UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 15, 2005
GRIFFON CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-6620 11-1893410
(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification Number)
of Incorporation)
100 Jericho Quadrangle Jericho, Suite 224, New York 11753
(Address of Principal Executive Offices) (Zip Code)
(516) 938-5544
(Registrant's telephone number, including area code)
----------------------------------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On December 15, 2005, Griffon Corporation (the "Company") and Telephonics
Corporation, a subsidiary of the Company ("Telephonics" and, together with the
Company, the "Borrowers"), entered into a credit agreement (the "Credit
Agreement") with JPMorgan Chase Bank, N.A., as administrative agent, and the
lenders party thereto (the "Lenders") pursuant to which the Lenders agreed to
provide the Borrowers with a five-year senior secured multicurrency revolving
credit facility in the amount of up to $150,000,000 (with a sublimit of
$45,000,000 for extensions of credit to Telephonics). Commitments under the
Credit Agreement may be increased by $50,000,000 under certain circumstances
upon request of the Company. Borrowings under the Credit Agreement bear interest
at rates based upon LIBOR or the prime rate and are collateralized by stock of a
subsidiary of the Company. The Credit Agreement contains certain restrictive and
financial covenants. Upon the occurrence of certain events of default specified
in the Credit Agreement, amounts due under the Credit Agreement may be declared
immediately due and payable.
The Credit Agreement replaces an existing loan agreement dating from
October 2001 and refinanced $60 million of borrowings under such agreement. The
proceeds of new borrowings under the Credit Agreement are intended to be used
for general corporate purposes, including share repurchases and acquisitions.
For more information regarding the credit facility, reference is made to
the Credit Agreement and Pledge Agreement attached hereto as Exhibits 10.1 and
10.2 and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated by reference into
this Item 2.03.
Item 9.01. Exhibits.
(d) Exhibits.
10.1. Credit Agreement, dated December 15, 2005, among Griffon Corporation,
Telephonics Corporation, the Lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent
10.2. Pledge Agreement, dated December 15, 2005, between Griffon Corporation
and JPMorgan Chase Bank, N.A., as administrative agent
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRIFFON CORPORATION
By: /s/Eric Edelstein
--------------------------
Eric Edelstein
Executive Vice President and
Chief Financial Officer
Date: December 16, 2005
Exhibit Index
10.1. Credit Agreement, dated December 15, 2005, among Griffon Corporation,
Telephonics Corporation, the Lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent
10.2. Pledge Agreement, dated December 15, 2005, between Griffon Corporation
and JPMorgan Chase Bank, N.A., as administrative agent
EXHIBIT 10.1
CREDIT AGREEMENT
dated as of
December 15, 2005
among
GRIFFON CORPORATION
TELEPHONICS CORPORATION,
as the Subsidiary Borrower
The LENDERS Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
------------
$150,000,000
------------
J.P. MORGAN SECURITIES INC.,
as Sole Lead Arranger and Sole Bookrunner
HSBC BANK USA, NATIONAL ASSOCIATION
and
BANK OF AMERICA, N.A.,
as Co-Documentation Agents
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TABLE OF CONTENTS
Page
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ARTICLE I 1
DEFINITIONS 1
SECTION 1.01. Defined Terms 1
SECTION 1.02. Terms Generally 20
SECTION 1.03. Accounting Terms; GAAP 20
SECTION 1.04. Currencies; Currency Equivalents; Euro 21
ARTICLE II 22
THE CREDITS 22
SECTION 2.01. The Commitments 22
SECTION 2.02. Loans and Borrowings. 22
SECTION 2.03. Requests for Borrowings. 23
SECTION 2.04. Letters of Credit. 24
SECTION 2.05. Funding of Borrowings. 28
SECTION 2.06. Interest Elections. 29
SECTION 2.07. Termination, Reduction and Increase of the Commitments. 30
SECTION 2.08. Repayment of Loans; Evidence of Debt. 32
SECTION 2.09. Prepayment of Loans. 33
SECTION 2.10. Fees. 34
SECTION 2.11. Interest. 35
SECTION 2.12. Alternate Rate of Interest 36
SECTION 2.13. Increased Costs. 37
SECTION 2.14. Break Funding Payments 38
SECTION 2.15. Taxes. 38
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. 40
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. 42
ARTICLE III 43
GUARANTEE 43
SECTION 3.01. The Guarantee 43
SECTION 3.02. Obligations Unconditional 43
SECTION 3.03. Reinstatement 44
SECTION 3.04. Subrogation 44
SECTION 3.05. Remedies 44
SECTION 3.06. Instrument for the Payment of Money 44
SECTION 3.07. Continuing Guarantee 44
SECTION 3.08. General Limitation on Guarantee Obligations 45
ARTICLE IV 45
i
REPRESENTATIONS AND WARRANTIES 45
SECTION 4.01. Organization; Powers 45
SECTION 4.02. Authorization; Enforceability 45
SECTION 4.03. Governmental Approvals; No Conflicts 45
SECTION 4.04. Financial Condition; No Material Adverse Change. 46
SECTION 4.05. Properties. 46
SECTION 4.06. Litigation and Environmental Matters. 46
SECTION 4.07. Compliance with Laws and Contractual Obligations 47
SECTION 4.08. Investment and Holding Company Status 47
SECTION 4.09. Taxes 47
SECTION 4.10. ERISA 47
SECTION 4.11. Disclosure 47
SECTION 4.12. Use of Credit 48
SECTION 4.13. Burdensome Agreements 48
SECTION 4.14. Labor Matters 48
ARTICLE V 48
CONDITIONS 48
SECTION 5.01. Effective Date 48
SECTION 5.02. Each Credit Event 50
ARTICLE VI 50
AFFIRMATIVE COVENANTS 50
SECTION 6.01. Financial Statements and Other Information 51
SECTION 6.02. Notices of Material Events 52
SECTION 6.03. Existence; Conduct of Business 53
SECTION 6.04. Payment of Obligations 53
SECTION 6.05. Maintenance of Properties 53
SECTION 6.06. Maintenance of Insurance 53
SECTION 6.07. Books and Records 54
SECTION 6.08. Inspection Rights 54
SECTION 6.09. Compliance with Laws and Contractual Obligations 54
SECTION 6.10. Use of Proceeds and Letters of Credit 54
SECTION 6.11. Collateral; Further Assurances. 54
ARTICLE VII 55
NEGATIVE COVENANTS 55
SECTION 7.01. Indebtedness; Guarantees. 55
SECTION 7.02. Liens 55
SECTION 7.03. Mergers, Consolidations, Etc. 56
SECTION 7.04. Dispositions 57
ii
SECTION 7.05. Lines of Business 57
SECTION 7.06. Investments and Acquisitions. 57
SECTION 7.07. Restricted Payments 58
SECTION 7.08. Transactions with Affiliates 58
SECTION 7.09. Restrictive Agreements 59
SECTION 7.10. Swap Agreements. 59
SECTION 7.11. Financial Covenants. 59
SECTION 7.12. Stock Issuance 60
SECTION 7.13. Modifications of Certain Documents 60
ARTICLE VIII 60
EVENTS OF DEFAULT 60
ARTICLE IX 63
THE ADMINISTRATIVE AGENT 63
ARTICLE X 65
MISCELLANEOUS 65
SECTION 10.01. Notices 65
SECTION 10.02. Waivers; Amendments. 66
SECTION 10.03. Expenses; Indemnity; Damage Waiver. 67
SECTION 10.04. Successors and Assigns. 68
SECTION 10.05. Survival 71
SECTION 10.06. Counterparts; Integration; Effectiveness 71
SECTION 10.07. Severability 72
SECTION 10.08. Right of Setoff 72
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
Process. 72
SECTION 10.10. WAIVER OF JURY TRIAL 73
SECTION 10.11. Judgment Currency 73
SECTION 10.12. Headings 74
SECTION 10.13. Confidentiality 74
SECTION 10.14. USA PATRIOT Act 74
SECTION 10.15. Authorization of Company 75
SECTION 10.16. Termination of Commitments under Existing Credit
Agreement 75
SCHEDULE 1.01 - Commitments
SCHEDULE 2.04(l) - Existing Letters of Credit
SCHEDULE 4.06(a) - Litigation
SCHEDULE 4.06(b) - Environmental Matters
SCHEDULE 4.13 - Burdensome Agreements
SCHEDULE 4.14 - Labor Matters
iii
SCHEDULE 7.01 - Existing Guarantees
SCHEDULE 7.02 - Existing Liens
SCHEDULE 7.06 - Existing Investments
SCHEDULE 7.09 - Restrictive Agreements
EXHIBIT A - Form of Assignment and Assumption
EXHIBIT B - Form of Pledge Agreement
EXHIBIT C - Form of Opinion of Counsel to the Borrowers
EXHIBIT D - Form of Opinion of Special New York Counsel to JPMCB
iv
CREDIT AGREEMENT dated as of December 15, 2005, among GRIFFON
CORPORATION, TELEPHONICS CORPORATION, the LENDERS party hereto, and JPMORGAN
CHASE BANK, N.A., as Administrative Agent.
The Borrowers (as hereinafter defined) have requested that the Lenders
(as so defined) extend credit to it in an aggregate principal or face amount not
exceeding $150,000,000 for the purposes specified herein. The Lenders are
prepared to extend such credit upon the terms and conditions hereof, and,
accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
-------------
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are denominated in
Dollars and bearing interest at a rate determined by reference to the Alternate
Base Rate.
"Adjusted LIBO Rate" means, for the Interest Period for any
------------------
Eurocurrency Borrowing, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate for such Interest Period.
"Adjusted Net Income" means, for any period, the aggregate income (or
-------------------
loss) for such period which shall be an amount equal to net revenues and other
proper items of income, plus extraordinary and unusual non-cash losses for such
period, plus minority interest in earnings of consolidated Subsidiaries for such
period, less any and all items that are treated as expenses under GAAP, less,
without duplication, Federal, state and local income taxes and income taxes
expensed for taxes payable to jurisdictions outside of the United States, less
minority interests in losses of consolidated Subsidiaries for such period and
less extraordinary and unusual non-cash gains for such period, as determined in
accordance with GAAP.
"Administrative Agent" means JPMCB, in its capacity as administrative
--------------------
agent for the Lenders hereunder.
"Administrative Agent's Account" means, for each Currency, an account
------------------------------
in respect of such Currency designated by the Administrative Agent in a notice
to the Borrowers and the Lenders.
"Administrative Questionnaire" means an Administrative Questionnaire
----------------------------
in a form supplied by the Administrative Agent.
Credit Agreement
----------------
-2-
"Affiliate" means, with respect to a specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Aggregate Commitment" means, at any time, the aggregate amount of the
--------------------
Commitments of all the Lenders at such time, as such amount is subject to
reduction or increase in accordance with the terms hereof. The initial amount of
the Aggregate Commitment is $150,000,000.
"Aggregate Foreign Currency Sublimit Dollar Amount" means
-------------------------------------------------
$100,000,000.
"Aggregate LC Exposure" means, at any time, the sum of (a) the
---------------------
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the aggregate amount of all LC Disbursements that have not yet been
reimbursed by or on behalf of each Borrower at such time.
"Aggregate Letter of Credit Sublimit Amount" means $45,000,000.
------------------------------------------
"Aggregate Revolving Credit Exposure" means, at any time, the sum of
-----------------------------------
(a) the aggregate outstanding principal amount of the Loans of all the Lenders
at such time plus (b) the aggregate amount of LC Exposures of all the Lenders at
such time.
"Aggregate Subsidiary Borrower Revolving Credit Exposure" means, at
-------------------------------------------------------
any time, the aggregate amount of (a) the aggregate outstanding principal amount
of the Loans of all the Lenders to the Subsidiary Borrower at such time plus (b)
the aggregate amount of LC Exposures of all the Lenders in respect of Letters of
Credit issued for the account of the Subsidiary Borrower at such time.
"Aggregate Subsidiary Borrower Sublimit Commitment" means, at any
-------------------------------------------------
time, the sum of the Subsidiary Borrower Sublimit Commitments of all the Lenders
at such time, as such amount is subject to reduction or increase in accordance
with the terms hereof. The initial amount of the Aggregate Subsidiary Borrower
Sublimit Commitment is $45,000,000.
"Agreed Foreign Currency" means, at any time, any of English Pounds
-----------------------
Sterling, euro and, with the agreement of each Lender, any other Foreign
Currency, so long as, in respect of any such specified Currency or other Foreign
Currency, at such time (a) such Currency is dealt with in the London (or, in the
case of English Pounds Sterling, Paris) interbank deposit market, (b) such
Currency is freely transferable and convertible into Dollars in the London
foreign exchange market and (c) no central bank or other governmental
authorization in the country of issue of such Currency (including, in the case
of the Euro, any authorization by the European Central Bank) is required to
permit use of such Currency by any Lender for making any Loan hereunder and/or
to permit the Borrowers to borrow and repay the principal thereof and to pay the
interest thereon, unless such authorization has been obtained and is in full
force and effect.
"Alternate Base Rate" means, for any day, a rate per annum equal to
-------------------
the greater of (a) the Prime Rate in effect on
Credit Agreement
----------------
-3-
such day and (b) the Federal Funds Effective Rate in effect on such day plus
0.50%. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the
---------------------
percentage of the Aggregate Commitment represented by such Lender's Commitment.
If the Commitments have terminated or expired, the Applicable Percentages shall
be determined based upon the Commitments most recently in effect, giving effect
to any assignments.
"Applicable Rate" means, for any day, with respect to any ABR Loan or
---------------
Eurocurrency Loan, or with respect to the commitment fees payable hereunder, as
the case may be, the applicable rate per annum set forth below under the caption
"ABR Spread", "Eurocurrency Spread" or "Commitment Fee Rate", respectively,
based upon the Leverage Ratio as of the most recent determination date; provided
that from the Effective Date until the delivery of the Company's consolidated
financial statements for the fiscal year ended September 30, 2005, the
"Applicable Rate" shall be the applicable rate per annum set forth below in
Category 3:
================================================================================
Leverage Ratio: ABR Eurocurrency Commitment
--------------- Spread Spread Fee Rate
------ ------ --------
- --------------------------------------------------------------------------------
Category 1
---------- 0.75% 1.75% 0.375%
Greater than or equal to
2.75:1.00
- --------------------------------------------------------------------------------
Category 2
---------- 0.50% 1.50% 0.30%
Greater than or equal to
2.25:1.00 but less than
2.75:1.00
- --------------------------------------------------------------------------------
Category 3
---------- 0.25% 1.25% 0.25%
Greater than or equal to
1.75:1.00 but less than
2.25:1.00
- --------------------------------------------------------------------------------
Category 4
---------- 0 1.00% 0.225%
Greater than or equal to
1.25:1.00 but less than
1.75:1.00
- --------------------------------------------------------------------------------
Category 5
----------
Credit Agreement
----------------
-4-
0 0.75% 0.20%
Less than 1.25:1.00
================================================================================
For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of
the end of each fiscal quarter of the Company's fiscal year based upon the
Company's consolidated financial statements delivered pursuant to Section
6.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the date three Business Days after delivery to the Administrative
Agent of such consolidated financial statements indicating such change and
ending on the date immediately preceding the effective date of the next such
change; provided that the Leverage Ratio shall be deemed to be in Category 1 (A)
at any time that an Event of Default has occurred and is continuing or (B) if
the Company fails to deliver the consolidated financial statements required to
be delivered by it pursuant to Section 6.01(a) or (b), during the period from
the expiration of the time for delivery thereof until such consolidated
financial statements are delivered.
"Approved Fund" means any Person (other than a natural person) that is
-------------
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.
"Assignment and Assumption" means an assignment and assumption entered
-------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Assuming Lender" has the meaning set forth in Section 2.07(c).
---------------
"Availability Period" means the period from and including the
-------------------
Effective Date to but excluding the earlier of the Commitment Termination Date
and the date of termination of the Commitments.
"Board" means the Board of Governors of the Federal Reserve System of
-----
the United States of America.
"Bohme" means Bohme-Clopay Verpackungsfolien GmbH, a wholly-owned
-----
subsidiary of Clopay Germany GmbH and a successor-in-interest to Bohme
Verwaltungs-Gesellschaft GmbH and Bohme GmbH & Co. KG Verpackungsfolien.
"Borrower" means the Company or the Subsidiary Borrower, as
--------
applicable.
"Borrowing" means (a) all ABR Loans made, converted or continued on
---------
the same date or (b) all Eurocurrency Loans denominated in the same Currency
that have the same Interest Period.
Credit Agreement
----------------
-5-
"Borrowing Request" means a request by a Borrower for a Borrowing in
-----------------
accordance with Section 2.03.
"Business Day" means any day (a) that is not a Saturday, Sunday or
------------
other day on which commercial banks in New York City are authorized or required
by law to remain closed, (b) if such day relates to a borrowing of, a payment or
prepayment of principal of or interest on, a continuation or conversion of or
into, or the Interest Period for, a Eurocurrency Borrowing, or to a notice by
any Borrower with respect to any such borrowing, payment, prepayment,
continuation, conversion, or Interest Period, that is also a day on which
dealings in deposits denominated in the Currency of such Borrowing are carried
out in the London interbank market, (c) if such day relates to a borrowing or
continuation of, a payment or prepayment of principal of or interest on, or the
Interest Period for, any Borrowing denominated in any Foreign Currency (other
than euro), or to a notice by any Borrower with respect to any such borrowing,
continuation, payment, prepayment or Interest Period, that is also a day on
which commercial banks and the London foreign exchange market settle payments in
the Principal Financial Center for such Foreign Currency and (d) if such day
relates to a borrowing or continuation of, a payment or prepayment of principal
of or interest on, or the Interest Period for, any Borrowing denominated in euro
(or any notice with respect thereto), that is also a TARGET Day.
"Capital Expenditures" means, for any period, expenditures (including
--------------------
the aggregate amount of Capital Lease Obligations incurred during such period)
made by the Company or any of its Subsidiaries to acquire or construct fixed
assets, plant and equipment (including renewals, improvements and replacements,
but excluding repairs) during such period computed in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, capital stock,
-------------
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a limited liability company, membership
units (whether common or preferred), (d) in the case of a partnership,
partnership interests (whether general or limited) and (e) any other equivalent
ownership interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Change in Control" means (a) the acquisition of ownership, directly
-----------------
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Exchange Act and the rules of the SEC thereunder as in effect on
the date hereof), of shares representing more than 30% of the aggregate ordinary
voting power represented by the issued and outstanding Capital Stock of the
Company or (b) during any period of 25 consecutive calendar months, commencing
on the date of this Agreement, the ceasing of those individuals (the "Continuing
----------
Directors") who (i) were directors of the Company on the first day of each such
period or (ii)
Credit Agreement
----------------
-6-
subsequently became directors of the Company and whose initial election or
initial nomination for election subsequent to that date was approved by a
majority of the Continuing Directors then on the board of directors of the
Company, to constitute a majority of the board of directors of the Company.
"Change in Law" means (a) the adoption of any law, rule or regulation
-------------
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Lender (or, for purposes of Section 2.13(b), by any lending office of such
Lender or by such Lender's or the Issuing Lender's holding company, if any) with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.
"Clopay" means Clopay Corporation, a Delaware corporation.
------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral Account" has the meaning assigned to such term in the
------------------
Pledge Agreement.
"Commitment" means, with respect to each Lender at any time, the
----------
commitment of such Lender to make Loans and to acquire participations in Letters
of Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender's Revolving Credit Exposure hereunder, as such commitment
may be (a) reduced or increased from time to time pursuant to Section 2.07 and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 10.04. The initial amount of each Lender's Commitment
is set forth on Schedule 1.01, or in the Assignment and Assumption pursuant to
which such Lender shall have assumed its Commitment, as applicable.
"Commitment Increase" has the meaning set forth in Section 2.07(c).
-------------------
"Commitment Increase Date" has the meaning set forth in Section
------------------------
2.07(c).
"Commitment Termination Date" means December 15, 2010 (or if such date
---------------------------
is not a Business Day, the immediately preceding Business Day).
"Company" means Griffon Corporation, a Delaware corporation.
-------
"Consolidated EBITDA" means, for any period, the sum of (i) Adjusted
-------------------
Net Income, (ii) Consolidated Interest Expense, (iii) depreciation and
amortization and (iv) foreign, Federal, state and local income taxes, in each
case, computed in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
----------------------------------------
ratio of (a) Consolidated EBITDA for such period, minus the aggregate amount
actually paid by the Company and its Subsidiaries during such period on account
of Capital Expenditures (excluding the principal amount of Indebtedness other
than any Loans incurred in connection with such expenditures) to (b)
Consolidated Interest Expense for such period.
Credit Agreement
----------------
-7-
"Consolidated Funded Debt" means, at any date, the aggregate principal
------------------------
amount of all Indebtedness for borrowed money of the Company and its
Subsidiaries at such date, determined on a consolidated basis in accordance with
GAAP.
"Consolidated Interest Expense" means, for any period, total cash
-----------------------------
interest expense (including that attributable to Capital Lease Obligations) of
the Company and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Company and its Subsidiaries (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Swap Agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP).
"Consolidated Leverage Ratio" means, as at the last day of any period,
---------------------------
the ratio of (a) Consolidated Funded Debt on such day to (b) Consolidated EBITDA
for such period.
"Consolidated Net Worth" means, at any date, all amounts that would,
----------------------
in conformity with GAAP, be included on a consolidated balance sheet of the
Company and its Subsidiaries under stockholders' equity at such date.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
"Convertible Securities" means evidences of indebtedness of the
----------------------
Company which are exchangeable for or exercisable or convertible into Capital
Stock of the Company either immediately or upon the arrival of a specified date
or the occurrence of a specified event.
"Currency" means Dollars or any Foreign Currency.
--------
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings disclosed
-----------------
in Schedule 4.06(a) and the environmental matters disclosed in Schedule 4.06(b).
"Dollar Equivalent" means, with respect to any Borrowing denominated
-----------------
in any Foreign Currency, the amount of Dollars that would be required to
purchase the amount of the Foreign Currency of such Borrowing on the date two
Business Days prior to the date of such Borrowing (or, in the case of any
determination made under Section 2.09(b) or redenomination under the last
sentence of Section 2.16(a), on the date of determination or redenomination
therein referred to), based upon the spot selling rate at which the
Administrative Agent offers to sell such Foreign Currency for Dollars in the
London foreign exchange market at approximately 11:00 a.m., London time, for
delivery two Business Days later.
Credit Agreement
----------------
-8-
"Dollars" or "$" refers to lawful money of the United States of
-------
America.
"Effective Date" means the date on which the conditions specified in
--------------
Section 5.01 are satisfied (or waived in accordance with Section 10.02).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Company or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Company or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Company or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Company or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
Credit Agreement
----------------
-9-
"Eurocurrency", when used in reference to any Loan or Borrowing,
------------
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"euro" means the single currency of Participating Member States of the
----
European Union, which shall be an Agreed Foreign Currency and a Foreign Currency
under this Agreement.
"Event of Default" has the meaning assigned to such term in Article
----------------
VIII.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender, the Issuing Lender or any other recipient of any payment to be made by
or on account of any obligation of the Borrowers hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed on any Lender by the United States of America and (c) in
the case of a Non-U.S. Lender (other than an assignee pursuant to a request by
the Company under Section 2.17(b)), any withholding tax that is imposed on
amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender becomes
a party to this Agreement (or designates a new lending office) or is
attributable to such Non-U.S. Lender's failure to comply with Section 2.15(e),
except to the extent that such Non-U.S. Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from the applicable Borrower with respect to such
withholding tax pursuant to Section 2.15(a).
"Existing Credit Agreement" means the Credit Agreement dated as of
-------------------------
October 25, 2001 among the Company, Telephonics Corporation, the lenders party
thereto, Fleet National Bank, as administrative agent, and JPMCB (formerly known
as The Chase Manhattan Bank), as documentation agent, as in effect on the date
hereof.
"Existing Letters of Credit" has the meaning set forth in Section
--------------------------
2.04(l).
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Company.
"Foreign Currency" means at any time any Currency other than Dollars.
----------------
Credit Agreement
----------------
-10-
"Foreign Currency Equivalent" means, with respect to any amount in
---------------------------
Dollars, the amount of any Foreign Currency that could be purchased with such
amount of Dollars using the reciprocal of the foreign exchange rate(s) specified
in the definition of the term "Dollar Equivalent", as determined by the
Administrative Agent.
"GAAP" means generally accepted accounting principles in the United
----
States of America.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guaranteed Obligations" has the meaning set forth in Section 3.01.
----------------------
"Guarantors" means the Company and the Subsidiary Borrower, in each
----------
case with respect to its respective Guaranteed Obligations.
"Hazardous Materials" means all explosive or radioactive substances or
-------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Increasing Lender" has the meaning set forth in Section 2.07(c).
-----------------
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property
Credit Agreement
----------------
-11-
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Interest Election Request" means a request by a Borrower to convert
-------------------------
or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, each
---------------------
Quarterly Date and (b) with respect to any Eurocurrency Loan, the last day of
each Interest Period therefor and, in the case of any Interest Period of more
than three months' duration, each day prior to the last day of such Interest
Period that occurs at three-month intervals after the first day of such Interest
Period.
"Interest Period" means, for any Eurocurrency Loan or Borrowing, the
---------------
period commencing on the date of such Loan or Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter or, with respect to such portion of any Eurocurrency Loan
or Borrowing denominated in a Foreign Currency that is scheduled to be repaid on
the Commitment Termination Date, a period of less than one month's duration
commencing on the date of such Loan or Borrowing and ending on the Commitment
Termination Date, as specified in the applicable Borrowing Request or Interest
Election Request; provided that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, and (ii) any Interest Period (other than an
Interest Period pertaining to a Eurocurrency Borrowing denominated in a Foreign
Currency that ends on the Commitment Termination Date that is permitted to be of
less than one month's duration as provided in this definition) that commences on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Loan initially shall be the
date on which such Loan is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Loan, and the date of a
Borrowing comprising Loans that have been converted or continued shall be the
effective date of the most recent conversion or continuation of such Loans.
Credit Agreement
----------------
-12-
"Investment" means, by any Person, (a) the amount paid or committed to
----------
be paid, or the value of property or services contributed or committed to be
contributed, by such person for or in connection with the acquisition by such
Person of any stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of any other Person and (b) the amount of any
advance, loan or extension of credit by such Person, to any other Person, or
guaranty or other similar obligation of such Person with respect to any
Indebtedness of such other Person (other than Indebtedness constituting trade
payables in the ordinary course of business), and (without duplication) any
amount committed to be advanced, loans, or extended by such Person to any other
Person, or any amount the payment of which is committed to be assured by a
guaranty or similar obligation by such Person for the benefit of, such other
Person.
"Issuing Lender" means JPMCB and (solely with respect to the Existing
--------------
Letters of Credit issued by it or its predecessor) Bank of America, N.A., each
in its capacity as the issuer of Letters of Credit hereunder, and (in the case
of JPMCB) its successors in such capacity as provided in Section 2.04(j). The
Issuing Lender may, in its discretion, arrange for one or more Letters of Credit
to be issued by Affiliates of the Issuing Lender, in which case the term
"Issuing Lender" shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.
"JPMCB" means JPMorgan Chase Bank, N.A.
-----
"LC Disbursement" means a payment made by the Issuing Lender pursuant
---------------
to a Letter of Credit.
"LC Exposure" means, with respect to each Lender at any time, such
-----------
Lender's Applicable Percentage of the Aggregate LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 1.01 and any other
-------
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption or an instrument entered into pursuant to
Section 2.07(c).
"Letter of Credit" means any standby letter of credit issued pursuant
----------------
to this Agreement.
"Letter of Credit Documents" means, with respect to any Letter of
--------------------------
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.
"LIBO Rate" means, for the Interest Period for any Eurocurrency
---------
Borrowing denominated in any Currency, the rate appearing on the Screen at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as LIBOR for deposits denominated in such
Currency with a maturity comparable to such Interest Period. In the event that
such rate is not available on the Screen at such time for any reason, then,
unless the last sentence of Section 10.11(e) is applicable, the LIBO Rate for
such Interest Period shall
Credit Agreement
----------------
-13-
be the rate at which deposits in such Currency in the amount of $5,000,000 and
for a maturity comparable to such Interest Period are offered by the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"LIBOR" means, for any Currency, the rate at which deposits
-----
denominated in such Currency are offered to leading banks in the London
interbank market.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means, collectively, this Agreement, the Letter of
--------------
Credit Documents and the Security Documents.
"Loan Party" means the Borrower, the Subsidiary Borrower and any
----------
Subsidiary which on the date hereof or hereafter executes and delivers to the
Administrative Agent or any Lender any Loan Document.
"Loans" means the loans made by the Lenders to the Borrowers pursuant
-----
to this Agreement.
"Local Time" means, with respect to any Loan denominated in or any
----------
payment to be made in any Currency, the local time in the Principal Financial
Center for the Currency in which such Loan is denominated or such payment is to
be made.
"Margin Stock" means "margin stock" within the meaning of Regulations
------------
T, U and X of the Board.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, property, operation, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole, (b) validity or
enforceability of any of the Loan Documents or (c) the rights or remedies of the
Administrative Agent and the Lenders hereunder or under any of the other Loan
Documents.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Swap Agreements, of
any one or more of the Company and its Subsidiaries in an aggregate principal
amount exceeding $10,000,000. For purposes of determining Material Indebtedness,
the "principal amount" of the obligations of any Person in respect of any Swap
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that such Person would be required to pay if such Swap
Agreement were terminated at such time.
Credit Agreement
----------------
-14-
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Non-U.S. Lender" means any Lender that is organized under the laws of
---------------
a jurisdiction other than the United States of America, any State thereof or the
District of Columbia.
"Obligations" means, collectively, all of the Indebtedness,
-----------
liabilities and obligations of each Borrower to the Administrative Agent and/or
the Lenders arising under the Loan Documents (including all reimbursement
obligations in respect of Letters of Credit), in each case whether fixed,
contingent (including without limitation those Obligations incurred as a
Guarantor pursuant to Article III), now existing or hereafter arising, created,
assumed, incurred or acquired, and whether before or after the occurrence of any
Event of Default under clause (h) or (i) of Article VIII and including any
obligation or liability in respect of any breach of any representation or
warranty and all post-petition interest and funding losses, whether or not
allowed as a claim in any proceeding arising in connection with such an event.
"Other Taxes" means any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"Out of the Money" means that the Company's common stock is trading
----------------
below the Conversion Price (as defined in the indenture governing the
Convertible Securities).
"Participant" has the meaning set forth in Section 10.04(c).
-----------
"Participating Member State" means any member state of the European
--------------------------
Community that adopts or has adopted the euro as its lawful currency in
accordance with the legislation of the European Union relating to the European
Monetary Union.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Permitted Acquisition" means the acquisition by either Borrower or
---------------------
any Subsidiary of any Person or of any division or line of business of any
Person (whether a Person, or division or line of business, an "Eligible
Business"), either by merger, consolidation, purchase of stock, or purchase of
all or a substantial part of the assets of such Eligible Business (any such type
of transaction is referred to in this Agreement as an "acquisition" and the
principal agreement relating thereto, whether a stock purchase agreement, an
asset purchase agreement, a merger agreement or otherwise, is referred to in
this Agreement as the "acquisition agreement"); provided that (a) in the case of
any acquisition by Clopay or any of its wholly-owned Subsidiaries, Clopay
remains a wholly-owned direct Subsidiary of the Company and all of the issued
and outstanding Capital Stock of Clopay remains subject to a first priority
security interest in favor of the Administrative Agent, (b) in the case of any
acquisition by the Subsidiary Borrower or any of its wholly-owned Subsidiaries,
the Subsidiary Borrower remains a wholly-owned direct Subsidiary of the Company,
(c) in the case of any acquisition by the Company or
Credit Agreement
----------------
-15-
any Subsidiary (other than the Subsidiary Borrower, Clopay or their respective
wholly-owned Subsidiaries) with respect to which the Permitted Acquisition
Purchase Price is greater than $5,000,000, the Company or such Subsidiary shall
have (i) pledged to the Administrative Agent for the benefit of the Lenders all
of the issued and outstanding Capital Stock of such Eligible Business acquired
by the Company or such Subsidiary, (ii) delivered to the Administrative Agent,
simultaneously with consummation of such acquisition, all of the stock
certificates representing such Capital Stock, together with stock powers
executed in blank and proxies with respect thereto and (iii) caused to be
delivered to the Administrative Agent from such Subsidiary customary corporate
or similar documents (including certified certificate of incorporation, by-laws
(and other organizational documents) and good standing certificates), (d) after
giving effect to such acquisition on a pro forma basis, the Consolidated
Leverage Ratio for the period of the four consecutive fiscal quarters of the
Company most recently ended prior to such acquisition shall not exceed 2.75:1,
(e) no Default shall exist immediately before and after giving affect to such
Permitted Acquisition or result from the consummation thereof, and (f) each of
the following conditions shall have been satisfied (and the Company shall have
delivered to the Administrative Agent a certificate to the effect that the
conditions under clause (a), (b) or (c) above (as applicable) and clauses (d)
and (e) above and this clause (f) have been satisfied):
(I) such transaction shall not be a "hostile" acquisition or
other "hostile" transaction (i.e., such transaction shall not be
opposed by the board of directors (or similar governing body) of the
Eligible Business), provided that (i) in the event a Borrower proposes
to initiate such transaction as hostile transaction with the intent to
subsequently obtain the approval of the board of directors of the
Eligible Business, such Borrower may notify the Administrative Agent
and each Lender in writing in advance of the initiation of such
proposed transaction together with any information concerning such
transaction as the Administrative Agent or any Lender may request, and
(ii) the Administrative Agent and each Lender shall have approved such
transaction in writing prior to the initiation of such transaction,
with the approval of each Lender not to be unreasonably withheld, such
Borrower may proceed with such transaction as long as the transaction
ultimately is approved by the board of directors (or similar governing
body) of the Eligible Business (and a majority of which were members
of such board of directors (or similar governing body) at the time
such transaction was initiated) and is otherwise in accordance with
the terms of this Agreement; and
(II) such acquisition (1) if such acquisition is a stock
acquisition, shall be of greater than 50% of the issued and
outstanding Capital Stock of such Eligible Business, whether by
purchase or as a result of merger or consolidation (provided that one
of the Borrowers or their respective wholly-owned Subsidiaries shall
be the surviving corporation in any such merger or consolidation), and
in any event shall consist of shares of capital stock with sufficient
voting rights which entitles such Borrower to elect a majority of the
directors of such Eligible Business and to control the outcome of any
shareholder votes with respect to the shareholders of such Eligible
Business and (2) if such acquisition is an asset acquisition, shall be
of all or a substantial part of an Eligible Business.
"Permitted Acquisition Purchase Price" means, with respect to any
------------------------------------
Permitted Acquisition, collectively, without duplication, (a) all cash paid by
the applicable Borrower or any
Credit Agreement
----------------
-16-
of its Subsidiaries in connection with such Permitted Acquisition, including in
respect of transaction costs, fees and other expenses incurred by such Borrower
or any of its Subsidiaries in connection with such Permitted Acquisition, (b)
all Indebtedness created, and all Indebtedness assumed, by such Borrower or any
of its Subsidiaries in connection with such Permitted Acquisition, including,
without limitation, the maximum amount of any purchase price to be paid pursuant
to any "earn out" provision contained in the agreements related to any Permitted
Acquisition, (c) the value of all Capital Stock issued by such Borrower or any
of its Subsidiaries in connection with such Permitted Acquisition and (d) any
deferred portion of the purchase price or any other costs paid by such Borrower
or any of its Subsidiaries in connection with such Permitted Acquisition.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within three years from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor's Ratings Services or
from Moody's Investors Services, Inc;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) of this definition and
entered into with a financial institution satisfying the criteria described
in clause (c) of this definition;
(e) money market funds that (i) comply with the criteria set forth in
SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA
by S&P and Aaa by Moody's and (iii) have portfolio assets of at least
$5,000,000,000; and
(f) investments in auction rate preferred stock rated at least BBB+ by
S&P or Baa1 by Moody's.
"Permitted Liens" means:
---------------
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 6.04;
Credit Agreement
----------------
-17-
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 6.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VIII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Company and its Subsidiaries
taken as a whole;
provided that the term "Permitted Liens" shall not include any Lien securing
- --------
Indebtedness.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means a Pledge Agreement substantially in the form
----------------
of Exhibit B between the Company and the Administrative Agent, as the same shall
be modified and supplemented and in effect from time to time.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by JPMCB as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"Principal Financial Center" means, in the case of any Currency, the
--------------------------
principal financial center where such Currency is cleared and settled, as
determined by the Administrative Agent.
Credit Agreement
----------------
-18-
"Quarterly Dates" means the last Business Day of September, December,
---------------
March and June in each year, the first of which shall be the first such day
after the date hereof.
"Register" has the meaning set forth in Section 10.04.
--------
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving Credit
----------------
Exposures and unused Commitments representing more than 50% of the sum of the
Aggregate Revolving Credit Exposures and the unused amount of the Aggregate
Commitments at such time.
"Requirement of Law" means, as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Restricted Payment" means any dividend or other distribution (whether
------------------
in cash, securities or other property) with respect to any shares of any class
of capital stock of the Company or any of its Subsidiaries, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
the Company or any option, warrant or other right to acquire any such shares of
capital stock of the Company.
"Revolving Credit Exposure" means, with respect to any Lender at any
-------------------------
time, the sum of the outstanding principal amount of such Lender's Loans and LC
Exposure at such time.
"Screen" means, for any Currency, the relevant display page for LIBOR
------
for such Currency (as determined by the Administrative Agent) on the Telerate
Service; provided that, if the Administrative Agent determines that there is no
such relevant display page for LIBOR for such Currency, "Screen" means the
relevant display page for LIBOR for such Currency (as determined by the
Administrative Agent) on the Reuter Monitor Money Rates Service.
"SEC" means the Securities and Exchange Commission, or any regulatory
---
body that succeeds to the functions thereof.
"Security Documents" means, collectively, the Pledge Agreement, any
------------------
pledge agreement entered into pursuant to Section 6.11 in favor of the
Administrative Agent, and all Uniform Commercial Code financing statements
required by the terms of any such agreement to be filed with respect to the
security interests created pursuant thereto.
"Statutory Reserve Rate" means, for the Interest Period for any
----------------------
Eurocurrency Borrowing, a fraction (expressed as a decimal), the numerator of
which is the number one and
Credit Agreement
----------------
-19-
the denominator of which is the number one minus the arithmetic mean, taken over
-----
each day in such Interest Period, of the aggregate of the maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which the
Administrative Agent is subject for eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subsidiary" means, with respect to any Person (the "parent") at any
----------
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent. Unless otherwise
specified, "Subsidiary" means a Subsidiary of the Company.
"Subsidiary Borrower" means Telephonics Corporation, a corporation
-------------------
duly organized and validly existing under the laws of the State of Delaware and
a wholly owned Subsidiary of the Company.
"Subsidiary Borrower Revolving Credit Exposure" means, with respect to
---------------------------------------------
any Lender at any time, the sum of (a) the outstanding principal amount of such
Lender's Loans to the Subsidiary Borrower at such time and (b) LC Exposure of
such Lender in respect of Letters of Credit issued for the account of the
Subsidiary Borrower at such time.
"Subsidiary Borrower Sublimit Commitment" means, with respect to each
---------------------------------------
Lender, the commitment of such Lender to make Loans to, and to acquire
participations in Letters of Credit issued for the account of, the Subsidiary
Borrower hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender's Applicable Percentage of the Subsidiary Borrower
Sublimit, as such commitment may be (a) reduced from time to time pursuant to
Section 2.07 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 10.04. The initial amount
of each Lender's Subsidiary Borrower Sublimit Commitment is set forth on
Schedule 1.01, or in the Assignment and Assumption, or an instrument entered
into under Section 2.07(c), pursuant to which such Lender shall have assumed its
Commitment, as applicable.
"Swap Agreement" means any agreement with respect to any swap,
--------------
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or
Credit Agreement
----------------
-20-
economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided that no phantom stock or similar plan providing for
payments only on account of services provided by current or former directors,
officers, employees or consultants of the Company or the Subsidiaries shall be a
Swap Agreement.
"TARGET Day" means any day on which the Trans-European Automated
----------
Real-time Gross Settlement Express Transfer payment system (or any successor
settlement system as determined by the Administrative Agent) is open for the
settlement of payments in euro.
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Transactions" means the execution, delivery and performance by each
------------
Loan Party of this Agreement and the other Loan Documents to which such Loan
Party is intended to be a party, the borrowing of Loans and the issuance of
Letters of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions of terms herein shall
---------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise expressly
----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if the Company notifies the Administrative Agent that the Company requests
an amendment to any provision hereof to
Credit Agreement
----------------
-21-
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Company that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith. To enable the ready and consistent determination of
compliance with the covenants set forth in Article VII, the Company will not
change the last day of its fiscal year from September 30, or the last days of
the first three fiscal quarters in each of its fiscal years from December 31,
March 31 and June 30, respectively.
SECTION 1.04. Currencies; Currency Equivalents; Euro. At any time, any
--------------------------------------
reference in the definition of the term "Agreed Foreign Currency" or in any
other provision of this Agreement to the Currency of any particular nation means
the lawful currency of such nation at such time whether or not the name of such
Currency is the same as it was on the date hereof. Except as provided in Section
2.09(b) and the last sentence of Section 2.16(a), for purposes of determining
(i) whether the amount of any Borrowing, together with all other Borrowings then
outstanding or to be borrowed at the same time as such Borrowing, would exceed
the Aggregate Commitments, (ii) the aggregate unused amount of the Commitments
and (iii) the outstanding aggregate principal amount of Borrowings, the
outstanding principal amount of any Borrowing that is denominated in any Foreign
Currency shall be deemed to be the Dollar Equivalent of the amount of the
Foreign Currency of such Borrowing determined as of the date of such Borrowing
(determined in accordance with the last sentence of the definition of the term
"Interest Period"). Wherever in this Agreement in connection with a Borrowing or
Loan an amount, such as a required minimum or multiple amount, is expressed in
Dollars, but such Borrowing or Loan is denominated in a Foreign Currency, such
amount shall be the relevant Foreign Currency Equivalent of such Dollar amount
(rounded to the nearest 1,000 units of such Foreign Currency).
(c) Each obligation hereunder of any party hereto that is denominated
in a Currency of a country that is not a Participating Member State on the date
hereof shall, effective from the date on which such country becomes a
Participating Member State, be redenominated in euro in accordance with the
legislation of the European Union applicable to the European Monetary Union;
provided that, if and to the extent that any such legislation provides that any
- --------
such obligation of any such party payable within such Participating Member State
by crediting an account of the creditor can be paid by the debtor either in euro
or such Currency, such party shall be entitled to pay or repay such amount
either in euro or in such Currency. If the basis of accrual of interest or fees
expressed in this Agreement with respect to an Agreed Foreign Currency of any
country that becomes a Participating Member State after the date on which such
currency becomes an Agreed Foreign Currency shall be inconsistent with any
convention or practice in the interbank market for the basis of accrual of
interest or fees in respect of the euro, such convention or practice shall
replace such expressed basis effective as of and from the date on which such
country becomes a Participating Member State; provided that, with respect to any
Borrowing denominated in such currency that is outstanding immediately prior to
such date, such replacement shall take effect at the end of the Interest Period
therefor. Without prejudice to the respective liabilities of the Borrowers to
the Lenders and of the Lenders to the Borrowers under or pursuant to this
Agreement, each provision of this Agreement shall be subject to such
Credit Agreement
----------------
-22-
reasonable changes of construction as the Administrative Agent may from time to
time reasonably specify to be necessary or appropriate to reflect the
introduction or changeover to the euro in any country that becomes a
Participating Member State after the date hereof.
ARTICLE II
THE CREDITS
SECTION 2.01. The Commitments. Subject to the terms and conditions set
---------------
forth herein, each Lender agrees to make Loans in Dollars or in any Agreed
Foreign Currency to the Borrowers from time to time during the Availability
Period in an aggregate principal amount that will not result in (a) such
Lender's Revolving Credit Exposure exceeding such Lender's Commitment, (b) such
Lender's Subsidiary Borrower Revolving Credit Exposure exceeding such Lender's
Subsidiary Borrower Sublimit Commitment, (c) the Aggregate Revolving Credit
Exposure exceeding the Aggregate Commitment, (d) the Aggregate Subsidiary
Borrower Revolving Credit Exposures exceeding the Aggregate Subsidiary Borrower
Sublimit Commitment and (e) the aggregate amount of Revolving Credit Exposures
denominated in Foreign Currencies exceeding the Aggregate Foreign Currency
Sublimit Dollar Amount. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Loans.
SECTION 2.02. Loans and Borrowings.
--------------------
(a) Obligations of Lenders. Each Loan shall be made as part of a
----------------------
Borrowing consisting of Loans of the same Currency and Type made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
--------
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Type of Loans. Subject to Section 2.12, each Borrowing shall be
-------------
constituted entirely of ABR Loans or of Eurocurrency Loans denominated in a
single Currency as a Borrower may request in accordance herewith. Each ABR Loan
shall be denominated in Dollars. Each Lender at its option may make any
Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
--------
affect the obligation of the applicable Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) Minimum Amounts; Limitation on Number of Borrowings. Each
---------------------------------------------------
Eurocurrency Borrowing shall be in an aggregate amount of $2,000,000 or a larger
multiple of $100,000. Each ABR Borrowing shall be in an aggregate amount equal
to $500,000 or a larger multiple of $100,000; provided that an ABR Borrowing may
--------
be in an aggregate amount that is equal to the entire unused amount of the
Aggregate Commitment or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.04(f). Borrowings of more than one
Currency and Type may be outstanding at the same time; provided that there shall
--------
not at any time be more than a total of six Eurocurrency Borrowings outstanding.
Credit Agreement
----------------
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(d) Limitations on Interest Periods. Notwithstanding any other
-------------------------------
provision of this Agreement, neither Borrower shall be entitled to request (or
to elect to convert to or continue as a Eurocurrency Borrowing) any Borrowing if
the Interest Period requested therefor would end after the Commitment
Termination Date.
SECTION 2.03. Requests for Borrowings.
-----------------------
(a) Notice by the Borrowers. To request a Borrowing, a Borrower shall
-----------------------
notify the Administrative Agent of such request by telephone (i) in the case of
a Eurocurrency Borrowing denominated in Dollars, not later than 11:00 a.m., New
York City time, three Business Days before the date of the proposed Borrowing,
(ii) in the case of a Eurocurrency Borrowing denominated in a Foreign Currency,
not later than 11:00 a.m., London time, five Business Days before the date of
the proposed Borrowing or (iii) in the case of an ABR Borrowing, not later than
11:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Borrowing to finance the
--------
reimbursement of an LC Disbursement as contemplated by Section 2.04(f) may be
given not later than 11:00 a.m., New York City time, on the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall
be confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Borrowing Request in a form approved by the Administrative Agent
and signed by such Borrower.
(b) Content of Borrowing Requests. Each telephonic and written
-----------------------------
Borrowing Request shall specify the following information in compliance with
Section 2.02:
(i) the aggregate amount and Currency of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) in the case of a Borrowing denominated in Dollars, whether such
Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;
(iv) in the case of a Eurocurrency Borrowing, the Interest Period
therefor, which shall be a period contemplated by the definition of the
term "Interest Period" and permitted under Section 2.02(d); and
(v) the location and number of the applicable Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.05.
(c) Notice by the Administrative Agent to the Lenders. Promptly
-------------------------------------------------
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
(d) Failure to Elect. If no election as to the Currency of a Borrowing
----------------
is specified, then the requested Borrowing shall be denominated in Dollars. If
no election as to the Type of a Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing unless an
Credit Agreement
----------------
-24-
Agreed Foreign Currency has been specified, in which case the requested
Borrowing shall be a Eurocurrency Borrowing denominated in such Agreed Foreign
Currency. If no Interest Period is specified with respect to any requested
Eurocurrency Borrowing, (i) if the Currency specified for such Borrowing is
Dollars (or if no Currency has been so specified), the requested Borrowing shall
be made instead as an ABR Borrowing, and (ii) if the Currency specified for such
Borrowing is an Agreed Foreign Currency, the applicable Borrower shall be deemed
to have selected an Interest Period of one month's duration.
SECTION 2.04. Letters of Credit.
-----------------
(a) General. Subject to the terms and conditions set forth herein, in
-------
addition to the Loans provided for in Section 2.01, each Borrower may request
the Issuing Lender to issue, at any time and from time to time during the
Availability Period, Letters of Credit denominated in Dollars for its own
account in such form as is acceptable to the Issuing Lender in its reasonable
determination. Letters of Credit issued hereunder shall constitute utilization
of the Commitments.
(b) Notice of Issuance, Amendment, Renewal or Extension. To request
---------------------------------------------------
the issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), a Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and the Administrative
Agent (reasonably in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (d) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Lender, such Borrower also shall submit a
letter of credit application on the Issuing Lender's standard form in connection
with any request for a Letter of Credit. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by such
Borrower to, or entered into by such Borrower with, the Issuing Lender relating
to any Letter of Credit, the terms and conditions of this Agreement shall
control.
(c) Limitations on Amounts. A Letter of Credit shall be issued,
----------------------
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the applicable Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the Aggregate LC Exposure shall not exceed the
Aggregate Letter of Credit Sublimit Amount, (ii) the Aggregate Revolving Credit
Exposure shall not exceed the Aggregate Commitment, (iii) the Aggregate
Subsidiary Borrower Revolving Credit Exposures shall not exceed the Aggregate
Subsidiary Borrower Sublimit Commitment and (iv) the aggregate amount of
Revolving Credit Exposures denominated in Foreign Currencies shall not exceed
the Aggregate Foreign Currency Sublimit Dollar Amount.
(d) Expiration Date. Each Letter of Credit shall expire at or prior to
---------------
the close of business on the date that is five Business Days prior to the
Commitment Termination Date.
Credit Agreement
----------------
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(e) Participations. By the issuance of a Letter of Credit (or an
--------------
amendment to a Letter of Credit increasing the amount thereof) by the Issuing
Lender, and without any further action on the part of the Issuing Lender or the
Lenders, the Issuing Lender hereby grants to each Lender, and each Lender hereby
acquires from the Issuing Lender, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments.
In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for account of the Issuing Lender, such Lender's Applicable Percentage of each
LC Disbursement made by the Issuing Lender promptly upon the request of the
Issuing Lender at any time from the time of such LC Disbursement until such LC
Disbursement is reimbursed by the applicable Borrower or at any time after any
reimbursement payment is required to be refunded to such Borrower for any
reason. Such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each such payment shall be made in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Lender the
amounts so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from a Borrower pursuant to paragraph (f) of
this Section, the Administrative Agent shall distribute such payment to the
Issuing Lender or, to the extent that the Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse the Issuing Lender for any LC
Disbursement shall not constitute a Loan and shall not relieve such Borrower of
its obligation to reimburse such LC Disbursement.
(f) Reimbursement. If the Issuing Lender shall make any LC
-------------
Disbursement in respect of a Letter of Credit, the applicable Borrower shall
reimburse the Issuing Lender in respect of such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than
12:00 noon, New York City time, on (i) the Business Day that such Borrower
receives notice of such LC Disbursement, if such notice is received prior to
10:00 a.m., New York City time, or (ii) the Business Day immediately following
the day that such Borrower receives such notice, if such notice is not received
prior to such time, provided that, if such LC Disbursement is not less than
--------
$500,000, such Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 that such payment be financed
with an ABR Borrowing in an equivalent amount and, to the extent so financed,
such Borrower's obligation to make such payment shall be discharged and replaced
by the resulting ABR Borrowing.
If a Borrower fails to make such payment when due, the Administrative
Agent shall notify each Lender of the applicable LC Disbursement, the payment
then due from such Borrower in respect thereof and such Lender's Applicable
Percentage thereof.
Credit Agreement
----------------
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(g) Obligations Absolute. Each Borrower's obligation to reimburse LC
--------------------
Disbursements as provided in paragraph (f) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Lender under a Letter of Credit against
presentation of a draft or other document that does not comply strictly with the
terms of such Letter of Credit, and (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of
such Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Lender,
nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit
by the Issuing Lender or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Lender; provided that the foregoing
--------
shall not be construed to excuse the Issuing Lender from liability to a Borrower
to the extent of any direct damages (as opposed to consequential damages, claims
in respect of which are hereby waived by each Borrower to the extent permitted
by applicable law) suffered by such Borrower that are caused by the Issuing
Lender's gross negligence or wilful misconduct when determining whether drafts
and other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that:
(i) the Issuing Lender may accept documents that appear on their face
to be in substantial compliance with the terms of a Letter of Credit
without responsibility for further investigation, regardless of any notice
or information to the contrary, and may make payment upon presentation of
documents that appear on their face to be in substantial compliance with
the terms of such Letter of Credit;
(ii) the Issuing Lender shall have the right, in its sole discretion,
to decline to accept such documents and to make such payment if such
documents are not in strict compliance with the terms of such Letter of
Credit; and
(iii) this sentence shall establish the standard of care to be
exercised by the Issuing Lender when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof
(and the parties hereto hereby waive, to the extent permitted by applicable
law, any standard of care inconsistent with the foregoing).
Credit Agreement
----------------
-27-
(h) Disbursement Procedures. The Issuing Lender shall, within a
-----------------------
reasonable time following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. The Issuing Lender
shall promptly after such examination notify the Administrative Agent and the
applicable Borrower by telephone (confirmed by telecopy) of such demand for
payment and whether the Issuing Lender has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such notice
--------
shall not relieve such Borrower of its obligation to reimburse the Issuing
Lender and the Lenders with respect to any such LC Disbursement.
(i) Interim Interest. If the Issuing Lender shall make any LC
----------------
Disbursement, then, unless the applicable Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid amount
thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that such Borrower reimburses
such LC Disbursement, at the rate per annum then applicable to ABR Loans;
provided that, if such Borrower fails to reimburse such LC Disbursement when due
- --------
pursuant to paragraph (f) of this Section, then Section 2.11(c) shall apply.
Interest accrued pursuant to this paragraph shall be for account of the Issuing
Lender, except that interest accrued on and after the date of payment by any
Lender pursuant to paragraph (f) of this Section to reimburse the Issuing Lender
shall be for account of such Lender to the extent of such payment.
(j) Replacement of the Issuing Lender. The Issuing Lender may be
---------------------------------
replaced at any time by written agreement between the Company, the
Administrative Agent, the replaced Issuing Lender and the successor Issuing
Lender. The Administrative Agent shall notify the Lenders of any such
replacement of the Issuing Lender. At the time any such replacement shall become
effective, the Borrowers shall pay all unpaid fees accrued for account of the
replaced Issuing Lender pursuant to Section 2.10(b). From and after the
effective date of any such replacement, (i) the successor Issuing Lender shall
have all the rights and obligations of the replaced Issuing Lender under this
Agreement with respect to Letters of Credit to be issued thereafter and (ii)
references herein to the term "Issuing Lender" shall be deemed to refer to such
successor or to any previous Issuing Lender, or to such successor and all
previous Issuing Lenders, as the context shall require. After the replacement of
an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party
hereto and shall continue to have all the rights and obligations of an Issuing
Lender under this Agreement with respect to Letters of Credit issued by it prior
to such replacement, but shall not be required to issue additional Letters of
Credit.
(k) Cash Collateralization. If an Event of Default shall occur and be
----------------------
continuing and the Company receives notice from the Administrative Agent or the
Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders
with LC Exposures representing more than 50% of the Aggregate LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, the
Borrowers shall immediately deposit into the Collateral Account (or such other
collateral account as the Administrative Agent shall establish for such purpose)
an amount in cash equal to, the Aggregate LC Exposure as of such date plus any
----
accrued and unpaid interest thereon; provided that the obligation to deposit
--------
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default described in clause (h) or (i) of
Article VIII. Such deposit shall be held by the Administrative Agent in the
Collateral Account as collateral in the first instance for the Aggregate LC
Exposure under this Agreement
Credit Agreement
----------------
-28-
and thereafter for the payment of the "Secured Obligations" under and as defined
in the Pledge Agreement, and for these purposes the Company hereby grants a
security interest to the Administrative Agent for the benefit of the Lenders in
the Collateral Account (or such other collateral account, as applicable) and in
any financial assets (as defined in the Uniform Commercial Code) or other
property held therein.
(l) Letters of Credit Under the Existing Credit Agreement. To the
-----------------------------------------------------
extent that, pursuant to Section 2.24 of the Existing Credit Agreement, JPMorgan
Chase Bank, N.A. (formerly The Chase Manhattan Bank) and Bank of America, N.A.
(formerly Fleet National Bank), as an "Issuer" thereunder, has issued "Letters
of Credit" under and as defined in the Existing Credit Agreement, then, on the
Effective Date, subject to the satisfaction of the conditions to effectiveness
of the obligations of the Lenders hereunder set forth in Article V, each of such
"Letters of Credit" under the Existing Credit Agreement listed on Schedule
2.04(l) (the "Existing Letters of Credit") shall automatically, and without any
--------------------------
action on the part of any Person, be continued as and become a Letter of Credit
hereunder and shall be governed by the terms of this Agreement. Notwithstanding
anything herein to the contrary, Bank of America, N.A. ("BofA") shall be the
----
"Issuing Lender" for all purposes of this Agreement with respect to each
Existing Letter of Credit issued by BofA (or any of its predecessors) (each such
Existing Letter of Credit, a "BofA Letter of Credit") and BofA shall have all of
---------------------
the rights and obligations of "the Issuing Lender" hereunder with respect to
each BofA Letter of Credit; provided that the (i) no new Letter of Credit shall
--------
be issued hereunder by BofA and (ii) no BofA Letter of Credit shall be amended,
renewed or extended (or permitted to be renewed or extended, and in that
connection BofA agrees that with respect to each BofA Letter of Credit that
provides for the automatic renewal of the expiry date hereof unless a notice of
non-renewal is given thereunder, BofA shall provide such notice at the next
earliest possible date in accordance with the terms of such BofA Letter of
Credit (and, if any Borrower shall so request in accordance with Section 2.04,
JPMCB shall issue a new Letter of Credit hereunder to replace such expiring BofA
Letter of Credit)).
SECTION 2.05. Funding of Borrowings.
---------------------
(a) Funding by Lenders. Each Lender shall make each Loan to be made by
------------------
it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, Local Time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the applicable
Borrower by promptly crediting the amounts so received, in like funds, to an
account of such Borrower designated by such Borrower in the applicable Borrowing
Request; provided that ABR Borrowings made to finance the reimbursement of an LC
--------
Disbursement as provided in Section 2.04(f) shall be remitted by the
Administrative Agent to the Issuing Lender.
(b) Presumption by the Administrative Agent. Unless the Administrative
---------------------------------------
Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender's share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount. In such
Credit Agreement
----------------
-29-
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and such
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to such Borrower to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of such Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections.
------------------
(a) Elections by the Borrowers. The Loans constituting each Borrowing
--------------------------
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurocurrency Borrowing, shall have the Interest Period
specified in such Borrowing Request. Thereafter, a Borrower may elect to convert
such Borrowing to a Borrowing of a different Type or to continue such Borrowing
as a Borrowing of the same Type and, in the case of a Eurocurrency Borrowing,
may elect the Interest Period therefor, all as provided in this Section;
provided that (i) a Borrowing denominated in one Currency may not be continued
- --------
as, or converted to, a Borrowing in a different Currency, (ii) no Eurocurrency
Borrowing denominated in a Foreign Currency may be continued if, after giving
effect thereto, the Aggregate Revolving Credit Exposure would exceed the
Aggregate Commitment, and (iii) a Eurocurrency Borrowing denominated in a
Foreign Currency may not be converted to a Borrowing of a different Type. A
Borrower may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders holding the Loans constituting such Borrowing, and the Loans
constituting each such portion shall be considered a separate Borrowing.
(b) Notice of Elections. To make an election pursuant to this Section,
-------------------
a Borrower shall notify the Administrative Agent of such election by telephone
by the time that a Borrowing Request would be required under Section 2.03 if
such Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
such Borrower.
(c) Content of Interest Election Requests. Each telephonic and written
-------------------------------------
Interest Election Request shall specify the following information in compliance
with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) of this paragraph shall be specified for each resulting
Borrowing);
Credit Agreement
----------------
-30-
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether, in the case of a Borrowing denominated in Dollars, the
resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;
and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the
Interest Period therefor after giving effect to such election, which shall
be a period contemplated by the definition of the term "Interest Period"
and permitted under Section 2.02(d).
(d) Notice by the Administrative Agent to the Lenders. Promptly
-------------------------------------------------
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing.
(e) Failure to Elect; Events of Default. If a Borrower fails to
-----------------------------------
deliver a timely and complete Interest Election Request with respect to a
Eurocurrency Borrowing prior to the end of the Interest Period therefor, then,
unless such Borrowing is repaid as provided herein, (i) if such Borrowing is
denominated in Dollars, at the end of such Interest Period such Borrowing shall
be converted to an ABR Borrowing, and (ii) if such Borrowing is denominated in a
Foreign Currency, such Borrower shall be deemed to have selected an Interest
Period of one month's duration. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Required Lenders, so notifies the Company, then, so
long as an Event of Default is continuing (A) no outstanding Borrowing
denominated in Dollars may be converted to or continued as a Eurocurrency
Borrowing, (B) unless repaid, each Eurocurrency Borrowing denominated in Dollars
shall be converted to an ABR Borrowing at the end of the Interest Period
therefor and (C) no outstanding Eurocurrency Borrowing denominated in a Foreign
Currency may have an Interest Period of more than one month's duration.
SECTION 2.07. Termination, Reduction and Increase of the Commitments.
------------------------------------------------------
(a) Scheduled Termination. Unless previously terminated, the
---------------------
Commitments of the Lenders shall terminate on the Commitment Termination Date.
(b) Voluntary Termination or Reduction. The Company may at any time
----------------------------------
terminate, or from time to time reduce, the Aggregate Commitment, and the
Subsidiary Borrower may at any time terminate, or from time to time reduce, the
Aggregate Subsidiary Borrower Sublimit Commitment; provided that (i) each
--------
reduction of the Aggregate Commitment or the Aggregate Subsidiary Borrower
Sublimit Commitment pursuant to this Section shall be in an amount that is
$500,000 or a larger multiple of $100,000, (ii) the Company shall not terminate
or reduce the Aggregate Commitments if, after giving effect to any concurrent
prepayment of the Loans in accordance with Section 2.09, the Aggregate Revolving
Credit Exposure would exceed the Aggregate Commitment, (iii) the Subsidiary
Borrower shall not terminate or reduce the Aggregate Subsidiary Borrower
Sublimit Commitment if, after giving effect to any concurrent prepayment of the
Loans to the Subsidiary Borrower in accordance with Section 2.09, the Aggregate
Subsidiary Borrower Revolving Credit Exposure would exceed the Aggregate
Subsidiary Borrower Sublimit Commitment and (iv) the Company shall not terminate
or reduce
Credit Agreement
----------------
-31-
the Aggregate Commitments if the Aggregate Subsidiary Borrower Sublimit
Commitment would exceed the Aggregate Commitment. The Company or the Subsidiary
Borrower, as applicable, shall notify the Administrative Agent of any election
to terminate or reduce the Aggregate Commitments or the Aggregate Subsidiary
Borrower Sublimit Commitments under this paragraph (b) at least three Business
Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. Promptly following receipt of any
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Company or the Subsidiary Borrower
pursuant to this Section shall be irrevocable; provided that a notice of such
--------
termination may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the Company
or the Subsidiary Borrower, as applicable (by notice to the Administrative Agent
on or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Aggregate Commitments and the Aggregate
Subsidiary Borrower Sublimit Commitment shall be permanent. Each reduction of
the Aggregate Commitments and the Aggregate Subsidiary Borrower Sublimit
Commitment shall be made ratably among the Lenders in accordance with their
respective Commitments or Subsidiary Borrower Sublimit Commitments, as the case
may be.
(c) Increase of Commitment.
----------------------
(i) Requests for Commitment Increase. The Company may, at any time
--------------------------------
(but in no event more than three times), propose that the Aggregate Commitment
hereunder be increased (each such proposed increase being a "Commitment
----------
Increase") by having an existing Lender agree to increase its then existing
- --------
Commitment (each an "Increasing Lender") and/or by adding as a new Lender
-----------------
hereunder any Person which shall agree to provide a Commitment hereunder (each
an "Assuming Lender"), in each case with the consent of the Administrative Agent
---------------
and the Issuing Lender (such consent in each case not to be unreasonably
withheld), by notice to the Administrative Agent specifying the amount of the
relevant Commitment Increase, the Lender or Lenders providing for such
Commitment Increase and the date on which such increase is to be effective (the
"Commitment Increase Date"), which shall be a Business Day at least three
------------------------
Business Days after delivery of such notice and 30 days prior to the Commitment
Termination Date; provided that:
--------
(A) the minimum amount of the Commitment of any Assuming Lender,
and the minimum amount of the increase of the Commitment of any
Increasing Lender, as part of such Commitment Increase shall be
$10,000,000 or a larger multiple of $1,000,000;
(B) the aggregate amount of all such Commitment Increases
hereunder shall not exceed $50,000,000;
(C) no Default shall have occurred and be continuing on such
Commitment Increase Date or shall result from the proposed Commitment
Increase;
(D) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct on
and as of the Commitment
Credit Agreement
----------------
-32-
Increase Date as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date); and
(E) no such Commitment Increase shall result in an increase of
the Aggregate Subsidiary Borrower Sublimit Commitment.
(ii) Effectiveness of Commitment Increase. Each Commitment Increase (and
------------------------------------
the increase of the Commitment of each Increasing Lender and/or the new
Commitment of each Assuming Lender, as applicable, resulting therefrom) shall
become effective as of the relevant Commitment Increase Date upon receipt by the
Administrative Agent, on or prior to 9:00 a.m., New York time, on such
Commitment Increase Date, of (A) a certificate of a duly authorized officer of
the Company stating that the conditions with respect to such Commitment Increase
under this paragraph (c) have been satisfied and (B) an agreement, in form and
substance satisfactory to the Company and the Administrative Agent, pursuant to
which, effective as of such Commitment Increase Date, the Commitment of each
such Increasing Lender shall be increased or each such Assuming Lender, as
applicable, shall undertake a Commitment, duly executed by such Increasing
Lender or Assuming Lender, as the case may be, and the Company and acknowledged
by the Administrative Agent. Upon the Administrative Agent's receipt of a fully
executed agreement from each Increasing Lender and/or Assuming Lender referred
to in clause (B) above, together with the certificate referred to in clause (A)
above, the Administrative Agent shall record the information contained in each
such agreement in the Register and give prompt notice of the relevant Commitment
Increase to the Company and the Lenders (including, if applicable, each Assuming
Lender). On each Commitment Increase Date the Borrowers shall simultaneously (i)
prepay in full the outstanding Loans (if any) held by the Lenders immediately
prior to giving effect to the relevant Commitment Increase, (ii) if any Borrower
shall have so requested in accordance with this Agreement, borrow new Loans from
all Lenders (including, if applicable, any Assuming Lender) such that, after
giving effect thereto, the Loans (in the respective Currencies) are held ratably
by the Lenders in accordance with their respective Commitments or Subsidiary
Borrower Sublimit Commitments, as the case may be (after giving effect to such
Commitment Increase) and (iii) pay to the Lenders the amounts, if any, payable
under Section 2.14.
SECTION 2.08. Repayment of Loans; Evidence of Debt.
------------------------------------
(a) Repayment. Each Borrower hereby unconditionally promises to pay to
---------
the Administrative Agent for account of the Lenders the outstanding principal
amount of the Loans on the Commitment Termination Date.
(b) Manner of Payment. Prior to any repayment or prepayment of any
-----------------
Borrowings hereunder, the applicable Borrower shall select the Borrowing or
Borrowings to be paid and shall notify the Administrative Agent by telephone
(confirmed by telecopy) of such selection not later than 11:00 a.m., New York
City time, three Business Days before the scheduled date of such repayment;
provided that each repayment of Borrowings shall be applied to repay any
- --------
outstanding ABR Borrowings before any other Borrowings. If a Borrower fails to
make a timely selection of the Borrowing or Borrowings to be repaid or prepaid,
such payment shall be applied, first, to pay any outstanding ABR Borrowings and,
second, to other Borrowings
Credit Agreement
----------------
-33-
in the order of the remaining duration of their respective Interest Periods (the
Borrowing with the shortest remaining Interest Period to be repaid first). Each
payment of a Borrowing shall be applied ratably to the Loans included in such
Borrowing.
(c) Maintenance of Records by Lenders. Each Lender shall maintain in
---------------------------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts and Currency of principal and interest
payable and paid to such Lender from time to time hereunder.
(d) Maintenance of Records by the Administrative Agent. The
--------------------------------------------------
Administrative Agent shall maintain accounts in which it shall record (i) the
amount and Currency of each Loan made hereunder, the Type thereof and each
Interest Period therefor, (ii) the amount and Currency of any principal or
interest due and payable or to become due and payable from each Borrower to each
Lender hereunder and (iii) the amount and Currency of any sum received by the
Administrative Agent hereunder for account of the Lenders and each Lender's
share thereof.
(e) Effect of Entries. The entries made in the accounts maintained
-----------------
pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence
----- -----
of the existence and amounts of the obligations recorded therein; provided that
--------
the failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligation of the
Borrowers to repay the Loans in accordance with the terms of this Agreement.
(f) Promissory Notes. Any Lender may request that Loans made by it to
----------------
any Borrower be evidenced by a promissory note of such Borrower. In such event,
the applicable Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) in a principal amount equal to (in the case
of the Company) such Lender's Commitment and (in case of the Subsidiary
Borrower) such Lender's Subsidiary Borrower Sublimit Commitment and in a form
approved by the Administrative Agent. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans.
-------------------
(a) Optional Prepayments. The Borrowers shall have the right at any
--------------------
time and from time to time to prepay any Borrowing in whole or in part, subject
to the requirements of this Section.
(b) Mandatory Prepayments Due to Currency Fluctuations. On each
--------------------------------------------------
Quarterly Date and promptly upon the receipt by the Administrative Agent of a
Currency Valuation Notice (as defined below), the Administrative Agent shall
determine the aggregate outstanding principal amount of the Loans to the extent
there shall be any Loans denominated in any Foreign Currency at such time. For
the purpose of this determination, the outstanding principal amount of any Loan
that is denominated in any Foreign Currency shall be deemed to be the Dollar
Equivalent of the amount in the Foreign Currency of such Loan, determined as of
such Quarterly Date or, in
Credit Agreement
----------------
-34-
the case of a Currency Valuation Notice received by the Administrative Agent
prior to 11:00 a.m., London time, on a Business Day, on such Business Day or, in
the case of a Currency Valuation Notice otherwise received, on the first
Business Day after such Currency Valuation Notice is received. Upon making such
determination, the Administrative Agent shall promptly notify the Lenders and
the Borrowers thereof. If, on the date of such determination, the aggregate
outstanding principal amount of the Loans denominated in Foreign Currencies
exceeds 105% of the Aggregate Foreign Currency Sublimit Dollar Amount, the
Borrowers shall, if requested by the Required Lenders (through the
Administrative Agent), prepay the Loans in such amounts as shall be necessary so
that after giving effect thereto the aggregate outstanding principal amount of
the Loans does not exceed the Aggregate Foreign Currency Sublimit Dollar Amount.
For purposes hereof, "Currency Valuation Notice" means a notice given by the
Required Lenders to the Administrative Agent stating that such notice is a
"Currency Valuation Notice" and requesting that the Administrative Agent
-------------------------
determine the aggregate outstanding principal amount of the Loans. The
Administrative Agent shall not be required to make more than one valuation
determination pursuant to Currency Valuation Notices within any rolling three
month period.
(c) Notices, Etc. The Borrowers shall notify the Administrative Agent
------------
by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurocurrency Borrowing, not later than 11:00 a.m., New York
City time (or, in the case of a Borrowing denominated in a Foreign Currency,
11:00 a.m., London time), three Business Days before the date of prepayment or
(ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m.,
New York City time, one Business Day before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date, the principal
amount of each Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment; provided that, if a notice of prepayment is given in connection with
--------
a conditional notice of termination of the Commitments as contemplated by
Section 2.07, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of a
Borrowing of the same Type as provided in Section 2.02, except as necessary to
apply fully the required amount of a mandatory prepayment. Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.11 and shall be made in the manner specified in Section
2.08(b).
SECTION 2.10. Fees.
----
(a) Commitment Fee. The Company agrees to pay to the Administrative
--------------
Agent for account of each Lender a commitment fee, which shall accrue at the
Applicable Rate on the average daily unused amount of the Commitment of such
Lender during the period from and including the Effective Date to but excluding
the earlier of the date such Commitment terminates and the Commitment
Termination Date. Accrued commitment fees shall be payable on each Quarterly
Date and on the earlier of the date the Commitments terminate and the Commitment
Termination Date, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for
Credit Agreement
----------------
-35-
the actual number of days elapsed (including the first day but excluding the
last day). For purposes of computing commitment fees, the Commitment of a Lender
shall be deemed to be used to the extent of the outstanding Loans and LC
Exposure of such Lender.
(b) Letter of Credit Fees. The Company agrees to pay (i) to the
---------------------
Administrative Agent for account of each Lender a participation fee with respect
to its participations in Letters of Credit, which shall accrue at a rate per
annum equal to the Applicable Rate applicable to interest on Eurocurrency Loans
on the average daily amount of such Lender's LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
and including the Effective Date to but excluding the later of the date on which
such Lender's Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, and (ii) to the Issuing Lender a fronting fee, which shall
accrue at the rate of 0.125% per annum on the average daily amount of the
Aggregate LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date of termination of the
Aggregate Commitment and the date on which there ceases to be any LC Exposure,
as well as the Issuing Lender's standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees and fronting fees accrued through and
including each Quarterly Date shall be payable on the third Business Day
following such Quarterly Date, commencing on the first such date to occur after
the Effective Date; provided that all such fees shall be payable on the date on
--------
which the Commitments terminate and any such fees accruing after the date on
which the Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Lender pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(c) Administrative Agent Fees. The Company agrees to pay to the
-------------------------
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Company and the Administrative
Agent.
(d) Payment of Fees. All fees payable hereunder shall be paid on the
---------------
dates due, in Dollars and immediately available funds, to the Administrative
Agent (or to the Issuing Lender, in the case of fees payable to it) for
distribution, in the case of facility fees and participation fees, to the
Lenders entitled thereto. Fees paid shall not be refundable under any
circumstances.
SECTION 2.11. Interest.
--------
(a) ABR Loans. The Loans comprising each ABR Borrowing shall bear
---------
interest at a rate per annum equal to the Alternate Base Rate plus the
----
Applicable Rate.
(b) Eurocurrency Loans. The Loans comprising each Eurocurrency
------------------
Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO
Rate for the Interest Period for such Borrowing plus the Applicable Rate.
----
Credit Agreement
----------------
-36-
(c) Default Interest. Notwithstanding the foregoing, if any principal
----------------
of or interest on any Loan or any fee or other amount payable by the Borrowers
hereunder is not paid when due, whether at stated maturity, upon acceleration,
by mandatory prepayment or otherwise, such overdue amount shall bear interest,
after as well as before judgment, at a rate per annum equal to (i) in the case
of overdue principal of any Loan, 2% plus the rate otherwise applicable to such
----
Loan as provided above or (ii) in the case of any other amount, 2% plus the
----
rate applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) Payment of Interest. Accrued interest on each Loan shall be
-------------------
payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (i) interest accrued pursuant to
--------
paragraph (c) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan
prior to the Commitment Termination Date), accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurocurrency
Borrowing denominated in Dollars prior to the end of the Interest Period
therefor, accrued interest on such Borrowing shall be payable on the effective
date of such conversion.
(e) Computation. All interest hereunder shall be computed on the basis
-----------
of a year of 360 days, except that interest computed by reference to the
Alternate Base Rate at times when the Alternate Base Rate is based on the Prime
Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
--------------------------
of the Interest Period for any Eurocurrency Borrowing (the Currency of such
Borrowing herein called the "Affected Currency"):
-----------------
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for the Affected Currency for
such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for the Affected Currency for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making
or maintaining their respective Loans included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Company and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Company and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or the
continuation of any Borrowing as, a Eurocurrency Borrowing denominated in the
Affected Currency shall be ineffective and, if the Affected Currency is Dollars,
such Borrowing (unless prepaid) shall be continued as, or converted to, an ABR
Borrowing, (ii) if the Affected Currency
Credit Agreement
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is Dollars and any Borrowing Request requests a Eurocurrency Borrowing
denominated in Dollars, such Borrowing shall be made as an ABR Borrowing and
(iii) if the Affected Currency is a Foreign Currency, any Borrowing Request that
requests a Eurocurrency Borrowing denominated in the Affected Currency shall be
ineffective.
SECTION 2.13. Increased Costs.
---------------
(a) Increased Costs Generally. If any Change in Law shall:
-------------------------
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for account of, or
credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Lender; or
(ii) impose on any Lender or the Issuing Lender or the London
interbank market any other condition affecting this Agreement or
Eurocurrency Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lenders of making or maintaining any Eurocurrency Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Lender of participating in, issuing or maintaining any Letter of Credit
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Lender hereunder (whether of principal, interest or otherwise), then the
applicable Borrower will pay to such Lender or the Issuing Lender, as the case
may be, in Dollars, such additional amount or amounts as will compensate such
Lender or the Issuing Lender, as the case may be, for such additional costs
incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the Issuing Lender
--------------------
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or the Issuing
Lender's capital or on the capital of such Lender's or the Issuing Lender's
holding company, if any, as a consequence of this Agreement or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Lender, to a level below that which such Lender
or the Issuing Lender or such Lender's or the Issuing Lender's holding company
could have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Lender's policies and the policies of such Lender's or
the Issuing Lender's holding company with respect to capital adequacy), then
from time to time the Borrowers will pay to such Lender or the Issuing Lender,
as the case may be, in Dollars, such additional amount or amounts as will
compensate such Lender or the Issuing Lender or such Lender's or the Issuing
Lender's holding company for any such reduction suffered.
(c) Certificates from Lenders. A certificate of a Lender or the
-------------------------
Issuing Lender setting forth the amount or amounts, in Dollars, necessary to
compensate such Lender or the Issuing Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the applicable Borrower and shall be conclusive absent manifest error. The
applicable Borrower shall pay such Lender or the Issuing Lender, as the case may
be, the amount shown as due on any such certificate within 10 days after receipt
thereof.
Credit Agreement
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(d) Delay in Requests. Failure or delay on the part of any Lender or
-----------------
the Issuing Lender to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or the Issuing Lender's right to demand
such compensation; provided that the Borrowers shall not be required to
--------
compensate a Lender or the Issuing Lender pursuant to this Section for any
increased costs or reductions incurred more than 270 days prior to the date that
such Lender or the Issuing Lender, as the case may be, notifies the Borrowers of
the Change in Law giving rise to such increased costs or reductions and of such
Lender's or the Issuing Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
- -------- -------
or reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
----------------------
of any principal of any Eurocurrency Loan other than on the last day of an
Interest Period therefor (including as a result of an Event of Default), (b) the
conversion of any Eurocurrency Loan other than on the last day of an Interest
Period therefor, (c) the failure to borrow, convert, continue or prepay any Loan
on the date specified in any notice delivered pursuant hereto (regardless of
whether such notice is permitted to be revocable under Section 2.09(d) and is
revoked in accordance herewith), or (d) the assignment as a result of a request
by the Company pursuant to Section 2.17(b) of any Eurocurrency Loan other than
on the last day of an Interest Period therefor, then, in any such event, the
Company shall compensate each Lender for the loss, cost and expense attributable
to such event. In the case of a Eurocurrency Loan, the loss to any Lender
attributable to any such event shall be deemed to include an amount determined
by such Lender to be equal to the excess, if any, of (i) the amount of interest
that such Lender would pay for a deposit equal to the principal amount of such
Loan denominated in the Currency of such Loan for the period from the date of
such payment, conversion, failure or assignment to the last day of the then
current Interest Period for such Loan (or, in the case of a failure to borrow,
convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the Adjusted LIBO Rate for such Currency
for such Interest Period, over (ii) the amount of interest that such Lender
----
would earn on such principal amount for such period if such Lender were to
invest such principal amount for such period at the interest rate that would be
bid by such Lender (or an affiliate of such Lender) for deposits denominated in
such Currency from other banks in the eurocurrency market at the commencement of
such period. A certificate of any Lender setting forth any amount or amounts
that such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrowers and shall be conclusive absent manifest error. The
Company shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
SECTION 2.15. Taxes.
-----
(a) Payments Free of Taxes. Any and all payments by or on account of
----------------------
any obligation of the Borrowers hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if a Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Credit Agreement
----------------
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Section)the Administrative Agent, Lender or Issuing Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and (iii)
such Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) Payment of Other Taxes by the Borrowers. In addition, each
---------------------------------------
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) Indemnification by the Borrowers. Each Borrower shall indemnify
--------------------------------
the Administrative Agent, each Lender and the Issuing Lender, within 10 days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) paid by the
Administrative Agent, such Lender or the Issuing Lender, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to a
Borrower by a Lender or the Issuing Lender, or by the Administrative Agent on
its own behalf or on behalf of a Lender or the Issuing Lender, shall be
conclusive absent manifest error.
(d) Evidence of Payments. As soon as practicable after any payment of
--------------------
Indemnified Taxes or Other Taxes by a Borrower to a Governmental Authority, such
Borrower shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Non-U.S. Lenders. Any Non-U.S. Lender that is entitled to an
----------------
exemption from or reduction of withholding tax under the law of the jurisdiction
in which a Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to such
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by such Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate.
(f) Refunds. If the Administrative Agent or a Lender determines, in
-------
its sole discretion, that it has received a refund of any Taxes or Other Taxes
as to which it has been indemnified by the Borrowers or with respect to which a
Borrower has paid additional amounts pursuant to this Section, it shall pay over
such refund to such Borrower (but only to the extent of indemnity payments made,
or additional amounts paid, by such Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided that such Borrower, upon the request of the
--------
Administrative Agent or such Lender, agrees to repay the amount paid over to
such Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This paragraph (f) shall not be construed
to require the Administrative Agent or any
Credit Agreement
----------------
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Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrowers or any other Person.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
--------------------------------------------------
Set-offs.
- --------
(a) Payments by the Borrowers. Each Borrower shall make each payment
-------------------------
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.13,
2.14 or 2.15, or otherwise) or under any other Loan Document (except to the
extent otherwise provided therein) prior to 12:00 noon, Local Time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at the Administrative Agent's Account,
except as otherwise expressly provided in the relevant Loan Document and except
payments to be made directly to the Issuing Lender as expressly provided herein
and payments pursuant to Sections 2.13, 2.14, 2.15 and 10.03, which shall be
made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All amounts owing under this Agreement (including commitment
fees, payments required under Section 2.13, and payments required under Section
2.14 relating to any Loan denominated in Dollars, but not including principal
of, and interest on, any Loan denominated in any Foreign Currency or payments
relating to any such Loan required under Section 2.14, which are payable in such
Foreign Currency) or under any other Loan Document (except to the extent
otherwise provided therein) are payable in Dollars. Notwithstanding the
foregoing, if a Borrower shall fail to pay any principal of any Loan when due
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), the unpaid portion of such Loan shall, if such Loan is not
denominated in Dollars, automatically be redenominated in Dollars on the due
date thereof (or, if such due date is a day other than the last day of the
Interest Period therefor, on the last day of such Interest Period) in an amount
equal to the Dollar Equivalent thereof on the date of such redenomination and
such principal shall be payable on demand; and if a Borrower shall fail to pay
any interest on any Loan that is not denominated in Dollars, such interest shall
automatically be redenominated in Dollars on the due date therefor (or, if such
due date is a day other than the last day of the Interest Period therefor, on
the last day of such Interest Period) in an amount equal to the Dollar
Equivalent thereof on the date of such redenomination and such interest shall be
payable on demand.
(b) Application of Insufficient Payments. If at any time insufficient
------------------------------------
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, to pay interest and fees then
due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, to pay
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
Credit Agreement
----------------
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(c) Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein: (i) each Borrowing shall be made from the Lenders, each payment of
commitment fee under Section 2.10 shall be made for account of the Lenders, and
each termination or reduction of the amount of the Commitments under Section
2.07 shall be applied to the respective Commitments of the Lenders, pro rata
according to the amounts of their respective Commitments; (ii) each Borrowing
shall be allocated pro rata among the Lenders according to the amounts of their
respective Commitments (in the case of the making of Loans) or their respective
Loans that are to be included in such Borrowing (in the case of conversions and
continuations of Loans); (iii) each payment or prepayment of principal of Loans
by a Borrower shall be made for account of the Lenders pro rata in accordance
with the respective unpaid principal amounts of the Loans held by them; and (iv)
each payment of interest on Loans by a Borrower shall be made for account of the
Lenders pro rata in accordance with the amounts of interest on such Loans then
due and payable to the respective Lenders.
(d) Sharing of Payments by Lenders. If any Lender shall, by exercising
------------------------------
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and participations in LC Disbursements and
accrued interest thereon then due than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided that (i) if any such
--------
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrowers pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Company or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(e) Presumptions of Payment. Unless the Administrative Agent shall
-----------------------
have received notice from a Borrower prior to the date on which any payment is
due to the Administrative Agent for account of the Lenders or the Issuing Lender
hereunder that such Borrower will not make such payment, the Administrative
Agent may assume that such Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Lender, as the case may be, the amount due. In such
event, if such Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Lender, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender or the
Credit Agreement
----------------
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Issuing Lender with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
(f) Certain Deductions by the Administrative Agent. If any Lender
----------------------------------------------
shall fail to make any payment required to be made by it pursuant to Section
2.04(e), 2.05(b) or 2.16(e), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for account of such Lender to
satisfy such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
----------------------------------------------
(a) Designation of a Different Lending Office. If any Lender requests
-----------------------------------------
compensation under Section 2.13, or if a Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for account of any
Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts
to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Company hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under
----------------------
Section 2.13, or if a Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for account of any Lender pursuant to
Section 2.15, or if any Lender defaults in its obligation to fund Loans
hereunder, then the Company may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 10.04), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
the Company shall have received the prior written consent of the Administrative
Agent (and, if a Commitment is being assigned, the Issuing Lender), which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the applicable
Borrower (in the case of all other amounts) and (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.13 or
payments required to be made pursuant to Section 2.15, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Company to require such assignment and delegation cease to apply.
Credit Agreement
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ARTICLE III
GUARANTEE
---------
SECTION 3.01. The Guarantee. Each Borrower hereby guarantees to each
-------------
Lender and the Administrative Agent and their respective successors and assigns
the prompt payment in full when due (whether at stated maturity, by acceleration
or otherwise) of the other Borrower's Obligations, in each case strictly in
accordance with the terms thereof (such obligations being herein collectively
called the "Guaranteed Obligations"). Each Borrower hereby further agrees that
----------------------
if the other Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of such Guaranteed Obligations, such
Borrower will promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
such Guaranteed Obligations, the same will be promptly paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance with
the terms of such extension or renewal.
SECTION 3.02. Obligations Unconditional. The obligations of the
-------------------------
Guarantors under Section 3.01 are absolute and unconditional irrespective of the
value, genuineness, validity, regularity or enforceability of the obligations of
the other Borrower under this Agreement or any other agreement or instrument
referred to herein, or any substitution, release or exchange of any other
guarantee of or security for any of their respective Guaranteed Obligations,
and, to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of
this Section that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or more
of the following shall not alter or impair the liability of the Guarantors
hereunder, which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of their
respective Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or any other agreement or instrument referred to herein shall be
done or omitted;
(iii) the maturity of any of their respective Guaranteed Obligations
shall be accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right under this
Agreement or any other agreement or instrument referred to herein shall be
waived or any other guarantee of any of their respective Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of, the
Administrative Agent or any Lender or Lenders as security for any of the
Guaranteed Obligations shall fail to be perfected.
Credit Agreement
----------------
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The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Lender exhaust any right, power or remedy or proceed against the
Company under this Agreement or any other agreement or instrument referred to
herein, or against any other Person under any other guarantee of, or security
for, any of their respective Guaranteed Obligations.
SECTION 3.03. Reinstatement. The obligations of each Guarantor under
-------------
this Article shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the other Borrowers in respect of the
relevant Guaranteed Obligations is rescinded or must be otherwise restored by
any holder of any of such Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and each Guarantor
agrees that it will indemnify the Administrative Agent and each Lender on demand
for all reasonable costs and expenses (including fees of counsel) incurred by
the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
SECTION 3.04. Subrogation. Each Guarantor hereby agrees that, until
-----------
the payment and satisfaction in full of all Guaranteed Obligations and the
expiration and termination of the Commitments of the Lenders under this
Agreement, it shall not exercise any right or remedy arising by reason of any
performance by it of its guarantee in Section 3.01, whether by subrogation or
otherwise, against the Company or any other guarantor of any of the Guaranteed
Obligations or any security for any of the Guaranteed Obligations.
SECTION 3.05. Remedies. Each Guarantor agrees that, as between such
--------
Guarantor and the Lenders, the obligations of the Borrowers under this Agreement
may be declared to be forthwith due and payable as provided in Article VIII (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Article VIII) for purposes of Section 3.01
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against any Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by any Borrower) shall forthwith
become due and payable by such Guarantor for purposes of Section 3.01.
SECTION 3.06. Instrument for the Payment of Money. Each Guarantor
-----------------------------------
hereby acknowledges that the guarantee in this Article constitutes an instrument
for the payment of money, and consents and agrees that any Lender or the
Administrative Agent, at its sole option, in the event of a dispute by such
Guarantor in the payment of any moneys due hereunder, shall have the right to
proceed by motion for summary judgment in lieu of complaint pursuant to N.Y.
Civ. Prac. L&R ss. 3213.
SECTION 3.07. Continuing Guarantee. The guarantee in this Article is a
--------------------
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
Credit Agreement
----------------
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SECTION 3.08. General Limitation on Guarantee Obligations. In any
-------------------------------------------
action or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under Section 3.01
would otherwise be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Guarantor, any Lender, the Administrative Agent or any other
Person, be automatically limited and reduced to the highest amount that is valid
and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Company and the Subsidiary Borrower represents and
warrants (as to itself and each of its Subsidiaries) to the Lenders that:
SECTION 4.01. Organization; Powers. Each of the Company and its
--------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 4.02. Authorization; Enforceability. The Transactions are
-----------------------------
within each Borrower and each other Loan Party's corporate powers and have been
duly authorized by all necessary corporate and, if required, by all necessary
shareholder action. This Agreement and each of the other Loan Documents have
been duly executed and delivered by each Loan Party party thereto and
constitutes, or when executed and delivered by such Loan Party will constitute,
a legal, valid and binding obligation of such Loan Party, enforceable against
each Loan Party in accordance with its terms, except as such enforceability may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(b) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 4.03. Governmental Approvals; No Conflicts. The Transactions
------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except for (i) such as have
been obtained or made and are in full force and effect and (ii) filings and
recordings in respect of the Liens created pursuant to the Security Documents,
(b) will not violate any Requirement of Law, (c) will not violate or result in a
default under any Contractual Obligation upon the Company and its Subsidiaries
or its or their respective assets, or give rise to a right thereunder to require
any payment to be made by any such Person, and (d) except for the Liens created
pursuant to the Security Documents, will not result in the creation or
imposition of any Lien on any asset of the Borrowers or any of their respective
Subsidiaries.
Credit Agreement
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SECTION 4.04. Financial Condition; No Material Adverse Change.
-----------------------------------------------
(a) Financial Condition. The Company has heretofore furnished to the
-------------------
Lenders its consolidated balance sheet and statements of income, stockholders'
equity and cash flows as of and for the fiscal years ended September 30, 2004
and September 30, 2005, in each case reported on by PricewaterhouseCoopers LLP.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its Subsidiaries as of such dates and for such periods in accordance with GAAP.
There are no liabilities of the Company or any of its Subsidiaries, fixed or
contingent, which are material in relation to the consolidated financial
condition of the Company that are not reflected in such financial statements or
in the notes thereto, other than liabilities arising in the ordinary course of
business since September 30, 2005.
(b) No Material Adverse Change. Since September 30, 2005, there has
--------------------------
not occurred any event, development or circumstance that has had or could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.05. Properties.
----------
(a) Property Generally. Each of the Company and its Subsidiaries has
------------------
good title to, or valid leasehold interests in, all its real and personal
property material to its business, subject only to Liens permitted by Section
7.02 and except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes. The Liens granted by the Security
Documents constitute valid perfected first priority Liens on the properties and
assets covered by the Security Documents, subject to no prior or equal Lien
except as permitted by Section 7.02.
(b) Intellectual Property. Each of the Company and its Subsidiaries
---------------------
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and
other intellectual property material to its business, and, to the Borrowers'
knowledge, the use thereof by the Company and its Subsidiaries does not infringe
upon the rights of any other Person except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 4.06. Litigation and Environmental Matters.
------------------------------------
(a) Actions, Suits and Proceedings. There are no actions, suits or
------------------------------
proceedings by or before any arbitrator or Governmental Authority now pending
against or, to the knowledge of the Borrowers, threatened against or affecting
the Company or any of its Subsidiaries that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or that involve this
Agreement or the Transactions.
(b) Environmental Matters. Except for the Disclosed Matters and except
---------------------
with respect to any other matters that,individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, neither the
Company nor any of its Subsidiaries
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----------------
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(i) has failed to comply with any Environmental Law or to obtain, maintain or
comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Disclosed Matters. Since the date of this Agreement, there has
-----------------
been no change in the status of the Disclosed Matters that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 4.07. Compliance with Laws and Contractual Obligations. Each
------------------------------------------------
of the Company and its Subsidiaries is in compliance with all Requirements of
Law applicable to it or its property or all Contractual Obligations binding upon
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 4.08. Investment and Holding Company Status. Neither the
-------------------------------------
Company nor its Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 4.09. Taxes. Each of the Company and its Subsidiaries has
-----
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Person has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 4.10. ERISA. No ERISA Event has occurred or is reasonably
-----
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. Except with respect to Clopay's underfunded
Plan, the present value of all accumulated benefit obligations under each Plan
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $5,000,000 the fair
market value of the assets of such Plan. The present value of all accumulated
benefit obligations of Clopay's underfunded Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts
exceed by more than $25,000,000 the fair market value of the assets of such
underfunded Plan.
SECTION 4.11. Disclosure. The Borrowers have disclosed to the Lenders
----------
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other information furnished by or on behalf of the Borrowers or any
Subsidiary to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement and the other Loan Documents or delivered
hereunder or thereunder (as modified or
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----------------
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supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, each Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 4.12. Use of Credit. Neither the 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, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
any extension of credit hereunder will be used to buy or carry any Margin Stock.
SECTION 4.13. Burdensome Agreements. Except as set forth on Schedule
---------------------
4.13, to the Borrowers' knowledge, neither the Company nor any of its
Subsidiaries is a party to or bound by, nor are any of the properties or assets
owned by the Company or any of its Subsidiaries used in the conduct of their
respective businesses affected by, any agreement, ordinance, resolution, decree,
bond, note, indenture, order or judgment, including, without limitation, any of
the foregoing relating to any Environmental Liability, that could reasonably be
expected to result in a Material Adverse Effect.
SECTION 4.14. Labor Matters. Except as set forth on Schedule 4.14, (a)
-------------
no collective bargaining agreement or other labor contract will expire during
the term of this Agreement, (b) to the Borrowers' knowledge, no union or other
labor organization is seeking to organize, or to be recognized as bargaining
representative for, a bargaining unit of employees of the Company or any of its
Subsidiaries, (c) there is no pending or, to the Borrowers' knowledge,
threatened strike, work stoppage, material unfair labor practice claim or
charge, arbitration or other material labor dispute against or affecting the
Company or any of its Subsidiaries or their representative employees, in each
case the consequences of which could reasonably be expected to affect aggregate
business (regardless of division or entity) of the Company and its Subsidiaries
which business generated gross revenues in excess of $50,000,000 individually or
in the aggregate in the prior fiscal year, and (d) there are no actions, suits,
charges, demands, claims, counterclaims or proceedings pending or, to the best
of the Borrowers' knowledge, threatened against the Company or any of its
Subsidiaries, by or on behalf of, or with, its employees, other than any such
actions, suits charges, demands, claims, counterclaims or proceedings arising in
the ordinary course of business that could not reasonably be expected to result
in a Material Adverse Effect.
ARTICLE V
CONDITIONS
SECTION 5.01. Effective Date. The obligations of the Lenders to make
--------------
Loans and of the Issuing Lender to issue Letters of Credit hereunder shall not
become effective until the date on which the Administrative Agent shall have
received each of the following documents, each of which shall be satisfactory to
the Administrative Agent in form and substance (or such condition shall have
been waived in accordance with Section 10.02):
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----------------
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(a) Executed Counterparts. From each party hereto either (i) a
---------------------
counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page to this Agreement)
that such party has signed a counterpart of this Agreement.
(b) Opinion of Counsel to the Borrowers. A written opinion (addressed
-----------------------------------
to the Administrative Agent and the Lenders and dated the Effective Date)
of Kramer, Coleman, Wactlar & Lieberman, PC, counsel for the Borrowers,
substantially in the form of Exhibit C, and covering such other matters
relating to the Borrowers, this Agreement or the Transactions as the
Administrative Agent shall reasonably request (and the Borrowers hereby
instruct such counsel to deliver such opinion to the Lenders and the
Administrative Agent).
(c) Opinion of Special New York Counsel to JPMCB. A written opinion
--------------------------------------------
(addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Milbank, Tweed, Hadley & McCloy LLP, special New York
counsel to JPMCB, substantially in the form of Exhibit D (and JPMCB hereby
instructs such counsel to deliver such opinion to the Lenders).
(d) Corporate Documents. Such documents and certificates as the
-------------------
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of each Borrower and Clopay, the
authorization of the Transactions and any other legal matters relating to
the Borrowers, Clopay, this Agreement or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(e) Officer's Certificate. A certificate, dated the Effective Date and
---------------------
signed by a senior executive officer of the Company, confirming compliance
with the conditions set forth in clauses (a) and (b) of the first sentence
of Section 5.02.
(f) Pledge Agreement. The Pledge Agreement, duly executed and
----------------
delivered by the Company and the Administrative Agent, and the certificates
identified in Annex 3 thereto, in each case accompanied by undated stock
powers executed in blank, shall have been delivered to the Administrative
Agent. In addition, the Company shall have taken such other action as the
Administrative Agent shall have requested in order to perfect the security
interests created pursuant to the Pledge Agreement.
(g) Repayment of Amounts under the Existing Credit Agreement. Evidence
--------------------------------------------------------
that (i) the principal of and interest on outstanding loans, and all
accrued fees and all other amounts owing, under the Existing Credit
Agreement shall have been (or shall be simultaneously) paid in full, (ii)
all commitments to extend credit thereunder shall have been terminated,
(iii) all Guarantees in respect of, and all Liens securing, any such
Indebtedness and any other obligations thereunder shall have been released
(or arrangements for such release satisfactory to the Administrative Agent
shall have been made) and (iv) all letters of credit issued thereunder and
outstanding immediately prior to
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----------------
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the Effective Date shall have been terminated and continued pursuant to Section
2.04(l) hereunder.
(h) Other Documents. Such other documents as the Administrative Agent
---------------
or any Lender or special New York counsel to JPMCB may reasonably request.
The obligation of each Lender to make its initial extension of credit
hereunder is also subject to the payment by the Company of such fees and
expenses as the Company shall have agreed to pay to any Lender or the
Administrative Agent in connection herewith, including the reasonable fees and
expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to
JPMCB, in connection with the negotiation, preparation, execution and delivery
of this Agreement and the other Loan Documents (to the extent that written
statements for such fees and expenses have been delivered to the Company).
The Administrative Agent shall notify the Company and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Lender to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 3:00 p.m., New York City time, on
December 15, 2005.
SECTION 5.02. Each Credit Event. The obligation of each Lender to make
-----------------
any Loan, and of the Issuing Lender to issue, amend, renew or extend any Letter
of Credit, is additionally subject to the satisfaction of the following
conditions:
(a) the representations and warranties of the Borrowers set forth in
this Agreement, and of each Loan Party in each of the other Loan Documents
to which it is a party, shall be true and correct on and as of the date of
such Loan or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable; and
(b) at the time of and immediately after giving effect to such Loan or
the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Company on the date thereof as to the matters specified in clauses (a) and (b)
of the immediately preceding sentence.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed,
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----------------
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each Borrower (on behalf of itself and each of its Subsidiaries) covenants and
agrees with the Lenders that:
SECTION 6.01. Financial Statements and Other Information. The Company
------------------------------------------
will furnish to the Administrative Agent and each Lender:
(a) on the date that is the earlier of (i) the date on which the same
shall have been filed with the SEC and (ii) the date the same are required
to be filed with the SEC (without regard to any extension of the SEC's
filing requirements), the audited consolidated balance sheet and related
statements of income, stockholders' equity and cash flows of the Company
and its Subsidiaries as of the end of and for such year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
reported on by PricewaterhouseCoopers LLP or other independent public
accountants of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Company and its Subsidiaries on
a consolidated basis in accordance with GAAP;
(b) on the date that is the earlier of (i) the date on which the same
shall have been filed with the SEC and (ii) the date the same are required
to be filed with the SEC (without regard to any extension of the SEC's
filing requirements), the consolidated balance sheets and related
consolidated statements of income and cash flows of the Company and its
Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for (or, in the case of the balance sheet, as
of the end of) the corresponding period or periods of the previous fiscal
year, all certified by a Financial Officer of the Company as presenting
fairly in all material respects the financial condition and results of
operations of the Company and its Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) as soon as available and in any event within 30 days after the
date on which financial statements under clause (b) of this Section shall
have been filed with the SEC, the consolidating balance sheets and related
consolidating statements of income and cash flows of the Company and its
Subsidiaries as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for (or, in the case of the balance sheet, as
of the end of) the corresponding period or periods of the previous fiscal
year;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) of this Section, a certificate of a Financial Officer of
the Company (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 7.01, 7.06 and
7.11 and (iii) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial statements
referred to in Section 4.04 and,
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----------------
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if any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) of this Section, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default under Article VII including Section 7.11 (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(f) promptly upon receipt thereof, copies of all other reports
submitted to the Company by its independent certified public accountants in
connection with any annual or interim audit or review of the books of the
Company made by such accountants;
(g) annually, as soon as available, but in any event within 60 days
after the last day of each fiscal year of the Company, consolidated and
consolidating projections of the Company and its Subsidiaries for the
following five fiscal years of the Company;
(h) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Company or any of its Subsidiaries with the SEC, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or
with any national securities exchange, or distributed by the Company to its
shareholders generally, as the case may be;
(i) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Company or any of its Subsidiaries, or compliance with the terms of this
Agreement and the other Loan Documents, as the Administrative Agent or any
Lender may reasonably request.
Documents required to be delivered pursuant to Sections 6.01(a), (b) or (h) (to
the extent any such documents are included in materials otherwise filed with the
SEC) shall be deemed to have been delivered on the date (i) on which the Company
posts such documents or provides a link thereto on the Company's website or (ii)
on which such documents are posted on the Company's behalf on
Intralinks/IntraAgency or another relevant website, if any, to which each Lender
and the Administrative Agent have access (whether a commercial, third-party
website or whether sponsored by the Administrative Agent); provided that the
--------
Company shall notify the Administrative Agent (by telecopier or electronic mail)
of the posting of any such documents and provide the Administrative Agent with
electronic mail versions of such documents.
SECTION 6.02. Notices of Material Events. The Company will furnish to
--------------------------
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Company or any of its Affiliates, other than disputes in the ordinary
course of business or, whether or not in the ordinary of business, disputes
involving amounts exceeding $5,000,000 (excluding,
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----------------
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however, any actions relating to workers' compensation claims or negligence
claims relating to use of motor vehicles, if fully covered by insurance,
subject to deductibles);
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate
amount exceeding $5,000,000;
(d) the assertion of any environmental matter by any Person against,
or with respect to the activities of, the Company or any of its
Subsidiaries and any alleged violation of or non-compliance with any
Environmental Laws or any permits, licenses or authorizations, other than
any environmental matter or alleged violation that, alone or together with
any other such matters that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate
amount exceeding $5,000,000; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Company setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 6.03. Existence; Conduct of Business. The Company will, and
------------------------------
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
7.03.
SECTION 6.04. Payment of Obligations. The Company will, and will cause
----------------------
each of its Subsidiaries to, pay its obligations, including tax liabilities,
that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Company or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 6.05. Maintenance of Properties. The Company will, and will
-------------------------
cause each of its Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted.
SECTION 6.06. Maintenance of Insurance. The Company will, and will
------------------------
cause each of its Subsidiaries to, maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations; provided that the Company
may maintain self-insurance consistent with its past practices and policies.
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SECTION 6.07. Books and Records. The Company will, and will cause each
-----------------
of its Subsidiaries to, keep proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its business and activities.
SECTION 6.08. Inspection Rights. The Company will, and will cause each
-----------------
of its Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested; provided that such visit or discussions shall be at the expense of
--------
the Administrative Agent or any Lender, as applicable, unless a Default has
occurred and is continuing in which case the expenses of the Administrative
Agent or any Lender, as applicable, in connection therewith shall be paid or
reimbursed by the Company.
SECTION 6.09. Compliance with Laws and Contractual Obligations. The
------------------------------------------------
Company will, and will cause each of its Subsidiaries to, comply with all
Requirements of Law (including any Environmental Laws) applicable to it or its
property, and all Contractual Obligations binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 6.10. Use of Proceeds and Letters of Credit. The proceeds of
-------------------------------------
the Loans, and the Letters of Credit issued hereunder, will be used only for
general corporate purposes of the Company and its Subsidiaries. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations U and X.
SECTION 6.11. Collateral; Further Assurances.
------------------------------
(a) Collateral. The Company will take such action, and will cause each
----------
of its Subsidiaries to take such action, (i) within 30 days after the
acquisition of Capital Stock of any Person is acquired pursuant to a Permitted
Acquisition (subject to clause (a), (b) or (c) (as applicable) of the definition
of "Permitted Acquisition"), to pledge to the Administrative Agent all of the
issued and outstanding Capital Stock of such Person and (ii) at any time when
the Aggregate Revolving Credit Exposure exceeds $150,000,000 hereunder, within
30 days thereafter, to pledge to the Administrative Agent all of the issued and
outstanding shares of the Capital Stock of the Subsidiary Borrower, such pledge
to thereafter remain in effect regardless of whether the Aggregate Revolving
Credit Exposure thereafter is less than $150,000,000.
(b) Further Assurances. The Company will, and will cause each of its
------------------
Subsidiaries to, take such action from time to time as shall reasonably be
requested by the Administrative Agent to effectuate the purposes and objectives
of this Agreement including this Section, and the other Loan Documents,
including entering into any pledge agreements in favor of the Administrative
Agent, and delivering to the Administrative Agent pursuant to such pledge
agreement the certificates evidencing the relevant pledged Capital Stock,
accompanied by undated stock powers executed in blank, in order to effectuate
the purposes of clause (a) of this Section and to take such other action as the
Administrative Agent shall reasonably request.
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ARTICLE VII
NEGATIVE COVENANTS
------------------
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each Borrower (on behalf of itself and each of its
Subsidiaries) covenants and agrees with the Lenders that:
SECTION 7.01. Indebtedness; Guarantees.
------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, create, incur, assume or permit to exist any Indebtedness that would violate
the terms of this Agreement.
(b) The Company will not, and will not permit any of its Subsidiaries
to, assume, endorse, be or become liable for, or Guarantee, the obligations of
any Person (except by the endorsement of negotiable instruments for deposit or
collection in the ordinary course of business), except:
(i) Guarantees existing on the date hereof and set forth on Schedule
7.01;
(ii) Guarantees of the Company and its Subsidiaries not in excess of
an aggregate of $5,000,000 at any one time outstanding;
(iii) Guarantees by the Company or any Subsidiary of obligations of
the Subsidiaries; provided that the Company or any Subsidiary (other than
--------
any Foreign Subsidiary) may guarantee the Indebtedness of any Foreign
Subsidiary as long as the aggregate amount of Indebtedness which is so
guaranteed does not in the aggregate at any one time outstanding exceed
$20,000,000; and
(iv) Guarantees by a Subsidiary of obligations of either or both
Borrowers under leases for real or personal property, provided that such
--------
Subsidiary will utilize all or a portion of such property.
SECTION 7.02. Liens. The Company will not, and will not permit any of
-----
its Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(a) Liens created pursuant to the Loan Documents;
(b) Permitted Liens;
(c) any Lien on any property or asset of the Company or any of its
Subsidiaries existing on the date hereof and set forth on Schedule 7.02
(excluding, however,
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----------------
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following the making of the initial Loans hereunder as of the Effective
Date, Liens securing Indebtedness to be repaid with the proceeds of such
Loans, as indicated on Schedule 7.02); provided that (i) no such Lien shall
--------
extend to any other property or asset of the Company or any of its
Subsidiaries and (ii) any such Lien shall secure only those obligations
which it secures on the date hereof and extensions, renewals, replacements
and combinations thereof that do not increase the outstanding principal
amount thereof or commitment therefor, in each case, as in effect on the
date hereof;
(d) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary (including in
connection with a Permitted Acquisition); provided that (i) such Lien is
--------
not created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall
not apply to any other property or assets of the Company or any Subsidiary
and (iii) such Lien shall secure only those obligations which it secures on
the date of such acquisition or the date such Person becomes a Subsidiary,
as the case may be and extensions, renewals and replacements thereof that
do not increase the original outstanding principal amount thereof;
(e) Liens on fixed or capital assets acquired, constructed or improved
by the Company or any Subsidiary; provided that (i) such security interests
--------
secure Indebtedness permitted by Section 7.01, (ii) such security interests
and the Indebtedness secured thereby are incurred prior to or within six
months after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital
assets and (iv) such security interests shall not apply to any other
property or assets of the Company or any Subsidiary;
(f) Liens on specifically identified inventory and accounts receivable
covered by bankers' acceptances resulting from import letters of credit
which do not cover any assets other than those financed with such bankers'
acceptances;
(g) additional Liens on any property or asset of any of the Foreign
Subsidiaries that, together with the aggregate amount of Liens on the
property or assets of the Foreign Subsidiaries existing on the date hereof
and set forth on Schedule 7.02, do not exceed 18% of Consolidated Net Worth
at any time; and
(h) additional Liens on any property or asset of any Subsidiary (other
than any Foreign Subsidiary) in an aggregate amount not exceeding
$15,000,000.
SECTION 7.03. Mergers, Consolidations, Etc. (a) The Company will not,
----------------------------
and will not permit any of its Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), except that (i) any
Subsidiary may be merged or consolidated with or into any other such Subsidiary
and any Borrower (so long as a Borrower or a wholly-owned Subsidiary is the
surviving entity) and (ii) the Company or any of its Subsidiaries may make
Permitted
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Acquisitions.
SECTION 7.04. Dispositions. The Company will not, and will not permit
------------
any of its Subsidiaries to, convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, any part of its business or
property, whether now owned or hereafter acquired (including receivables and
leasehold interests), except:
(a) obsolete or worn-out property, tools or equipment no longer used
or useful in its business;
(b) any inventory or other property sold or disposed of in the
ordinary course of business and for fair consideration;
(c) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its property (upon voluntary liquidation
or otherwise) to the Company or any wholly owned Subsidiary of the Company;
(d) the Capital Stock of any Subsidiary of the Company may be sold,
transferred or otherwise disposed of to the Company or any wholly owned
Subsidiary of the Company; and
(e) the Company or any Subsidiary may sell, lease, transfer or
otherwise dispose of (i) its property and assets the fair market value of
which does not exceed in the aggregate in any fiscal year 5% of the
consolidated assets of the Company and its Subsidiaries as of the end of
the immediately preceding fiscal year of the Company for fair consideration
and (ii) the Capital Stock of any Subsidiary (x) the net revenues of which
do not exceed in the aggregate in any fiscal year 5% of the consolidated
net revenues of the Company and its Subsidiaries or (y) the assets of which
do not exceed in the aggregate in any fiscal year 5% of the consolidated
assets of the Company and its Subsidiaries, in each case, as of the end of
the immediately preceding fiscal year of the Company for fair
consideration; provided that in no event may the Company or any of its
Subsidiaries sell, lease, transfer or otherwise dispose of any Capital
Stock that is at any time pledged pursuant to the Security Documents.
SECTION 7.05. Lines of Business. The Company will not, and will not
-----------------
permit any of its Subsidiaries to, engage to any material extent in any business
other than businesses of the type conducted by the Company and its Subsidiaries
on the date hereof and businesses reasonably related thereto.
SECTION 7.06. Investments and Acquisitions. The Company will not, and
----------------------------
will not permit any of its Subsidiaries to, make or suffer to exist any
Investment in any Person or purchase or otherwise acquire (in one transaction or
a series of transactions) any assets of any other Person constituting a business
unit, except:
(a) Permitted Investments;
(b) Investments by the Company in the capital stock of its
Subsidiaries;
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(c) Guarantees constituting Indebtedness permitted by Section 7.01;
(d) Investments by either Borrower or any Subsidiary in entities
related to the business of either Borrower or any Subsidiary in an
aggregate amount not to exceed $5,000,000;
(e) Investments (other than Investments permitted under clauses (a)
and (b) of this Section) existing on the date hereof and set forth on
Schedule 7.06;
(f) additional Investments (other than Guarantees permitted by Section
7.01) by the Company in any Subsidiary or by any Subsidiary in any other
Subsidiary or in the Company; provided that the Company or any Subsidiary
(other than any Foreign Subsidiary) may make an Investment in any Foreign
Subsidiary as long as the aggregate amount of such Investments does not in
the aggregate at any one time outstanding exceed $50,000,000;
(g) the Company and its Subsidiaries may make Permitted Acquisitions;
(h) purchases of inventory and other property to be sold or used in
the ordinary course of business;
(j) Investments not exceeding in the aggregate $5,000,000.
SECTION 7.07. Restricted Payments. The Company will not, and will not
-------------------
permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except that (a) the Company may
declare and pay dividends with respect to its Capital Stock payable solely in
additional shares of its Capital Stock and (b) the Company may make Restricted
Payments so long as, at the time of such Restricted Payment and immediately
after giving effect thereto, no Default shall have occurred and be continuing;
provided that nothing herein shall be deemed to prohibit the payment of
dividends by any Subsidiary of the Company to the Company, any other Subsidiary
of the Company or, if applicable, any minority shareholder of such Subsidiary
(in accordance with the percentage of the Capital Stock of such Subsidiary owned
by such minority shareholder).
SECTION 7.08. Transactions with Affiliates. The Company will not, and
----------------------------
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except:
(a) transactions in the ordinary course of business at prices and on
terms and conditions not less favorable to the Company or such Subsidiary
than could be obtained on an arm's-length basis from a Person that is not
an Affiliate;
(b) transactions between or among the Company and its wholly-owned
Subsidiaries not involving any other Affiliate;
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(c) any Investments permitted by Section 7.06;
(d) any Restricted Payment permitted by Section 7.07; and
(e) any Affiliate who is a natural person may serve as an employee or
director of either Borrower and receive reasonable compensation for his
services in such capacity.
SECTION 7.09. Restrictive Agreements. The Company will not, and will
----------------------
not permit any of its Subsidiaries to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Company or any Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets,
or (b) the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Company or any other Subsidiary or to Guarantee Indebtedness of
the Company or any other Subsidiary; except:
(i) restrictions and conditions imposed by law or by this Agreement;
(ii) restrictions and conditions existing on the date hereof
identified on Schedule 7.09 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition);
(iii) customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided that such
restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder; and
(iv) (with respect to clause (a) above) (x) restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (y) customary provisions in leases
and other contracts restricting the assignment thereof.
SECTION 7.10. Swap Agreements. The Company will not, and will not
---------------
permit any of its Subsidiaries to, enter into any Swap Agreement, other than
Swap Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Company or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities.
SECTION 7.11. Financial Covenants.
-------------------
(a) Consolidated Leverage Ratio. The Company will not permit the
---------------------------
Consolidated Leverage Ratio as at the last day of any period of four consecutive
fiscal quarters of the Company to exceed 3.00 to 1.0.
(b) Consolidated Fixed Charges Ratio. The Company will not permit the
--------------------------------
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Company to be less than 5.00 to 1.0.
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(c) Consolidated Net Worth. The Company will not permit the
----------------------
Consolidated Net Worth at any time to be less than the sum of (i) $250,000,000
and (ii) 50% of consolidated net income of the Company and its Subsidiaries for
each fiscal quarter of the Company (beginning with the fiscal quarter ending
December 31, 2005) for which such consolidated net income is positive.
(d) Minimum Liquidity. At any time from and after December 31, 2009 so
-----------------
long as the Company's Convertible Securities are Out of the Money, the Company
will not permit the sum of (i) cash on hand and cash equivalents denominated in
Dollars and (ii) the aggregate unused amount of the Commitments to be less than
$180,000,000.
SECTION 7.12. Stock Issuance. The Company will not, and will not
--------------
permit any of its Subsidiaries to, issue any additional shares, or any right or
option to acquire any shares or any security convertible into any shares, of the
Capital Stock of any Subsidiary, except (a) in connection with dividends in
Capital Stock permitted by Section 7.07 and (b) to either Borrower or a
Subsidiary.
SECTION 7.13. Modifications of Certain Documents. The Borrowers will
----------------------------------
not consent to any modification, supplement or waiver of any of the provisions
of the charter, by-laws or other organizational documents of the Borrowers or
any of their respective Subsidiaries or any other agreement or instrument to
which the Company or any of its Subsidiaries is a party or is bound that could
reasonably be expected to have a Material Adverse Effect, in each case, without
the prior consent of the Administrative Agent (with the approval of the Required
Lenders).
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrowers shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrowers shall fail to pay any reimbursement obligation
in respect of any LC Disbursement or any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or under any other
Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five or more
Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrowers or any of the their respective Subsidiaries in
or in connection with this Agreement or any other Loan Document or any
amendment or modification hereof or thereof, or in any report,
certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement or any other Loan Document or
any
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amendment or modification hereof or thereof, shall prove to have
been false or misleading when made or deemed made in any material
respect;
(d) the Borrowers shall fail to observe or perform any covenant,
condition or agreement contained in Section 6.02, 6.03 (with respect
to the Borrowers' existence) or 6.09 or in Article VII or the Company
shall default in the performance of any of its obligations contained
in Section 4.01 or 4.02 of the Pledge Agreement;
(e) either Borrower or any other Loan Party shall fail to observe
or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in clause (a), (b) or (d) of
this Article) or any other Loan Document and such failure shall
continue unremedied for a period of 30 or more days after notice
thereof from the Administrative Agent (given at the request of any
Lender) to the Company;
(f) the Company or any of its Subsidiaries shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall
become due and payable, and such failure shall continue unremedied for
a period of five or more Business Days;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or
any trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
--------
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Company or any
Subsidiary having assets in excess of $10,000,000 or its debts, or of
a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any
such Subsidiary or for a substantial part of its assets, and, in any
such case, such proceeding or petition shall continue undismissed for
a period of 60 or more days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) the Company or any Subsidiary having assets in excess of
$10,000,000 shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Company or any such Subsidiary or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a
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----------------
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general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;
(j) the Company or any of its Subsidiaries shall become unable,
admit in writing its inability or fail generally to pay its debts as
they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against the
Company or any of its Subsidiaries or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Company or any of its Subsidiaries to enforce any
such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a
Material Adverse Effect;
(m) a Change in Control shall occur; or
(n) the Liens created by the Security Documents shall at any time
not constitute a valid and perfected Lien on the collateral intended
to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein)
in favor of the Administrative Agent, free and clear of all other
Liens (other than Liens permitted under Section 7.02 or under the
respective Security Documents), or, except for expiration in
accordance with its terms, any of the Security Documents shall for
whatever reason be terminated or cease to be in full force and effect,
or the enforceability thereof shall be contested by any Loan Party;
then, and in every such event (other than any event described in clause (h) or
(i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Company, take either or both of the following actions,
at the same or different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Borrower; and in case of any event
described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower.
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ARTICLE IX
THE ADMINISTRATIVE AGENT
------------------------
Each of the Lenders and the Issuing Lender hereby irrevocably appoints
the Administrative Agent as its agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.
The Person serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Documents that the Administrative Agent is required to
exercise in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances provided
in Section 10.02), and (c) except as expressly set forth herein and in the other
Loan Documents, the Administrative Agent shall not have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating to
the Company or any of its Subsidiaries that is communicated to or obtained by
the Person serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances provided in Section 10.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until written notice thereof is given
to the Administrative Agent by the Company or a Lender, and the Administrative
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein,
(iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article V or
elsewhere herein or therein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument,
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----------------
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document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person. The Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for a
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Lender and the Company.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Company, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Lender, appoint a successor Administrative Agent which
shall be a Lender with an office in New York, New York or an Affiliate of a
Lender. Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Company to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Company and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.
Notwithstanding anything herein to the contrary the Sole Bookrunner
and the Sole Lead Arranger and Co-Documentation Agents named on the cover page
of this Agreement shall
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not have any duties or liabilities under this Agreement, except in their
capacity, if any, as Lenders.
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.01. Notices.
-------
(a) Notices Generally. Except in the case of notices and other
-----------------
communications expressly permitted to be given by telephone (and subject to
paragraph (b) of this Section), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
(i) if to the Company, to it at Griffon Corporation, 100 Jericho
Quadrangle, Jericho, New York 11753, Attention of ____________
(Telecopy No. ___________; Telephone No. __________);
(ii) if to the Subsidiary Borrower, to it at Telephonics Corporation,
815 Broad Hollow Road, Farmingdale, New York 11735, Attention of
____________ (Telecopy No. ___________; Telephone No. __________);
(iii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A.,
1111 Fannin Street, 10th Floor, Houston, Texas 77002-6925 Attention:
Loan and Agency Services Group (Telecopy No. (713) _____ Telephone No.
(713)__________) and, if such notice or other communication relates to
borrowings of, or payments or prepayments of, or the duration of
Interest Periods for, Loans denominated in a Foreign Currency, also to
J.P.Morgan Europe Limited, ____________, London, England, Attention:
________ (Telecopy No. 44-207-_____; Telephone No. 44-207-____), in
each case with a copy to JPMorgan Chase Bank, N.A., _________________,
Attention of Loan and Agency Services (Telecopy No. (___) ________;
Telephone No. (___) ________);
(iv) if to the Issuing Lender, to it at __________, Attention of
___________ (Telecopy No. ______________; Telephone No. __________);
and
(v) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
(b) Electronic Communications. Notices and other communications to the
-------------------------
Lenders hereunder may be delivered or furnished by electronic communications
pursuant to procedures approved by the Administrative Agent; provided that the
--------
foregoing shall not apply to notices pursuant to Article II unless otherwise
agreed by the Administrative Agent and the applicable Lender. The Administrative
Agent or a Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
--------
limited to
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particular notices or communications.
(c) Change of Address, Etc. Any party hereto may change its address or
----------------------
telecopy number for notices and other communications hereunder by notice to the
other parties hereto. All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments.
-------------------
(a) No Deemed Waivers; Remedies Cumulative. No failure or delay by the
--------------------------------------
Administrative Agent, the Issuing Lender or any Lender in exercising any right
or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Lender and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by a Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed as
a waiver of any Default, regardless of whether the Administrative Agent, any
Lender or the Issuing Lender may have had notice or knowledge of such Default at
the time.
(b) Amendments. Neither this Agreement nor any provision hereof may be
----------
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders or by the
Borrowers and the Administrative Agent with the consent of the Required Lenders;
provided that no such agreement shall:
- --------
(i) increase the Commitment of any Lender without the written consent
of such Lender;
(ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender adversely affected thereby;
(iii) postpone the scheduled date of payment of the principal amount
of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender adversely affected thereby;
(iv) change Section 2.16(b), (c) or (d) in a manner that would alter
the pro rata sharing of payments required thereby, without the written
consent of each Lender;
(v) change any of the provisions of this Section or the definition of
the term "Required Lenders" or any other provision hereof specifying the
number or percentage of
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Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent
of each Lender; or
(vi) release all or substantially all of the Guarantors from their
guarantee obligations under Article III or all or substantially all of the
collateral, in each case without the written consent of each Lender;
and provided further that no such agreement shall amend, modify or otherwise
-------- -------
affect the rights or duties of the Administrative Agent or the Issuing Lender
hereunder without the prior written consent of the Administrative Agent or the
Issuing Lender, as the case may be.
Except as otherwise provided in this Section with respect to this
Agreement, the Administrative Agent may, with the prior consent of the Required
Lenders (but not otherwise), consent to any modification, supplement or waiver
under any of the Security Documents, provided that, without the prior consent of
each Lender, the Administrative Agent shall not (except as provided herein or in
the Security Documents) release all or substantially all of the collateral or
otherwise terminate all or substantially all of the Liens under any Security
Document providing for collateral security, except that no such consent shall be
required, and the Administrative Agent is hereby authorized, to release any Lien
covering property (and to release any such guarantor) that is the subject of
either a disposition of property permitted hereunder or a disposition to which
the Required Lenders have consented.
SECTION 10.03. Expenses; Indemnity; Damage Waiver.
----------------------------------
(a) Costs and Expenses. The Borrowers shall pay (i) all reasonable
------------------
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Lender in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder, (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Lender or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Lender or any Lender, in connection with the enforcement or protection
of its rights in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect thereof
and (iv) and all reasonable costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated by any Security Document or any
other document referred to therein.
(b) Indemnification by the Borrowers. The Borrowers shall indemnify
--------------------------------
the Administrative Agent, the Issuing Lender and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each
----------
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Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any agreement or instrument contemplated hereby,
the performance by the parties hereto of their respective obligations hereunder
or the consummation of the Transactions or any other transactions contemplated
hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Lender to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Company or any of its Subsidiaries, or any
Environmental Liability related in any way to the Company or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
- --------
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) Reimbursement by Lenders. To the extent that the Borrowers fail to
------------------------
pay any amount required to be paid by it to the Administrative Agent or the
Issuing Lender under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to the Administrative Agent or the Issuing Lender, as the case may
be, such Lender's Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent or the Issuing Lender in its capacity
as such.
(d) Waiver of Consequential Damages, Etc. To the extent permitted by
------------------------------------
applicable law, neither Borrower shall assert, and each Borrower hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement
or any agreement or instrument contemplated hereby, the Transactions, any Loan
or Letter of Credit or the use of the proceeds thereof.
(e) Payments. All amounts due under this Section shall be payable
--------
promptly after written demand therefor.
SECTION 10.04. Successors and Assigns.
----------------------
(a) Assignments Generally. The provisions of this Agreement shall be
---------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Lender that issues any Letter of Credit), except that (i) neither Borrower may
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by a Borrower without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this
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Section. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Lender that issues any Letter of Credit), Participants (to the extent provided
in paragraph (c) of this Section) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Issuing
Lender and the Lenders) any legal or equitable right, remedy or claim under or
by reason of this Agreement.
(b) Assignments by Lenders.
----------------------
(i) Assignments Generally. Subject to the conditions set forth in
---------------------
paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:
(A) the Borrowers, provided that no consent of the Borrowers
shall be required for an assignment to a Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and
is continuing, any other assignee;
(B) the Administrative Agent; and
(C) the Issuing Lender.
(ii) Certain Conditions to Assignments. Assignments shall be subject
---------------------------------
to the following additional conditions:
(A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount
of the assigning Lender's Commitment or Loans, the amount of the
Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrowers
and the Administrative Agent otherwise consent, provided that no such
consent of the Borrowers shall be required if an Event of Default has
occurred and is continuing,
(B) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement,
(C) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500, and
(D) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire.
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(iii) Effectiveness of Assignments. Subject to acceptance and
----------------------------
recording thereof pursuant to paragraph (b)(iv) of this Section, from and after
the effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.
(iv) Maintenance of Register by the Administrative Agent. The
---------------------------------------------------
Administrative Agent, acting for this purpose as an agent of the Borrowers,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitment of, and principal amount of the Loans and LC
Disbursements owing to, each Lender pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be conclusive, and the
--------
Borrowers, the Administrative Agent, the Issuing Lender and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Borrowers, the Issuing Lender and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.
(v) Acceptance of Assignments by Administrative Agent. Upon its
-------------------------------------------------
receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee's completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective
for purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.
(c) Participations.
--------------
(i) Participations Generally. Any Lender may, without the consent of
------------------------
the Borrowers, the Administrative Agent or the Issuing Lender, sell
participations to one or more banks or other entities (a "Participant") in all
-----------
or a portion of such Lender's rights and obligations under this Agreement and
the other Loan Documents (including all or a portion of its Commitment and the
Loans owing to it); provided that (A) such Lender's obligations under this
--------
Agreement and the other Loan Documents shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (C) the Borrowers, the Administrative Agent, the Issuing
Lender and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. Any agreement or instrument pursuant to
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----------------
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which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and the other Loan Documents and
to approve any amendment, modification or waiver of any provision of this
Agreement or any other Loan Document; provided that such agreement or instrument
--------
may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in the first proviso to
Section 10.02(b) that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrowers agree that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
--------
that such Participant agrees to be subject to Section 2.16(c) as though it were
a Lender.
(ii) Limitations on Rights of Participants. A Participant shall not be
-------------------------------------
entitled to receive any greater payment under Section 2.13 or 2.15 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrowers' prior written consent. A
Participant that would be a Non-U.S. Lender if it were a Lender shall not be
entitled to the benefits of Section 2.15 unless the Borrowers are notified of
the participation sold to such Participant and such Participant agrees, for the
benefit of the Borrowers, to comply with Section 2.15(e) as though it were a
Lender.
(d) Certain Pledges. Any Lender may at any time pledge or assign a
---------------
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
SECTION 10.05. Survival. All covenants, agreements, representations
--------
and warranties made by the Borrowers herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Lender or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.13, 2.14, 2.15, 3.03 and 10.03 and
Article IX shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This
----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of
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----------------
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which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement and any separate letter agreements
with respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 5.01, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to
------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall have
---------------
occurred and be continuing, each Lender and each of its Affiliates 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 obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of either
Borrower against any of and all the obligations of either Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process.
- -------
(a) Governing Law. This Agreement shall be construed in accordance
-------------
with and governed by the law of the State of New York.
(b) Submission to Jurisdiction. Each Borrower hereby irrevocably and
--------------------------
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto 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. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Issuing Lender or any Lender may otherwise have to
bring any action
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----------------
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or proceeding relating to this Agreement against either Borrower or its
properties in the courts of any jurisdiction.
(c) Waiver of Venue. Each Borrower hereby irrevocably and
---------------
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Service of Process. Each party to this Agreement irrevocably
------------------
consents to service of process in the manner provided for notices in Section
10.01. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
--------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Judgment Currency. This is an international loan
-----------------
transaction in which the specification of Dollars or any Foreign Currency, as
the case may be (the "Specified Currency"), and payment in New York City or the
------------------
country of the Specified Currency, as the case may be (the "Specified Place"),
---------------
is of the essence, and the Specified Currency shall be the currency of account
in all events relating to Loans denominated in the Specified Currency. The
payment obligations of each Borrower under this Agreement shall not be
discharged or satisfied by an amount paid in another currency or in another
place, whether pursuant to a judgment or otherwise, to the extent that the
amount so paid on conversion to the Specified Currency and transfer to the
Specified Place under normal banking procedures does not yield the amount of the
Specified Currency at the Specified Place due hereunder. If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in the Specified Currency into another currency (the "Second Currency"), the
---------------
rate of exchange that shall be applied shall be the rate at which in accordance
with normal banking procedures the Administrative Agent could purchase the
Specified Currency with the Second Currency on the Business Day next preceding
the day on which such judgment is rendered. The obligation of each Borrower in
respect of any such sum due from it to the Administrative Agent or any Lender
hereunder or under any other Loan Document (in this Section called an "Entitled
--------
Person") shall, notwithstanding the rate of exchange actually applied in
- ------
rendering such judgment, be discharged only to the extent that on the Business
Day following receipt by such Entitled Person of any sum adjudged to be due
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hereunder in the Second Currency such Entitled Person may in accordance with
normal banking procedures purchase and transfer to the Specified Place the
Specified Currency with the amount of the Second Currency so adjudged to be due;
and each Borrower hereby, as a separate obligation and notwithstanding any such
judgment, agrees to indemnify such Entitled Person against, and to pay such
Entitled Person on demand, in the Specified Currency, the amount (if any) by
which the sum originally due to such Entitled Person in the Specified Currency
hereunder exceeds the amount of the Specified Currency so purchased and
transferred.
SECTION 10.12. Headings. Article and Section headings and the Table of
--------
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.13. Confidentiality. Each of the Administrative Agent, the
---------------
Issuing Lender and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder, (f)
subject to an agreement containing provisions substantially the same as those of
this Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to the Borrowers and their
obligations, (g) with the consent of the Borrowers or (h) to the extent such
Information (A) becomes publicly available other than as a result of a breach of
this Section or (iii) becomes available to the Administrative Agent, the Issuing
Lender or any Lender on a nonconfidential basis from a source other than a
Borrower. For the purposes of this Section, "Information" means all information
-----------
received from either Borrower relating to either Borrower or its business, other
than any such information that is available to the Administrative Agent, the
Issuing Lender or any Lender on a nonconfidential basis prior to disclosure by a
Borrower; provided that, in the case of information received from a Borrower
--------
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 10.14. USA PATRIOT Act. Each Lender hereby notifies the
---------------
Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)), such Lender may be required
to obtain, verify and record information that identifies the Borrowers, which
information includes the name and address of each Borrower and other information
that will allow such Lender to identify the Borrowers in accordance with said
Act.
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SECTION 10.15. Authorization of Company. The Subsidiary Borrower
------------------------
hereby authorizes the Company to give on behalf of such Borrower all notices,
consents and other communications that may be given by such Borrower under or in
connection with this Agreement or any other Loan Document, and to receive on
behalf of such Borrower all notices, consents and other communications that may
be given to such Borrower under or in connection with this Agreement or any
other Loan Document (in each case, irrespective of whether or not such notice,
consent or other communication is expressly provided elsewhere in this Agreement
to be given or received by the Company on behalf of such Borrower). Such
notices, consents and other communications may include Borrowing Requests,
notices as to continuations, conversions and prepayments of Loans, notices and
demands in connection with Events of Default, and notices and demands in
connection with the exercise by the Administrative Agent or any Lender of
remedies. Such notices, consents and other communications may be given by or to
the Company in its own name or in the name of the Subsidiary Borrower. The
authority given by the Subsidiary Borrower in this Section is coupled with an
interest and is irrevocable until all the Commitments of the Lenders have
expired or been terminated and all the obligations of such Borrower under this
Agreement and the other Loan Documents have been paid in full.
SECTION 10.16. Termination of Commitments under Existing Credit
------------------------------------------------
Agreement. Each of the Lenders that is also a party to the Existing Credit
- ---------
Agreement and the Borrowers hereby agree that, as of the Effective Date, all of
the commitments of the lenders party thereto to extend credit to the Borrowers
under the Existing Credit Agreement will be terminated automatically. This
Agreement constitutes notice thereof to such Lenders and pursuant hereto the
requirement contained in Section 2.2 of the Existing Credit Agreement that prior
notice of the termination of such commitments and (if applicable) prepayment of
the loans thereunder be given to the administrative agent thereunder is waived
by such Lenders.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
GRIFFON CORPORATION
By /s/Eric Edelstein
-------------------------------
Name: Eric Edelstein
Title: Executive Vice President
U.S. Federal Tax Identification No.: 11-1893410
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TELEPHONICS CORPORATION
By /s/Donald Pastor
--------------------------------
Name: Donald Pastor
Title: Executive Vice President
U.S. Federal Tax Identification No.: 52-0897556
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LENDERS
-------
JPMORGAN CHASE BANK, N.A.
individually and as Administrative Agent
By /s/Tara Lynne Moore
-------------------------------
Name: Tara Lynne Moore
Title: Vice President
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BANK OF AMERICA, N.A.
By /s/Steven J. Melicharik
---------------------------
Name: Steven J. Melicharik
Title: SVP/CPO
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HSBC BANK USA, NATIONAL ASSOCIATION
By /s/Christopher J. Mendelsohn
--------------------------------
Name: Christopher J. Mendelsohn
Title: First Vice President
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U.S. BANK NATIONAL ASSOCIATION
By /s/Patrick H. McGraw
-----------------------------
Name: Patrick H. McGraw
Title: Assistant Vice President
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MANUFACTURERS AND TRADERS TRUST COMPANY
By /s/Robert T. Stratford, Jr.
---------------------------------
Name: Robert T. Stratford, Jr.
Title: Vice President
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NORTH FORK BANK
By Enrico Panno
----------------------------
Name: Enrico Panno
Title: Vice President
Credit Agreement
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EXHIBIT 10.2
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of December 15, 2005, between GRIFFON
CORPORATION, a corporation duly organized and validly existing under the laws of
Delaware (the "Company"), and JPMORGAN CHASE BANK, N.A., as administrative agent
for the parties defined as "Lenders" under the Credit Agreement referred to
below (in such capacity, together with its successors in such capacity, the
"Administrative Agent").
The Company and Telephonics Corporation, a corporation organized and
validly existing under the laws of Delaware (the "Subsidiary Borrower" and,
together with the Company, the "Borrowers"), such Lenders and the Administrative
Agent are parties to a Credit Agreement dated as of December 15, 2005 (as
modified and supplemented and in effect from time to time, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit (by means of loans and letters of credit) to be made by
such Lenders to the Borrowers.
To induce such Lenders to enter into the Credit Agreement and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company has agreed
to grant a security interest in the Collateral (as hereinafter defined) as
security for the Secured Obligations (as so defined).
Accordingly, the parties hereto agree as follows:
Section 1. Definitions, Etc.
----------------
1.01 Terms Generally. Terms used herein and not otherwise defined
---------------
herein are used herein as defined in the Credit Agreement.
1.02 Certain Uniform Commercial Code Terms. As used herein, the term
-------------------------------------
"Proceeds" has the meaning set forth in Article 9 of the NYUCC.
1.03 Additional Definitions. In addition, as used herein:
----------------------
"Collateral" has the meaning assigned to such term in Section 3.
----------
"Initial Pledged Shares" means the Shares of the Issuer beneficially
----------------------
owned by the Company on the date hereof and identified in Annex 1.
"Issuer" means Clopay Corporation, a Delaware corporation.
------
"NYUCC" means the Uniform Commercial Code as in effect from time to
-----
time in the State of New York.
Pledge Agreement
----------------
-2-
"Pledged Shares" means, collectively, (i) the Initial Pledged Shares
--------------
and (ii) all other Shares of the Issuer now or hereafter owned by the
Company, together in each case with (a) all certificates representing the
same, (b) all shares, securities, moneys or other property representing a
dividend on or a distribution or return of capital on or in respect of the
Pledged Shares, or resulting from a split-up, revision, reclassification or
other like change of the Pledged Shares or otherwise received in exchange
therefor, and any warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Shares, and (c) without prejudice to
any provision of any of the Loan Documents prohibiting any merger or
consolidation by the Company, all Shares of any successor entity of any
such merger or consolidation.
"Secured Creditors" means, collectively, the Lenders and the
-----------------
Administrative Agent, and, in each case, their respective successors and
assigns.
"Secured Obligations" means, collectively, (a) the obligations of the
-------------------
Company under the Loan Documents to pay the principal of and interest on
the Loans and all fees, indemnification payments and other amounts
whatsoever (including all reimbursement and other obligations in respect of
Letters of Credit), whether direct or indirect, absolute or contingent, now
or hereafter from time to time owing to the Secured Creditors or any of
them under the Loan Documents and (b) in the case of each of the foregoing,
including all interest thereon and expenses related thereto, including any
interest or expenses accruing or arising after the commencement of any case
with respect to the Borrowers under the United States Bankruptcy Code or
any other bankruptcy or insolvency law (whether or not such interest or
expenses are allowed or allowable as a claim in whole or in part in such
case).
"Shares" means the shares of Capital Stock of any class of the Issuer.
------
Section 2. Representations and Warranties. The Company represents and
------------------------------
warrants to the Lenders and the Administrative Agent that:
2.01 Title. The Company is the sole beneficial owner of the Collateral
-----
in which it purports to grant a security interest pursuant to Section 3 and no
Lien exists upon the Collateral (and no right or option to acquire the same
exists in favor of any other Person) other than the security interest created or
provided for herein, which security interest constitutes a valid first and prior
perfected Lien on the Collateral.
2.02 Pledged Shares. The Initial Pledged Shares constitute 100% of the
--------------
issued and outstanding Shares of the Issuer on the date hereof. Annex 3
correctly identifies, as at the date hereof, the respective class and par value
of such Shares and the respective number of such Shares (and registered owner
thereof) represented by each such certificate. The Initial Pledged Shares are,
and all other Pledged Shares in which the Company shall hereafter grant a
security interest pursuant to Section 3 will be, duly authorized, validly
existing, fully paid and non-assessable, and none of such Pledged Shares are or
will be subject to any contractual restriction, or any restriction under the
charter, by-laws or other organizational instrument of the
Pledge Agreement
----------------
-3-
Issuer, upon the transfer of such Pledged Shares (except for any such
restriction contained herein or in the Loan Documents).
Section 3. Collateral. As collateral security for the payment in full
----------
when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations, the Company hereby pledges and grants to the Administrative
Agent for the benefit of the Secured Creditors as hereinafter provided a
security interest in all of the Company's right, title and interest in, to and
under the following property, in each case whether now owned by the Company or
hereafter acquired and whether now existing or hereafter coming into existence
(all of the property described in this Section 3 being collectively referred to
herein as "Collateral"):
----------
(a) the Pledged Shares; and
(b) all Proceeds of any of the Collateral and, to the extent related
to any Collateral, all books, correspondence, credit files, records,
invoices and other papers (including all tapes, cards, computer runs and
other papers and documents in the possession or under the control of the
Company or any computer bureau or service company from time to time acting
for the Company).
Section 4. Further Assurances; Remedies. In furtherance of the grant
----------------------------
of the security interest pursuant to Section 3, the Company hereby agrees with
the Administrative Agent for the benefit of the Secured Creditors as follows:
4.01 Delivery and Other Perfection. The Company shall promptly from
-----------------------------
time to time give, execute, deliver, file, record, authorize or obtain all such
financing statements, continuation statements, notices, instruments, documents,
agreements or consents or other papers as may be necessary or desirable in the
judgment of the Administrative Agent to create, preserve, perfect, maintain the
perfection of or validate the security interest granted pursuant hereto or to
enable the Administrative Agent to exercise and enforce its rights hereunder
with respect to such security interest, and without limiting the foregoing,
shall:
(a) if any of the Pledged Shares constituting part of the Collateral
are received by the Company, forthwith (i) deliver to the Administrative
Agent the certificates or instruments representing or evidencing the same,
duly endorsed in blank or accompanied by such instruments of assignment and
transfer in such form and substance as the Administrative Agent may
reasonably request, all of which thereafter shall be held by the
Administrative Agent, pursuant to the terms of this Agreement, as part of
the Collateral and (ii) take such other action as the Administrative Agent
may reasonably deem necessary or appropriate to duly record or otherwise
perfect the security interest created hereunder in such Collateral;
(b) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement; and
Pledge Agreement
----------------
-4-
(c) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect and
make abstracts from its books and records pertaining to the Collateral, and
permit representatives of the Administrative Agent to be present at the
Company's place of business to receive copies of communications and
remittances relating to the Collateral, and forward copies of any notices
or communications received by the Company with respect to the Collateral,
all in such manner as the Administrative Agent may require.
4.02 Other Financing Statements or Control. Except as otherwise
-------------------------------------
permitted under Section 7.02 of the Credit Agreement, the Company shall not (a)
file or suffer to be on file, or authorize or permit to be filed or to be on
file, in any jurisdiction, any financing statement or like instrument with
respect to any of the Collateral in which the Administrative Agent is not named
as the sole secured party for the benefit of the Secured Creditors, or (b) cause
or permit any Person other than the Administrative Agent to have "control" (as
defined in Section 9-106 of the NYUCC) over any part of the Collateral.
4.03 Preservation of Rights. The Administrative Agent shall not be
----------------------
required to take steps necessary to preserve any rights against prior parties to
any of the Collateral.
4.04 Special Provisions Relating to Pledged Shares.
---------------------------------------------
(a) Percentage Pledged. The Company will cause the Pledged Shares to
------------------
constitute at all times 100% of the total number of Shares of the Issuer then
outstanding.
(b) Certain Rights of Company. So long as no Event of Default shall
-------------------------
have occurred and be continuing, the Company shall have the right to exercise
all voting, consensual and other powers of ownership pertaining to the Pledged
Shares for all purposes not inconsistent with the terms of this Agreement, the
Loan Documents or any other instrument or agreement referred to herein or
therein, provided that the Company agrees that it will not vote the Pledged
--------
Shares in any manner that is inconsistent with the terms of this Agreement, the
Loan Documents or any such other instrument or agreement; and the Administrative
Agent shall execute and deliver to the Company or cause to be executed and
delivered to the Company all such proxies, powers of attorney, dividend and
other orders, and all such instruments, without recourse, as the Company may
reasonably request for the purpose of enabling the Company to exercise the
rights and powers that it is entitled to exercise pursuant to this Section
4.04(b).
(c) Dividends, Etc. Pre-Default. Unless and until an Event of Default
---------------------------
shall have occurred and be continuing, the Company shall be entitled to receive
and retain any dividends, distributions or proceeds on the Pledged Shares.
(d) Dividends, Etc. Post-Default. If an Event of Default shall have
----------------------------
occurred and be continuing, whether or not the Secured Creditors or any of them
exercise any available right to declare any Secured Obligations due and payable
or seek or pursue any other relief or remedy available to them under applicable
law or under this Agreement, the Loan Documents or any other agreement relating
to such Secured Obligation, all dividends and distributions on the Pledged
Shares shall be paid directly to the Administrative Agent and retained by it as
part of the Collateral, subject to the terms of this Agreement, and, if the
Administrative Agent shall so
Pledge Agreement
----------------
-5-
request in writing, the Company agrees to execute and deliver to the
Administrative Agent appropriate additional dividend, distribution and other
orders and documents to that end, provided that if such Event of Default is
--------
cured or waived in writing, any such dividend or distribution theretofore paid
to the Administrative Agent shall, upon request of the Company (except to the
extent theretofore applied to the Secured Obligations), be returned by the
Administrative Agent to the Company.
4.05 Remedies.
--------
(a) Rights and Remedies Generally upon Default. If an Event of Default
------------------------------------------
shall have occurred and is continuing, the Administrative Agent shall have all
of the rights and remedies with respect to the Collateral of a secured party
under the NYUCC (whether or not the NYUCC is in effect in the jurisdiction where
the rights and remedies are asserted) and such additional rights and remedies to
which a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted, including the right, to
the fullest extent permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the Administrative
Agent were the sole and absolute owner thereof (and the Company agrees to take
all such action as may be appropriate to give effect to such right); and without
limiting the foregoing:
(i) the Administrative Agent in its discretion may, in its name or in
the name of the Company or otherwise, demand, sue for, collect or receive
any money or other property at any time payable or receivable on account of
or in exchange for any of the Collateral, but shall be under no obligation
to do so;
(ii) the Administrative Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and may
extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, any of the Collateral;
(iii) the Administrative Agent may require the Company to assemble the
Collateral at such place or places, reasonably convenient to the
Administrative Agent and the Company, as the Administrative Agent may
direct;
(iv) the Administrative Agent may apply any money or other property
therein to payment of the Secured Obligations;
(v) the Administrative Agent may require the Company to cause the
Pledged Shares to be transferred of record into the name of the
Administrative Agent or its nominee (and the Administrative Agent agrees
that if any of such Pledged Shares is transferred into its name or the name
of its nominee, the Administrative Agent will thereafter promptly give to
the Company copies of any notices and communications received by it with
respect to the Pledged Shares); and
(vi) the Administrative Agent may sell, lease, assign or otherwise
dispose of all or any part of the Collateral, at such place or places as
the Administrative Agent deems best, and for cash or for credit or for
future delivery (without thereby assuming
Pledge Agreement
----------------
-6-
any credit risk), at public or private sale, without demand of performance or
notice of intention to effect any such disposition or of the time or place
thereof (except such notice as is required by applicable statute and cannot be
waived), and the Administrative Agent or any other Secured Creditor or anyone
else may be the purchaser, lessee, assignee or recipient of any or all of the
Collateral so disposed of at any public sale (or, to the extent permitted by
law, at any private sale) and thereafter hold the same absolutely, free from any
claim or right of whatsoever kind, including any right or equity of redemption
(statutory or otherwise), of the Company, any such demand, notice and right or
equity being hereby expressly waived and released. The Administrative Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned.
(b) Certain Securities Act Limitations. The Company recognizes that,
----------------------------------
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and applicable state securities laws, the Administrative Agent may be
compelled, with respect to any sale of all or any part of the Collateral, to
limit purchasers to those who will agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Company acknowledges that any such private
sales may be at prices and on terms less favorable to the Administrative Agent
than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Administrative Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the Issuer to register it for public sale.
(c) Notice. The Company agrees that to the extent the Administrative
------
Agent is required by applicable law to give reasonable prior notice of any sale
or other disposition of any Collateral, ten Business Days' notice shall be
deemed to constitute reasonable prior notice.
4.06 Deficiency. If the proceeds of sale, collection or other
----------
realization of or upon the Collateral pursuant to Section 4.05 are insufficient
to cover the costs and expenses of such realization and the payment in full of
the Secured Obligations, the Company shall remain liable for any deficiency.
4.07 Locations; Names, Etc. Without at least 30 days' prior written
---------------------
notice to the Administrative Agent, the Company shall not agree to or authorize
any modification of the terms of any item of Collateral that would result in a
change thereof from one Uniform Commercial Code category to another such
category (such as from "investment property" to a "general intangible" (as such
terms are defined in the NYUCC)), if the effect thereof would be to result in a
loss of perfection of, or diminution of priority for, the security interests
created hereunder in such item of Collateral, or the loss of control (within the
meaning of Section 9-106 of the NYUCC) over such item of Collateral.
4.08 Private Sale. The Secured Creditors shall incur no liability as a
------------
result of the sale of the Collateral, or any part thereof, at any private sale
pursuant to Section 4.05 conducted in a commercially reasonable manner. The
Company hereby waives any claims
Pledge Agreement
----------------
-7-
against the Secured Creditors arising by reason of the fact that the price at
which the Collateral may have been sold at such a private sale was less than the
price that might have been obtained at a public sale or was less than the
aggregate amount of the Secured Obligations, even if the Administrative Agent
accepts the first offer received and does not offer the Collateral to more than
one offeree.
4.09 Application of Proceeds. Except as otherwise herein expressly
-----------------------
provided and except as provided below in this Section 4.09, the Proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto shall be applied by the Administrative Agent:
First, to the payment of the costs and expenses of such collection,
-----
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Administrative Agent and the fees and expenses of its
agents and counsel, and all expenses incurred and advances made by the
Administrative Agent in connection therewith;
Next, to the payment in full of the Secured Obligations, in each case
----
equally and ratably in accordance with the respective amounts thereof then
due and owing or as the Lenders holding the same may otherwise agree; and
Finally, to the payment to the Company, or its successors or assigns,
-------
or as a court of competent jurisdiction may direct, of any surplus then
remaining.
4.10 Attorney-in-Fact. Without limiting any rights or powers granted
----------------
by this Agreement to the Administrative Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the provisions
of this Section 4 and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Administrative Agent shall be entitled under this Section 4 to make collections
in respect of the Collateral, the Administrative Agent shall have the right and
power to receive, endorse and collect all checks made payable to the order of
the Company representing any dividend, payment or other distribution in respect
of the Collateral or any part thereof and to give full discharge for the same.
4.11 Perfection and Recordation. The Company authorizes the
--------------------------
Administrative Agent to file Uniform Commercial Code financing statements
describing the Collateral as set forth in Section 3 (provided that no such
--------
description shall be deemed to modify the description of Collateral set forth in
Section 3).
4.12 Termination. When all Secured Obligations shall have been paid in
-----------
full and the Commitments of the Lenders under the Credit Agreement and all LC
Exposure shall have expired or been terminated, this Agreement shall terminate,
and the Administrative Agent shall forthwith cause to be assigned, transferred
and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money received in
respect thereof, to or on the order of the Company. The Administrative Agent
shall also, at
Pledge Agreement
----------------
-7-
the expense of the Company, execute and deliver to the Company upon such
termination such Uniform Commercial Code termination statements and such other
documentation as shall be reasonably requested by the Company to effect the
termination and release of the Liens on the Collateral as required by this
Section 4.12.
4.13 Further Assurances. The Company agrees that, from time to time
------------------
upon the written request of the Administrative Agent, the Company will execute
and deliver such further documents and do such other acts and things as the
Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
Section 5. Miscellaneous.
-------------
5.01 Notices. All notices, requests, consents and demands hereunder
-------
shall be in writing and telecopied or delivered to the intended recipient at the
address specified in Section 10.01 of the Credit Agreement or, as to either
party, at such other address as shall be designated by such party in a notice to
the other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
5.02 No Waiver. No failure on the part of any Secured Creditor to
---------
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by any Secured Creditor of any right, power
or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are cumulative
and are not exclusive of any remedies provided by law.
5.03 Amendments, Etc. The terms of this Agreement may be waived,
---------------
altered or amended only by an instrument in writing duly executed by the Company
and the Administrative Agent (with the consent of the Lenders as specified in
Section 10.02 of the Credit Agreement). Any such amendment or waiver shall be
binding upon the Secured Creditors and the Company.
5.04 Expenses. The Company agrees to reimburse each of the Secured
--------
Creditors for all costs and expenses incurred by them (including the reasonable
fees and expenses of legal counsel) in connection with (a) any Default and any
enforcement or collection proceeding resulting therefrom, including all manner
of participation in or other involvement with (i) performance by the
Administrative Agent of any obligations of the Company in respect of the
Collateral that the Company has failed or refused to perform, (ii) bankruptcy,
insolvency, receivership, foreclosure, winding up or liquidation proceedings, or
any actual or attempted sale, or any exchange, enforcement, collection,
compromise or settlement in respect of any of the Collateral, and for the care
of the Collateral and defending or asserting rights and claims of the
Administrative Agent in respect thereof, by litigation or otherwise, including
expenses of insurance, (iii) judicial or regulatory proceedings and (iv)
workout, restructuring or other negotiations or proceedings (whether or not the
workout, restructuring or transaction contemplated thereby is consummated) and
(b) the enforcement of this Section 5.04, and all such
Pledge Agreement
----------------
-9-
costs and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant to Section 3.
5.05 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the respective successors and assigns of the Company and
the Secured Creditors (provided that the Company shall not assign or transfer
any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent).
5.06 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
5.07 Governing Law; Submission to Jurisdiction; Etc.
----------------------------------------------
(a) Governing Law. This Agreement shall be construed in accordance
-------------
with and governed by the law of the State of New York.
(b) Submission to Jurisdiction. The Company hereby irrevocably and
--------------------------
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto 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. Nothing in this Agreement shall affect any right that any
Secured Creditor may otherwise have to bring any action or proceeding relating
to this Agreement against the Company or its properties in the courts of any
jurisdiction.
(c) Waiver of Venue. The Company hereby irrevocably and
---------------
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section 5.07. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Service of Process. Each party to this Agreement irrevocably
------------------
consents to service of process in the manner provided for notices in Section
5.01. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
5.08 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
--------------------
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE
Pledge Agreement
----------------
-10-
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 5.08.
5.09 Captions. The captions and section headings appearing herein are
--------
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
5.10 Agents and Attorneys-in-Fact. The Administrative Agent may employ
----------------------------
agents and attorneys-in-fact in connection herewith and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith.
5.11 Severability. If any provision hereof is invalid and
------------
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Secured Creditors
in order to carry out the intentions of the parties hereto as nearly as may be
possible and (b) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
Pledge Agreement
----------------
-11-
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered as of the day and year first above
written.
GRIFFON CORPORATION
By /s/Eric Edelstein
-------------------------------
Name: Eric Edelstein
Title: Executive Vice President
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
By /s/Tara Lynne Moore
-------------------------------
Name: Tara Lynne Moore
Title: Vice President
Pledge Agreement
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ANNEX 1
PLEDGED SHARES
[See definition of "Initial Pledged Shares" in
Section 1.03 and Section 2.02]
Percentage
Stock of
Class of Certificate No. of Issued
Issuer Stock No. Shares Shares
- ------ -------- ----------- ------ -----------
Clopay Corporation Common 1 100 100%
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