in full and the Letter of Credit shall have
expired or been cancelled. Guarantor hereby irrevocably waives any right
(including without limitation any such right arising under California Civil
Code Section 2815) to revoke this Guaranty as to future transactions giving
rise to any Guarantied Obligations.
2.10 AUTHORITY OF GUARANTOR OR COMPANY. It is not necessary for
any Beneficiary to inquire into the capacity or powers of Guarantor or Company
or the officers, directors or any agents acting or purporting to act on behalf
of any of them.
2.11 FINANCIAL CONDITION OF COMPANY. No Beneficiary shall have any
obligation to disclose or discuss with Guarantor its assessment, or Guarantor's
assessment, of the financial condition of Company. Guarantor has adequate
means to obtain information from Company on a continuing basis concerning the
financial condition of Company and its ability to perform its obligations under
the Reimbursement Agreement, and Guarantor assumes the responsibility for being
and keeping informed of the financial condition of Company and of all
circumstances bearing upon the risk of nonpayment of the Guarantied
Obligations. Guarantor hereby waives and relinquishes any duty on the part of
any Beneficiary to disclose any matter, fact or thing relating to the business,
operations or conditions of Company now known or hereafter known by any
Beneficiary.
2.12 RIGHTS CUMULATIVE. The rights, powers and remedies given to
Beneficiaries by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to Beneficiaries by virtue
of any statute or rule of law or in the Credit Agreement or any other agreement
between Guarantor and any Beneficiary or Beneficiaries or between Company and
any Beneficiary or Beneficiaries. Any forbearance or failure to exercise, and
any delay by any Beneficiary in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to
be a waiver thereof, nor shall it preclude the further exercise of any such
right, power or remedy.
2.13 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY.
(a) So long as any Guarantied Obligations remain outstanding, Guarantor shall
not, without the prior written consent of Guarantied Party in accordance with
the terms of the Reimbursement Agreement, commence or join with any other
Person in commencing any bankruptcy, reorganization or insolvency proceedings
of or against Company. The obligations of Guarantor under this Guaranty shall
not be reduced, limited, impaired, discharged, deferred, suspended or
terminated by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Company
Exhibit C - 9
374
or by any defense which Company may have by reason of the order, decree or
decision of any court or administrative body resulting from any such
proceeding.
(b) Guarantor acknowledges and agrees that any interest on
any portion of the Guarantied Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on such portion of the Guarantied Obligations if said proceedings had
not been commenced) shall be included in the Guarantied Obligations because it
is the intention of Guarantor and Beneficiaries that the Guarantied Obligations
which are guarantied by Guarantor pursuant to this Guaranty should be
determined without regard to any rule of law or order which may relieve Company
of any portion of such Guarantied Obligations. Guarantor will permit any
trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit
of creditors or similar person to pay Guarantied Party, or allow the claim of
Guarantied Party in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guarantied
Obligations are paid by Company, the obligations of Guarantor hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from any Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guarantied Obligations for all purposes under
this Guaranty.
2.14 NOTICE OF EVENTS. As soon as Guarantor obtains knowledge
thereof, Guarantor shall give Guarantied Party written notice of any condition
or event which has resulted in (a) a material adverse change in the financial
condition of Guarantor or Company or (b) a breach of or noncompliance with any
term, condition or covenant contained herein or in the Reimbursement Agreement
or any other document delivered pursuant hereto or thereto.
2.15 SET OFF. In addition to any other rights any Beneficiary may
have under law or in equity, if any amount shall at any time be due and owing
by Guarantor to any Beneficiary under this Guaranty, such Beneficiary is
authorized at any time or from time to time, without notice (any such notice
being hereby expressly waived), to set off and to appropriate and to apply any
and all deposits (general or special, including but not limited to indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness of such Beneficiary owing to Guarantor and any other
property of Guarantor held by any Beneficiary to or for the credit or the
account of Guarantor against and on account of the Guarantied Obligations and
liabilities of Guarantor to any Beneficiary under this Guaranty.
Exhibit C - 10
375
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Beneficiaries to accept this Guaranty and
to induce Guarantied Party enter into the Reimbursement Agreement and to issue
the Letter of Credit thereunder, Guarantor hereby represents and warrants to
Beneficiaries that the following statements are true and correct:
3.1 CORPORATE EXISTENCE. Guarantor is duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
has the corporate power to own its assets and to transact the business in which
it is now engaged and is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except for
failures to be so qualified, authorized or licensed that would not in the
aggregate have a material adverse effect on the business, operations, assets or
financial condition of Guarantor and its Subsidiaries, taken as a whole.
3.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Guarantor has the corporate power, authority and legal right to execute,
deliver and perform this Guaranty and all obligations required hereunder and
has taken all necessary corporate action to authorize its Guaranty hereunder on
the terms and conditions hereof and its execution, delivery and performance of
this Guaranty and all obligations required hereunder. No consent of any other
Person including, without limitation, stockholders and creditors of Guarantor,
and no license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required by Guarantor in connection with this Guaranty or the
execution, delivery, performance, validity or enforceability of this Guaranty
and all obligations required hereunder. This Guaranty has been, and each
instrument or document required hereunder will be, executed and delivered by a
duly authorized officer of Guarantor, and this Guaranty constitutes, and each
instrument or document required hereunder when executed and delivered hereunder
will constitute, the legally valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
relating to or limiting creditors' rights generally.
3.3 NO LEGAL BAR TO THIS GUARANTY. The execution, delivery and
performance of this Guaranty and the documents or instruments required
hereunder will not violate any provision of any existing law or regulation
binding on Guarantor, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on Guarantor, or the certificate
of incorporation or bylaws of Guarantor or any securities issued by Guarantor,
or any mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which Guarantor is a party or by which Guarantor or any of its
assets may be bound, the violation of which would have a material adverse
effect on the business, operations, assets or financial condition of Guarantor
and its Subsidiaries, taken as a whole,
Exhibit C - 11
376
and will not result in, or require, the creation or imposition of any lien on
any of its property, assets or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
3.4 RELATIONSHIP TO COMPANY. (i) Guarantor is the owner, directly
or through one or more wholly-owned subsidiaries, of all of the issued and
outstanding capital stock of Company; (ii) Guarantied Party's agreement to
issue the Letter of Credit is of substantial and material benefit to Guarantor;
and (iii) Guarantor has reviewed and approved copies of the Reimbursement
Agreement and is fully informed of the remedies Guarantied Party may pursue
upon the occurrence of an Event of Default under the Reimbursement Agreement.
SECTION 4. AFFIRMATIVE COVENANTS
Guarantor covenants and agrees that, unless and until all of
the Guarantied Obligations shall have been paid in full:
4.1 CORPORATE EXISTENCE, ETC. Guarantor shall at all times
preserve and keep in full force and effect its corporate existence and all
rights and franchises material to its business.
4.2 COMPLIANCE WITH LAWS, ETC. Guarantor shall comply in all
material respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying when due all taxes,
assessments and governmental charges imposed upon it or upon any of its
properties or assets or in respect of any of its franchises, businesses, income
or property before any penalty or interest accrues thereon.
4.3 BOOKS AND RECORDS. Guarantor shall keep and maintain books of
record and account with respect to its operations in accordance with generally
accepted accounting principles and shall permit any Beneficiary and its
officers, employees and authorized agents, to the extent Guarantied Party in
good ▇▇▇▇▇ ▇▇▇▇▇ necessary for the proper administration of this Guaranty, to
examine, copy and make excerpts from the books and records of Guarantor and its
Subsidiaries and to inspect the properties of Guarantor and its Subsidiaries,
both real and personal, at such reasonable times as Guarantied Party may
request.
SECTION 5. MISCELLANEOUS
5.1 SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Guaranty.
Exhibit C - 12
377
5.2 NOTICES. Any communications between Guarantied Party and
Guarantor and any notices or requests provided herein to be given may be given
by mailing the same, postage prepaid, or by telex, facsimile transmission or
cable to each such party at its address set forth in the Reimbursement
Agreement, on the signature pages hereof or to such other addresses as each
such party may in writing hereafter indicate. Any notice, request or demand to
or upon Guarantied Party or Guarantor shall not be effective until received.
5.3 SEVERABILITY. In case any provision in or obligation under
this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
5.4 AMENDMENTS AND WAIVERS. No amendment, modification,
termination or waiver of any provision of this Guaranty, and no consent to any
departure by Guarantor therefrom, shall in any event be effective without the
written concurrence of Guarantied Party and, in the case of any such amendment
or modification, Guarantor. Any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given.
5.5 HEADINGS. Section and subsection headings in this Guaranty
are included herein for convenience of reference only and shall not constitute
a part of this Guaranty for any other purpose or be given any substantive
effect.
5.6 APPLICABLE LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS
OF GUARANTOR AND BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF
THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
5.7 SUCCESSORS AND ASSIGNS. This Guaranty is a continuing
guaranty and shall be binding upon Guarantor and its successors and assigns.
This Guaranty shall inure to the benefit of Beneficiaries and their respective
successors and assigns. Guarantor shall not assign this Guaranty or any of the
rights or obligations of Guarantor hereunder without the prior written consent
of all Lenders. Any Beneficiary may, without notice or consent, assign its
interest in this Guaranty in whole or in part. The terms and provisions of
this Guaranty shall inure to the benefit of any transferee or assignee of the
Guarantied Party, and in the event of such transfer or assignment the rights
and privileges herein conferred upon such Beneficiary shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof.
5.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST GUARANTOR ARISING OUT OF OR RELATING
Exhibit C - 13
378
TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND
CITY OF LOS ANGELES. BY EXECUTING AND DELIVERING THIS AGREEMENT, GUARANTOR,
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO GUARANTOR AT ITS ADDRESS PROVIDED
IN ACCORDANCE WITH SUBSECTION 5.2;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GUARANTOR IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 5.8
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER [CALIFORNIA CODE OF CIVIL
PROCEDURE SECTION 410.40 ] [NEW YORK GENERAL OBLIGATIONS LAW SECTION
5-1402 ] OR OTHERWISE.
5.9 WAIVER OF TRIAL BY JURY. GUARANTOR AND, BY ITS ACCEPTANCE OF
THE BENEFITS HEREOF, EACH BENEFICIARY EACH HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Guarantor and, by its acceptance of the
benefits hereof, each Beneficiary each (i) acknowledges that this waiver is a
material inducement for Guarantor and Beneficiaries to enter into a business
relationship, that Guarantor and Beneficiaries have already relied on this
waiver in entering into this Guaranty or accepting the benefits thereof, as the
case
Exhibit C - 14
379
may be, and that each will continue to rely on this waiver in their related
future dealings and (ii) further warrants and represents that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SUBSECTION 5.9 AND EXECUTED BY GUARANTIED PARTY AND GUARANTOR), AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this Guaranty may
be filed as a written consent to a trial by the court.
5.10 NO OTHER WRITING. This writing is intended by Guarantor and
Beneficiaries as the final expression of this Guaranty and is also intended as
a complete and exclusive statement of the terms of their agreement with respect
to the matters covered hereby. No course of dealing, course of performance or
trade usage, and no parol evidence of any nature, shall be used to supplement
or modify any terms of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
5.11 FURTHER ASSURANCES. At any time or from time to time, upon
the request of Guarantied Party, Guarantor shall execute and deliver such
further documents and do such other acts and things as Guarantied Party may
reasonably request in order to effect fully the purposes of this Guaranty.
5.12 GUARANTIED PARTY AS AGENT.
(a) Guarantied Party has been appointed to act as
Guarantied Party hereunder by Lenders. Guarantied Party shall be obligated,
and shall have the right hereunder, to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking any action, solely in accordance with this Guaranty, the Reimbursement
Agreement and the Credit Agreement.
(b) Guarantied Party shall at all times be the same
Person that is Agent under the Credit Agreement. Written notice of resignation
by Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute notice of resignation as Guarantied Party under this Guaranty;
removal of Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute removal as Guarantied Party under this Guaranty; and appointment of
a successor Agent pursuant to subsection 9.5 of the Credit Agreement shall also
constitute appointment of a successor Guarantied Party under this Guaranty.
Upon the acceptance of any appointment as Agent under subsection 9.5 of the
Credit Agreement by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Guarantied Party under this Guaranty, and the
retiring or removed Guarantied Party under this Guaranty shall promptly (i)
transfer to such successor Guarantied Party all sums held hereunder, together
with all
Exhibit C - 15
380
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate
in connection with the assignment to such successor Guarantied Party of the
rights created hereunder, whereupon such retiring or removed Guarantied Party
shall be discharged from its duties and obligations under this Guaranty. After
any retiring or removed Guarantied Party's resignation or removal hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Guaranty while it
was Guarantied Party hereunder.
[Remainder of page intentionally left blank]
Exhibit C - 16
381
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first written above.
▇▇▇▇ INDUSTRIES, INC.
By __________________________________
Title _______________________________
Address: ____________________________
____________________________
____________________________
S - 1
▇▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ PROPERTY
[TO COME]
Exhibit D - 1
383
EXHIBIT XXIV
[FORM OF LETTER AGREEMENT REGARDING
PREPAYMENT OF EXISTING SENIOR NOTES]
(begins on the next page)
XXIV-1
384
[▇▇▇▇ INDUSTRIES LETTERHEAD]
December 16, 1996
CIGNA Private Placements, S-307
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: ▇▇▇▇ Industries 9.70% Senior Notes
Ladies and Gentlemen:
On November 27, 1996, ▇▇▇▇ announced that it had agreed to acquire Milgray
Electronics, a publicly held electronics distributor based in Farmingdale, New
York. This transaction would be consummated by ▇▇▇▇'▇ cash tender offer for
Milgray shares in the aggregate amount of $100 million ($14.77 per share). In
connection with financing the transaction, ▇▇▇▇ also intends to restructure the
existing debt of ▇▇▇▇ and Milgray. The funds for the acquisition and
restructuring will be provided by a syndicated bank financing currently being
coordinated through Union Bank of California. The acquisition is conditioned
upon a number of standard closing conditions, including the successful tender
of sufficient Milgray shares (66 2/3% of the outstanding shares) to enable
Milgray to become a wholly-owned subsidiary of ▇▇▇▇. The major shareholder of
Milgray, owning approximately 55% of the outstanding shares, has already
tendered his shares.
As a holder of record of ▇▇▇▇ Industries, Inc. 9.70% Senior Notes due February
1, 2001 (the "Notes"), your concurrence is required to shorten the notice
period for Note redemption from 30 days to five business days as set forth
below.
The target date to consummate the tender is January 8, 1997. If the tender is
successful, ▇▇▇▇ would give you formal notice of redemption of your Note and
prepay the outstanding balance (with accrued interest and make-whole amount) on
January 15, 1997.
Our records will indicate the following as of January 15, 1997:
Note number
Registered Noteholder
Principal amount outstanding
We have calculated the accrued interest and make-whole amount through January
15th to be:
Accrued interest $
Make-whole amount $
-------------
January 15 redemption price $
=============
385
CIGNA Private Placements, S-307
December 16, 1996
Page 2
------------------------------------------------------------------------------
Should the January 8th target date slip, the aggregate redemption amounts on
January 16, 17 and 21 would be:
January 16 redemption price $
January 17 redemption price $
January 21 redemption price $
Please indicate your concurrence with the redemption amounts and procedure set
forth above by signing below where indicated and faxing it to my attention at
▇▇▇-▇▇▇-▇▇▇▇. Naturally, your agreement to accept a shortened notice period is
conditioned upon the agreement of the majority of the Noteholders.
Should you have any questions, please call me or, in my absence, ▇▇▇▇▇ ▇▇▇▇▇▇▇
at ▇▇▇-▇▇▇-▇▇▇▇. Thank you in advance for your cooperation.
Sincerely,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Chief Financial Officer
cc: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Union Bank
▇▇▇▇▇▇ ▇▇▇▇▇, CIGNA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Northwest Mutual Life
▇▇▇▇ ▇. Cost, Esq.
-------------------------------------------------------------------------------
We are reviewing the redemption amounts and procedure as set forth in this
letter. We have waived the 30 day notice period for the redemption as proposed.
CIG & CO.
By: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Partner