-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KLLvTvbowU2W0TnojzWPFZvn4ooDdNOV2O/XKL+QNogiE5qmKnRSziyPJPyeTHE1 fCW9OMoPfX9gzsfkqAYvjw== 0000913849-97-000083.txt : 19971016 0000913849-97-000083.hdr.sgml : 19971016 ACCESSION NUMBER: 0000913849-97-000083 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971015 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BINKS SAMES CORP CENTRAL INDEX KEY: 0000012180 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 360808480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01416 FILM NUMBER: 97696086 BUSINESS ADDRESS: STREET 1: 9201 W BELMONT AVE CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 7086713000 MAIL ADDRESS: STREET 1: 9201 WEST BELMONT AVENUE CITY: FRANKLIN PARK STATE: IL ZIP: 60131 FORMER COMPANY: FORMER CONFORMED NAME: BINKS MANUFACTURING CO DATE OF NAME CHANGE: 19920703 10-Q 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------------------------- FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended August 31, 1997 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From _____ to _____ Commission file number 1-1416 BINKS SAMES CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 36-0808480 ------------------------------ ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 9201 WEST BELMONT AVENUE, FRANKLIN PARK, ILLINOIS 60131 (Address of principal executive offices) Registrant's telephone number, including area code 847-671-3000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report: Class Outstanding August 31, 1997 ------------------------------ ------------------------------ Common, par value $1.00 3,088,837 ================================================================================ PART I - FINANCIAL INFORMATION Summarized Financial Statements Company or group of companies for which report is filed: Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS August 31, 1997 (Unaudited) and November 30, 1996
Aug 31 Nov 30 1997 1996 ---- ---- ($000 omitted) ASSETS Current assets: Cash and cash equivalents $ 8,547 $ 16,200 Receivables, net 71,470 79,433 Inventories 77,884 84,737 Other current assets 12,472 9,644 -------- -------- Total current assets 170,373 190,014 Other noncurrent assets 14,675 12,247 Property, plant and equipment, at cost 63,452 65,450 Less accumulated depreciation 38,419 37,482 -------- -------- Net property, plant and equipment 25,033 27,968 TOTAL ASSETS $210,081 $230,229 ======== ========
-1- Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED BALANCE SHEETS August 31, 1997 (Unaudited) and November 30, 1996
Aug 31 Nov 30 1997 1996 ---- ---- ($000 omitted) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable, bank overdrafts and current maturities of long- term debt $ 12,308 $ 9,384 Accounts payable 41,109 52,987 Other current liabilities 18,067 31,188 -------- -------- Total current liabilities 71,484 93,559 Deferred compensation 9,217 9,564 Deferred income taxes 362 425 Long term debt, less current maturities 54,156 44,634 -------- -------- Total liabilities 135,219 148,182 -------- -------- Stockholders' equity: Capital stock, $1.00 par value. Authorized 12,000,000 shares; issued 3,088,837 shares 3,089 3,089 Additional paid-in capital 24,504 24,504 Retained earnings 50,646 54,327 Foreign currency translation adjustment (3,377) 127 -------- -------- Total stockholders' equity 74,862 82,047 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $210,081 $230,229 ======== ========
-2- Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS Nine months ended August 31, 1997 and August 31, 1996 (Unaudited)
For the three For the nine months ended months ended ------------ ------------ Aug 31 Aug 31 Aug 31 Aug 31 1997 1996 1997 1996 ---- ---- ---- ---- ($000 omitted) ($000 omitted) Net sales $67,506 71,536 185,064 199,841 Cost of goods sold 47,823 47,707 130,952 134,077 ------- ------ ------- ------- Gross profit 19,683 23,829 54,112 65,764 Selling, general and administrative expenses 19,846 20,447 55,087 58,972 ------- ------ ------- ------- Operating income (loss) (163) 3,382 (975) 6,792 ------- ------ ------- ------- Other expense (income): Interest expense 1,304 963 3,567 3,102 Other expense (income), net 263 442 (255) 398 ------- ------ ------- ------- 1,567 1,405 3,312 3,500 Earnings (loss) before income taxes (1,730) 1,977 (4,287) 3,292 Income tax expense (benefit) (406) 1,170 (1,224) 1,659 ------- ------ ------- ------- Net earnings (loss) $(1,324) 807 (3,063) 1,633 ======= ====== ======= ======= Net earnings (loss) per share $ (.43) .26 (.99) .53 ====== ====== ======= ======= Cash dividends declared per share $ .10 .10 .20 .30 ====== ====== ======= =======
-3- Binks Sames Corporation and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended August 31, 1997 and August 31, 1996 (Unaudited)
1997 1996 ------ ------ ($000 omitted) Cash flows from operating activities Net earnings (loss) $ (3,063) 1,633 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 3,144 3,259 Deferred compensation, net of payments 200 472 Deferred income taxes (26) (78) Other, net (99) 428 Cash provided by (used in) changes in: Receivables 1,073 11,826 Inventories 4,789 (20,810) Other current assets (4,822) 56 Accounts payable (8,233) 5,165 Accrued expenses (9,317) 493 Income taxes (1,883) 448 --------- -------- Net cash provided by (used in) operating activities (18,237) 2,892 -------- -------- Cash flows from investing activities: Purchase of property, plant and equipment (1,362) (2,537) Proceeds from sale of equipment 249 793 Other investments and assets 2 432 -------- -------- Net cash provided by (used in) investing activities (1,111) (1,312) -------- -------- Cash flows from financing activities: Proceeds from long-term borrowings 10,659 1,041 Dividends paid (618) (927) Net increase (decrease) in short-term borrowings 2,826 180 Principal payments on long-term debt (498) (920) ------- -------- Net cash provided by (used in) financing activities 12,369 (626) ------- -------- Effect of exchange rate changes on cash (674) (67) ------- -------- Net increase (decrease in cash and cash equivalents) (7,635) 887 Cash and cash equivalents at beginning of period 16,200 8,527 ------- -------- Cash and cash equivalents at end of period $ 8,547 9,414 ======= ========
-4- Binks Sames Corporation and Consolidated Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 1997 (Unaudited) and November 30, 1996 NOTE 1 The accompanying financial statements are unaudited, but in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position for the periods presented. Results of operations for any interim period are not necessarily indicative of results for any other period or for the full year. These interim financial statements should be read in conjunction with the financial statements and related notes contained in the Annual Report on Form 10-K for the year ended November 30, 1996. NOTE 2 On September 25, 1997 the Company entered into an agreement with Graco Inc. to settle a lawsuit initiated in May, 1983 wherein Graco Inc. asserted that the Company had "willfully" infringed a patent through the sale of certain pumps by the Company prior to expiration of the patent in June 1993. The settlement agreement called for a cash payment of $640 thousand by the Company to Graco Inc. which was made on September 26, 1997. The settlement is reflected in other expense in the Company's third quarter 1997 financial statements. The Company is the defendant in a lawsuit filed by former financial advisors seeking approximately $900 thousand under terms of a contract. Management believes that all required payments have been made and no further amounts have been provided for. The Company has certain other contingent liabilities resulting from litigation and claims incident to the ordinary course of business. Management believes that the probable resolution of such contingencies will not materially affect the financial position or results of operations of the Company. NOTE 3 In the third quarter of 1996, the Company sold its corporate jet. The pretax loss on this sale amounted to $194 thousand and is included in other expense in the Company's financial statements. The after tax loss on this sale was $152 thousand. NOTE 4 The Franklin Park plant was closed at the end of February 1997. The Company has entered into a contract to sell the Franklin Park facility. The Company anticipates that the sale of the Franklin Park facility and surplus machinery and equipment will be completed by the end of fiscal 1997. NOTE 5 On September 23, 1997 the Company entered into a $50 million long term credit agreement with The First National Bank of Chicago. The new financing agreement includes a $20 million five-year term loan and a $30 million five-year revolving credit line. The agreement includes competitive pricing and terms, and replaces existing credit facilities totaling $44 million. -5- NOTE 6 On September 23, 1997 the Company repurchased and retired 125,000 shares of its common stock at the price of $40.00 per share. The purchase was made from the John Francis Roche, Jr. Savings and Profit Sharing Fund of Binks Sames Corporation ("The Fund"), an employee benefit plan for U.S. employees. The Fund will use the proceeds to make distributions to former employees, many of whom were terminated due to the Franklin Park plant shutdown. The Fund also sold 122,400 shares at $38.07 in private transactions on September 23, 1997. The Fund also plans to sell 30,000 Company shares in the open market. -6- Binks Sames Corporation and Consolidated Subsidiaries MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company had net sales of $185.1 million for nine months fiscal 1997, a decrease of $14.7 million, or 7.4%, from the $199.8 million reported for nine months fiscal 1996. In third quarter fiscal 1997, sales declined 5.6% to $67.5 million as compared to third quarter fiscal 1996 sales of $71.5 million. Operations in Europe continued to show strong sales growth, achieving a 12.3% increase over the nine month period of the prior year. If the prevailing currency exchange rates for nine months fiscal 1996 had remained in effect during nine months fiscal 1997, sales growth in European markets would have been 17.8%. For nine months fiscal 1997, sales in the Americas declined 23.1% compared to the prior year. This decline was largely attributable to the rationalization of the Company's product offerings which included the elimination of 60% of engineered products and 45% of standard spray equipment. These slow-moving and unprofitable products, which had contributed $16 million to annual 1996 sales, were dropped from the line by the end of first quarter fiscal 1997. Also contributing to lower sales in the Americas were logistical issues associated with restructuring North American manufacturing operations. The Company believes that sales in the Americas will improve as order backlogs related to start-up inefficiencies of new and expanded manufacturing facilities are eliminated. Order backlog at August 31, 1997 was over $64.8 million. For nine months fiscal 1997, sales in the Pacific Rim decreased by 7.5% compared to prior year. This decline was largely due to the rising U.S. Dollar against local currencies. Gross profit declined $11.1 million (17%) in nine months fiscal 1997 compared to nine months fiscal 1996. The gross profit margin was 29.2% for nine months fiscal 1997 as compared to 32.6% for the same period last year. This decline was largely due to the cost impact of diminished productivity at the Franklin Park plant following the announcement of its impending closure and start-up inefficiencies at the new Longmont, Colorado plant. The last day of production at the Franklin Park plant was February 20, 1997. For nine months fiscal 1997, selling, general, and administrative expenses decreased $3.3 million (5.7%) as compared to prior year reflecting efficiencies resulting from the fiscal 1996 restructuring. Interest expense increased by $465 thousand (15%) for the nine month period due to higher average borrowing levels. Other income and expense, which amounted to $255 thousand of income for the nine month period as compared to an expense of $398 thousand in the prior year, includes interest income, exchange gains and losses, gains on sales of fixed assets, and miscellaneous income. The majority of this income was in European and Pacific Rim markets. Included in third quarter fiscal 1997 other expense is a $640 thousand settlement of a lawsuit initiated against the Company in May of 1983. Included in third quarter fiscal 1996 other expense is a $194 thousand loss resulting from the sale of the Company's corporate jet. Income tax benefit was $1.2 million on pretax loss of $4.3 million in nine months fiscal 1997. This amounted to an effective tax rate of 28.5% as compared to 50.4% in nine months fiscal 1996. The tax rate is a function of the geographical mix of the Company's pretax profitability. -7- Binks Sames Corporation and Consolidated Subsidiaries MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) As a result of all of the factors above, the Company recorded a net loss of $3.1 million ($.99 per share) in nine months fiscal 1997, and a net loss of $1.3 million ($.43 per share) in third quarter fiscal 1997 as compared to net earnings of $1.6 million for nine months fiscal 1996 ($.53 per share) and net earnings of $807 thousand ($.26 per share) in third quarter fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES Revenue generated from operations is the primary source of the Company's liquidity. Short-term funds are also provided for current operations through bank loans and the issuance of bankers' acceptances. The Company maintains substantial lines of credit for general corporate purposes. The unused lines of credit were approximately $16 million at August 31, 1997. On September 23, 1997 the Company entered into a $50 million long-term credit agreement with The First National Bank of Chicago. The new financing agreement includes a $20 million five-year term loan and a $30 million five-year revolving credit line. The agreement includes competitive pricing and terms, and replaces existing credit facilities totaling $44 million. The Company's cash balances decreased $7.7 million during the nine months ended August 31, 1997, largely due to cash outflows of $17.5 million used to decrease accounts payable and accrued expenses. Decreases in accounts receivable and inventories partially offset the liability reductions. Cash used in operating activities for the nine month period amounted to $18.2 million. Total cash outlays of $4.6 million were made in nine months fiscal 1997 relating to accruals established at November 30, 1996 for restructuring. The Company used $1.1 million in investing activities, primarily for the purchase of computer equipment and machinery to improve efficiency in administrative activities and production. Financing activities provided $12.4 million to the Company during nine months fiscal 1997 which was primarily used to fund previously accrued restructuring costs in the Americas and to support increased sales activity in Europe. Changes in foreign currency translation rates resulted in a $674 thousand cash reduction as reported at August 31, 1997 compared to November 30, 1996. On June 26, 1997 the Board of Directors declared a dividend of $.10 per share to stockholders of record on July 18, 1997, payable on August 1, 1997. The Franklin Park plant was closed at the end of February 1997. The Company has entered into a contract to sell the Franklin Park facility. The Company has also taken steps to sell surplus machinery and equipment. -8- DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS Statements contained herein regarding the Company's expectations for fiscal year 1997 revenues and the sale of the Franklin Park plant and surplus machinery and equipment constitute "forward looking statements" within the meaning of 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations include, without limitation in the case of 1997 revenues, general conditions in the Company's markets, unfavorable changes in currency exchange rates, and product mix; and with respect to the sale of the Franklin Park plant and surplus machinery and equipment, a change in the market for such properties at the time of the actual sale. No assurance can be given that the forward looking statements will prove to be accurate. PART II - OTHER INFORMATION Items 1 through 5 Not applicable Item 6 (a) Exhibits. Exhibit 3 - Certificate of Amendment of the Restated Certificate of Incorporation. Exhibit 4.6 - Waiver and First Amendment dated September 23, 1997 to the Note Purchase Agreement dated as of November 30, 1993 among the Company and the parties named therein. Exhibit 4.7 - Credit Agreement dated as of September 23, 1997 among the Registrant, certain institutional lenders and The First National Bank of Chicago, as agent. Exhibit 27 - Financial Data Schedule. (b) None 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 thereunto duly authorized. The enclosed financial statements include all adjustments, including normal and recurring adjustments, which are necessary to a fair presentation of the results of operations for the periods presented. Binks Sames Corporation ----------------------- /s/ Jeffrey W. Lemajeur ----------------------- Jeffrey W. Lemajeur, Treasurer/ Chief Financial Officer /s/ Doran J. Unschuld --------------------- Doran J. Unschuld, President/ Chief Executive Officer Date October 15, 1997 -9- EX-3 2 EXHIBIT 3 BINKS MANUFACTURING COMPANY (a Delaware corporation) CERTIFICATE OF AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION BINKS MANUFACTURING COMPANY, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), pursuant to Section 242 of The General Corporation Law of the State of Delaware (the "Corporation Law"), DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation, at a meeting duly held, adopted resolutions proposing and declaring advisable the following amendments to the Restated Certificate of Incorporation of the Corporation: RESOLVED, that Article FIRST of the Certificate of Incorporation be amended to read in its entirety as follows: FIRST: The name of this Corporation is BINKS SAMES CORPORATION FURTHER RESOLVED, that the second paragraph of Article FOURTH of the Certificate of Incorporation be amended to read in its entirety as follows: In addition to any other vote otherwise required by law or this restated certificate of incorporation, (a) the merger or consolidation of the Corporation with, or the sale, lease or exchange of all or substantially all of the property and assets of the Corporation to, any person, firm, corporation or other entity, or (b) the issuance or creation of any shares of stock of any class (other than the issuance of shares by means of a stock dividend payable solely to the holders of the then outstanding shares) having voting power in excess of 25% of the total number of shares of stock of all classes having voting power then outstanding, excluding treasury shares, or (c) the amendment or repeal of any provisions of this second paragraph of Article FOURTH, shall be authorized, approved or become effective only upon receiving the favorable vote of not less than 75% of the total number of shares of stock of all classes having voting power of the Corporation then outstanding, voting together as a single class, at the annual or a special meeting of stockholders held for the purpose of acting thereon. Except as hereinabove provided, shares of capital stock of the Corporation may be issued by the Corporation from time to time in such amounts and proportions and for such consideration as may be fixed and determined from time to time by the Board of Directors and as shall be permitted by law. SECOND: That the foregoing amendments to the Restated Certificate of Incorporation of the Corporation were duly approved and adopted by the Stockholders of the Corporation on April 29, 1997, in accordance with the provisions of Section 242 of the Corporation Law. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed by Doran J. Unschuld, its President, and attested by Guy E. Snyder, its Secretary, the 9th day of May, 1997. BINKS MANUFACTURING COMPANY /s/ DORAN J. UNSCHULD ----------------------------------- Doran J. Unschuld President ATTEST: /s/ GUY E. SNYDER - ----------------------------------- Guy E. Snyder Secretary EX-4.6 3 EXHIBIT 4.6 BINKS SAMES CORPORATION WAIVER AND FIRST AMENDMENT TO THE NOTE PURCHASE AGREEMENT $15,000,000 7.14% SERIES A SENIOR NOTES DUE DECEMBER 6, 2008 September 23, 1997 The Equitable Life Assurance Society of the United States c/o Alliance Corporate Finance Group Incorporated 1345 Avenue of the Americas, 39th Floor New York, New York 10105 Ladies and Gentlemen: In response to the request of Binks Sames Corporation (the "Company"), The Equitable Life Assurance Society of the United States, the sole owner (the "Majority Holder") of $15,000,000 aggregate principal amount of the 7.14% Series A Senior Notes of the Company due December 6, 2008 (the "Notes") issued under that certain Note Purchase Agreement dated as of November 30, 1993 (the "Agreement"), pursuant to Section 15.2 of the Agreement, hereby: (i) waives any Default or Event of Default under Section 12.1(c) of the Agreement that may have occurred as the result of a violation of Section 10.1 or Section 10.2 during the period from the Closing Date up to but not including the date hereof; (ii) waives any Default resulting from the failure of the Company to comply with Section 10.11 of the Agreement, as calculated on August 31, 1997, and agrees that the first sentence of Section 10.11 of the Agreement shall be hereby amended by deleting the following language "(a) 1.30:1.00 from the Closing Date to November 30, 1995" and replacing it with the following language "(a) 1.40:1.00 from September 1, 1997 to February 28, 1998"; (iii) agrees, in order to permit the Company to enter into that certain Credit Agreement dated as of September 23, 1997, among the Company, the Institutions from Time to Time Parties Thereto as Lenders (the "Banks") and The First National Bank of Chicago as Agent ("Agent") (the "Credit Agreement"), (a) to waive Section 10.1(e) of the Agreement solely for the purpose of permitting: (1) Sames Electrostatic, Inc. to enter into a guaranty of indebtedness from time to time incurred under or pursuant to the Credit Agreement and a guaranty of the indebtedness evidenced by the Notes, in form and substance satisfactory to the Majority Holder (the "Guaranty of the Notes"); and (2) any domestic Subsidiary (as defined in the Credit Agreement) of the Company that is, at any time, a Material Subsidiary (as defined in the Credit Agreement) to enter into a guaranty of indebtedness from time to time incurred under or pursuant to the Credit Agreement, provided the obligations under such guaranty are governed by the terms of the Intercreditor Agreement; and (b) to waive the requirements of Section 9.5 of the Agreement solely for the purpose of permitting: (1) certain pledge agreements to be entered into by the Company wherein the Company shall pledge to the Agent 65% of the issued and outstanding capital stock of each of Sames, S.A., a corporation organized under the laws of France, and Binks Sames Limited, a corporation organized under the laws of the United Kingdom; and (2) the Company to execute one or more pledge agreements or share mortgages with respect to 65% of the shares of each Material Subsidiary (as defined in the Credit Agreement), provided the pledge agreements or share mortgages are governed by the terms of the Collateral Sharing Agreement; and (iv) waives any Default or Event of Default resulting from the failure of the Company to comply with Section 4.18(i) of the Agreement by virtue of the Company having provided certain retired employees with health insurance pursuant to Retirement Income Contracts, in the forms attached hereto as Exhibits B and C. The amendments and waivers set forth in clauses (i) through (iv) of the first paragraph of this Waiver and First Amendment shall become effective at such time as: (i) the Majority Holder shall have indicated its written consent to such amendments and waivers by executing and delivering a counterpart of this Waiver and First Amendment to the Company; (ii) the Agent, the Banks and the Company shall have executed and delivered a counterpart of a Collateral Sharing Agreement, dated the date hereof, in form and substance satisfactory to the Majority Holder; (iii) Sames Electrostatic, Inc. shall have executed and delivered the Guaranty of the Notes; (iv) the Agent, the Company and Sames Electrostatic, Inc. shall have executed and delivered a counterpart of an Intercreditor Agreement, dated the date hereof, in form and substance satisfactory to the Majority Holder; and (v) the Company shall have paid the Majority Holder a fee in the amount of $22,500, by wire transfer of immediately available funds to the Majority Holder's account specified for receipt of payments in respect of the Notes pursuant to the Agreement. 2 The Company agrees to pay the statement for reasonable fees and disbursements of the Majority Holder's special counsel presented to the Company in connection with this Waiver and First Amendment. The Company hereby represents that Exhibit A hereto sets forth a correct and complete list and brief description of all Funded Debt of the Company (including the Notes) and its Subsidiaries and all consensual Liens securing such Debt as of the date hereof, after giving effect to the execution and delivery of this Waiver and First Amendment and the agreements and documents referred to herein as being executed and delivered in connection herewith. The Majority Holder hereby represents that (i) it is the sole owner of the Notes issued under the Agreement, (ii) the Equitable Variable Life Insurance Company ("Equitable Variable") is no longer in existence and (iii) Equitable Variable is not a necessary party to the effectiveness of this Waiver and First Amendment. This Waiver and First Amendment shall be deemed to be entered into simultaneously with, and shall be deemed for all purposes to be effective as of the date of, the Credit Agreement. The Agreement, as amended hereby, shall continue in full force and effect. All capitalized terms used herein, unless otherwise defined herein, shall have the same meanings assigned to them in the Agreement. Except as expressly amended hereby, the Agreement shall continue in full force and effect in accordance with the provisions thereof. Except as expressly provided herein, this Waiver and First Amendment shall not be deemed (a) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Agreement or (b) to prejudice any right or rights which the holders of the Notes may have in the future under or in connection with the Agreement or the Notes. This Waiver and First Amendment shall be construed in accordance with and shall be governed by the internal laws of the State of New York. This Waiver and First Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this Waiver and First Amendment to be executed by their duly authorized representatives, all as of the day and year first above written. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES By:___________________________________ Name:_________________________________ Title:________________________________ BINKS SAMES CORPORATION By:/s/ DORAN J. UNSCHULD -------------------------------------- Name: Doran J. Unschuld Title: Chief Executive Officer 4 This Agreement, as amended hereby, shall continue in full force and effect. All capitalized terms used herein, unless otherwise defined herein, shall have the same meanings assigned to them in the Agreement. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES By:/s/ JOEL SEREBRANSKY ---------------------------------------- Name: Joel Serebransky Title: Investment Officer EX-4.7 4 EXHIBIT 4.7 $50,000,000 CREDIT AGREEMENT Dated as of September 23, 1997 among BINKS SAMES CORPORATION, THE INSTITUTIONS FROM TIME TO TIME PARTIES HERETO AS LENDERS and THE FIRST NATIONAL BANK OF CHICAGO, as Agent TABLE OF CONTENTS
SECTION PAGE ARTICLE I: DEFINITIONS 1.1 Certain Defined Terms...............................................................................1 1.2 References.........................................................................................22 1.3 Supplemental Disclosure............................................................................22 ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES 2.1. Term Loans.........................................................................................22 2.2 Revolving Loans....................................................................................24 2.3 Swing Line Loans...................................................................................24 2.4 Rate Options for all Advances......................................................................26 2.5 Optional Payments; Mandatory Prepayments...........................................................26 2.6 Reduction of Commitments...........................................................................28 2.7 Method of Borrowing................................................................................28 2.8 Method of Selecting Types and Interest Periods for Advances........................................28 2.9 Minimum Amount of Each Advance.....................................................................28 2.10 Method of Selecting Types and Interest Periods for Conversion and Continuation of Advances.......................................................................29 2.11 Default Rate......................................................................................29 2.12 Method of Payment.................................................................................29 2.13 Notes.............................................................................................30 2.14 Telephonic Notices................................................................................30 2.15 Promise to Pay; Interest and Commitment Fees; Interest Payment Dates; Interest and Fee Basis; Taxes; Loan and Control Accounts................................30 2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate Revolving Loan Commitment Reductions...........................................................35 2.17 Lending Installations.............................................................................35 2.18 Non-Receipt of Funds by the Agent.................................................................36 2.19 Termination Date..................................................................................36 2.20 Replacement of Certain Lenders....................................................................36 ARTICLE III: THE LETTER OF CREDIT FACILITY AND OUTSTANDING ACCEPTANCES 3.1 Obligation to Issue Letters of Credit..............................................................37 3.2 Types and Amounts of Letters of Credit.............................................................37 3.3 Conditions with respect to Letters of Credit.......................................................38 3.4 Procedure for Issuance of Letters of Credit........................................................38 3.4-A The Outstanding Acceptances......................................................................38 3.5 Participation in Letters of Credit and Outstanding Acceptances.....................................39 3.6 Reimbursement Obligation...........................................................................40 3.7 Credit Support Fees................................................................................40 3.8 Issuing Bank Reporting Requirements................................................................41 i SECTION PAGE 3.9 Indemnification; Exoneration.......................................................................41 3.10 Cash Collateral...................................................................................42 ARTICLE IV: CHANGE IN CIRCUMSTANCES 4.1 Yield Protection...................................................................................43 4.2 Changes in Capital Adequacy Regulations............................................................44 4.3 Availability of Types of Advances..................................................................44 4.4 Funding Indemnification............................................................................44 4.5 Lender Statements; Survival of Indemnity...........................................................45 ARTICLE V: CONDITIONS PRECEDENT 5.1 Initial Advances and Letters of Credit.............................................................45 5.2 Each Advance and Letter of Credit..................................................................46 ARTICLE VI: REPRESENTATIONS AND WARRANTIES 6.1 Organization; Corporate Powers.....................................................................46 6.2 Authority..........................................................................................47 6.3 No Conflict; Governmental Consents.................................................................47 6.4 Financial Statements...............................................................................48 6.5 No Material Adverse Change.........................................................................48 6.6 Taxes..............................................................................................48 6.7 Litigation; Loss Contingencies and Violations......................................................49 6.8 Subsidiaries.......................................................................................49 6.9 ERISA..............................................................................................50 6.10 Accuracy of Information...........................................................................51 6.11 Securities Activities.............................................................................51 6.12 Material Agreements...............................................................................51 6.13 Compliance with Laws..............................................................................51 6.14 Assets and Properties.............................................................................51 6.15 Statutory Indebtedness Restrictions...............................................................52 6.16 Insurance.........................................................................................52 6.17 Labor Matters.....................................................................................52 6.18 Environmental Matters.............................................................................52 6.19 Solvency..........................................................................................53 ARTICLE VII : COVENANTS 7.1 Reporting..........................................................................................53 7.2 Affirmative Covenants..............................................................................58 7.3 Negative Covenants.................................................................................60 7.4 Financial Covenants................................................................................68 ARTICLE VIII: DEFAULTS ii SECTION PAGE 8.1 Defaults...........................................................................................71 ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES 9.1 Termination of Commitments; Acceleration...........................................................75 9.2 Defaulting Lender..................................................................................75 9.3 Amendments.........................................................................................77 9.4 Preservation of Rights.............................................................................78 ARTICLE X: GENERAL PROVISIONS 10.1 Survival of Representations.......................................................................78 10.2 Governmental Regulation...........................................................................78 10.3 Performance of Obligations........................................................................78 10.4 Headings..........................................................................................79 10.5 Entire Agreement..................................................................................79 10.6 Several Obligations; Benefits of this Agreement...................................................79 10.7 Expenses; Indemnification.........................................................................79 10.8 Numbers of Documents..............................................................................81 10.9 Accounting........................................................................................81 10.10 Severability of Provisions.......................................................................81 10.11 Nonliability of Lenders..........................................................................81 10.12 GOVERNING LAW....................................................................................81 10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL..........................................82 ARTICLE XI: THE AGENT 11.1 Appointment; Nature of Relationship...............................................................83 11.2 Powers............................................................................................83 11.3 General Immunity..................................................................................83 11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc......................................83 11.5 Action on Instructions of Lenders.................................................................84 11.6 Employment of Agents and Counsel..................................................................84 11.7 Reliance on Documents; Counsel....................................................................84 11.8 The Agent's Reimbursement and Indemnification.....................................................84 11.9 Rights as a Lender................................................................................85 11.10 Lender Credit Decision...........................................................................85 11.11 Successor Agent..................................................................................85 ARTICLE XII: SETOFF; RATABLE PAYMENTS 12.1 Setoff............................................................................................86 12.2 Ratable Payments..................................................................................86 12.3 Application of Payments...........................................................................86 12.4 Relations Among Lenders...........................................................................87 iii SECTION PAGE ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 13.1 Successors and Assigns............................................................................88 13.2 Participations....................................................................................88 13.3 Assignments.......................................................................................89 13.4 Confidentiality...................................................................................90 13.5 Dissemination of Information......................................................................91 13.6 Guaranty Terminations and Pledge Releases.........................................................91 ARTICLE XIV: NOTICES 14.1 Giving Notice.....................................................................................91 14.2 Change of Address.................................................................................91 ARTICLE XV: COUNTERPARTS
iv EXHIBITS AND SCHEDULES EXHIBITS EXHIBIT A -- Commitments (Definitions) EXHIBIT B-1 -- Form of Revolving Note (Definitions) EXHIBIT B-2 -- Form of Swing Line Note (Definitions) EXHIBIT B-3 -- Form of Term Note Definitions EXHIBIT C -- Form of Borrowing Notice (Section 2.8) EXHIBIT D -- Form of Request for Letter of Credit (Section 3.3) EXHIBIT E -- Form of Assignment and Acceptance Agreement (Sections 2.20 and 13.3) EXHIBIT F -- Form of Borrower's Counsel's Opinion (Section 5.1) EXHIBIT G -- List of Closing Documents (Section 5.1) EXHIBIT H -- Form of Officer's Certificate (Sections 5.2 and 7.1(A)(iii)) EXHIBIT I -- Form of Compliance Certificate (Sections 5.2 and 7.1(A)(iii)) DISCLOSURE -- Disclosure Letter (Definitions) LETTER v SCHEDULES Schedule 1.1.1 -- Permitted Existing Contingent Obligations (Definitions) Schedule 1.1.2 -- Permitted Existing Indebtedness (Definitions) Schedule 1.1.3 -- Permitted Existing Investments (Definitions) Schedule 1.1.4 -- Permitted Existing Liens (Definitions) Schedule 1.1.5 -- Outstanding Acceptances (Definitions) Schedule 2.15 -- Closing Fees (Section 2.15) Schedule 3.7 -- Calculation of Commissions on Outstanding Acceptances (Section 3.7) Schedule 6.3 -- Conflicts; Governmental Consents (Section 6.3) Schedule 6.7 -- Litigation; Loss Contingencies (Section 6.7) Schedule 6.8 -- Subsidiaries (Section 6.8) Schedule 6.9 -- ERISA (Section 6.9) Schedule 6.18 -- Environmental Matters (Section 6.18) vi CREDIT AGREEMENT This Credit Agreement dated as of September 23, 1997 is entered into among Binks Sames Corporation, a Delaware corporation, the institutions from time to time parties hereto as Lenders, whether by execution of this Agreement or an Assignment Agreement pursuant to Section 13.3, and The First National Bank of Chicago, in its capacity as contractual representative for itself and the other Lenders. The parties hereto agree as follows: ARTICLE I: DEFINITIONS 1.1 Certain Defined Terms. In addition to the terms defined above, the following terms used in this Agreement shall have the following meanings, applicable both to the singular and the plural forms of the terms defined. As used in this Agreement: "ACQUISITION" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage of voting power) of the outstanding equity interests of another Person. "ADVANCE" means a borrowing hereunder consisting of the aggregate amount of the several Loans made by the Lenders to the Borrower of the same Type and, in the case of Eurodollar Rate Advances, for the same Interest Period. "AFFECTED LENDER" is defined in Section 2.20 hereof. "ACCEPTANCE OBLIGATIONS" means, as at any date of determinations thereof, all liabilities of the Borrower as at such date with respect to the Outstanding Acceptances, including the Borrower's obligation to pay the outstanding face amount of each Outstanding Acceptance on its Maturity Date. "AFFILIATE" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person is the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of greater than ten percent (10%) or more of any class of voting securities (or other voting interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of Capital Stock, by contract or otherwise. "AGENT" means First Chicago in its capacity as contractual representative for itself and the Lenders pursuant to Article XI hereof and any successor Agent appointed pursuant to Article XI hereof. "AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the Revolving Loan Commitments of all the Lenders, as reduced from time to time pursuant to the terms hereof. The initial Aggregate Revolving Loan Commitment is Thirty Million and 00/100 Dollars ($30,000,000.00). "AGGREGATE TERM LOAN COMMITMENT" means the aggregate of the Term Loan Commitments of all the Lenders. The Aggregate Term Loan Commitment is Twenty Million and 00/100 Dollars ($20,000,000.00). "AGREEMENT" means this Credit Agreement, as it may be amended, restated or otherwise modified and in effect from time to time. "AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting principles as in effect as of the date of this Agreement, applied in a manner consistent with that used in preparing the financial statements referred to in Section 6.4(B)(1) hereof, provided, however, that with respect to the calculation of financial ratios and other financial tests required by this Agreement, "Agreement Accounting Principles" means generally accepted accounting principles as in effect as of the date of this Agreement, applied in a manner consistent with that used in preparing the financial statements referred to in Section 6.4(A) hereof; provided, further, however, all pro forma financial statements reflecting Acquisitions shall be prepared in accordance with the requirements established by the Commission for acquisition accounting for reporting acquisitions by public companies (whether or not such Acquisitions are required to be publicly reported). "ALTERNATE BASE RATE" means, for any day, a fluctuating rate of interest per annum equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum of (a) the Federal Funds Effective Rate for such day and (b) one-half of one percent (0.5%) per annum. "APPLICABLE COMMITMENT FEE PERCENTAGE" means, as at any date of determination, the rate per annum then applicable in the determination of the amount payable under Section 2.15(C)(i) hereof determined in accordance with the provisions of Section 2.15(D)(ii) hereof. "APPLICABLE EURODOLLAR MARGIN" means, as at any date of determination, the rate per annum then applicable to Eurodollar Rate Loans determined in accordance with the provisions of Section 2.15(D)(ii) hereof. 2 "APPLICABLE L/C FEE PERCENTAGE" means, as at any date of determination, a rate per annum equal to the Applicable Eurodollar Margin in effect on such date. "ARRANGER"means First Chicago Capital Markets, Inc., in its capacity as the arranger for the loan transaction evidenced by this Agreement. "ASSIGNMENT AGREEMENT" shall mean an assignment and acceptance agreement entered into in connection with an assignment pursuant to Section 13.3 hereof in substantially the form of Exhibit E. "ASSET SALE" means, with respect to any Person, the sale, lease, conveyance, disposition or other transfer by such Person of any of its assets (including by way of a sale-leaseback transaction, and including the sale or other transfer of any of the Equity Interests of any Subsidiary of such Person) and expressly excluding the sale of (i) the Borrower's Franklin Park, Illinois facility and (ii) Binks de Mexico, S.A. de C.V.'s Mexico City facility. "AUTHORIZED OFFICER" means any of the President or Chief Financial Officer of the Borrower, acting singly. "BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or any other member of the Controlled Group is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA. "BORROWER" means Binks Sames Corporation, a Delaware corporation, together with its successors and assigns, including a debtor-in-possession on behalf of the Borrower. "BORROWING DATE" means a date on which an Advance or Swing Line Loan is made hereunder. "BORROWING NOTICE" is defined in Section 2.8 hereof. "BUSINESS DAY" means (i) with respect to any borrowing, payment or rate selection of Loans bearing interest at the Eurodollar Rate, a day (other than a Saturday or Sunday) on which banks are open for business in Chicago, Illinois and New York, New York and on which dealings in Dollars are carried on in the London interbank market and (ii) for all other purposes a day (other than a Saturday or Sunday) on which banks are open for business in Chicago, Illinois and New York, New York. "CAPITAL EXPENDITURES" means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including Capitalized Leases and Permitted Purchase Money Indebtedness) by the Borrower and its Subsidiaries during that period that, in conformity with Agreement Accounting Principles, are required to be included in or reflected by 3 the property, plant, equipment or similar fixed asset accounts reflected in the consolidated balance sheet of the Borrower and its Subsidiaries. "CAPITAL STOCK" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) any other 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. "CAPITALIZED LEASE" of a Person means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "CASH EQUIVALENTS" means (i) marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government; (ii) domestic and Eurodollar certificates of deposit and time deposits, bankers' acceptances and floating rate certificates of deposit issued by any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies (fully protected against currency fluctuations for any such deposits with a term of more than ninety (90) days); (iii) shares of money market, mutual or similar funds having assets in excess of $100,000,000 and the investments of which are limited to investment grade securities (i.e., securities rated at least Baa by Moody's Investors Service, Inc. or at least BBB by Standard & Poor's Corporation); and (iv) commercial paper of United States and foreign banks and bank holding companies and their subsidiaries and United States and foreign finance, commercial industrial or utility companies which, at the time of acquisition, are rated A-1 (or better) by Standard & Poor's Corporation or P-1 (or better) by Moody's Investors Services, Inc.; provided that the maturities of such Cash Equivalents shall not exceed 365 days. "CHANGE" is defined in Section 4.2 hereof. "CHANGE OF CONTROL" means an event or series of events by which: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% 4 or more of the combined voting power of the Borrower's Capital Stock ordinarily having the right to vote at an election of directors; or (b) during any period of twelve (12) consecutive calendar months, individuals: (i) who were directors of the Borrower on the first day of such period, or (ii) whose election or nomination for election to the board of directors of the Borrower was recommended or approved by at least a majority of the directors then still in office who were directors of the Borrower on the first day of such period, or whose election or nomination for election was so approved, shall cease to constitute a majority of the board of directors of the Borrower; or (c) the Borrower consolidates with or merges into another corporation or conveys, transfers or leases all or substantially all of its property to any Person, or any corporation consolidates with or merges into the Borrower, in either event pursuant to a transaction in which the outstanding Capital Stock of the Borrower is reclassified or changed into or exchanged for cash, securities or other property. "CLOSING DATE" means the date on which this Credit Agreement is executed by the parties hereto. "CODE" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "COLLATERAL" means any property owned by the Borrower and pledged by the Borrower to the Agent pursuant to the Pledge Agreements to secure payment and performance of the Obligations. "COLLATERAL SHARING AGREEMENT" means that certain Collateral Sharing Agreement dated of even date herewith among the Agent, the Lenders and the holders of the Senior Notes, as the same may from time to time be amended, modified, supplemented and or restated. "COMMISSION" means the Securities and Exchange Commission and any Person succeeding to the functions thereof. "COMMITMENT" means, for each Lender, collectively, such Lender's Revolving Loan Commitment and Term Loan Commitment. "CONSOLIDATED TANGIBLE ASSETS" means the total assets of the Borrower and its Subsidiaries on a consolidated basis, but excluding therefrom all items that are treated as intangibles under Agreement Accounting Principles. "CONSOLIDATED TANGIBLE NET WORTH" means, at a particular date, all amounts which would be included under shareholders' equity for the Borrower and its consolidated Subsidiaries 5 determined in accordance with Agreement Accounting Principles, excluding all items properly classified as intangibles in accordance with Agreement Accounting Principles and calculated without giving effect to any foreign currency translation adjustments. "CONTAMINANT" means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos, polychlorinated biphenyls ("PCBS"), or any constituent of any such substance or waste, and includes but is not limited to these terms as defined in Environmental, Health or Safety Requirements of Law. "CONTINGENT OBLIGATION", as applied to any Person, means any Contractual Obligation, contingent or otherwise, of that Person with respect to any Indebtedness of another or other obligation or liability of another, including, without limitation, any such Indebtedness, obligation or liability of another directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable, including Contractual Obligations (contingent or otherwise) arising through any agreement to purchase, repurchase, or otherwise acquire such Indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make payment other than for value received. "CONTRACTUAL OBLIGATION", as applied to any Person, means any material provision of any equity or debt securities issued by that Person or any indenture, mortgage, deed of trust, security agreement, pledge agreement, guaranty, contract, undertaking, agreement or instrument, in any case in writing, to which that Person is a party or by which it or any of its properties is bound, or to which it or any of its properties is subject, with obligations in excess of $5,000,000. "CONTROLLED GROUP" means the group consisting of (i) any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Borrower; (ii) a partnership or other trade or business (whether or not incorporated) which is under common control (within the meaning of Section 414(c) of the Code) with the Borrower; and (iii) a member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as the Borrower, any corporation described in clause (i) above or any partnership or trade or business described in clause (ii) above. "CONTROLLED SUBSIDIARY" of any Person means a Subsidiary of such Person (i) 90% or more of the total Equity Interests or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more wholly-owned Subsidiaries of such Person and (ii) of which such Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies, whether through the ownership of voting securities, by agreement or otherwise. "CONVERSION/CONTINUATION NOTICE" is defined in Section 2.10(D) hereof. 6 "CORPORATE BASE RATE" means the corporate base rate of interest announced by First Chicago from time to time, changing when and as said corporate base rate changes. "CREDIT SUPPORT INTEREST" is defined in Section 3.5. "CREDIT SUPPORT OBLIGATIONS" means, at any time, the sum of (i) all L/C Obligations outstanding at such time and (ii) the aggregate face amount of all Outstanding Acceptances outstanding at such time. "CURE LOAN" is defined in Section 9.2(iii) hereof. "CUSTOMARY PERMITTED LIENS" means: (i) Liens (other than Environmental Liens and Liens in favor of the IRS or the PBGC) with respect to the payment of taxes, assessments or governmental charges in all cases which are not yet due or (if foreclosure, distraint, sale or other similar proceedings shall not have been commenced) which are being contested in good faith by appropriate proceedings properly instituted and diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with Agreement Accounting Principles; (ii) statutory Liens of landlords and Liens of suppliers, mechanics, carriers, materialmen, warehousemen or workmen and other similar Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings properly instituted and diligently conducted and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with Agreement Accounting Principles; (iii) Liens (other than Environmental Liens and Liens in favor of the IRS or the PBGC) incurred or deposits made in the ordinary course of business in connection with worker's compensation, unemployment insurance or other types of social security benefits or to secure the performance of bids, tenders, sales, contracts (other than for the repayment of borrowed money), surety, appeal and performance bonds; provided that (A) all such Liens do not in the aggregate materially detract from the value of the Borrower's or such Subsidiary's assets or property taken as a whole or materially impair the use thereof in the operation of the businesses taken as a whole, and (B) all Liens securing bonds to stay judgments or in connection with appeals do not secure at any time an aggregate amount exceeding $5,000,000; (iv) Liens arising with respect to zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar charges or encumbrances on the use of real property which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries; 7 (v) Liens of attachment or judgment with respect to judgments, writs or warrants of attachment, or similar process against the Borrower or any of its Subsidiaries which do not constitute a Default under Section 8.1(H) hereof; and (vi) any interest or title of the lessor in the property subject to any operating lease entered into by the Borrower or any of its Subsidiaries in the ordinary course of business. "DEFAULT" means an event described in Article VIII hereof. "DISCLOSURE LETTER" means that certain disclosure letter dated of even date herewith issued by the Borrower and addressed to the Agent and the Lenders, as the same may from time to time be amended, modified, supplemented or restated with the consent of the Required Lenders. "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the Revolving Loan Termination Date. "DOL" means the United States Department of Labor and any Person succeeding to the functions thereof. "DOLLAR" and "$" means dollars in the lawful currency of the United States. "EBITDA" means, for any period, on a consolidated basis for the Borrower and its Subsidiaries, the sum of the amounts for such period, without duplication, of (i) Net Income, plus (ii) Interest Expense, plus (iii) charges against income for foreign, federal, state and local taxes to the extent deducted in computing Net Income, plus (iv) depreciation expense to the extent deducted in computing Net Income, plus (v) amortization expense, including, without limitation, amortization of goodwill and other intangible assets to the extent deducted in computing Net Income, plus (vi) other non-cash charges classified as long-term deferrals in accordance with Agreement Accounting Principles to the extent deducted in computing Net Income, plus (vii) other extraordinary non-cash charges to the extent deducted in computing Net Income minus (viii) extraordinary non-cash gains to the extent included in computing Net Income. "ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all Requirements of Law derived from or relating to foreign, federal, state and local laws or regulations relating to or addressing pollution or protection of the environment, or protection of worker health or safety, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the Occupational Safety and Health Act of 1970, 29 U.S.C. ss. 651 et seq., and the Resource Conservation and Recovery Act of 1976, 42 U.S.C. ss. 6901 et seq., in each case including any amendments thereto, any successor statutes, and any regulations or guidance promulgated thereunder, and any state or local equivalent thereof. 8 "ENVIRONMENTAL LIEN" means a lien in favor of any Governmental Authority for (a) any liability under Environmental, Health or Safety Requirements of Law, or (b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the environment. "ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable requirement of law that conditions, restricts, prohibits or requires any notification or disclosure triggered by the closure of any property or the transfer, sale or lease of any property or deed or title for any property for environmental reasons, including, but not limited to, any so-called "Industrial Site Recovery Act" or "Responsible Property Transfer Act." "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time including (unless the context otherwise requires) any rules or regulations promulgated thereunder. "EURODOLLAR BASE RATE" means, with respect to a Eurodollar Rate Loan for the relevant Interest Period, (a) the rate at which deposits in Dollars are offered by First Chicago to first-class banks in the London interbank market at approximately 11 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amounts of the portions of the relevant Eurodollar Rate Loan of First Chicago, and having a maturity approximately equal to such Interest Period divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period. "EURODOLLAR RATE" means, with respect to a Eurodollar Rate Loan for the relevant Interest Period, the Eurodollar Base Rate applicable to such Interest Period plus the then Applicable Eurodollar Margin. The Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not such a multiple. "EURODOLLAR RATE ADVANCE" means an Advance which bears interest at the Eurodollar Rate. "EURODOLLAR RATE LOAN" means a Loan, or portion thereof, which bears interest at the Eurodollar Rate. "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such 9 day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "FINANCING" means, with respect to any Person, the issuance or sale by such Person of any Equity Interests of such Person or any Indebtedness consisting of debt securities of such Person. "FIRST CHICAGO" means The First National Bank of Chicago, in its individual capacity, and its successors. "FIXED CHARGE COVERAGE RATIO" is defined in Section 7.4(A) hereof. "FLOATING RATE" means, for any day for any Loan, a rate per annum equal to the Alternate Base Rate for such day, changing when and as the Alternate Base Rate changes. "FLOATING RATE ADVANCE" means an Advance which bears interest at the Floating Rate. "FLOATING RATE LOAN" means a Loan, or portion thereof, which bears interest at the Floating Rate. "GOVERNMENTAL ACTS" is defined in Section 3.9(A) hereof. "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "GROSS NEGLIGENCE" means recklessness, or actions taken or omitted with conscious indifference to or the complete disregard of consequences. Gross Negligence does not mean the absence of ordinary care or diligence, or an inadvertent act or inadvertent failure to act. If the term "gross negligence" is used with respect to the Agent or any Lender or any indemnitee in any of the other Loan Documents, it shall have the meaning set forth herein. "GUARANTY" means that certain Guaranty dated of even date herewith executed by Sames Electrostatic, Inc. in favor of the Agent, for the ratable benefit of the Lenders, as it may be amended, modified, supplemented and/or restated (including to add new Guarantors), and as in effect from time to time. "HEDGING AGREEMENTS" is defined in Section 7.3(Q) hereof. "HEDGING OBLIGATIONS" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, commodity prices, exchange 10 rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any of the foregoing. "INDEBTEDNESS" of any Person means, without duplication, such Person's (a) obligations for borrowed money, (b) obligations representing the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from property or assets now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances or other instruments, (e) Capitalized Lease Obligations, (f) Contingent Obligations, (g) obligations with respect to letters of credit, (h) Hedging Obligations and (i) Off Balance Sheet Liabilities. The amount of Indebtedness of any Person at any date shall be without duplication (i) the outstanding balance at such date of all unconditional obligations as described above and the maximum liability of any such Contingent Obligations at such date and (ii) in the case of Indebtedness of others secured by a Lien to which the property or assets owned or held by such Person is subject, the lesser of the fair market value at such date of any asset subject to a Lien securing the Indebtedness of others and the amount of the Indebtedness secured. "INDEMNIFIED MATTERS" is defined in Section 10.7(B) hereof. "INDEMNITEES" is defined in Section 10.7(B) hereof. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement dated of even date herewith among the Lenders, the Agent and the holders of the Senior Notes, as the same may from time to time be amended, modified, supplemented and or restated. "INTEREST EXPENSE" means, for any period, the total interest expense of the Borrower and its consolidated Subsidiaries, whether paid or accrued (including the interest component of Capitalized Leases, commitment and letter of credit fees), but excluding interest expense not payable in cash (including amortization of discount), all as determined in conformity with Agreement Accounting Principles. "INTEREST PERIOD" means, with respect to a Eurodollar Rate Loan, a period of one (1), two (2), three (3) months or six (6) months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on (but exclude) the day which corresponds numerically to such date one, two, three or six months thereafter; provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, 11 provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day. "INVESTMENT" means, with respect to any Person, (i) any purchase or other acquisition by that Person of any Indebtedness, Equity Interests or other securities, or of a beneficial interest in any Indebtedness, Equity Interests or other securities, issued by any other Person, (ii) any purchase by that Person of all or substantially all of the assets of a business conducted by another Person, and (iii) any loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable, advances to employees and similar items made or incurred in the ordinary course of business) or capital contribution by that Person to any other Person, including all Indebtedness to such Person arising from a sale of property by such Person other than in the ordinary course of its business. "IRS" means the Internal Revenue Service and any Person succeeding to the functions thereof. "ISSUING BANKS" means First Chicago, LaSalle National Bank and any other Lender which, at the Borrower's request, agrees, in each such Lender's sole discretion, to become an Issuing Bank for the purpose of issuing Letters of Credit, and their respective successors and assigns, in each case in such Lender's separate capacity as an issuer of Letters of Credit pursuant to Section 3.1. The designation of any Lender as an Issuing Bank after the date hereof shall be subject to the prior written consent of the Agent. "L/C DRAFT" means a draft drawn on an Issuing Bank pursuant to a Letter of Credit. "L/C INTEREST" shall have the meaning ascribed to such term in Section 3.5 hereof. "L/C OBLIGATIONS" means, without duplication, an amount equal to the sum of (i) the aggregate of the amount then available for drawing under each of the Letters of Credit, (ii) the face amount of all outstanding L/C Drafts corresponding to the Letters of Credit, which L/C Drafts have been accepted by the applicable Issuing Bank, (iii) the aggregate outstanding amount of all Reimbursement Obligations at such time and (iv) the aggregate face amount of all Letters of Credit requested by the Borrower but not yet issued (unless the request for an unissued Letter of Credit has been denied). "LENDERS" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. "LENDING INSTALLATION" means, with respect to a Lender or the Agent, any office, branch, subsidiary or affiliate of such Lender or the Agent. "LETTER OF CREDIT" means the letters of credit to be issued by the Issuing Banks pursuant to Section 3.1 hereof. 12 "LEVERAGE RATIO" is defined in Section 7.4(B) hereof. "LIEN" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "LOAN(S)" means, with respect to a Lender, such Lender's portion of any Advance made pursuant to Section 2.1 or Section 2.2 hereof, as applicable, and in the case of the Swing Line Bank, any Swing Line Loan made pursuant to Section 2.3 hereof, and collectively all Term Loans, Revolving Loans and Swing Line Loans, whether made or continued as or converted to Floating Rate Loans or Eurodollar Rate Loans. "LOAN ACCOUNT" is defined in Section 2.15(F) hereof. "LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranty, the Pledge Agreements, the Intercreditor Agreement, the Collateral Sharing Agreement, the Outstanding Acceptances and all other documents, instruments and agreements executed in connection therewith or contemplated thereby, as the same may be amended, restated or otherwise modified and in effect from time to time. "MARGIN STOCK" shall have the meaning ascribed to such term in Regulation U. "MASTER NOTE AGREEMENT" means that certain Master Note Agreement dated as of November 30, 1993 pursuant to which the Borrower issued the Senior Notes. "MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower or any of its Subsidiaries to perform their respective obligations under the Loan Documents in any material respect, or (c) the ability of the Lenders or the Agent to enforce in any material respect the Obligations. "MATERIAL SUBSIDIARIES" means Subsidiaries with (i) assets as of any "Subsidiary Test Date" (as defined herein) in an amount equal to or greater than $15,000,000 or (ii) year-to-date revenues as of any Subsidiary Test Date in an amount equal to or greater than $15,000,000. "Subsidiary Test Date" shall mean (a) for all Subsidiaries, the last day of each fiscal quarter and the last day of each fiscal year, calculated as of the date of delivery of the financial statements required to be delivered pursuant to Section 7.1(A)(i) and Section 7.1(A)(ii); and (b) for any Subsidiary which has consummated an Acquisition or is formed or acquired in connection with an Acquisition, as of the date of the consummation of such Acquisition. "MATURITY DATE" shall mean the date with respect to each Outstanding Acceptance on which such Outstanding Acceptance matures as specified on Schedule 1.1.5. 13 "MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section 4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years was, contributed to by either the Borrower or any member of the Controlled Group. "NET CASH PROCEEDS" means, with respect to any Asset Sale by any Person, (a) cash (freely convertible into Dollars) received by such Person or any Subsidiary of such Person from such Asset Sale (including cash received as consideration for the assumption or incurrence of liabilities incurred in connection with or in anticipation of such Asset Sale), after (i) provision for all income or other taxes measured by or resulting from such Asset Sale, (ii) payment of all brokerage commissions and other fees and expenses related to such Asset Sale, (iii) all amounts used to repay Indebtedness secured by a Lien on any asset disposed of in such Asset Sale or which is or may be required (by the express terms of the instrument governing such Indebtedness) to be repaid in connection with such Asset Sale (including payments made to obtain or avoid the need for the consent of any holder of such Indebtedness), and (iv) deduction of appropriate amounts to be provided by such Person or a Subsidiary of such Person as a reserve, in accordance with Agreement Accounting Principles, against any liabilities associated with the assets sold or disposed of in such Asset Sale and retained by such Person or a Subsidiary of such Person after such Asset Sale, including, without limitation, pension and other post- employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with the assets sold or disposed of in such Asset Sale; and (b) cash payments in respect of any other consideration received by such Person or any Subsidiary of such Person from such Asset Sale upon receipt of such cash payments by such Person or such Subsidiary. "NET INCOME" means, for any period, the net earnings (or loss) after taxes of the Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with Agreement Accounting Principles. "NON PRO RATA LOAN" is defined in Section 9.2 hereof. "NOTES" means the Revolving Notes, Swing Line Notes and Term Notes. "NOTICE OF ASSIGNMENT" is defined in Section 13.3(B) hereof. "OBLIGATIONS" means all Loans, Credit Support Obligations, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Agent, any Lender, the Swing Line Bank, the Arranger, any Affiliate of the Agent or any Lender, or any Indemnitee, of any kind or nature, present or future, arising under this Agreement, the Notes or any other Loan Document, whether or not evidenced by any note, guaranty or other instrument, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification, or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. The term includes, without limitation, all interest, charges, expenses, fees, 14 attorneys' fees and disbursements, paralegals' fees (in each case whether or not allowed), and any other sum chargeable to the Borrower under this Agreement or any other Loan Document. "OFF BALANCE SHEET LIABILITIES" of a Person means (a) any repurchase obligation or liability of such Person or any of its Subsidiaries with respect to accounts or notes receivable sold by such Person or any of its Subsidiaries, (b) any liability under any sale and leaseback transactions which do not create a liability on the consolidated balance sheet of such Person, (c) any liability under any financing lease or so-called "synthetic" lease transaction, or (d) any obligations arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets of such Person and its Subsidiaries. "OTHER TAXES" is defined in Section 2.15(E)(ii) hereof. "OUTSTANDING ACCEPTANCES" means the acceptances with one or more of the Lenders or their Affiliates in connection with which the Borrower is indebted as of the Closing Date as set forth on Schedule 1.1.5. "PARTICIPANTS" is defined in Section 13.2(A) hereof. "PAYMENT DATE" means the 15th day of each month. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "PERMITTED ACQUISITION" is defined in Section 7.3(G) hereof. "PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent Obligations of the Borrower and its Subsidiaries identified as such on Schedule 1.1.1. "PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Borrower and its Subsidiaries identified as such on Schedule 1.1.2 to this Agreement. "PERMITTED EXISTING INVESTMENTS" means the Investments of the Borrower and its Subsidiaries identified as such on Schedule 1.1.3 to this Agreement. "PERMITTED EXISTING LIENS" means the Liens on assets of the Borrower and its Subsidiaries identified as such on Schedule 1.1.4 to this Agreement. "PERMITTED PURCHASE MONEY INDEBTEDNESS" is defined in Section 7.3(A)(viii) hereof. "PERMITTED REFINANCING INDEBTEDNESS" means any replacement, renewal, refinancing or extension of any Indebtedness permitted by this Agreement that (i) does not exceed the aggregate principal amount (plus accrued interest and any applicable premium and associated fees and expenses) of the Indebtedness being replaced, renewed, refinanced or extended, (ii) does not have 15 a Weighted Average Life to Maturity at the time of such replacement, renewal, refinancing or extension that is less than the Weighted Average Life to Maturity of the Indebtedness being replaced, renewed, refinanced or extended, (iii) does not rank at the time of such replacement, renewal, refinancing or extension senior to the Indebtedness being replaced, renewed, refinanced or extended, and (iv) does not contain terms (including, without limitation, terms relating to security, amortization, interest rate, premiums, fees, covenants, event of default and remedies) materially less favorable to the Borrower or to the Lenders than those applicable to the Indebtedness being replaced, renewed, refinanced or extended. "PERMITTED SUBORDINATED INDEBTEDNESS" is defined in Section 7.3(A)(x) "PERSON" means any individual, corporation, firm, enterprise, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company or other entity of any kind, or any government or political subdivision or any agency, department or instrumentality thereof. "PLAN" means an employee benefit plan defined in Section 3(3) of ERISA in respect of which the Borrower or any member of the Controlled Group is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA. "PLEDGE AGREEMENTS" shall mean the pledge agreements from time to time executed pursuant to the terms of clause (i) and clause (iii) of Section 7.2(K), as the same may from time to time be amended, modified, supplemented or restated. "PRIOR ACCEPTANCE AGREEMENTS" is defined in Section 3.4-A. "PRO RATA SHARE" means, with respect to any Lender, (i) at any time prior to the Closing Date, the percentage obtained by dividing (A) such Lender's Commitments at such time (in each case, as adjusted from time to time in accordance with the provisions of this Agreement) by (B) the sum of the Aggregate Term Loan Commitment and the Aggregate Revolving Loan Commitment at such time and (ii) at any time after the Closing Date, the percentage obtained by dividing (A) the sum of such Lender's Term Loan and Revolving Loan Commitment at such time (in each case, as adjusted from time to time in accordance with the provisions of this Agreement) by (B) the sum of the aggregate amount of all of the Term Loans and the Aggregate Revolving Loan Commitment at such time; provided, however, if all of the Commitments are terminated pursuant to the terms of this Agreement, then "Pro Rata Share" means the percentage obtained by dividing (x) the sum of such Lender's Term Loan, Revolving Loans, Credit Support Obligations and, in the case of the Swing Line Bank, Swing Lines Loans, by (y) the aggregate amount of all Term Loans, Revolving Loans, Credit Support Obligations and Swing Line Loans. "PURCHASERS" is defined in Section 13.3(A) hereof. "RATE OPTION" means the Eurodollar Rate or the Floating Rate. 16 "REGISTER" is defined in Section 13.3(C) hereof. "REGULATION G" means Regulation G of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by nonbank, nonbroker lenders for the purpose of purchasing or carrying margin stock (as defined therein). "REGULATION T" means Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by and to brokers and dealers of securities for the purpose of purchasing or carrying margin stock (as defined therein). "REGULATION U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying Margin Stock applicable to member banks of the Federal Reserve System. "REGULATION X" means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by foreign lenders for the purpose of purchasing or carrying margin stock (as defined therein). "REIMBURSEMENT OBLIGATION" is defined in Section 3.6 hereof. "RELEASE" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including the movement of Contaminants through or in the air, soil, surface water or groundwater. "RENTALS" of a Person means the aggregate fixed amounts payable by such Person under any lease of real or personal property but does not include any amounts payable under Capitalized Leases of such Person. "REPLACEMENT LENDER" is defined in Section 2.20 hereof. "REPORTABLE EVENT" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days after such event occurs, provided, however, that a failure to meet the minimum funding standards of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. 17 "REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the aggregate, are greater than fifty percent (50%); provided, however, that, if any of the Lenders shall have failed to fund its Pro Rata Share of (i) any Revolving Loan requested by the Borrower, (ii) any Revolving Loan required to be made in connection with reimbursement for any Credit Support Obligations or (iii) any Swing Line Loan as requested by the Agent, which such Lenders are obligated to fund under the terms of this Agreement and any such failure has not been cured, then for so long as such failure continues, "REQUIRED LENDERS" means Lenders (excluding all Lenders whose failure to fund their respective Pro Rata Shares of such Revolving Loans or Swing Line Loans has not been so cured) whose Pro Rata Shares represent greater than fifty percent (50%) of the aggregate Pro Rata Shares of such Lenders; provided further, however, that, if the Commitments have been terminated pursuant to the terms of this Agreement, "REQUIRED LENDERS" means Lenders (without regard to such Lenders' performance of their respective obligations hereunder) whose aggregate ratable shares (stated as a percentage) of the aggregate outstanding principal balance of all Loans and Credit Support Obligations are greater than fifty percent (50%). "REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws or other organizational or governing documents of such Person, and any law, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject including, without limitation, the Securities Act of 1933, the Securities Exchange Act of 1934, Regulations G, T, U and X, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act, Americans with Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or permit or environmental, labor, employment, occupational safety or health law, rule or regulation, including Environmental, Health or Safety Requirements of Law. "RESERVE REQUIREMENT" shall mean the maximum reserve requirement, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) with respect to "Eurocurrency liabilities" or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Rate Loans is determined or category of extensions of credit or other assets which includes loans by a non-United States office of any Lender to United States residents. "RESTRICTED PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any Equity Interests of the Borrower now or hereafter outstanding, except a dividend payable solely in the Borrower's Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock, (ii) any redemption, retirement, purchase or other acquisition for value, direct or indirect, of any Equity Interests of the Borrower or any of its Subsidiaries now or hereafter outstanding, other than in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Borrower) of other Equity Interests of the Borrower (other than Disqualified Stock), (iii) any redemption, purchase, retirement, defeasance, prepayment or other acquisition for value, direct or indirect, of any Indebtedness other than the Obligations, and (iv) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any 18 Indebtedness (other than the Obligations) or any Equity Interests of the Borrower or any of the Borrower's Subsidiaries, or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission. "REVOLVING CREDIT AVAILABILITY" means, at any particular time, the amount by which the Aggregate Revolving Loan Commitment at such time exceeds the Revolving Credit Obligations at such time. "REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum of (i) the outstanding principal amount of the Revolving Loans at such time, plus (ii) the outstanding principal amount of the Swing Line Loans at such time, plus (iii) the outstanding Credit Support Obligations at such time. "REVOLVING LOAN" is defined in Section 2.2 hereof. "REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of such Lender to make Revolving Loans and to purchase participations in Letters of Credit and Outstanding Acceptances not exceeding the amount set forth on Exhibit A to this Agreement opposite its name thereon under the heading "Revolving Loan Commitment" or the signature page of the assignment and acceptance by which it became a Lender, as such amount may be modified from time to time pursuant to the terms of this Agreement or to give effect to any applicable assignment and acceptance. "REVOLVING LOAN TERMINATION DATE" means September 23, 2002. "REVOLVING NOTE" means a promissory note, in substantially the form of Exhibit B-1 hereto, duly executed by the Borrower and payable to the order of a Lender in the amount of its Revolving Loan Commitment, including any amendment, restatement, modification, renewal or replacement of such Revolving Note. "RISK-BASED CAPITAL GUIDELINES" is defined in Section 4.2 hereof. "SENIOR NOTES" means those certain Senior Notes due December 6, 2008, issued by the Borrower in the aggregate principal amount of $15,000,000 pursuant to the Master Note Agreement. "SHARE REPURCHASE" is defined in Section 6.4(A). "SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group. "SOLVENT" shall mean, when used with respect to any Person, that at the time of determination: 19 (i) the fair value of its assets (both at fair valuation and at present fair saleable value) is equal to or in excess of the total amount of its liabilities, including, without limitation, contingent liabilities; and (ii) it is then able and expects to be able to pay its debts as they mature; and (iii) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. With respect to contingent liabilities (such as litigation, guarantees and pension plan liabilities), such liabilities shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represent the amount which can be reasonably be expected to become an actual or matured liability. "SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Borrower or any Subsidiary of the Borrower, the payment of which is subordinated to payment of the Obligations to the written satisfaction of the Agent. "SUBSIDIARY" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower. "SWING LINE BANK" means First Chicago or any other Lender as a successor Swing Line Bank. "SWING LINE COMMITMENT" means the obligation of the Swing Line Bank to make Swing Line Loans up to a maximum of $3,000,000 at any one time outstanding. "SWING LINE LOAN" means a Loan made available to the Borrower by the Swing Line Bank pursuant to Section 2.3 hereof. "SWING LINE NOTE" means a promissory note, in substantially the form of Exhibit B-2 hereto, duly executed by the Borrower and payable to the order of the Swing Line Bank in the amount of its Swing Line Commitment, including any amendment, restatement, modification, renewal or replacement of such Swing Line Note. "TAXES" is defined in Section 2.15(E)(i) hereof. 20 "TERMINATION DATE" means the earlier of (a) the Revolving Loan Termination Date, and (b) the date of termination of the Aggregate Revolving Loan Commitment pursuant to Section 2.6 hereof or the Commitments pursuant to Section 9.1 hereof. "TERMINATION EVENT" means (i) a Reportable Event with respect to any Benefit Plan; (ii) the withdrawal of the Borrower or any member of the Controlled Group from a Benefit Plan during a plan year in which the Borrower or such Controlled Group member was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of twenty percent (20%) of Benefit Plan participants who are employees of the Borrower or any member of the Controlled Group; (iii) the imposition of an obligation on the Borrower or any member of the Controlled Group under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Benefit Plan; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit Plan; or (vi) the partial or complete withdrawal of the Borrower or any member of the Controlled Group from a Multiemployer Plan. "TERM LOAN" is defined in Section 2.1(A) hereof. "TERM LOAN COMMITMENT" means, for each Lender, the obligation of such Lender to make its Term Loan pursuant to the terms and conditions of this Agreement, and which shall not exceed the principal amount set forth on Exhibit A to this Agreement opposite its name thereon under the heading "Term Loan Commitment", as such amount may be modified from time to time pursuant to the terms hereof. "TERM LOAN TERMINATION DATE" means November 30, 2002. "TERM NOTE" means a promissory note, in substantially the form of Exhibit B-3 hereto, duly executed by the Borrower and payable to the order of a Lender in the amount of its Term Loan Commitment, including any amendment, restatement, modification, renewal or replacement of such Term Note. "TRANSFEREE" is defined in Section 13.5 hereof. "TYPE" means, with respect to any Loan, its nature as a Floating Rate Loan or a Eurodollar Rate Loan. "UNFUNDED LIABILITIES" means (i) in the case of Single Employer Plans, the amount (if any) by which the present value of all vested nonforfeitable benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans, and (ii) in the case of Multiemployer Plans, the withdrawal liability that would be incurred by the Controlled Group if all members of the Controlled Group completely withdrew from all Multiemployer Plans. 21 "UNMATURED DEFAULT" means an event which, but for the lapse of time or the giving of notice, or both, would constitute a Default. "WEIGHTED AVERAGE LIFE TO MATURITY" means when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily given them in accordance with generally accepted accounting principles in existence as of the date hereof. 1.2 References. The existence throughout the Agreement of references to the Borrower's Subsidiaries is for a matter of convenience only. Any references to Subsidiaries of the Borrower set forth herein shall not in any way be construed as consent by the Agent or any Lender to the establishment, maintenance or acquisition of any Subsidiary, except as may otherwise be permitted hereunder. In addition, NBD Bank (formerly known as NBD Bank, N.A.) ("NBD") is a party to this Agreement solely for the purpose of the Outstanding Acceptances created by it. Any references to Lenders set forth herein shall refer to NBD solely in such capacity and shall not in any way be construed as an agreement by NBD to make any Loans or participate in any Letters of Credit. 1.3 Supplemental Disclosure. At any time at the request of the Agent and at such additional times as the Borrower determines, the Borrower shall supplement each schedule or representation herein or in the other Loan Documents with respect to any matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such schedule or as an exception to such representation or which is necessary to correct any information in such schedule or representation which has been rendered inaccurate thereby. Unless any such supplement to such schedule or representation discloses the existence or occurrence of events, facts or circumstances which are not prohibited by the terms of this Agreement or any other Loan Documents, such supplement to such schedule or representation shall not be deemed an amendment thereof unless expressly consented to in writing by Agent and the Required Lenders, and no such amendments, except as the same may be consented to in a writing which expressly includes a waiver, shall be or be deemed a waiver by the Agent or any Lender of any Default disclosed therein. ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES 22 2.1. Term Loans. (A) Amount of Term Loans. Subject to the terms and conditions set forth in this Agreement, each Lender on the date that is not later than five (5) Business Days following the Closing Date and as specified in the applicable Borrowing Notice severally and not jointly agrees to make on the specified date, a term loan, in Dollars, to the Borrower in an amount equal to such Lender's Term Loan Commitment (each individually, a "TERM LOAN" and, collectively, the "TERM LOANS"). All Term Loans shall be made by the Lenders on the specified date for borrowing simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Term Loan hereunder nor shall the Term Loan Commitment of any Lender be increased or decreased as a result of any such failure. (B) Borrowing Notice. The Borrower shall deliver to the Agent a Borrowing Notice, signed by it, on the Closing Date. Such Borrowing Notice shall specify (i) the aggregate amount of the Term Loans, (ii) instructions for the disbursement of the proceeds of the Term Loans and (iii) the date on which the Term Loans are to be made, which date shall not be later than five (5) Business Days following the Closing Date. The Term Loans shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurodollar Rate Loans in the manner provided in Section 2.10 and subject to the other conditions and limitations therein set forth and set forth in this Article II. Any Borrowing Notice given pursuant to this Section 2.1(B) shall be irrevocable. (C) Making of Term Loans. Promptly after receipt of the Borrowing Notice under Section 2.1(B) in respect of the Term Loans, the Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the proposed Advance. Each Lender shall deposit an amount equal to its Pro Rata Share of the Term Loans with the Agent at its office in Chicago, Illinois, in immediately available funds, on the date specified in the Borrowing Notice. Subject to the fulfillment of the conditions precedent set forth in Sections 5.1 and 5.2, the Agent shall make the proceeds of such amounts received by it available to the Borrower at the Agent's office in Chicago, Illinois on such date and shall disburse such proceeds in accordance with the Borrower's disbursement instructions set forth in such Borrowing Notice. The failure of any Lender to deposit the amount described above with the Agent on the specified date shall not relieve any other Lender of its obligations hereunder to make its Term Loan on the Closing Date. (D) Repayment of the Term Loans. (i) The Term Loans shall be repaid in eighteen (18) consecutive quarterly installments, payable on the last Business Day of each fiscal quarter of the Borrower, commencing on August 31, 1998 and continuing thereafter until the Term Loan Termination Date, and the Term Loans shall be permanently reduced by the amount of each installment on the date payment thereof is made hereunder. The installments shall be in the aggregate amounts set forth below: INSTALLMENT DATE INSTALLMENT AMOUNT August 31, 1998 $1,000,000 November 30, 1998 $1,000,000 23 February 28, 1999 $1,000,000 May 31, 1999 $1,000,000 August 31, 1999 $1,000,000 November 30, 1999 $1,000,000 February 29, 2000 $1,000,000 May 31, 2000 $1,000,000 August 31, 2000 $1,000,000 November 30, 2000 $1,000,000 February 28, 2001 $1,000,000 May 31, 2001 $1,000,000 August 31, 2001 $1,000,000 November 30, 2001 $1,000,000 February 28, 2002 $1,500,000 May 31, 2002 $1,500,000 August 31, 2002 $1,500,000 November 30, 2002 $1,500,000 Notwithstanding the foregoing, the final installment shall be in the amount of the then outstanding principal balance of the Term Loans. In addition, the then outstanding principal balance of the Term Loans, if any, shall be due and payable on the Termination Date. No installment of any Term Loan shall be reborrowed once repaid. (ii) In addition to the scheduled payments on the Term Loans, the Borrower (a) may make the voluntary prepayments described in Section 2.5(A) for credit against the scheduled payments on the Term Loans pursuant to Section 2.5(A) and (b) shall make the mandatory prepayments prescribed in Section 2.5(B) for credit against the scheduled payments on the Term Loans pursuant to Section 2.5(B). 2.2 Revolving Loans. Upon the satisfaction of the conditions precedent set forth in Sections 5.1 and 5.2, from and including the date of this Agreement and prior to the Termination Date, each Lender severally and not jointly agrees, on the terms and conditions set forth in this Agreement, to make revolving loans to the Borrower from time to time, in Dollars, in an amount not to exceed such Lender's Pro Rata Share of Revolving Credit Availability at such time (each individually, a "REVOLVING LOAN" and, collectively, the "REVOLVING LOANS"); provided, however, at no time shall the Revolving Credit Obligations exceed the Aggregate Revolving Loan Commitment. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Revolving Loans at any time prior to the Termination Date. The Revolving Loans made on the Closing Date shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurodollar Rate Loans in the manner provided in Section 2.10 and subject to the other conditions and limitations therein set forth and set forth in 24 this Article II. On the Termination Date, the Borrower shall repay in full the outstanding principal balance of the Revolving Loans. Each Advance under this Section 2.2 shall consist of Revolving Loans made by each Lender ratably in proportion to such Lender's respective Pro Rata Share. 2.3 Swing Line Loans. (A) Amount of Swing Line Loans. Upon the satisfaction of the conditions precedent set forth in Section 5.1 and 5.2, from and including the date of this Agreement and prior to the Termination Date, the Swing Line Bank agrees, on the terms and conditions set forth in this Agreement, to make swing line loans to the Borrower from time to time, in Dollars, in an amount not to exceed the Swing Line Commitment (each, individually, a "SWING LINE LOAN" and collectively, the "SWING LINE LOANS"); provided, however, at no time shall the Revolving Credit Obligations exceed the Aggregate Revolving Loan Commitment; and provided, further, that at no time shall the sum of (a) the outstanding amount of the Swing Line Loans, plus (b) the outstanding amount of Revolving Loans made by the Swing Line Bank pursuant to Section 2.2, exceed the Swing Line Bank's Revolving Loan Commitment at such time. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Swing Line Loans at any time prior to the Termination Date. (B) Borrowing Notice. The Borrower shall deliver to the Agent and the Swing Line Bank a Borrowing Notice, signed by it, not later than 12:00 noon (Chicago time) on the Borrowing Date of each Swing Line Loan, specifying (i) the applicable Borrowing Date (which shall be a Business Day), and (ii) the aggregate amount of the requested Swing Line Loan which shall be an amount not less than $100,000. The Swing Line Loans shall at all times be Floating Rate Loans. (C) Making of Swing Line Loans. Promptly after receipt of the Borrowing Notice under Section 2.3(B) in respect of Swing Line Loans, the Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the requested Swing Line Loan. Not later than 2:00 p.m. (Chicago time) on the applicable Borrowing Date, the Swing Line Bank shall make available its Swing Line Loan, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIV. The Agent will promptly make the funds so received from the Swing Line Bank available to the Borrower at the Agent's aforesaid address. (D) Repayment of Swing Line Loans. The Swing Line Loans shall be evidenced by the Swing Line Note, and each Swing Line Loan shall be paid in full by the Borrower on or before the thirtieth Business Day after the Borrowing Date for such Swing Line Loan. The Borrower may at any time pay, without penalty or premium, all outstanding Swing Line Loans or, in a minimum amount and increments of $100,000, any portion of the outstanding Swing Line Loans, upon notice to the Agent and the Swing Line Bank. In addition, the Agent (i) may at any time in its sole discretion with respect to any outstanding Swing Line Loan, or (ii) shall on the thirtieth Business Day after the Borrowing Date of any Swing Line Loan, require each Lender (including the Swing Line Bank) to make a Revolving Loan in the amount of such Lender's Pro Rata Share of such Swing Line Loan, for the purpose of repaying such Swing Line Loan. Not later than 2:00 p.m. (Chicago time) on the date of any notice received pursuant to this Section 2.3(D), each 25 Lender shall make available its required Revolving Loan or Revolving Loans, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIV. Revolving Loans made pursuant to this Section 2.3(D) shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurodollar Rate Loans in the manner provided in Section 2.10 and subject to the other conditions and limitations therein set forth and set forth in this Article II. Unless a Lender shall have notified the Swing Line Bank, prior to its making any Swing Line Loan, that any applicable condition precedent set forth in Sections 5.1 and 5.2 had not then been satisfied, such Lender's obligation to make Revolving Loans pursuant to this Section 2.3(D) to repay Swing Line Loans shall be unconditional, continuing, irrevocable and absolute and shall not be affected by any circumstances, including, without limitation, (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Agent, the Swing Line Bank or any other Person, (b) the occurrence or continuance of a Default or Unmatured Default, (c) any adverse change in the condition (financial or otherwise) of the Borrower, or (d) any other circumstances, happening or event whatsoever. In the event that any Lender fails to make payment to the Agent of any amount due under this Section 2.3(D), the Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Agent receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Agent of any amount due under this Section 2.3(D), such Lender shall be deemed, at the option of the Agent, to have unconditionally and irrevocably purchased from the Swing Line Bank, without recourse or warranty, an undivided interest and participation in the applicable Swing Line Loan in the amount of such Revolving Loan, and such interest and participation may be recovered from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received. On the Termination Date, the Borrower shall repay in full the outstanding principal balance of the Swing Line Loans. 2.4 Rate Options for all Advances. The Revolving Loans and Term Loans may be Floating Rate Advances or Eurodollar Rate Advances, or a combination thereof, selected by the Borrower in accordance with Section 2.10. The Borrower may select, in accordance with Section 2.10, Rate Options and Interest Periods applicable to portions of the Revolving Loans and the Term Loans; provided that there shall be no more than ten (10) Interest Periods in effect with respect to all of the Loans at any time. The Swing Line Loans shall at all times be Floating Rate Loans. 2.5 Optional Payments; Mandatory Prepayments. (A) Optional Payments. The Borrower may from time to time repay or prepay, without penalty or premium all or any part of outstanding Floating Rate Advances; provided, that the Borrower may not so prepay Floating Rate Advances consisting of Term Loans unless it shall have provided at least one Business Day's written notice to the Agent of such prepayment. Eurodollar Rate Advances may be voluntarily repaid or prepaid prior to the last day of the applicable Interest Period, subject to the indemnification provisions contained in Section 4.4, 26 provided, that the Borrower may not so prepay Eurodollar Rate Advances unless it shall have provided at least three Business Days' written notice to the Agent of such prepayment. Unless the aggregate outstanding principal balance of the Term Loans is to be prepaid in full, voluntary prepayments of the Term Loans shall be in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount, and shall be applied to each of the then remaining installments payable thereunder, on a ratable basis based upon the respective amounts of such installments. (B) Mandatory Prepayments. (i) Mandatory Prepayments of Term Loans. (a) Upon the consummation of any Asset Sale by the Borrower or any Subsidiary of the Borrower, other than those Asset Sales permitted pursuant to Section 7.3(B)(i) and (ii), except to the extent that the Net Cash Proceeds of such Asset Sale, when combined with the Net Cash Proceeds of all such Asset Sales during the immediately preceding twelve-month period, do not exceed $3,000,000, and except as provided in the second sentence of this Section 2.5(B)(i)(a), within thirty (30) days after the Borrower's or any of its Subsidiaries' (i) receipt of any Net Cash Proceeds from any such Asset Sale, or (ii) conversion to cash or Cash Equivalents of non-cash proceeds (whether principal or interest and including securities, release of escrow arrangements or lease payments) received from any Asset Sale, the Borrower shall make a mandatory prepayment of the Obligations in an amount equal to one hundred percent (100%) of such Net Cash Proceeds or such proceeds converted from non-cash to cash or Cash Equivalents. Net Cash Proceeds of Asset Sales with respect to which the Borrower shall have given the Agent written notice of its intention to replace the assets within twelve (12) months, in the case of a sale of equipment, or eighteen (18) months, in the case of a sale of real property, following such Asset Sale shall not be subject to the provisions of the first sentence of this Section 2.5(B)(i)(a) unless and to the extent that such applicable period shall have expired without such replacement having been made. (b) Nothing in this Section 2.5(B)(i) shall be construed to constitute the Lenders' consent to any transaction referred to in clause (a) above which is not expressly permitted by the terms of this Agreement. (c) Each mandatory prepayment required by clause (a) of this Section 2.5(B) shall be referred to herein as a "Designated Prepayment." Designated Prepayments shall be allocated and applied to the Obligations as follows: (I) the amount of each Designated Prepayment shall be applied to each of the then remaining installments payable under the Term Loans, in the inverse order of their maturity; and 27 (II) following the payment in full of the Term Loans, the amount of each Designated Prepayment shall be applied to repay Revolving Loans (but shall reduce Revolving Loan Commitments only at the option of the Required Lenders) and following the payment in full of the Revolving Loans, the amount of each Designated Prepayment shall be applied first to interest on the Credit Support Obligations, then to principal on the Credit Support Obligations, then to fees and commissions on account of Letters of Credit and Outstanding Acceptances and then, to the extent any Credit Support are contingent, deposited with the Agent as cash collateral in respect of such Credit Support Obligations. (d) On the date any Designated Prepayment is received by the Agent, such prepayment shall be applied first to Floating Rate Loans and to any Eurodollar Rate Loans maturing on such date and then to subsequently maturing Eurodollar Rate Loans in order of maturity. (ii) Mandatory Prepayments of Revolving Loans. In addition to repayments under Section 2.5(B)(i)(c)(II), if at any time and for any reason the Revolving Credit Obligations are greater than the Aggregate Revolving Loan Commitment, the Borrower shall immediately make a mandatory prepayment of the Obligations in an amount equal to such excess. In addition, if Revolving Credit Availability is at any time less than the amount of contingent L/C Obligations outstanding at any time, the Borrower shall deposit cash collateral with the Agent in an amount equal to the amount by which such L/C Obligations exceed such Revolving Credit Availability. (iii) Subject to the preceding provisions of this Section 2.5(B), all of the mandatory prepayments made under this Section 2.5(B) shall be applied first to Floating Rate Loans and to any Eurodollar Rate Loans maturing on such date and then to subsequently maturing Eurodollar Rate Loans in order of maturity. 2.6 Reduction of Commitments. The Borrower may permanently reduce the Aggregate Revolving Loan Commitment in whole, or in part ratably among the Lenders, in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount (unless the Aggregate Revolving Loan Commitment is reduced in whole), upon at least one Business Day's written notice to the Agent, which notice shall specify the amount of any such reduction; provided, however, that the amount of the Aggregate Revolving Loan Commitment may not be reduced below the aggregate principal amount of the outstanding Revolving Credit Obligations. All accrued commitment fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder. 2.7 Method of Borrowing. Not later than 2:00 p.m. (Chicago time) on each Borrowing Date, each Lender shall make available its Revolving Loan or Revolving Loans, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIV. The Agent will promptly make the funds so received from the Lenders available to the Borrower at the Agent's aforesaid address. 28 2.8 Method of Selecting Types and Interest Periods for Advances. The Borrower shall select the Type of Advance and, in the case of each Eurodollar Rate Advance, the Interest Period applicable to each Advance from time to time. The Borrower shall give the Agent irrevocable notice in substantially the form of Exhibit C hereto (a "BORROWING NOTICE") not later than 12:00 noon (Chicago time) (a) on the Borrowing Date of each Floating Rate Advance and (b) three Business Days before the Borrowing Date for each Eurodollar Rate Advance, specifying: (i) the Borrowing Date (which shall be a Business Day) of such Advance; (ii) the aggregate amount of such Advance; (iii) the Type of Advance selected; and (iv) in the case of each Eurodollar Rate Advance, the Interest Period applicable thereto. The Borrower shall use its best efforts to select Interest Periods so that, to the best of the Borrower's knowledge, it will not be necessary to prepay all or any portion of any Eurodollar Rate Advance prior to the last day of the applicable Interest Period in order to make mandatory prepayments as required pursuant to the terms hereof. Each Floating Rate Advance and all Obligations other than Loans shall bear interest from and including the date of the making of such Advance to (but not including) the date of repayment thereof at the Floating Rate, changing when and as such Floating Rate changes. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Loan will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Rate Advance shall bear interest from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such Eurodollar Rate Advance. 2.9 Minimum Amount of Each Advance. Each Advance (other than an Advance to repay Swing Line Loans or a Reimbursement Obligation) shall be in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess thereof), provided, however, that any Floating Rate Advance may be in the amount of the unused Aggregate Revolving Loan Commitment. 2.10 Method of Selecting Types and Interest Periods for Conversion and Continuation of Advances. (A) Right to Convert. The Borrower may elect from time to time, subject to the provisions of Section 2.4 and this Section 2.10, to convert all or any part of a Loan of any Type into any other Type or Types of Loans; provided that any conversion of any Eurodollar Rate Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. (B) Automatic Conversion and Continuation. Floating Rate Loans shall continue as Floating Rate Loans unless and until such Floating Rate Loans are converted into Eurodollar Rate Loans. Eurodollar Rate Loans shall continue as Eurodollar Rate Loans until the end of the then applicable Interest Period therefor, at which time such Eurodollar Rate Loans shall be automatically converted into Floating Rate Loans unless the Borrower shall have given the Agent notice in accordance with Section 2.10(D) requesting that, at the end of such Interest Period, such Eurodollar Rate Loans continue as a Eurodollar Rate Loan. 29 (C) No Conversion Post-Default. Notwithstanding anything to the contrary contained in Section 2.10(A) or Section 2.10(B), no Loan may be converted into or continued as a Eurodollar Rate Loan (except with the consent of the Required Lenders) when any Default has occurred and is continuing. (D) Conversion/Continuation Notice. The Borrower shall give the Agent irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") of each conversion of a Floating Rate Loan into a Eurodollar Rate Loan or continuation of a Eurodollar Rate Loan not later than 12:00 noon (Chicago time) three Business Days prior to the date of the requested conversion or continuation, specifying: (1) the requested date (which shall be a Business Day) of such conversion or continuation; (2) the amount and Type of the Loan to be converted or continued; and (3) the amount of Eurodollar Rate Loan(s) into which such Loan is to be converted or continued and the duration of the Interest Period applicable thereto. 2.11 Default Rate. After the occurrence and during the continuance of a Default, at the option of the Agent or at the direction of the Required Lenders, the interest rate(s) applicable to the Obligations and the fees payable under Section 3.7 with respect to Letters of Credit shall be increased by two percent (2.0%) per annum above the Floating Rate or Eurodollar Rate, as applicable. 2.12 Method of Payment. All payments of principal, interest, fees, commissions and Credit Support Obligations hereunder shall be made, without setoff, deduction or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIV, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by 2:00 p.m. (Chicago time) on the date when due and shall be made ratably among the Lenders (unless such amount is not to be shared ratably in accordance with the terms hereof). Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds which the Agent received at its address specified pursuant to Article XIV or at any Lending Installation specified in a notice received by the Agent from such Lender. The Borrower authorizes the Agent to charge the account of the Borrower maintained with First Chicago for each payment of principal, interest, fees, commissions and Credit Support Obligations as it becomes due hereunder. 2.13 Notes. Each Lender is authorized to record the principal amount of each of its Loans and each repayment with respect to its Loans on the schedule attached to its respective Notes; provided, however, that the failure to so record shall not affect the Borrower's obligations under any such Note. 2.14 Telephonic Notices. The Borrower authorizes the Lenders and the Agent to extend Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrower. The Borrower agrees to deliver promptly to the Agent a written confirmation, signed by an Authorized Officer, if such confirmation is requested by the Agent or any Lender, of each telephonic notice. If the written confirmation differs in any 30 material respect from the action taken by the Agent and the Lenders, (i) the telephonic notice shall govern absent manifest error and (ii) the Agent or the Lender, as applicable, shall promptly notify the Authorized Officer who provided such confirmation of such difference. 2.15 Promise to Pay; Interest and Commitment Fees; Interest Payment Dates; Interest and Fee Basis; Taxes; Loan and Control Accounts. (A) Promise to Pay. The Borrower unconditionally promises to pay when due the principal amount of each Loan and all other Obligations incurred by it, and to pay all unpaid interest accrued thereon, in accordance with the terms of this Agreement and the Notes. (B) Interest Payment Dates. Interest accrued on each Floating Rate Loan shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, and at maturity (whether by acceleration or otherwise). Interest accrued on each Eurodollar Rate Loan shall be payable on the last day of its applicable Interest Period, on any date on which the Eurodollar Rate Loan is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Rate Loan having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest accrued on the principal balance of all other Obligations shall be payable in arrears (i) on the last day of each calendar month, commencing on the first such day following the incurrence of such Obligation, (ii) upon repayment thereof in full or in part, and (iii) if not theretofore paid in full, at the time such other Obligation becomes due and payable (whether by acceleration or otherwise). (C) Fees. (i) The Borrower shall pay to the Agent, for the account of the Lenders in accordance with their Pro Rata Shares, from and after the Closing Date until the date on which the Aggregate Revolving Loan Commitment shall be terminated in whole, a commitment fee accruing at the rate of the then Applicable Commitment Fee Percentage, on the amount by which (A) the Aggregate Revolving Loan Commitment in effect from time to time exceeds (B) the Revolving Credit Obligations in effect from time to time. All such commitment fees payable under this clause (C) shall be payable quarterly in arrears on the last day of each fiscal quarter of the Borrower occurring after the Closing Date (with the first such payment being calculated for the period from the Closing Date and ending on November 30, 1997), and, in addition, on the date on which the Aggregate Revolving Loan Commitment shall be terminated in whole. (ii) The Borrower agrees to pay to the Agent for the sole account of the Agent and the Arranger (unless otherwise agreed between the Agent and the Arranger and any Lender) the fees set forth in the letter agreement between the Agent and the Borrower dated July 23, 1997, payable at the times and in the amounts set forth therein. In addition, the Borrower agrees to pay to the Agent for the account of the Lenders the amounts set forth on Schedule 2.15 hereto, payable on the Closing Date. (D) Interest, Commission and Fee Basis; Applicable Eurodollar Margin and Applicable Commitment Fee Percentage. 31 (i) Interest, fees and commissions shall be calculated for actual days elapsed on the basis of a 360-day year. Interest shall be payable for the day an Obligation is incurred but not for the day of any payment on the amount paid if payment is received prior to 2:00 p.m. (Chicago time) at the place of payment. If any payment of principal of or interest on a Loan or any payment of any other Obligations shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest, fees and commissions. (ii) The Applicable Eurodollar Margin and Applicable Commitment Fee Percentage shall be determined from time to time by reference to the table set forth below, on the basis of the then applicable Leverage Ratio as described in this Section 2.15(D)(ii):
Leverage Ratio Applicable Eurodollar Applicable Commitment - -------------- Margin Fee Percentage ------ -------------- Greater than 3.5 to 1.0 1.25% 0.25% Greater than 3.0 to 1.0 and less than 1.00% 0.25% or equal to 3.5 to 1.0 Greater than 2.5 to 1.0 and less than 0.75% 0.25% or equal to 3.0 to 1.0 Less than or equal to 2.5 to 1.0 0.50% 0.25%
For purposes of this Section 2.15(D)(ii), the Leverage Ratio shall be determined as of the last day of each fiscal quarter based upon (a) for Indebtedness for borrowed money (which shall include, without limitation, the Borrower's obligations with respect to Outstanding Acceptances), the amount as of the last day of each such fiscal quarter; and (b) for EBITDA, the actual amount for the four-quarter period ending on such day, calculated, with respect to Permitted Acquisitions, on a pro forma basis using historical audited and reviewed unaudited financial statements obtained from the seller, broken down by fiscal quarter in the Borrower's reasonable judgment. Upon receipt of the financial statements delivered pursuant to Sections 7.1(A)(ii) and (iii), as applicable, the Applicable Eurodollar Margin and Applicable Commitment Fee Percentage shall be adjusted, such adjustment being effective five (5) Business Days following the Agent's receipt of such financial statements and the compliance certificate required to be delivered in connection therewith pursuant to Section 7.1(A)(iv); provided, that if the Borrower shall not have timely delivered its financial statements in accordance with Section 7.1(A)(ii) or (iii), as applicable, then commencing fifteen (15) days after the date upon which such financial statements should have been delivered and continuing until such financial statements are actually delivered, it shall be assumed for purposes of determining the Applicable Eurodollar Margin and Applicable Commitment Fee Percentage that the Leverage Ratio was greater than 3.5 to 1.0. Notwithstanding anything herein to the contrary, from the Closing Date to but not including the 32 fifth Business Day following receipt of the Borrower's financial statements in accordance with Section 7.1(A)(ii) for the fiscal quarter ending February 28, 1998, the Applicable Eurodollar Margin and Applicable Commitment Fee Percentage shall be determined based upon an assumption that the Leverage Ratio is greater than 3.0 to 1.0 and less than or equal to 3.5 to 1.0. (E) Taxes. (i) Any and all payments by the Borrower hereunder shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings or any liabilities with respect thereto including those arising after the date hereof as a result of the adoption of or any change in any law, treaty, rule, regulation, guideline or determination of a Governmental Authority or any change in the interpretation or application thereof by a Governmental Authority but excluding, in the case of each Lender and the Agent, such taxes (including income taxes, franchise taxes and branch profit taxes) as are imposed on or measured by such Lender's or Agent's, as the case may be, income by the United States of America or any Governmental Authority of the jurisdiction under the laws of which such Lender or Agent, as the case may be, is organized or maintains a Lending Installation (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities which the Agent or a Lender determines to be applicable to this Agreement, the other Loan Documents, the Revolving Loan Commitments, the Loans, the Outstanding Acceptances or the Letters of Credit being hereinafter referred to as "TAXES"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under the other Loan Documents to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.15(E)) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. If a withholding tax of the United States of America or any other Governmental Authority shall be or become applicable (y) after the date of this Agreement, to such payments by the Borrower made to the Lending Installation or any other office that a Lender may claim as its Lending Installation, or (z) after such Lender's selection and designation of any other Lending Installation, to such payments made to such other Lending Installation, such Lender shall use reasonable efforts to make, fund and maintain its Loans through another Lending Installation of such Lender in another jurisdiction so as to reduce the Borrower's liability hereunder, if the making, funding or maintenance of such Loans through such other Lending Installation of such Lender does not, in the judgment of such Lender, otherwise adversely affect such Loans, or obligations under the Revolving Loan Commitments or such Lender. (ii) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies which arise from any payment made hereunder, from the issuance of Letters of Credit 33 hereunder, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the other Loan Documents, the Revolving Loan Commitments, the Loans, the Letters of Credit or the Outstanding Acceptances (hereinafter referred to as "OTHER TAXES"). (iii) The Borrower indemnifies each Lender and the Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any Governmental Authority on amounts payable under this Section 2.15(E)) paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days after the date such Lender or the Agent (as the case may be) makes written demand therefor. A certificate as to any additional amount payable to any Lender or the Agent under this Section 2.15(E) submitted to the Borrower and the Agent (if a Lender is so submitting) by such Lender or the Agent shall show in reasonable detail the amount payable and the calculations used to determine such amount and shall, absent manifest error, be final, conclusive and binding upon all parties hereto. With respect to such deduction or withholding for or on account of any Taxes and to confirm that all such Taxes have been paid to the appropriate Governmental Authorities, the Borrower shall promptly (and in any event not later than thirty (30) days after receipt) furnish to each Lender and the Agent such certificates, receipts and other documents as may be required (in the judgment of such Lender or the Agent) to establish any tax credit to which such Lender or the Agent may be entitled. (iv) Within thirty (30) days after the date of any payment of Taxes or Other Taxes by the Borrower, the Borrower shall furnish to the Agent the original or a certified copy of a receipt evidencing payment thereof. (v) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.15(E) shall survive the payment in full of principal and interest hereunder, the termination of the Letters of Credit and Outstanding Acceptances and the termination of this Agreement. (vi) Without limiting the obligations of the Borrower under this Section 2.15(E), each Lender that is not created or organized under the laws of the United States of America or a political subdivision thereof shall deliver to the Borrower and the Agent on or before the Closing Date, or, if later, the date on which such Lender becomes a Lender pursuant to Section 13.3, a true and accurate certificate executed in duplicate by a duly authorized officer of such Lender, in a form satisfactory to the Borrower and the Agent, to the effect that such Lender is capable under the provisions of an applicable tax treaty concluded by the United States of America (in which case the certificate shall be accompanied by two executed copies of Form 1001 of the IRS) or under Section 1442 of the Code (in which case the certificate shall be accompanied by two copies of Form 4224 34 of the IRS) of receiving payments of interest hereunder without deduction or withholding of United States federal income tax. Each such Lender further agrees to deliver to the Borrower and the Agent from time to time a true and accurate certificate executed in duplicate by a duly authorized officer of such Lender substantially in a form satisfactory to the Borrower and the Agent, before or promptly upon the occurrence of any event requiring a change in the most recent certificate previously delivered by it to the Borrower and the Agent pursuant to this Section 2.15(E)(vi). Further, each Lender which delivers a certificate accompanied by Form 1001 of the IRS covenants and agrees to deliver to the Borrower and the Agent within fifteen (15) days prior to January 1, 1998, and every third (3rd) anniversary of such date thereafter on which this Agreement is still in effect, another such certificate and two accurate and complete original signed copies of Form 1001 (or any successor form or forms required under the Code or the applicable regulations promulgated thereunder), and each Lender that delivers a certificate accompanied by Form 4224 of the IRS covenants and agrees to deliver to the Borrower and the Agent within fifteen (15) days prior to the beginning of each subsequent taxable year of such Lender during which this Agreement is still in effect, another such certificate and two accurate and complete original signed copies of IRS Form 4224 (or any successor form or forms required under the Code or the applicable regulations promulgated thereunder). Each such certificate shall certify as to one of the following: (a) that such Lender is capable of receiving payments of interest hereunder without deduction or withholding of United States of America federal income tax; (b) that such Lender is not capable of receiving payments of interest hereunder without deduction or withholding of United States of America federal income tax as specified therein but is capable of recovering the full amount of any such deduction or withholding from a source other than the Borrower and will not seek any such recovery from the Borrower; or (c) that, as a result of the adoption of or any change in any law, treaty, rule, regulation, guideline or determination of a Governmental Authority or any change in the interpretation or application thereof by a Governmental Authority after the date such Lender became a party hereto, such Lender is not capable of receiving payments of interest hereunder without deduction or withholding of United States of America federal income tax as specified therein and that it is not capable of recovering the full amount of the same from a source other than the Borrower. Each Lender shall promptly furnish to the Borrower and the Agent such additional documents as may be reasonably required by the Borrower or the Agent to establish any exemption from or reduction of any Taxes or Other Taxes required to be deducted or withheld and which may be obtained without undue expense to such Lender. 35 (F) Loan Account. Each Lender shall maintain in accordance with its usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the Obligations of the Borrower to such Lender owing to such Lender from time to time, including the amount of principal and interest payable and paid to such Lender from time to time hereunder and under the Notes. (G) Control Account. The Register maintained by the Agent pursuant to Section 13.3(C) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Advance made hereunder, the type of Loan comprising such Advance and any Interest Period applicable thereto, (ii) the effective date and amount of each Assignment Agreement delivered to and accepted by it and the parties thereto pursuant to Section 13.3, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder or under the Notes, (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender's share thereof, and (v) all other appropriate debits and credits as provided in this Agreement, including, without limitation, all fees, charges, expenses and interest. (H) Entries Binding. The entries made in the Register and each Loan Account shall be presumptive evidence, absent manifest error, unless the Borrower objects in writing to information contained in the Register and each Loan Account within sixty (60) days of the Borrower's receipt of such information in written form. 2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate Revolving Loan Commitment Reductions. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Aggregate Revolving Loan Commitment reduction notice, Borrowing Notice, Continuation/Conversion Notice, and repayment notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Rate Loan promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.17 Lending Installations. Each Lender may book its Loans, Letters of Credit, or Outstanding Acceptances at any Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Notes shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written or facsimile notice to the Agent and the Borrower, designate a Lending Installation through which Loans will be made by it and for whose account Loan payments and/or payments of Credit Support Obligations are to be made. 2.18 Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case 36 may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (i) in the case of payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in the case of payment by the Borrower, the Floating Rate. 2.19 Termination Date. This Agreement shall be effective until the Termination Date. Notwithstanding the termination of this Agreement on the Termination Date, until all of the Obligations (other than contingent indemnity obligations) shall have been fully and indefeasibly paid and satisfied, all financing arrangements among the Borrower and the Lenders shall have been terminated (other than under Hedging Agreements or other agreements with respect to Hedging Obligations) and all of the Letters of Credit shall have expired, been cancelled or terminated, all of the rights and remedies under this Agreement and the other Loan Documents shall survive. 2.20 Replacement of Certain Lenders. In the event a Lender ("AFFECTED LENDER") shall have: (i) failed to fund its Pro Rata Share of any Advance requested by the Borrower, or to fund a Revolving Loan in order to repay Swing Line Loans pursuant to Section 2.3(D), which such Lender is obligated to fund under the terms of this Agreement and which failure has not been cured, (ii) requested compensation from the Borrower under Sections 2.15(E), 4.1 or 4.2 to recover Taxes, Other Taxes or other additional costs incurred by such Lender which are not being incurred generally by the other Lenders, (iii) delivered a notice pursuant to Section 4.3 claiming that such Lender is unable to extend Eurodollar Rate Loans to the Borrower for reasons not generally applicable to the other Lenders or (iv) has invoked Section 10.2, then, in any such case, the Borrower or the Agent may make written demand on such Affected Lender (with a copy to the Agent in the case of a demand by the Borrower and a copy to the Borrower in the case of a demand by the Agent) for the Affected Lender to assign, and such Affected Lender shall use its best efforts to assign pursuant to one or more duly executed Assignments Agreements five (5) Business Days after the date of such demand, to one or more financial institutions that comply with the provisions of Section 13.3(A) which the Borrower or the Agent, as the case may be, shall have engaged for such purpose ("REPLACEMENT LENDER"), all of such Affected Lender's rights and obligations under this Agreement and the other Loan Documents (including, without limitation, its Revolving Loan Commitment, all Loans owing to it, all of its participation interests in existing Letters of Credit and Outstanding Acceptances, and its obligation to participate in additional Letters of Credit hereunder) in accordance with Section 13.3. The Agent agrees, upon the occurrence of such events with respect to an Affected Lender and upon the written request of the Borrower, to use its reasonable efforts to obtain the commitments from one or more financial institutions to act as a Replacement Lender. The Agent is authorized to execute one or more of such assignment agreements as attorney-in-fact for any Affected Lender failing to execute and deliver the same within five (5) Business Days after the date of such demand. Further, with respect to such assignment the Affected Lender shall have concurrently received, in cash, all amounts due and owing to the Affected Lender hereunder or under any other Loan Document, including, without limitation, the aggregate outstanding principal amount 37 of the Loans owed to such Lender, together with accrued interest thereon through the date of such assignment, amounts payable under Sections 2.15(E), 4.1, and 4.2 with respect to such Affected Lender and compensation payable under Section 2.15(C) in the event of any replacement of any Affected Lender under clause (ii) or clause (iii) of this Section 2.20; provided that upon such Affected Lender's replacement, such Affected Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15(E), 4.1, 4.2, 4.4, and 10.7, as well as to any fees accrued for its account hereunder and not yet paid, and shall continue to be obligated under Section 11.8. Upon the replacement of any Affected Lender pursuant to this Section 2.20, the provisions of Section 9.2 shall continue to apply with respect to Borrowings which are then outstanding with respect to which the Affected Lender failed to fund its Pro Rata Share and which failure has not been cured. ARTICLE III: THE LETTER OF CREDIT FACILITY AND OUTSTANDING ACCEPTANCES 3.1 Obligation to Issue Letters of Credit. Subject to the terms and conditions of this Agreement and in reliance upon the representations, warranties and covenants of the Borrower herein set forth, each Issuing Bank hereby agrees to issue for the account of the Borrower through such Issuing Bank's branches as it and the Borrower may jointly agree, one or more Letters of Credit denominated in Dollars in accordance with this Article III, from time to time after the date hereof. 3.2 Types and Amounts of Letters of Credit. No Issuing Bank shall have any obligation to and no Issuing Bank shall: (i) issue any Letter of Credit if on the date of issuance, before or after giving effect to the Letter of Credit requested hereunder, (a) the Revolving Credit Obligations at such time would exceed the Aggregate Revolving Loan Commitment at such time, or (b) the aggregate outstanding amount of the L/C Obligations would exceed $5,000,000; or (ii) issue any Letter of Credit which has an expiration date later than the date which is the earlier of one (1) year after the date of issuance thereof or five (5) Business Days immediately preceding the Termination Date. 3.3 Conditions with respect to Letters of Credit. In addition to being subject to the satisfaction of the conditions contained in Sections 5.1 and 5.2, the obligation of an Issuing Bank to issue any Letter of Credit is subject to the satisfaction in full of the following conditions: (i) the Borrower shall have delivered to the applicable Issuing Bank at such times and in such manner as such Issuing Bank may reasonably prescribe, a request for issuance of such Letter of Credit in substantially the form of Exhibit D hereto, duly executed applications for such Letter of Credit, and such other 38 documents, instructions and agreements as may be required pursuant to the terms thereof, and the proposed Letter of Credit shall be reasonably satisfactory to such Issuing Bank as to form and content; and (ii) as of the date of issuance no order, judgment or decree of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain the applicable Issuing Bank from issuing such Letter of Credit and no law, rule or regulation applicable to such Issuing Bank and no request or directive (whether or not having the force of law) from a Governmental Authority with jurisdiction over such Issuing Bank shall prohibit or request that such Issuing Bank refrain from the issuance of Letters of Credit generally or the issuance of that Letter of Credit. 3.4 Procedure for Issuance of Letters of Credit. (a) Subject to the terms and conditions of this Article III and provided that the applicable conditions set forth in Sections 5.1 and 5.2 hereof have been satisfied, the applicable Issuing Bank shall, on the requested date, issue a Letter of Credit on behalf of the Borrower in accordance with such Issuing Bank's usual and customary business practices and, in this connection, such Issuing Bank may assume that the applicable conditions set forth in Section 5.2 hereof have been satisfied unless it shall have received notice to the contrary from the Agent or a Lender or has knowledge that the applicable conditions have not been met. (b) The applicable Issuing Bank shall give the Agent written or telex notice, or telephonic notice confirmed promptly thereafter in writing, of the issuance of a Letter of Credit, provided, however, that the failure to provide such notice shall not result in any liability on the part of such Issuing Bank. (c) No Issuing Bank shall extend or amend any Letter of Credit unless the requirements of this Section 3.4 are met as though a new Letter of Credit was being requested and issued. 3.4-A The Outstanding Acceptances. Set forth on Schedule 1.1.5 are the Outstanding Acceptances previously created by certain one of the Lenders for the account of the Borrower. From and after the date of this Agreement, the terms of this Agreement, rather than any other agreement pursuant to which such Outstanding Acceptances were created (the "Prior Acceptance Agreements"), shall govern the terms and conditions of such Outstanding Acceptances. The Prior Acceptance Agreements shall hereby be terminated on the date of this Agreement provided nothing herein shall affect or impair the rights of the applicable Lenders parties to such Prior Acceptance Agreements with respect to indemnities or other provisions stated to survive the termination of such Prior Acceptance Agreements. The Borrower is obligated, and hereby unconditionally agrees, to pay to the Agent for the account of the applicable Lender which created an Outstanding Acceptance the face amount of each Outstanding Acceptance on the Maturity Date of such Outstanding Acceptance. If the Borrower at any time fails to repay on the applicable Maturity Date the face amount of any Outstanding Acceptance pursuant to this Section 3.4-A, the Borrower shall be deemed to have elected to borrow Revolving Loans from 39 the Lenders, as of the applicable Maturity Date, equal in amount to the face amount of the maturing Outstanding Acceptance. Such Revolving Loans shall be made as of such Maturity Date, automatically, without notice and without any requirement to satisfy the conditions precedent otherwise applicable to an Advance of Revolving Loans. Such Revolving Loans shall constitute a Floating Rate Advance, the proceeds of which Advance shall be used to pay the applicable creating Lender. If, for any reason, the Borrower fails to repay on the applicable Maturity Date the face amount of any Outstanding Acceptance on the applicable Maturity Date and, for any reason, the Lenders have no obligation to make Revolving Loans, then such matured amount shall bear interest from and after such day, until paid in full, at the interest rate applicable to a Floating Rate Advance. 3.5 Participation in Letters of Credit and Outstanding Acceptances. On the date of this Agreement, with respect to the Outstanding Acceptances, and immediately upon the issuance of each Letter of Credit hereunder, each Lender shall be deemed to have automatically, irrevocably and unconditionally purchased and received from the applicable Lender which created such Outstanding Acceptance and/or Issuing Bank an undivided interest and participation in and to each of the Outstanding Acceptances and each such Letter of Credit, the obligations of the Borrower in respect thereof, and the liability of such creating Lender and/or Issuing Bank thereunder (individually, an "Acceptance Interest" or "L/C Interest," as applicable and collectively, a "CREDIT SUPPORT INTEREST") in an amount equal to the face amount of the Outstanding Acceptances and/or the amount available for drawing under such Letter of Credit multiplied by such Lender's Pro Rata Share. The applicable creating Lender and/or Issuing Bank shall give to each Lender notice in the event that the Borrower fails to reimburse the applicable Issuing Bank with respect to any Outstanding Acceptance, any L/C Draft or any other draw on a Letter of Credit pursuant to the provisions of Section 3.4-A or Section 3.6, and each Lender shall promptly and unconditionally pay to the Agent for the account of the applicable creating Lender and/or Issuing Bank, in immediately available funds, an amount equal to such Lender's Pro Rata Share of the amount of such payment or draw. The obligation of each Lender to reimburse the creating Lenders and Issuing Banks under this Section 3.5 shall be unconditional, continuing, irrevocable and absolute. In the event that any Lender fails to make payment to the Agent of any amount due under this Section 3.5, the Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Agent receives such payment from such Lender or such obligation is otherwise fully satisfied; provided, however, that nothing contained in this sentence shall relieve such Lender of its obligation to reimburse the applicable creating Lender and/or Issuing Bank for such amount in accordance with this Section 3.5. 3.6 Reimbursement Obligation. The Borrower agrees unconditionally, irrevocably and absolutely to pay immediately to reimburse the applicable Issuing Bank for the amount of each drawing under or pursuant to a Letter of Credit or an L/C Draft related thereto (such obligation of the Borrower to reimburse the Agent for an advance made under a Letter of Credit or L/C Draft being hereinafter referred to as a "REIMBURSEMENT OBLIGATION" with respect to such Letter of Credit or L/C Draft), each such reimbursement to be made by the Borrower no later than the Business Day on which the applicable Issuing Bank makes payment of each such L/C Draft or, in 40 the case of any other draw on a Letter of Credit, the date specified in the demand of such Issuing Bank. If the Borrower at any time fails to repay a Reimbursement Obligation pursuant to this Section 3.6, the Borrower shall be deemed to have elected to borrow Revolving Loans from the Lenders, as of the date of the advance giving rise to the Reimbursement Obligation, equal in amount to the amount of the unpaid Reimbursement Obligation. Such Revolving Loans shall be made as of the date of the payment giving rise to such Reimbursement Obligation, automatically, without notice and without any requirement to satisfy the conditions precedent otherwise applicable to an Advance of Revolving Loans. Such Revolving Loans shall constitute a Floating Rate Advance, the proceeds of which Advance shall be used to repay such Reimbursement Obligation. If, for any reason, the Borrower fails to repay a Reimbursement Obligation on the day such Reimbursement Obligation arises and, for any reason, the Lenders are unable to make or have no obligation to make Revolving Loans, then such Reimbursement Obligation shall bear interest from and after such day, until paid in full, at the interest rate applicable to a Floating Rate Advance. 3.7 Credit Support Fees. The Borrower agrees to pay: (i) quarterly, in arrears, to the Agent for the ratable benefit of the Lenders, except as set forth in Section 9.2, a letter of credit fee at a rate per annum equal to the Applicable L/C Fee Percentage on the average daily outstanding face amount available for drawing under all Letters of Credit; (ii) quarterly, in arrears, to the Agent for the sole account of each Issuing Bank, a letter of credit fronting fee at such percentage rate as may be agreed between the Borrower and each Issuing Bank on the average daily outstanding face amount available for drawing under all Letters of Credit issued by such Issuing Bank; (iii) to the Agent for the benefit of each Issuing Bank, all customary fees and other issuance, amendment, document examination, negotiation and presentment expenses and related charges in connection with the issuance, amendment, presentation of L/C Drafts, and the like customarily charged by such Issuing Banks with respect to standby and commercial Letters of Credit, including, without limitation, standard commissions with respect to commercial Letters of Credit, payable at the time of invoice of such amounts; (iv) for the period from and including the date of this Agreement to and including the applicable Maturity Date, to the Agent for the ratable benefit of the Lenders, the acceptance commission amount as set forth on Schedule 3.7, with respect to each Outstanding Acceptance, on the face amount of such Outstanding Acceptance, payable on the date of this Agreement; and (v) to the Agent for the benefit of the applicable Lender which created the Outstanding Acceptances, all customary fees and other document, examination, negotiation and presentment fees, expenses and related charges in connection with the payment of Outstanding Acceptances, and the like customarily charged by such Lender with respect to acceptances payable at the time of invoice of such amounts. 41 3.8 Issuing Bank Reporting Requirements. In addition to the notices required by Section 3.4(b), each Issuing Bank shall, no later than the tenth Business Day following the last day of each month, provide to the Agent, upon the Agent's request, schedules, in form and substance reasonably satisfactory to the Agent, showing the date of issue, account party, amount, expiration date and the reference number of each Letter of Credit issued by it outstanding at any time during such month and the aggregate amount payable by the Borrower during such month. In addition, upon the request of the Agent, each Issuing Bank shall furnish to the Agent copies of any Letter of Credit and any application for or reimbursement agreement with respect to a Letter of Credit to which the Issuing Bank is party and such other documentation as may reasonably be requested by the Agent. Upon the request of any Lender, the Agent will provide to such Lender information concerning such Letters of Credit. 3.9 Indemnification; Exoneration. (A) In addition to amounts payable as elsewhere provided in this Article III, the Borrower hereby agrees to protect, indemnify, pay and save harmless the Agent, each Issuing Bank and each Lender from and against any and all liabilities and costs which the Agent, such Issuing Bank or such Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit other than, in the case of the applicable Issuing Bank, as a result of its Gross Negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, or (ii) the failure of the applicable Issuing Bank to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or omissions herein called "GOVERNMENTAL ACTS"). (B) As among the Borrower, the Lenders, the Agent and the Issuing Banks, the Borrower assumes all risks of the acts and omissions of, or misuse of such Letter of Credit by, the beneficiary of any Letters of Credit. In furtherance and not in limitation of the foregoing, subject to the provisions of the Letter of Credit applications and Letter of Credit reimbursement agreements executed by the Borrower at the time of request for any Letter of Credit, neither the Agent, any Issuing Bank nor any Lender shall be responsible (in the absence of Gross Negligence or willful misconduct in connection therewith, as determined by the final judgment of a court of competent jurisdiction): (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of the Letters of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of a Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, or other similar form of teletransmission or otherwise; (v) for errors in interpretation of technical trade terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (vii) for the misapplication by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (viii) for any consequences arising 42 from causes beyond the control of the Agent, the Issuing Banks and the Lenders, including, without limitation, any Governmental Acts. None of the above shall affect, impair, or prevent the vesting of any Issuing Bank's rights or powers under this Section 3.9. (C) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by any Issuing Bank under or in connection with the Letters of Credit or any related certificates shall not, in the absence of Gross Negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, put the applicable Issuing Bank, the Agent or any Lender under any resulting liability to the Borrower or relieve the Borrower of any of its obligations hereunder to any such Person. (D) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 3.9 shall survive the payment in full of principal and interest hereunder, the termination of the Letters of Credit and the termination of this Agreement. 3.10 Cash Collateral. Notwithstanding anything to the contrary herein or in any application for a Letter of Credit, after the occurrence and during the continuance of a Default, the Borrower shall, upon the Agent's demand, deliver to the Agent for the benefit of the Lenders and the Issuing Banks, cash, or other collateral of a type satisfactory to the Required Lenders, having a value, as reasonably determined by such Lenders, equal to the aggregate outstanding Credit Support Obligations. In addition, if the Revolving Credit Availability is at any time less than the amount of contingent L/C Obligations outstanding at any time, the Borrower shall deposit cash collateral with the Agent in an amount equal to the amount by which such L/C Obligations exceed such Revolving Credit Availability. Any such collateral shall be held by the Agent in a separate account appropriately designated as a cash collateral account in relation to this Agreement, the Letters of Credit and the Outstanding Acceptances and retained by the Agent for the benefit of the Lenders and the Issuing Banks as collateral security for the Borrower's obligations in respect of this Agreement and each of the Letters of Credit, L/C Drafts and Outstanding Acceptances. Such amounts shall be applied to reimburse the Issuing Banks for drawings or payments under or pursuant to Letters of Credit or L/C Drafts, and to reimburse the applicable creating Lender for drafts presented for payment with respect to the Outstanding Acceptances or if no such reimbursement is required, to payment of such of the other Obligations as the Agent shall determine. If no Default shall be continuing, amounts remaining in any cash collateral account established pursuant to this Section 3.10 which are not to be applied to reimburse an Issuing Bank for amounts actually paid or to be paid by such Issuing Bank in respect of a Letter of Credit or L/C Draft or a creating Lender for drafts presented for payment with respect to Outstanding Acceptances, shall be returned to the Borrower (after deduction of the Agent's expenses incurred in connection with such cash collateral account). ARTICLE IV: CHANGE IN CIRCUMSTANCES 43 4.1 Yield Protection. If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) adopted after the date of this Agreement and having general applicability to all banks within the jurisdiction in which such Lender operates (excluding, for the avoidance of doubt, the effect of and phasing in of capital requirements or other regulations or guidelines passed prior to the date of this Agreement), or any interpretation or application thereof by any Governmental Authority charged with the interpretation or application thereof, or the compliance of any Lender therewith, (i) subjects any Lender or any applicable Lending Installation to any tax, duty, charge or withholding on or from payments due from the Borrower (excluding federal taxation of the overall net income of any Lender or applicable Lending Installation), or changes the basis of taxation of payments to any Lender in respect of its Loans, its L/C Interests, the Outstanding Acceptances, the Letters of Credit or other amounts due it hereunder, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Rate Loans) with respect to its Loans, Credit Support Interests, the Outstanding Acceptances, or the Letters of Credit, or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining the Loans, the Credit Support Interests, the Outstanding Acceptances, or the Letters of Credit or reduces any amount received by any Lender or any applicable Lending Installation in connection with Loans, Outstanding Acceptances or Letters of Credit, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Loans or Credit Support Interests held or interest received by it or by reference to the Letters of Credit or Outstanding Acceptances, by an amount deemed material by such Lender; and the result of any of the foregoing is to increase the cost to that Lender of making, renewing or maintaining its Loans, Credit Support Interests, Outstanding Acceptances or Letters of Credit or to reduce any amount received under this Agreement, then, within thirty (30) days after receipt by the Borrower of written demand by such Lender pursuant to Section 4.5, the Borrower shall, upon receipt of a written statement setting forth the basis for calculating such additional amounts, pay such Lender that portion of such increased expense incurred or reduction in an amount received which such Lender determines is attributable to making, funding and maintaining its Loans, Credit Support Interests, Outstanding Acceptances, Letters of Credit and its Revolving Loan Commitment. 4.2 Changes in Capital Adequacy Regulations. If a Lender determines (i) the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such 44 Lender or any corporation controlling such Lender is increased as a result of a "Change" (as defined below), and (ii) such increase in capital will result in an increase in the cost to such Lender of maintaining its Loans, Credit Support Interests, Outstanding Acceptances, the Letters of Credit or its obligation to make Loans hereunder, then, within 15 days after receipt by the Borrower of written demand by such Lender pursuant to Section 4.5, the Borrower shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender reasonably determines is attributable to this Agreement, its Loans, its Credit Support Interests, Outstanding Acceptances, the Letters of Credit or its obligation to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "CHANGE" means (i) any change after the date of this Agreement in the "Risk-Based Capital Guidelines" (as defined below) excluding, for the avoidance of doubt, the effect of any phasing in of such Risk-Based Capital Guidelines or any other capital requirements passed prior to the date hereof, or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement and having general applicability to all banks and financial institutions within the jurisdiction in which such Lender operates which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 4.3 Availability of Types of Advances. If (i) any Lender determines that maintenance of its Eurodollar Rate Loans at a suitable Lending Installation would violate any applicable law, rule, regulation or directive, whether or not having the force of law, or (ii) the Required Lenders determine that (x) deposits of a type and maturity appropriate to match fund Eurodollar Rate Advances are not available or (y) the interest rate applicable to a Type of Advance does not accurately reflect the cost of making or maintaining such an Advance, then the Agent shall suspend the availability of the affected Type of Advance and, in the case of any occurrence set forth in clause (i) require any Advances of the affected Type to be repaid. 4.4 Funding Indemnification. If any payment of a Eurodollar Rate Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment, or otherwise, or a Eurodollar Rate Advance is not made on the date specified by the Borrower for any reason other than default or Gross Negligence by the Lenders, the Borrower indemnifies each Lender for any loss or reasonable cost incurred by it resulting therefrom, including, without limitation, any loss or reasonable cost in liquidating or employing deposits acquired to fund or maintain the Eurodollar Rate Advance. 45 4.5 Lender Statements; Survival of Indemnity. If reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Rate Loans to reduce any liability of the Borrower to such Lender under Sections 4.1 and 4.2 or to avoid the unavailability of a Type of Advance under Section 4.3, so long as such designation is not materially, financially disadvantageous to such Lender. Each Lender requiring compensation pursuant to Section 2.15(E) or to this Article IV shall use its reasonable efforts to notify the Borrower and the Agent in writing of any Change, law, policy, rule, guideline or directive giving rise to such demand for compensation not later than ninety (90) days following the date upon which the responsible account officer of such Lender knows or should have known of such Change, law, policy, rule, guideline or directive. Any demand for compensation pursuant to this Article IV shall be in writing and shall state the amount due, if any, under Section 4.1, 4.2 or 4.4 and shall set forth in reasonable detail the calculations upon which such Lender determined such amount. Such written demand shall be rebuttably presumed correct for all purposes. Determination of amounts payable under such Sections in connection with a Eurodollar Rate Loan shall be calculated as though each Lender funded its Eurodollar Rate Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. The obligations of the Borrower under Sections 4.1, 4.2 and 4.4 shall survive payment of the Obligations and termination of this Agreement. ARTICLE V: CONDITIONS PRECEDENT 5.1 Initial Advances and Letters of Credit. The Lenders shall not be required to make the initial Loans or issue any Letters of Credit unless the Borrower has furnished to the Agent each of the following, with sufficient copies for the Lenders, all in form and substance satisfactory to the Agent and the Lenders: (1) Copies of the Articles of Incorporation of the Borrower, together with all amendments and a certificate of good standing, both certified by the appropriate governmental officer in its jurisdiction of incorporation; (2) Copies, certified by the Secretary or Assistant Secretary of the Borrower, of its By-Laws and of its Board of Directors' resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for any Lender) authorizing the execution of the Loan Documents; (3) An incumbency certificate, executed by the Secretary or Assistant Secretary of the Borrower, which shall identify by name and title and bear the signature of the officers of the Borrower authorized to sign the Loan Documents and to make borrowings hereunder, upon which certificate the Lenders shall be entitled to rely until informed of any change in writing by the Borrower; 46 (4) A certificate, in form and substance satisfactory to the Agent, signed by the chief financial officer of the Borrower, stating that on Closing Date no Default or Unmatured Default has occurred and is continuing; (5) A written opinion of the Borrower's counsel, addressed to the Agent and the Lenders, addressing the issues identified in Exhibit F hereto containing assumptions and qualifications acceptable to the Agent and the Lenders; (6) Notes payable to the order of each of the applicable Lenders; (7) Written money transfer instructions reasonably requested by the Agent, addressed to the Agent and signed by an Authorized Officer; and (8) Such other documents as the Agent or any Lender or its counsel may have reasonably requested, including, without limitation all of the documents reflected on the List of Closing Documents attached as Exhibit G to this Agreement. 5.2 Each Advance and Letter of Credit. The Lenders shall not be required to make any Advance or issue any Letter of Credit, unless on the applicable Borrowing Date, or in the case of a Letter of Credit, the date on which the Letter of Credit is to be issued: (i) There exists no Default or Unmatured Default; and (ii) The representations and warranties contained in Article VI are true and correct as of such Borrowing Date except for changes in the Schedules to this Agreement reflecting transactions permitted by this Agreement. Each Borrowing Notice with respect to each such Advance and the letter of credit application with respect to a Letter of Credit shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 5.2(i) and (ii) have been satisfied. Any Lender may require a duly completed officer's certificate in substantially the form of Exhibit H hereto and/or a duly completed compliance certificate in substantially the form of Exhibit I hereto as a condition to making an Advance. ARTICLE VI: REPRESENTATIONS AND WARRANTIES In order to induce the Agent and the Lenders to enter into this Agreement and to make the Loans and the other financial accommodations to the Borrower and to issue the Letters of Credit described herein, the Borrower represents and warrants as follows to each Lender and the Agent as of the Closing Date, and thereafter on each date as required by Section 5.2: 6.1 Organization; Corporate Powers. The Borrower and each of its Subsidiaries (i) is a corporation duly organized, validly existing and in good standing under the laws of the 47 jurisdiction of its organization, (ii) is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which failure to be so qualified and in good standing could not reasonably be expected to have a Material Adverse Effect, and (iii) has all requisite corporate power and authority to own, operate and encumber its property and to conduct its business as presently conducted and as proposed to be conducted other than any failure under clause (i) or (iii) the effect of which is not reasonably likely to impair in any material respect the conduct of the Borrower's business, or the business of the Borrower and its Subsidiaries taken as a whole or the ability of the Borrower's or its Subsidiaries' ability to perform their obligations under the Loan Documents. 6.2 Authority. (A) The Borrower and each of its Subsidiaries that is a party thereto has the requisite corporate power and authority to execute, deliver and perform each of the Loan Documents. (B) The execution, delivery and performance of each of the Loan Documents and the consummation of the transactions contemplated thereby, have been duly approved by the respective boards of directors and, if necessary, the shareholders of the Borrower and each of its Subsidiaries that is a party thereto, and such approvals have not been rescinded. No other corporate action or proceedings on the part of the Borrower or such Subsidiaries are necessary to consummate such transactions. (C) Each of the Loan Documents to which the Borrower or any of its Subsidiaries is a party has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (except as enforceability may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally), and no unmatured default, default or breach of any covenant by any such party exists thereunder. 6.3 No Conflict; Governmental Consents. The execution, delivery and performance of each of the Loan Documents to which the Borrower or any of its Subsidiaries is a party do not and will not (i) conflict with the certificate or articles of incorporation or by-laws of the Borrower or any such Subsidiary, (ii) constitute a tortious interference with any Contractual Obligation of any Person or conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under any Requirement of Law (including, without limitation, any Environmental Property Transfer Act) or Contractual Obligation of the Borrower or any such Subsidiary, or require termination of any Contractual Obligation, except such interference, breach, default or termination which individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect, (iii) with respect to the Loan Documents, constitute a tortious interference with any Contractual Obligation of any Person or conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under any Requirement of Law (including, without limitation, any Environmental Property Transfer Act) or Contractual Obligation of the Borrower or any such Subsidiary, or require termination of any Contractual Obligation, except such interference, breach, default or 48 termination which individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect, (iv) result in or require the creation or imposition of any Lien whatsoever upon any of the property or assets of the Borrower or any such Subsidiary, other than Liens permitted by the Loan Documents, or (v) require any approval of the Borrower's or any such Subsidiary's Board of Directors or shareholders except such as have been obtained. Except as set forth on Schedule 6.3 to this Agreement, the execution, delivery and performance of each of the Transaction Documents to which the Borrower or any of its Subsidiaries is a party do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by any Governmental Authority, including under any Environmental Property Transfer Act, except filings, consents or notices which have been made, obtained or given, or which, if not made, obtained or given, individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. 6.4 Financial Statements. (A) The pro forma financial statements of the Borrower and its Subsidiaries, copies of which are attached to the Disclosure Letter, present on a pro forma basis the financial condition of the Borrower and such Subsidiaries as of such date, and reflect on a pro forma basis those liabilities reflected in the notes thereto and resulting from the planned purchase for retirement of approximately 125,000 shares of the Capital Stock of the Borrower (the "SHARE REPURCHASE") and the other transactions contemplated by this Agreement, and the payment or accrual of all transaction costs payable on the Closing Date with respect to any of the foregoing. The projections and assumptions expressed in the pro forma financials referenced in this Section 6.4(A) were prepared in good faith and represent management's opinion based on the information available to the Borrower at the time so furnished. (B) Complete and accurate copies of the following financial statements and the following related information have been delivered to the Agent: (1) the balance sheet of the Borrower as at November 30, 1996, the related combined statements of income, changes in stockholders' equity and cash flows of the Borrower and its consolidated Subsidiaries for the fiscal year then ended, and the audit report related thereto; and (2) the unaudited balance sheet of the Borrower and its consolidated Subsidiaries for the fiscal period ended May 31, 1997 and the related statements of operations, changes in stockholder's equity and cash flows of the Borrower and its consolidated Subsidiaries for the two fiscal quarter period then ended. 6.5 No Material Adverse Change. (a) Since May 31, 1997 up to the Closing Date, there has occurred no change in the business, properties, condition (financial or otherwise) or results of operations of the Borrower, or the Borrower and its Subsidiaries taken as a whole or any other event which has had or could reasonably be expected to have a Material Adverse Effect. (b) Since the Closing Date, there has occurred no change in the business, properties, condition (financial or otherwise) or results of operations of the Borrower or the Borrower and its Subsidiaries taken as a whole or any other event which has had or could reasonably be expected to have a Material Adverse Effect. 49 6.6 Taxes. (A) Tax Examinations. Except as described in the Disclosure Letter, all material deficiencies which have been asserted against the Borrower or any of the Borrower's Subsidiaries as a result of any federal, state, local or foreign tax examination for each taxable year in respect of which an examination has been conducted have been fully paid or finally settled or are being contested in good faith, and as of the Closing Date no issue has been raised by any taxing authority in any such examination which, by application of similar principles, reasonably can be expected to result in assertion by such taxing authority of a material deficiency for any other year not so examined which has not been reserved for in the Borrower's consolidated financial statements to the extent, if any, required by Agreement Accounting Principles. Except as permitted pursuant to Section 7.2(D), neither the Borrower nor any of the Borrower's Subsidiaries anticipates any material tax liability with respect to the years which have not been closed pursuant to applicable law. (B) Payment of Taxes. All tax returns and reports of the Borrower and its Subsidiaries required to be filed have been timely filed, and all material taxes, assessments, fees and other governmental charges thereupon and upon their respective property, assets, income and franchises which are shown in such returns or reports to be due and payable have been paid except those items which are being contested in good faith and have been reserved for in accordance with Agreement Accounting Principles. The Borrower has no knowledge of any proposed tax assessment against the Borrower or any of its Subsidiaries that will have or could reasonably be expected to have a Material Adverse Effect. (C) For purposes of this Section 6.6, "material" means any noncompliance or basis for liability which could reasonably be likely to subject the Borrower or the Borrower's Subsidiaries to liability, individually for the Borrower or any Subsidiary in excess of $1,000,000 or in the aggregate for the Borrower and its Subsidiaries in excess of $5,000,000. 6.7 Litigation; Loss Contingencies and Violations. Except as set forth in Schedule 6.7 to this Agreement, there is no action, suit, proceeding, arbitration or (to the Borrower's knowledge) investigation before or by any Governmental Authority or private arbitrator pending or, to the Borrower's knowledge, threatened against the Borrower or any of its Subsidiaries or any property of any of them which will have or could reasonably be expected to have a Material Adverse Effect. There is no material loss contingency within the meaning of Agreement Accounting Principles which has not been reflected in the consolidated financial statements of the Borrower prepared and delivered pursuant to Section 7.1(A) for the fiscal period during which such material loss contingency was incurred. Neither the Borrower nor any of its Subsidiaries is (A) in violation of any applicable Requirements of Law which violation will have or could reasonably be expected to have a Material Adverse Effect, or (B) subject to or in default with respect to any final judgment, writ, injunction, restraining order or order of any nature, decree, rule or regulation of any court or Governmental Authority which will have or could reasonably be expected to have a Material Adverse Effect. 50 6.8 Subsidiaries. Schedule 6.8 to this Agreement (i) contains a description of the corporate structure of the Borrower, its Subsidiaries and any other Person in which the Borrower or any of its Subsidiaries holds an Equity Interest (both narratively and in chart form); and (ii) accurately sets forth (A) the correct legal name, the jurisdiction of incorporation and the jurisdictions in which each of the Borrower and the direct and indirect domestic Subsidiaries and Material Subsidiaries which are foreign Subsidiaries of the Borrower is qualified to transact business as a foreign corporation, (B) for every domestic Subsidiary and for each foreign Subsidiary which is a Material Subsidiary, the authorized, issued and outstanding shares of each class of Capital Stock of each of such Subsidiaries and the owners of such shares (both as of the Closing Date and on a fully-diluted basis), (C) for each foreign Subsidiary which is not a Material Subsidiary, the percentage of ownership by the Borrower of such Subsidiary's Capital Stock, and (D) a summary of the direct and indirect partnership, joint venture, or other Equity Interests, if any, of the Borrower and each Subsidiary of the Borrower in any Person that is not a corporation. The outstanding Capital Stock of the Borrower and each of the Borrower's Material Subsidiaries is duly authorized, validly issued, fully paid and nonassessable. 6.9 ERISA. Except as disclosed on Schedule 6.9, no Benefit Plan has incurred any accumulated funding deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code) whether or not waived. Neither the Borrower nor any member of the Controlled Group has incurred any liability to the PBGC which remains outstanding other than the payment of premiums, and there are no premium payments which have become due which are unpaid. Schedule B to the most recent annual report filed with the IRS with respect to each Benefit Plan is complete and accurate. Since the date of each such Schedule B, there has been no material adverse change in the funding status or financial condition of the Benefit Plan relating to such Schedule B. Neither the Borrower nor any member of the Controlled Group has (i) failed to make a required contribution or payment to a Multiemployer Plan or (ii) made a complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a Multiemployer Plan. Neither the Borrower nor any member of the Controlled Group has failed to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or other payment. Neither the Borrower nor any member of the Controlled Group is required to provide security to a Benefit Plan under Section 401(a)(29) of the Code due to a Plan amendment that results in an increase in current liability for the plan year. Except for benefits provided to a select group of management employees which in any event are not material, neither the Borrower nor any of its Subsidiaries maintains or contributes to any employee welfare benefit plan within the meaning of Section 3(1) of ERISA which provides benefits to employees after termination of employment other than as required by Section 601 of ERISA. Each Plan which is intended to be qualified under Section 401(a) of the Code as currently in effect is so qualified, and each trust related to any such Plan is exempt from federal income tax under Section 501(a) of the Code as currently in effect. The Borrower and all Subsidiaries are in compliance in all material respects with the responsibilities, obligations and duties imposed on them by ERISA and the Code with respect to all Plans. Neither the Borrower nor any of its Subsidiaries nor any fiduciary of any Plan has engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of the Code which could reasonably be expected to subject the Borrower to liability in excess of $1,000,000. Neither the Borrower nor any member of the Controlled 51 Group has taken or failed to take any action which would constitute or result in a Termination Event, which action or inaction could reasonably be expected to subject the Borrower and its Subsidiaries to liability, individually or in the aggregate, in excess of $1,000,000. Neither the Borrower nor any Subsidiary is subject to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA and no other member of the Controlled Group is subject to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA which could reasonably be expected to subject the Borrower and its Subsidiaries to liability, individually or in the aggregate, in excess of $1,000,000. Neither the Borrower nor any of its Subsidiaries has, by reason of the transactions contemplated hereby, any obligation to make any payment to any employee pursuant to any Plan or existing contract or arrangement. 6.10 Accuracy of Information. The information, exhibits and reports furnished by or on behalf of the Borrower and any of its Subsidiaries to the Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents, the representations and warranties of the Borrower and its Subsidiaries contained in the Loan Documents, and all certificates and documents delivered to the Agent and the Lenders pursuant to the terms thereof, taken as a whole, do not contain as of the date furnished any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not materially misleading. 6.11 Securities Activities. Neither the Borrower nor any of its Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock. 6.12 Material Agreements. Neither the Borrower nor any Subsidiary is a party to any Contractual Obligation or subject to any charter or other corporate restriction which individually or in the aggregate will have or could reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received notice or has knowledge that (i) it is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Contractual Obligation applicable to it, or (ii) any condition exists which, with the giving of notice or the lapse of time or both, would constitute a default with respect to any such Contractual Obligation, in each case, except where such default or defaults, if any, individually or in the aggregate will not have or could not reasonably be expected to have a Material Adverse Effect. 6.13 Compliance with Laws. The Borrower and its Subsidiaries are in compliance with all Requirements of Law applicable to them and their respective businesses, in each case where the failure to so comply individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. 6.14 Assets and Properties. The Borrower and each of its Subsidiaries has good and marketable title to substantially all of its assets and properties (tangible and intangible, real or personal) owned by it or a valid leasehold interest in substantially all of its leased assets (except insofar as marketability may be limited by any laws or regulations of any Governmental Authority affecting such assets), and all such assets and property are free and clear of all Liens, 52 except Liens permitted under Section 7.3(C). Substantially all of the assets and properties owned by, leased to or used by the Borrower and/or each such Subsidiary of the Borrower are in adequate operating condition and repair, ordinary wear and tear excepted. Neither this Agreement nor any other Transaction Document, nor any transaction contemplated under any such agreement, will affect any right, title or interest of the Borrower or such Subsidiary in and to any of such assets in a manner that would have or could reasonably be expected to have a Material Adverse Effect. 6.15 Statutory Indebtedness Restrictions. Neither the Borrower nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the Investment Company Act of 1940, or any other federal or state statute or regulation which limits its ability to incur indebtedness or its ability to consummate the transactions contemplated hereby. 6.16 Insurance. The Borrower and its Subsidiaries currently maintain such insurance policies and programs reflect coverage that is reasonably consistent with prudent industry practice. 6.17 Labor Matters. As of the Closing Date, no attempt to organize the employees of the Borrower, and no labor disputes, strikes or walkouts affecting the operations of the Borrower or any of its Subsidiaries, is pending, or, to the Borrower's knowledge, threatened, planned or contemplated. 6.18 Environmental Matters. (A) Except as disclosed on Schedule 6.18 to this Agreement: (i) the operations of the Borrower and its Subsidiaries comply in all material respects with Environmental, Health or Safety Requirements of Law; (ii) the Borrower and its Subsidiaries have all permits, licenses or other authorizations required under Environmental, Health or Safety Requirements of Law and are in material compliance with such permits; (iii) neither the Borrower, any of its Subsidiaries nor any of their respective present property or operations, or, to the best of, the Borrower's or any of its Subsidiaries' knowledge, any of their respective past property or operations, are subject to or the subject of, any investigation known to the Borrower or any of its Subsidiaries, any judicial or administrative proceeding, order, judgment, decree, settlement or other agreement respecting: (A) any material violation of Environmental, Health or Safety Requirements of Law; (B) any material remedial action; or (C) any material claims or liabilities arising from the Release or threatened Release of a Contaminant into the environment; 53 (iv) there is not now, nor to the best of the Borrower's or any of its Subsidiaries' knowledge has there ever been on or in the property of the Borrower or any of its Subsidiaries, in material violation of Environmental, Health or Safety Requirements of Law, any landfill, waste pile, underground storage tanks, aboveground storage tanks, surface impoundment or hazardous waste storage facility of any kind, any polychlorinated biphenyls (PCBs) used in hydraulic oils, electric transformers or other equipment, or any asbestos containing material which in any such instance or all such instances in the aggregate is in material violation of Environmental, Health or Safety Requirements of Law; and (v) neither the Borrower nor any of its Subsidiaries has any material liability in connection with any Release or threatened Release of a Contaminant into the environment. (B) For purposes of this Section 6.18 "material" means any noncompliance or basis for liability which could reasonably be likely to subject the Borrower or the Borrower's Subsidiaries to liability, individually or in the aggregate, in excess of $5,000,000. 6.19 Solvency. After giving effect to (i) the Loans to be made on the Closing Date or such other date as Loans requested hereunder are made, (ii) the Share Repurchase and the other transactions contemplated by this Agreement and (iii) the payment and accrual of all transaction costs with respect to the foregoing, the Borrower and its Subsidiaries taken as a whole are Solvent. ARTICLE VII : COVENANTS The Borrower covenants and agrees that so long as any Commitments are outstanding and thereafter until payment in full of all of the Obligations (other than contingent indemnity obligations) and termination of all Letters of Credit and Outstanding Acceptances, unless the Required Lenders shall otherwise give prior written consent: 7.1 Reporting. The Borrower shall: (A) Financial Reporting. Furnish to the Lenders: (i) Quarterly Reports. As soon as practicable, and in any event within forty-five (45) days after the end of each fiscal quarter in each fiscal year, the consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such period and the related consolidated and consolidating statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, certified by the chief financial officer of the Borrower on behalf of the Borrower as fairly presenting the consolidated and consolidating financial position of the Borrower and its Subsidiaries 54 as at the dates indicated and the results of their operations and cash flows for the periods indicated in accordance with Agreement Accounting Principles, subject to normal year end adjustments. (ii) Annual Reports. As soon as practicable, and in any event within ninety (90) days after the end of each fiscal year, (a) the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income, stockholders' equity and cash flows of the Borrower and its Subsidiaries for such fiscal year, and in comparative form the corresponding figures for the previous fiscal year along with consolidating schedules in form and substance sufficient to calculate the financial covenants set forth in Section 7.4 and (b) an audit report on the items listed in clause (a) hereof (other than the consolidating schedules) of independent certified public accountants of recognized national standing, which audit report shall be unqualified and shall state that such financial statements fairly present the consolidated and consolidating financial position of the Borrower and its Subsidiaries as at the dates indicated and the results of their operations and cash flows for the periods indicated in conformity with Agreement Accounting Principles and that the examination by such accountants in connection with such consolidated and consolidating financial statements has been made in accordance with generally accepted auditing standards. The deliveries made pursuant to this clause (ii) shall be accompanied by (x) any management letter identifying material weaknesses in internal accounting controls prepared by the above-referenced accountants, (y) a certificate of such accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof. (iii) Officer's Certificate. Together with each delivery of any financial statement (a) pursuant to clauses (i) and (ii) of this Section 7.1(A), an Officer's Certificate of the Borrower, substantially in the form of Exhibit H attached hereto and made a part hereof, stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof and (b) a compliance certificate, substantially in the form of Exhibit I attached hereto and made a part hereof, signed by the Borrower's Chief Financial Officer or Treasurer, setting forth calculations for the period then ended for Section 2.5(B), if applicable, which demonstrate compliance with the provisions of Section 7.3(B) and Section 7.4, and which calculate the Leverage Ratio for purposes of determining the then Applicable Eurodollar Margin and Applicable Commitment Fee Percentage. (iv) Budgets; Business Plans; Financial Projections. As soon as practicable and in any event not later than thirty (30) days after the beginning of each fiscal year, a copy of the plan and forecast (including a projected balance sheet, income statement and a statement of cash flow) of the Borrower and its Subsidiaries for the upcoming fiscal year. 55 (B) Notice of Default. Promptly upon any of the chief executive officer, chief operating officer, chief financial officer, treasurer or controller of the Borrower obtaining knowledge (i) of any condition or event which constitutes a Default or Unmatured Default, or becoming aware that any Lender or Agent has given any written notice with respect to a claimed Default or Unmatured Default under this Agreement, or (ii) that any Person has given any written notice to the Borrower or any Subsidiary of the Borrower or taken any other action with respect to a claimed default or event or condition of the type referred to in Section 8.1(E), deliver to the Agent and the Lenders an Officer's Certificate specifying (a) the nature and period of existence of any such claimed default, Default, Unmatured Default, condition or event, (b) the notice given or action taken by such Person in connection therewith, and (c) what action the Borrower has taken, is taking and proposes to take with respect thereto. (C) Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of the institution of, or written threat of, any action, suit, proceeding, governmental investigation or arbitration against or affecting the Borrower or any of its Subsidiaries or any property of the Borrower or any of its Subsidiaries not previously disclosed pursuant to Section 6.7, which action, suit, proceeding, governmental investigation or arbitration exposes, or in the case of multiple actions, suits, proceedings, governmental investigations or arbitrations arising out of the same general allegations or circumstances which expose, in the Borrower's reasonable judgment, the Borrower or any of its Subsidiaries to liability in an amount aggregating $1,000,000 or more (exclusive of claims covered by insurance policies of the Borrower or any of its Subsidiaries unless the insurers of such claims have disclaimed coverage or reserved the right to disclaim coverage on such claims and exclusive of claims covered by the indemnity of a financially responsible indemnitor in favor of the Borrower or any of its Subsidiaries unless the indemnitor has disclaimed or reserved the right to disclaim coverage thereof), give written notice thereof to the Agent and the Lenders and provide such other information as may be reasonably available to enable each Lender and the Agent and its counsel to evaluate such matters; and (ii) in addition to the requirements set forth in clause (i) of this Section 7.1(C), upon request of the Agent or the Required Lenders, promptly give written notice of the status of any action, suit, proceeding, governmental investigation or arbitration covered by a report delivered pursuant to clause (i) above and provide such other information as may be reasonably available to it that would not jeopardize any attorney-client privilege by disclosure to the Lenders to enable each Lender and the Agent and its counsel to evaluate such matters. (D) ERISA Notices. Deliver or cause to be delivered to the Agent and the Lenders, at the Borrower's expense, the following information and notices as soon as reasonably possible, and in any event: (i) (a) within fifteen (15) Business Days after the Borrower obtains knowledge that a Termination Event has occurred, a written statement of the chief financial officer of the Borrower describing such Termination Event and the action, if any, which the Borrower has taken, is taking or proposes to take with respect thereto, and when known, any action taken or threatened by the IRS, DOL or PBGC with respect thereto and (b) within fifteen (15) Business Days after any member of the Controlled Group obtains 56 knowledge that a Termination Event has occurred which could reasonably be expected to subject the Borrower to liability in excess of $1,000,000, a written statement of the chief financial officer of the Borrower describing such Termination Event and the action, if any, which the member of the Controlled Group has taken, is taking or proposes to take with respect thereto, and when known, any action taken or threatened by the IRS, DOL or PBGC with respect thereto; (ii) within fifteen (15) Business Days after the Borrower or any of its Subsidiaries obtains knowledge that a prohibited transaction (defined in Sections 406 of ERISA and Section 4975 of the Code) has occurred, a statement of the chief financial officer of the Borrower describing such transaction and the action which the Borrower or such Subsidiary has taken, is taking or proposes to take with respect thereto; (iii) within fifteen (15) Business Days after the material increase in the benefits of any existing Plan or the establishment of any new Benefit Plan or the commencement of, or obligation to commence, contributions to any Benefit Plan or Multiemployer Plan to which the Borrower or any member of the Controlled Group was not previously contributing, notification of such increase, establishment, commencement or obligation to commence and the amount of such contributions; (iv) within fifteen (15) Business Days after the Borrower or any of its Subsidiaries receives notice of any unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the Code, copies of each such letter; (v) within fifteen (15) Business Days after the establishment of any foreign employee benefit plan or the commencement of, or obligation to commence, contributions to any foreign employee benefit plan to which the Borrower or any Subsidiary was not previously contributing, notification of such establishment, commencement or obligation to commence and the amount of such contributions; (vi) within fifteen (15) Business Days of request of any Lender, copies of each annual report (form 5500 series), including Schedule B thereto, filed with respect to each Benefit Plan; (vii) within fifteen (15) Business Days of request of any Lender, each actuarial report for any Benefit Plan or Multiemployer Plan and each annual report for any Multiemployer Plan, copies of each such report; (viii) within fifteen (15) Business Days after the filing thereof with the IRS, a copy of each funding waiver request filed with respect to any Benefit Plan and all communications received by the Borrower or a member of the Controlled Group with respect to such request; 57 (ix) within fifteen (15) Business Days after receipt by the Borrower or any member of the Controlled Group of the PBGC's intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies of each such notice; (x) within fifteen (15) Business Days after receipt by the Borrower or any member of the Controlled Group of a notice from a Multiemployer Plan regarding the imposition of withdrawal liability, copies of each such notice; (xi) within fifteen (15) Business Days after the Borrower or any member of the Controlled Group fails to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment, a notification of such failure; and (xii) within fifteen (15) Business Days after the Borrower or any member of the Controlled Group knows or has reason to know that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan. (E) Labor Matters. Notify the Agent and the Lenders in writing, promptly upon the Borrower's learning thereof, of (i) any material labor dispute to which the Borrower or any of its Material Subsidiaries may become a party, including, without limitation, any strikes, lockouts or other disputes relating to such Persons' plants and other facilities and (ii) any Worker Adjustment and Retraining Notification Act liability incurred with respect to the closing of any plant or other facility of the Borrower or any of its Material Subsidiaries. (F) Other Indebtedness. Deliver to the Agent (i) a copy of each regular report, notice or communication regarding potential or actual defaults (including any accompanying officer's certificate) delivered by or on behalf of the Borrower or any of its Subsidiaries to the holders of funded Indebtedness which has an outstanding principal balance of $5,000,000 or more pursuant to the terms of the agreements governing such Indebtedness, such delivery to be made at the same time and by the same means as such notice or other communication is delivered to such holders, and (ii) a copy of each notice received by the Borrower or any of its Subsidiaries from the holders of funded Indebtedness pursuant to the terms of such Indebtedness, such delivery to be made promptly after such notice or other communication is received by the Borrower or Subsidiary, as applicable. (G) Other Reports. Deliver or cause to be delivered to the Agent and the Lenders copies of all financial statements, reports and notices, if any, sent or made available generally by the Borrower to its securities holders or filed with the Commission by the Borrower, all press releases made available generally by the Borrower or any of the Borrower's Subsidiaries to the public concerning material developments in the business of the Borrower or any such Subsidiary and all notifications received from the Commission by the Borrower or its Subsidiaries pursuant to the Securities Exchange Act of 1934 and the rules promulgated thereunder. 58 (H) Environmental Notices. As soon as possible and in any event within ten (10) days after receipt by the Borrower, deliver to the Agent and the Lenders a copy of (i) any notice or claim to the effect that the Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the Release by the Borrower, any of its Subsidiaries, or any other Person of any Contaminant into the environment, and (ii) any notice alleging any violation of any Environmental, Health or Safety Requirements of Law by the Borrower or any of its Subsidiaries if, in either case, such notice or claim relates to an event which could reasonably be expected to subject the Borrower and its Subsidiaries to liability individually or in the aggregate in excess of $3,000,000. (I) Other Information. Promptly upon receiving a request therefor from the Agent, prepare and deliver to the Agent and the Lenders such other information with respect to the Borrower, any of its Subsidiaries, or the Collateral, including, without limitation, schedules identifying and describing the Collateral and any dispositions thereof or any Asset Sale or Financing (and the use of the Net Cash Proceeds thereof), as from time to time may be reasonably requested by the Agent. 7.2 Affirmative Covenants. (A) Corporate Existence, Etc. Except as permitted pursuant to Section 7.3(I), the Borrower shall, and shall cause each of its Subsidiaries to, at all times maintain its corporate existence and preserve and keep, or cause to be preserved and kept, in full force and effect its rights and franchises material to its businesses. (B) Corporate Powers; Conduct of Business. The Borrower shall, and shall cause each of its Subsidiaries to, qualify and remain qualified to do business in each jurisdiction in which the nature of its business requires it to be so qualified and where the failure to be so qualified will have or could reasonably be expected to have a Material Adverse Effect. The Borrower will, and will cause each Subsidiary to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted. (C) Compliance with Laws, Etc. The Borrower shall, and shall cause its Subsidiaries to, (a) comply with all Requirements of Law and all restrictive covenants affecting such Person or the business, properties, assets or operations of such Person unless failure to comply could not reasonably be expected to have a Material Adverse Effect and (b) obtain as needed all Permits necessary for its operations and maintain such Permits in good standing unless failure to obtain such Permits could not reasonably be expected to have a Material Adverse Effect. (D) Payment of Taxes and Claims; Tax Consolidation. The Borrower shall pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and other governmental charges imposed upon it or on any of its properties or assets or in respect of any of its franchises, business, income or property before any penalty or interest accrues thereon, and (ii) all material claims (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or may become a Lien (other than a 59 Lien permitted by Section 7.3(C)) upon any of the Borrower's or such Subsidiary's property or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, however, that no such taxes, assessments and governmental charges referred to in clause (i) above or claims referred to in clause (ii) above (and interest, penalties or fines relating thereto) need be paid if being contested in good faith by appropriate proceedings diligently instituted and conducted and if such reserve or other appropriate provision, if any, as shall be required in conformity with Agreement Accounting Principles shall have been made therefor. (E) Insurance. The Borrower shall maintain for itself and its Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force and effect, the insurance policies and programs required by Section 6.16 of this Agreement as reflect coverage that is reasonably consistent with prudent industry practice. (F) Inspection of Property; Books and Records; Discussions. The Borrower shall permit and cause each of the Borrower's Subsidiaries to permit, any authorized representative(s) designated by either the Agent or any Lender to visit and inspect any of the properties of the Borrower or any of its Subsidiaries, to examine, audit, check and make copies of their respective financial and accounting records, books, journals, orders, receipts and any correspondence and other data relating to their respective businesses or the transactions contemplated hereby (including, without limitation, in connection with environmental compliance, hazard or liability), and to discuss their affairs, finances and accounts with their officers and upon prior written notice to Borrower, independent certified public accountants, all upon reasonable notice and at such reasonable times during normal business hours, as often as may be reasonably requested. The Borrower shall keep and maintain, and cause each of the Borrower's Subsidiaries to keep and maintain, in all material respects, proper books of record and account in which entries in conformity with Agreement Accounting Principles shall be made of all dealings and transactions in relation to their respective businesses and activities. If a Default has occurred and is continuing, the Borrower, upon the Agent's request, shall turn over copies of any such records to the Agent or its representatives and, upon any Lender's request, the Agent shall turn over copies of any such records to such Lender or its representatives. (G) ERISA Compliance. The Borrower shall, and shall cause each of the Borrower's Subsidiaries to, establish, maintain and operate all Plans to comply in all material respects with the provisions of ERISA, the Code, all other applicable laws, and the regulations and interpretations thereunder and the respective requirements of the governing documents for such Plans. (H) Maintenance of Property. The Borrower shall cause all property used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 7.2(H) shall prevent the Borrower from discontinuing the 60 operation or maintenance of any of such property if such discontinuance is, in the judgment of the Borrower, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Agent or the Lenders. (I) Environmental Compliance. The Borrower and its Subsidiaries shall comply with all Environmental, Health or Safety Requirements of Law, except where noncompliance will not have or is not reasonably likely to subject the Borrower or any of its Subsidiaries to liability, individually or in the aggregate, in excess of $5,000,000. (J) Use of Proceeds. The Borrower shall use the proceeds of the Revolving Loans and the Term Loans to (i) consummate the Share Repurchase, (ii) repay certain existing Indebtedness, and (iii) provide funds for the additional working capital needs and other general corporate purposes of the Borrower. Except to the limited extent set forth above, the Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Loans to purchase or carry any Margin Stock or to make any Acquisition, other than a Permitted Acquisition pursuant to Section 7.3(G). (K) Subsidiary Guarantees and Pledges. The Borrower shall (i) on or prior to the sixtieth (60th) day following the Closing Date, execute one or more pledge agreements or share mortgages with respect to 65% of the shares of each of Binks Sames, Ltd. and Sames, S.A., together with appropriate corporate resolutions and other documentation (including opinions, if requested by the Agent, the stock certificates representing the shares subject to such pledge, stock powers with respect thereto executed in blank, and such other documents as shall be reasonably requested to perfect the Lien of such pledge) in each case in form and substance reasonably satisfactory to the Agent, and the Agent shall be reasonably satisfied that it has a first priority perfected pledge of or charge over such shares, which lien shall be extended equally and ratably to the holders of the Senior Notes pursuant to the Collateral Sharing Agreement; (ii) cause each domestic Subsidiary that is, at any time, a Material Subsidiary to deliver to the Agent an executed guaranty supplement to become a guarantor under the Guaranty in the form attached to the Guaranty and appropriate corporate resolutions, opinions and other documentation in form and substance reasonably satisfactory to the Agent; and (iii) for each foreign Subsidiary that is, at any time, a Material Subsidiary, within sixty (60) days of the date following which the Borrower knew or should have known such Subsidiary became a Material Subsidiary to execute and deliver to the Agent one or more pledge agreements or share mortgages with respect to 65% of the shares of each such Material Subsidiary together with appropriate corporate resolutions and other documentation (including opinions, if requested by the Agent, the stock certificates representing the shares subject to such pledge, stock powers with respect thereto executed in blank, and such other documents as shall be reasonably requested to perfect the Lien of such pledge) in each case in form and substance reasonably satisfactory to the Agent, and the Agent shall be reasonably satisfied that it has a first priority perfected pledge of or charge over such shares, which lien shall be extended equally and ratably to the holders of the Senior Notes pursuant to the Collateral Sharing Agreement. 61 7.3 Negative Covenants. (A) Indebtedness. Neither the Borrower nor any of its Subsidiaries shall directly or indirectly create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except: (i) the Obligations; (ii) Indebtedness evidenced by the Senior Notes; (iii) Permitted Existing Indebtedness and Permitted Refinancing Indebtedness; (iv) Indebtedness in respect of obligations secured by Customary Permitted Liens; (v) Indebtedness constituting Contingent Obligations permitted by Section 7.3(E); (vi) Indebtedness arising from intercompany loans (a) from any Subsidiary to the Borrower or any wholly-owned Subsidiary and (b) intercompany loans from the Borrower to its Subsidiaries permitted under Section 7.3(S); (vii) Indebtedness in respect of Hedging Obligations permitted under Section 7.3(Q); (viii) secured or unsecured purchase money Indebtedness (including Capitalized Leases) incurred by the Borrower or any of its Subsidiaries after the Closing Date to finance the acquisition of fixed assets, if (1) at the time of such incurrence, no Default or Unmatured Default has occurred and is continuing or would result from such incurrence, (2) such Indebtedness has a scheduled maturity and is not due on demand, (3) such Indebtedness does not exceed the lower of the fair market value or the cost of the applicable fixed assets on the date acquired, (4) such Indebtedness does not exceed $5,000,000 in the aggregate outstanding at any time, and (5) any Lien securing such Indebtedness is permitted under Section 7.3(C) (such Indebtedness being referred to herein as "PERMITTED PURCHASE MONEY INDEBTEDNESS"); (ix) Indebtedness with respect to surety, appeal and performance bonds obtained by the Borrower or any of its Subsidiaries in the ordinary course of business; (x) Unsecured Subordinated Indebtedness the terms (including, without limitation, maturity, amortization, interest rate, premiums, fees, covenants, events of default, and remedies) of which are acceptable to the Agent when issued, but in each case not any increase in the principal amount thereof and not any refinancing, modification, refunding or extension of maturity thereof, in whole or in part, unless such refinancing, 62 modification, refunding or extension is not materially less favorable to the Borrower, including, without limitation, with respect to amount, maturity, amortization, interest rate, premiums, fees, covenants, subordination terms, events of default and remedies; provided any such Subordinated Indebtedness incurred by the Borrower or any Subsidiary to the seller in any Permitted Acquisition as part of the consideration therefor shall not exceed $10,000,000 in the aggregate outstanding at any time (the Indebtedness under this clause (x) being referred to as "PERMITTED SUBORDINATED INDEBTEDNESS"); (xi) Indebtedness evidenced by the Outstanding Acceptances; (xii) Indebtedness which is outstanding at another Person which is the target company in a Permitted Acquisition and either remains outstanding at such Person when its Equity Interests are acquired by the Borrower or one of its Subsidiaries or is assumed by the Borrower or one of its Subsidiaries in connection with the purchase of the assets of such target; provided none of such Indebtedness was incurred in connection with or in anticipation of such Permitted Acquisition; provided, further, any Liens in respect of such Indebtedness shall extend only to the assets of such Person; (xiii) Indebtedness in respect of judgments or awards which have been in force for less than the applicable appeal period so long as execution is not levied thereunder (or in respect of which the Borrower or its Subsidiary, as applicable, shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review) and which does not, in the aggregate, exceed $1,000,000; and (xiv) Indebtedness in addition to that referred to elsewhere in this Section 7.3(A) in an outstanding principal amount not to exceed (a) $10,000,000 in the aggregate at any time for the Borrower and its Subsidiaries and (b) $7,500,000 in the aggregate at any time for the Borrowers' Subsidiaries. (B) Sales of Assets. Neither the Borrower nor any of its Subsidiaries shall sell, assign, transfer, lease, convey or otherwise dispose of any property, whether now owned or hereafter acquired, or any income or profits therefrom, or enter into any agreement to do so, except: (i) sales of Inventory and other assets in the ordinary course of business; (ii) the disposition in the ordinary course of business of equipment that is obsolete, excess or no longer useful in the Borrower's or its Subsidiaries' business; (iii) the sale of the Borrower's Franklin Park, Illinois facility; (iv) the sale of Binks de Mexico, S.A. de C.V.'s Mexico City facility; and 63 (v) sales, assignments, transfers, leases, conveyances or other dispositions of other assets (other than receivables) to Persons which are not Affiliates of the Borrower if the value of such assets (which, for these purposes, shall mean the greater of such assets' book value at the time of sale or other disposition or the proceeds realized by the Borrower or its Subsidiaries from the sale or disposition of such assets), when added to the value of all other assets sold or disposed of by the Company and its Subsidiaries under this clause (v) after the Closing Date, does not exceed ten percent (10%) of the Borrower's Consolidated Tangible Assets determined at the end of the fiscal year immediately preceding that in which such transaction is proposed to be entered into. (C) Liens. Neither the Borrower nor any of its Subsidiaries shall directly or indirectly create, incur, assume or permit to exist any Lien on or with respect to any of their respective property or assets except: (i) Permitted Existing Liens; (ii) Customary Permitted Liens; (iii) purchase money Liens (including the interest of a lessor under a Capitalized Lease and Liens to which any property is subject at the time of the Borrower's acquisition thereof) securing Permitted Purchase Money Indebtedness; provided that such Liens shall not apply to any property of the Borrower or its Subsidiaries other than that purchased or subject to such Capitalized Lease; (iv) mortgages, pledges or security interests on the properties or assets of a Subsidiary in favor of the Borrower or in favor of any other Subsidiary; (v) Liens created pursuant to applications or reimbursement arrangements pertaining to Letters of Credit which encumber only the goods, or documents of title covering the goods, which are sold or shipped in the transaction for which such Letters of Credit were issued; (vi) any attachment or judgment Liens with respect to a judgments not exceeding $1,000,000 in the aggregate, unless the judgment(s) it secures shall not, within 30 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 30 days after the expiration of any such stay; and (vii) other Liens securing Indebtedness not to exceed $500,000 in the aggregate. In addition, neither the Borrower nor any of its Subsidiaries shall become a party to any agreement, note, indenture or other instrument, or take any other action, which would prohibit the creation of a Lien on any of its properties or other assets with an aggregate fair market value of $5,000,000 or more in favor of the Agent for the benefit of itself and the Lenders, as collateral for the Obligations; provided that any agreement, note, indenture or other instrument in 64 connection with Permitted Purchase Money Indebtedness (including Capitalized Leases) may prohibit the creation of a Lien in favor of the Agent for the benefit of itself and the Lenders on the items of property obtained with the proceeds of such Permitted Purchase Money Indebtedness. (D) Investments. Except to the extent permitted pursuant to paragraph (G) below, neither the Borrower nor any of its Subsidiaries shall directly or indirectly make or own any Investment except: (i) Investments in Cash Equivalents; (ii) Permitted Existing Investments in an amount not greater than the amount thereof on the Closing Date; (iii) Investments in trade receivables or received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (iv) Investments consisting of deposit accounts maintained by the Borrower; (v) Investments consisting of non-cash consideration from a sale, assignment, transfer, lease, conveyance or other disposition of property permitted by Section 7.3(B); (vi) Investments consisting of (a) intercompany loans from any Subsidiary to the Borrower or any other Subsidiary permitted by Section 7.1(A)(vi) and (b) intercompany loans from the Borrower to its Subsidiaries permitted under Section 7.3(S); (vii) Investments constituting Permitted Acquisitions; (viii) Investments resulting from advances to employees made in the ordinary course of business not to exceed an aggregate of $1,000,000 outstanding at any time; (ix) Investments resulting from leasehold improvements not to exceed an aggregate amount of $4,000,000; and (x) Investments in addition to those referred to elsewhere in this Section 7.3(D) in an amount not to exceed $10,000,000 in the aggregate at any time outstanding; provided, however, that the Investments described in clause (vii) above shall not be permitted if either a Default or an Unmatured Default shall have occurred and be continuing on the date thereof or would result therefrom. 65 (E) Contingent Obligations. Neither the Borrower nor any of its Subsidiaries shall directly or indirectly create or become or be liable with respect to any Contingent Obligation, except: (i) recourse obligations resulting from endorsement of negotiable instruments for collection in the ordinary course of business; (ii) Permitted Existing Contingent Obligations; (iii) obligations, warranties, and indemnities, not relating to Indebtedness of any Person, which have been or are undertaken or made in the ordinary course of business and, except for product warranties extended to Subsidiaries or Affiliates of the Borrower in the ordinary course of business and consistent with warranties given to non-Affiliated parties, not for the benefit of or in favor of an Affiliate of the Borrower or such Subsidiary; (iv) additional Contingent Obligations which do not exceed $5,000,000 in the aggregate at any time; (v) Contingent Obligations with respect to surety, appeal and performance bonds obtained by the Borrower or any Subsidiary in the ordinary course of business; (vi) Contingent Obligations of Borrower in respect of any Subsidiary; and (vii) contingent obligations arising from any guaranty executed by a Subsidiary of the indebtedness evidenced by the Senior Notes if such Subsidiary has also executed a Guaranty in connection with the Obligations and provided the obligations under such guaranty shall be governed by the terms of the Intercreditor Agreement.. (F) Restricted Payments. Neither the Borrower nor any of its Subsidiaries shall declare or make any Restricted Payment, except: (i) Restricted Payments made in connection with the defeasance, redemption or repurchase of any Indebtedness with the Net Cash Proceeds of Permitted Refinancing Indebtedness; (ii) mandatory payments of interest, principal or premium, if any, due on the Senior Notes in accordance with repayment provisions in effect with respect to such Indebtedness as of the Closing Date; (iii) Restricted Payments made in connection with the Share Repurchase provided no Default or Unmatured Default has occurred and is continuing at the date of declaration or payment thereof or would result therefrom; (iv) mandatory payments of interest, principal or premium, if any, due on the Permitted Subordinated Indebtedness unless such payments are prohibited by the terms of such Indebtedness or the subordination agreements related thereto; (v) Restricted Payments of any Subsidiary of the Borrower to the Borrower or to another Subsidiary of the Borrower; and (vi) additional Restricted Payments provided no Default or Unmatured Default has occurred and is continuing at the date of declaration or payment thereof or would result therefrom; 66 (G) Conduct of Business; Subsidiaries; Acquisitions. Neither the Borrower nor any of its Subsidiaries shall engage in any business other than the businesses engaged in by the Borrower on the date hereof and any business or activities which are substantially similar, related or incidental thereto. The Borrower shall not create, acquire or capitalize any Subsidiary after the date hereof unless (i) no Default or Unmatured Default shall have occurred and be continuing or would result therefrom; (ii) after such creation, acquisition or capitalization, all of the representations and warranties contained herein shall be true and correct; and (iii) after such creation, acquisition or capitalization the Borrower shall be in compliance with the terms of Section 7.2(K). The Borrower shall not make any Acquisitions, other than Acquisitions meeting the following requirements (each such Acquisition constituting a "PERMITTED ACQUISITION"): (i) no Default or Unmatured Default shall have occurred and be continuing or would result from such Acquisition or the incurrence of any Indebtedness in connection therewith; (ii) the purchase is consummated pursuant to a negotiated acquisition agreement on a non-hostile basis; (iii) the businesses being acquired shall be substantially similar, related or incidental to the businesses or activities engaged in by the Borrower and its Subsidiaries taken as a whole on the Closing Date; and (iv) the aggregate purchase price (including assumed liabilities) in connection with all such transactions from and after the Closing Date shall not exceed $10,000,000. (H) Transactions with Shareholders and Affiliates. Neither the Borrower nor any of its Subsidiaries shall directly or indirectly enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder or holders of any of the Equity Interests of the Borrower holding in excess of 5.0% of the fully-diluted aggregate amount of Equity Interests outstanding, or with any Affiliate of the Borrower which is not its Subsidiary, on terms that are less favorable to the Borrower or any of its Subsidiaries, as applicable, than those that might be obtained in an arm's length transaction at the time from Persons who are not such a holder or Affiliate, except for Restricted Payments permitted by Section 7.3(F) and Investments permitted by Section 7.3(D). (I) Restriction on Fundamental Changes. Except as set forth in the Disclosure Letter, neither the Borrower nor any of its Subsidiaries shall enter into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or convey, lease, sell, transfer or otherwise dispose of, in one transaction or series of transactions, all or substantially all of the Borrower's or any such Subsidiary's business or property, whether now or hereafter acquired, except (i) transactions permitted under Sections 7.3(B) or 7.3(G), (ii) mergers, consolidations, or amalgamations of a Subsidiary of the Borrower with and into the Borrower (with the Borrower as the surviving corporation) or with another Subsidiary of the Borrower, and 67 (iii) any liquidation of any Subsidiary of the Borrower into the Borrower or another Subsidiary of the Borrower. (J) Sales and Leasebacks. Neither the Borrower nor any of its Subsidiaries shall become liable, directly, by assumption or by Contingent Obligation, with respect to any lease, whether an operating lease or a Capitalized Lease, of any property (whether real or personal or mixed) (i) which it or one of its Subsidiaries sold or transferred or is to sell or transfer to any other Person, or (ii) which it or one of its Subsidiaries intends to use for substantially the same purposes as any other property which has been or is to be sold or transferred by it or one of its Subsidiaries to any other Person in connection with such lease, unless in either case the sale involved is not prohibited under Section 7.3(B) and the lease involved is not prohibited under Section 7.3(A). (K) Margin Regulations. Other than in connection with the Share Repurchase, neither the Borrower nor any of its Subsidiaries, shall use all or any portion of the proceeds of any credit extended under this Agreement to purchase or carry Margin Stock. (L) ERISA. The Borrower shall not (i) engage, or permit any of its Subsidiaries to engage, in any prohibited transaction described in Sections 406 of ERISA or 4975 of the Code for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the DOL; (ii) permit to exist any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the Code), with respect to any Benefit Plan, whether or not waived; (iii) fail, or permit any Controlled Group member to fail, to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan; (iv) terminate, or permit any Controlled Group member to terminate, any Benefit Plan which would result in any liability of the Borrower or any Controlled Group member under Title IV of ERISA which liability could reasonably be expected to have a Material Adverse Effect; (v) fail to make any contribution or payment to any Multiemployer Plan which the Borrower or any Controlled Group member may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; (vi) fail, or permit any Controlled Group member to fail, to pay any required installment or any other payment required under Section 412 of the Code on or before the due date for such installment or other payment; or 68 (vii) amend, or permit any Controlled Group member to amend, a Plan resulting in an increase in current liability for the plan year such that the Borrower or any Controlled Group member is required to provide security to such Plan under Section 401(a)(29) of the Code. (M) Corporate Documents. Neither the Borrower nor any of its Material Subsidiaries shall amend, modify or otherwise change any of the terms or provisions in any of their respective constituent documents as in effect on the date hereof in any manner adverse to the interests of the Lenders, without the prior written consent of the Required Lenders. (N) Other Indebtedness. The Borrower shall not amend, supplement or otherwise modify the terms of the Senior Notes in any way that would be materially less advantageous to the Borrower or materially adverse to the Lenders, including, without limitation, with respect to amount, maturity, amortization, interest rate, premiums, fees, covenants, events of default, remedies and dividend provisions, except for the First Amendment to the Master Note Agreement substantially in the form of Exhibit J to be entered into as of the Closing Date. (O) Fiscal Year. The Borrower shall not change its fiscal year for accounting or tax purposes from a period consisting of the 12-month period ending on the last day of November of each year. (P) Subsidiary Covenants. The Borrower will not, and will not permit any Subsidiary to, create or otherwise cause to become effective any material consensual encumbrance or material restriction of any kind on the ability of any Subsidiary to pay dividends or make any other distribution on its stock, or make any other Restricted Payment, pay any Indebtedness or other Obligation owed to the Borrower or any other Subsidiary, make loans or advances or other Investments in the Borrower or any other Subsidiary, or sell, transfer or otherwise convey any of its property to the Borrower or any other Subsidiary; provided, nothing herein shall restrict the ability of any foreign Subsidiary to capitalize retained earnings in the ordinary course of business if required in connection with the incurrence of Indebtedness provided the maximum amount of retained earnings capitalized after the date hereof shall not exceed $7,500,000 in the aggregate for all of the Borrower's foreign Subsidiaries. (Q) Hedging Obligations. The Borrower shall not and shall not permit any of its Subsidiaries to enter into any interest rate, commodity or foreign currency exchange, swap, collar, cap or similar agreements evidencing Hedging Obligations, other than interest rate, foreign currency or commodity exchange, swap, collar, cap or similar agreements entered into by the Borrower or its Subsidiaries pursuant to which the Borrower or such Subsidiary has hedged its actual interest rate, foreign currency or commodity exposure. Such permitted hedging agreements entered into by the Borrower and its Subsidiaries and any Lender or any affiliate of any Lender are sometimes referred to herein as "HEDGING AGREEMENTS." (R) Subordinated Indebtedness. The Borrower shall not and shall not permit any of its Subsidiaries to, amend, supplement or modify the terms of any Permitted Subordinated 69 Indebtedness, or make any payment required as a result of an amendment or change thereto other than amendments, supplements or modifications which (i) decrease the rate of interest payable on the Permitted Subordinated Indebtedness, (ii) provide for the payment in kind in lieu of cash of any portion of the interest on the Permitted Subordinated Indebtedness, (iii) provide for the extension of the maturity date with respect to any principal or interest payment to be made under the instruments evidencing Permitted Subordinated Indebtedness, (iv) provide more flexibility to the Borrower and its Subsidiaries in connection with any financial covenants, (v) waives any defaults existing in connection with the Permitted Subordinated Indebtedness, and (vi) do not adversely affect in any respect the interests of the Agent or the Lenders. (S) Intercompany Loans from the Borrower to its Subsidiaries. The Borrower shall not make any loans to or Investments in any of its Subsidiaries other than loans to the Borrower's Subsidiaries in an aggregate outstanding principal amount not to exceed $7,500,000 outstanding at any time; provided, however, loans from the Borrower to Subsidiaries which are not a guarantor of the Obligations, in the case of domestic Subsidiaries, or 65% percent of the stock of which has not been pledged, in the case of foreign Subsidiaries, shall not exceed an aggregate outstanding principal amount of $2,500,000 for all such loans. All loans by the Borrower to its Subsidiaries shall be evidenced by promissory notes which provide that (i) a Default under this Agreement shall constitute a default under such promissory note entitling the Borrower to accelerate the payment thereof and (ii) if any acceleration of the Obligations under this Agreement shall occur, the obligations under such promissory note shall immediately become due and payable without any election or action on the part of the Borrower. 7.4 Financial Covenants. The Borrower shall comply with the following: (A) Minimum Fixed Charge Coverage Ratio. The Borrower shall maintain a ratio ("FIXED CHARGE COVERAGE RATIO") of (i) the sum of the amounts, in each case for the Borrower and its consolidated Subsidiaries, of (a) EBITDA minus (b) Capital Expenditures plus (c) Rentals to (ii) the sum of the amounts of (x) Interest Expense plus (y) scheduled amortization of the principal portion of the Term Loans and scheduled amortization of the principal portion of all other Indebtedness for borrowed money plus (z) Rentals plus (d) taxes paid in cash during such period plus (e) Restricted Payments (other than in connection with the Share Repurchase) paid during such period of at least: (i) 1.10 to 1.00 for each fiscal quarter for the period commencing with the fiscal quarter ending February 28, 1998 through the fiscal quarter ending November 30, 1999; (ii) 1.15 to 1.00 for each fiscal quarter thereafter until the Termination Date. In each case, the Fixed Charge Coverage Ratio shall be determined as of the last day of each fiscal quarter for the four fiscal quarter period ending on such day, and calculated, with respect to Permitted Acquisitions consummated during such four-quarter period, for the period from the date of such Acquisition to the last day of the fiscal quarter ending on such day. 70 (B) Maximum Leverage Ratio. The Borrower shall not permit the ratio (the "LEVERAGE RATIO") of (i) the sum, in each case for the Borrower and its consolidated Subsidiaries, of (a) Indebtedness for borrowed money (which shall include, without limitation, the Borrower's obligations with respect to Outstanding Acceptance) and (b) Capitalized Lease Obligations to (ii) EBITDA to be greater than the ratio set forth below at the end of the fiscal quarter ending on the corresponding date set forth below: QUARTER ENDING RATIO November 30, 1997 4.5 to 1.0 February 28, 1998 4.5 to 1.0 May 31, 1998 4.5 to 1.0 August 31, 1998 4.0 to 1.0 November 30, 1998 4.0 to 1.0 February 28, 1999 3.5 to 1.0 May 31, 1999 3.5 to 1.0 August 31, 1999 3.5 to 1.0 November 30, 1999 3.5 to 1.0 QUARTER ENDING RATIO February 28, 2000 3.5 to 1.0 May 31, 2000 3.5 to 1.0 August 31, 2000 3.5 to 1.0 November 30, 2000 3.5 to 1.0 February 28, 2001 3.0 to 1.0 May 31, 2001 3.0 to 1.0 August 31, 2001 3.0 to 1.0 November 30, 2001 3.0 to 1.0 February 28, 2002 3.0 to 1.0 May 31, 2002 3.0 to 1.0 August 31, 2002 3.0 to 1.0 November 30, 2002 and each quarter thereafter 3.0 to 1.0 The Leverage Ratio shall be calculated, in each case, determined as of the last day of each fiscal quarter based upon (a) for Indebtedness for borrowed money and Capitalized Lease Obligations 71 as of the last day of each such fiscal quarter; and (b) for EBITDA, the actual amount for the four-quarter period ending on such day, and calculated, with respect to Permitted Acquisitions, on a pro forma basis using historical audited and reviewed unaudited financial statements obtained from the seller, broken down by fiscal quarter in the Borrower's reasonable judgment. (C) Minimum Consolidated Tangible Net Worth. The Borrower shall not permit its Consolidated Tangible Net Worth at any time to be less than the sum of (a) $70,000,000, plus (b) fifty percent (50%) of Net Income (if positive) calculated separately for each fiscal quarter ending after November 30, 1997, plus (c) one hundred percent (100%) of the net cash proceeds resulting from the issuance by the Borrower of any Capital Stock. (D) Interest Expense Coverage Ratio. The Borrower shall maintain a ratio (the "INTEREST EXPENSE COVERAGE RATIO") of (i) EBITDA to (ii) Interest Expense during each four fiscal quarter period ending on the date described below of at least: 72 QUARTER ENDING RATIO November 30, 1997 2.75 to 1.0 February 28, 1998 2.75 to 1.0 May 31, 1998 2.75 to 1.0 August 31, 1998 3.0 to 1.0 November 30, 1998 3.0 to 1.0 February 28, 1999 4.0 to 1.0 May 31, 1999 4.0 to 1.0 August 31, 1999 4.0 to 1.0 November 30, 1999 4.0 to 1.0 February 29, 2000 4.0 to 1.0 May 31, 2000 4.0 to 1.0 August 31, 2000 4.0 to 1.0 November 30, 2000 4.0 to 1.0 February 28, 2001 5.0 to 1.0 May 31, 2001 5.0 to 1.0 August 31, 2001 5.0 to 1.0 November 30, 2001 5.0 to 1.0 February 28, 2002 5.0 to 1.0 May 31, 2002 5.0 to 1.0 August 31, 2002 5.0 to 1.0 November 30, 2002 and each quarter thereafter 5.0 to 1.0 In each case, the Interest Expense Coverage Ratio shall be determined as of the last day of each fiscal quarter described above for the four fiscal quarter period ending on such day, and calculated, with respect to Permitted Acquisitions consummated during such four-quarter period, for the period from the date of such Acquisition to the last day of the fiscal quarter ending on such day. ARTICLE VIII: DEFAULTS 8.1 Defaults. Each of the following occurrences shall constitute a Default under this Agreement: 73 (A) Failure to Make Payments When Due. The Borrower shall (i) fail to pay when due any Reimbursement Obligation or any of the Obligations consisting of principal with respect to the Loans or the Outstanding Acceptances or (ii) shall fail to pay within five (5) Business Days of the date when due any of the other Obligations under this Agreement or the other Loan Documents. (B) Breach of Certain Covenants. The Borrower shall fail duly and punctually to perform or observe any agreement, covenant or obligation binding on the Borrower under: (i) Sections 7.2(F) or Section 7.2(J) and such failure shall continue unremedied for ten (10) Business Days; or (ii) Sections 7.3 or 7.4. (C) Breach of Representation or Warranty. Any representation or warranty made or deemed made by the Borrower to the Agent or any Lender herein or by the Borrower or any of its Subsidiaries in any of the other Loan Documents or in any statement or certificate at any time given by any such Person pursuant to any of the Loan Documents shall be false or misleading in any material respect on the date as of which made (or deemed made). (D) Other Defaults. The Borrower shall default in the performance of or compliance with any term contained in this Agreement (other than as covered by paragraphs (A), (B) or (C) of this Section 8.1), or the Borrower or any of its Subsidiaries shall default in the performance of or compliance with any term contained in any of the other Loan Documents, and such default shall continue for thirty (30) days after the earlier of (1) written notice thereof has been given to the Borrower; and (2) any member of senior executive management of the Borrower has "Knowledge" (as hereinafter defined) of such Default. For purposes hereof and clause (Q) below, "Knowledge" means with respect to any Person, the actual knowledge, after due inquiry, of any fact or circumstance or any fact or circumstance of which such Person should have known, with respect to any of the (A) chairman of the board of directors, chief executive officer, chief financial officer, chief operating officer, executive vice president for operations, treasurer and/or controller of the Borrower (or persons performing the functions typically performed by persons with such titles) and (B) the senior corporate executive officers and chairman of the board of each Material Subsidiary of the Borrower; provided, however, with respect to Requirements of Law and other matters regulated by any Governmental Authority the list of Persons in clauses (A) and (B) shall include the persons primarily responsible for monitoring and ensuring compliance with such Requirements of Law and other regulatory matters or Persons succeeding to their respective duties as employees of such Person as of the Closing Date. (E) Default as to Other Indebtedness. (i) Senior Note Defaults. The Borrower or any of its Subsidiaries shall fail to pay any part of the principal of, the premium, if any, or the interest on, or any other payment of money due under the Senior Notes beyond any period of grace provided with respect 74 thereto; or any breach, default or event of default shall occur, or any other condition shall exist under any instrument, agreement or indenture pertaining to the Senior Notes, beyond any period of grace, if any, provided with respect thereto, if the effect thereof is to cause an acceleration, mandatory redemption, a requirement that the Borrower offer to purchase the Indebtedness evidenced by the Senior Notes or other required repurchase of such Indebtedness, or permit the holder(s) of the Senior Notes to accelerate the maturity of any such Indebtedness or require a redemption or other repurchase of such Indebtedness; or any such Indebtedness evidenced by the Senior Notes shall be otherwise declared to be due and payable (by acceleration or otherwise) or required to be prepaid, redeemed or otherwise repurchased by the Borrower or any of its Subsidiaries (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof. (ii) Other Indebtedness. The Borrower or any of its Subsidiaries shall fail to pay any part of the principal of, the premium, if any, or the interest on, or any other payment of money due under any Indebtedness (other than Indebtedness hereunder or under the Outstanding Acceptances), beyond any period of grace provided with respect thereto, which individually or together with other such Indebtedness as to which any such failure exists has an aggregate outstanding principal amount in excess of $5,000,000; or any breach, default or event of default shall occur, or any other condition shall exist under any instrument, agreement or indenture pertaining to any such Indebtedness having such aggregate outstanding principal amount, beyond any period of grace, if any, provided with respect thereto, if the effect thereof is to cause an acceleration, mandatory redemption, a requirement that the Borrower offer to purchase such Indebtedness or other required repurchase of such Indebtedness, or permit the holder(s) of such Indebtedness to accelerate the maturity of any such Indebtedness or require a redemption or other repurchase of such Indebtedness; or any such Indebtedness shall be otherwise declared to be due and payable (by acceleration or otherwise) or required to be prepaid, redeemed or otherwise repurchased by the Borrower or any of its Subsidiaries (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof. (F) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An involuntary case shall be commenced against the Borrower or any of the Borrower's Material Subsidiaries and the petition shall not be dismissed, stayed, bonded or discharged within sixty (60) days after commencement of the case; or a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Borrower or any of the Borrower's Material Subsidiaries in an involuntary case, under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect; or any other similar relief shall be granted under any applicable federal, state, local or foreign law. (ii) A decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over the Borrower or any of the Borrower's Material Subsidiaries 75 or over all or a substantial part of the property of the Borrower or any of the Borrower's Material Subsidiaries shall be entered; or an interim receiver, trustee or other custodian of the Borrower or any of the Borrower's Material Subsidiaries or of all or a substantial part of the property of the Borrower or any of the Borrower's Material Subsidiaries shall be appointed or a warrant of attachment, execution or similar process against any substantial part of the property of the Borrower or any of the Borrower's Material Subsidiaries shall be issued and any such event shall not be stayed, dismissed, bonded or discharged within sixty (60) days after entry, appointment or issuance. (G) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Borrower or any of the Borrower's Material Subsidiaries shall (i) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (ii) consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, (iii) consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property, (iv) make any assignment for the benefit of creditors or (v) take any corporate action to authorize any of the foregoing. (H) Judgments and Attachments. Any money judgment(s) (other than a money judgment covered by insurance as to which the insurance company has not disclaimed or reserved the right to disclaim coverage), writ or warrant of attachment, or similar process against the Borrower or any of its Material Subsidiaries or any of their respective assets involving in any single case or in the aggregate an amount in excess of $1,000,000 is or are entered and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days or in any event later than fifteen (15) days prior to the date of any proposed sale thereunder. (I) Dissolution. Any order, judgment or decree shall be entered against the Borrower decreeing its involuntary dissolution and such order shall remain undischarged and unstayed for a period in excess of sixty (60) days; or the Borrower shall otherwise dissolve or cease to exist except as specifically permitted by this Agreement. (J) Loan Documents. At any time, for any reason, any Loan Document as a whole that materially affects the ability of the Agent, or any of the Lenders to enforce the Obligations ceases to be in full force and effect and Borrower fails to cure any defect within ten (10) Business Days of written notice thereof by Agent to Borrower or the Borrower or any of the Borrower's Material Subsidiaries which is a party to any Loan Document seeks to repudiate its obligations thereunder. (K) Termination Event. Any Termination Event occurs which the Required Lenders believe is reasonably likely to subject the Borrower to liability in excess of $1,000,000. (L) Waiver of Minimum Funding Standard. If the plan administrator of any Plan applies under Section 412(d) of the Code for a waiver of the minimum funding standards of Section 412(a) of the Code and the Agent reasonably believes the substantial business hardship 76 upon which the application for the waiver is based could reasonably be expected to subject either the Borrower or any Controlled Group member to liability in excess of $1,000,000. (M) Change of Control. A Change of Control shall occur. (N) Hedging Agreements. Nonpayment by the Borrower of any obligation under any Hedging Agreement or the declared default by the Borrower of any material term, provision or condition contained in any such Hedging Agreement. (O) Environmental Matters. The Borrower or any of its Material Subsidiaries shall be the subject of any proceeding or investigation pertaining to (i) the Release by the Borrower or any of its Material Subsidiaries of any Contaminant into the environment, (ii) the liability of the Borrower or any of its Material Subsidiaries arising from the Release by any other Person of any Contaminant into the environment, or (iii) any violation of any Environmental, Health or Safety Requirements of Law which by the Borrower or any of its Material Subsidiaries, which, in any case, has or is reasonably likely to subject the Borrower to liability in excess of $5,000,000. (P) Guarantor Revocation. Any guarantor of the Obligations shall terminate or revoke any of its obligations under the applicable guarantee agreement or breach any of the material terms of such guarantee agreement. (Q) Failure of Subordination. The subordination provisions of the documents and instruments evidencing any Permitted Subordinated Indebtedness shall, at any time, be invalidated or otherwise cease to be in full force and effect and such event shall continue for ten (10) Business Days after the earlier of (1) written notice thereof has been given to the Borrower or (2) any member of senior management of the Borrower has Knowledge thereof. A Default shall be deemed "continuing" until cured or until waived in writing in accordance with Section 9.3. ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES 9.1 Termination of Commitments; Acceleration. If any Default described in Section 8.1(F) or 8.1(G) occurs with respect to the Borrower, the obligations of the Lenders to make Loans hereunder and the obligation of any Issuing Banks to issue Letters of Credit hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent or any Lender. If any other Default occurs, the Required Lenders may terminate or suspend the obligations of the Lenders to make Loans hereunder and the obligation of the Issuing Banks to issue Letters of Credit hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower expressly waives. 77 9.2 Defaulting Lender. In the event that any Lender fails to fund its Pro Rata Share of any Advance requested or deemed requested by the Borrower, which such Lender is obligated to fund under the terms of this Agreement (the funded portion of such Advance being hereinafter referred to as a "NON PRO RATA LOAN"), until the earlier of such Lender's cure of such failure and the termination of the Revolving Loan Commitments, the proceeds of all amounts thereafter repaid to the Agent by the Borrower and otherwise required to be applied to such Lender's share of all other Obligations pursuant to the terms of this Agreement shall be advanced to the Borrower by the Agent on behalf of such Lender to cure, in full or in part, such failure by such Lender, but shall nevertheless be deemed to have been paid to such Lender in satisfaction of such other Obligations. Notwithstanding anything in this Agreement to the contrary: (i) the foregoing provisions of this Section 9.2 shall apply only with respect to the proceeds of payments of Obligations and shall not affect the conversion or continuation of Loans pursuant to Section 2.10; (ii) any such Lender shall be deemed to have cured its failure to fund its Pro Rata Share of any Advance at such time as an amount equal to such Lender's original Pro Rata Share of the requested principal portion of such Advance is fully funded to the Borrower, whether made by such Lender itself or by operation of the terms of this Section 9.2, and whether or not the Non Pro Rata Loan with respect thereto has been repaid, converted or continued; (iii) amounts advanced to the Borrower to cure, in full or in part, any such Lender's failure to fund its Pro Rata Share of any Advance ("CURE LOANS") shall bear interest at the rate applicable to Floating Rate Loans in effect from time to time, and for all other purposes of this Agreement shall be treated as if they were Floating Rate Loans; (iv) regardless of whether or not a Default has occurred or is continuing, and notwithstanding the instructions of the Borrower as to its desired application, all repayments of principal which, in accordance with the other terms of this Agreement, would be applied to the outstanding Floating Rate Loans shall be applied first, ratably to all Floating Rate Loans constituting Non Pro Rata Loans, second, ratably to Floating Rate Loans other than those constituting Non Pro Rata Loans or Cure Loans and, third, ratably to Floating Rate Loans constituting Cure Loans; (v) for so long as and until the earlier of any such Lender's cure of the failure to fund its Pro Rata Share of any Advance and the termination of the Revolving Loan Commitments, the term "Required Lenders" for purposes of this Agreement shall mean Lenders (excluding all Lenders whose failure to fund their respective Pro Rata Shares of such Advance have not been so cured) whose Pro Rata Shares represent greater than fifty percent (50%) of the aggregate Pro Rata Shares of such Lenders; and 78 (vi) for so long as and until any such Lender's failure to fund its Pro Rata Share of any Advance is cured in accordance with Section 9.2(ii), (A) such Lender shall not be entitled to, and Borrower shall not be obligated to pay, any commitment fees with respect to its Revolving Loan Commitment and (B) such Lender shall not be entitled to any letter of credit fees or commission in connection with Outstanding Acceptances. 9.3 Amendments. Subject to the provisions of this Article IX, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of each Lender affected thereby: (i) Postpone or extend the Revolving Loan Termination Date or Term Loan Termination Date or any other date fixed for any payment of principal of, or interest on, the Loans, the Reimbursement Obligations, the Acceptance Obligations or any fees or other amounts payable to such Lender (except with respect to (a) any modifications of the provisions relating to prepayments of Loans and other Obligations and (b) a waiver of the application of the default rate of interest pursuant to Section 2.11 hereof). (ii) Reduce the principal amount of any Loans or Credit Support Obligations, or reduce the rate or extend the time of payment of interest or fees thereon. (iii) Reduce the percentage specified in the definition of Required Lenders or any other percentage of Lenders specified to be the applicable percentage in this Agreement to act on specified matters. (iv) Increase the amount of the Revolving Loan Commitment of any Lender hereunder. (v) Permit the Borrower to assign its rights under this Agreement. (vi) Amend Section 7.2(K). (vii) other than pursuant to a transaction permitted by the terms of this Agreement, release any Collateral which is subject to any Pledge Agreement. (viii) other than pursuant to a transaction permitted by the terms of this Agreement, release any Subsidiary from its obligations under the Guaranty. (ix) Amend this Section 9.3. 79 No amendment of any provision of this Agreement relating to (a) the Agent shall be effective without the written consent of the Agent, and (b) Swing Line Loans shall be effective without the written consent of the Swing Line Bank. The Agent may waive payment of the fee required under Section 13.3(B) without obtaining the consent of any of the Lenders. 9.4 Preservation of Rights. No delay or omission of the Lenders or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan or the issuance of a Letter of Credit notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Loan or issuance of such Letter of Credit shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 9.3, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full. ARTICLE X: GENERAL PROVISIONS 10.1 Survival of Representations. All representations and warranties of the Borrower contained in this Agreement shall survive delivery of the Notes and the making of the Loans herein contemplated. 10.2 Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 10.3 Performance of Obligations. The Borrower agrees that the Agent may, but shall have no obligation, after the occurrence and during the continuance of a Default, to make any other payment or perform any act required of the Borrower under any Loan Document. The Agent shall use its reasonable efforts to give the Borrower notice of any action taken under this Section 10.3 prior to the taking of such action or promptly thereafter provided the failure to give such notice shall not affect the Borrower's obligations in respect thereof. The Agent shall use its reasonable efforts to give the Lenders notice of any action taken under this Section 10.3 prior to the taking of such action or promptly thereafter and shall obtain the consent of the Required Lenders to any such action which involves amounts in excess of $50,000; provided the failure to give such notice shall not affect the Lenders' obligations in respect thereof for amounts under $50,000 for which the Lenders have not received such notice or shall not have provided consent. The Borrower agrees to pay the Agent, upon demand, the principal amount of all funds advanced by the Agent under this Section 10.3, together with interest thereon at the rate from time to time applicable to Floating Rate Loans from the date of such advance until the outstanding principal balance thereof is paid in full. If the Borrower fails to make payment in respect of any such 80 advance under this Section 10.3 within three (3) Business Days after the date the Borrower receives written demand therefor from the Agent, the Agent shall promptly notify each Lender and each Lender agrees, subject to the third sentence of this Section 10.3, that it shall thereupon make available to the Agent, in Dollars in immediately available funds, the amount equal to such Lender's Pro Rata Share of such advance. If such funds are not made available to the Agent by such Lender within one (1) Business Day after the Agent's demand therefor, the Agent will be entitled to recover any such amount from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of such demand and ending on the date such amount is received. The failure of any Lender to make available to the Agent its Pro Rata Share of any such unreimbursed advance under this Section 10.3 shall neither relieve any other Lender of its obligation hereunder to make available to the Agent such other Lender's Pro Rata Share of such advance on the date such payment is to be made nor increase the obligation of any other Lender to make such payment to the Agent. All outstanding principal of, and interest on, advances made under this Section 10.3 shall constitute Obligations. 10.4 Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 10.5 Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrower, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrower, the Agent and the Lenders relating to the subject matter thereof. 10.6 Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other Lender (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. 10.7 Expenses; Indemnification. (A) Expenses. The Borrower shall reimburse the Agent and the Arranger (but not the Lenders) for any reasonable costs, internal charges and out-of-pocket expenses (including attorneys' and paralegals' fees and time charges of attorneys and paralegals for the Agent, which attorneys and paralegals may be employees of the Agent) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, review, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent and the Arranger and the Lenders for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' and paralegals' fees and time charges of attorneys and paralegals for the Agent and the Arranger and the Lenders, 81 which attorneys and paralegals may be employees of the Agent or the Arranger or the Lenders) paid or incurred by the Agent or the Arranger or any Lender in connection with the collection of the Obligations and enforcement of the Loan Documents. In addition to expenses set forth above, the Borrower agrees to reimburse the Agent, promptly after the Agent's request therefor, for each audit, or other business analysis performed by or for the benefit of the Lenders in connection with this Agreement or the other Loan Documents in an amount equal to the Agent's then reasonable customary charges for each person employed to perform such audit or analysis, plus all reasonable costs and expenses (including without limitation, reasonable travel expenses) incurred by the Agent in the performance of such audit or analysis. Agent shall provide the Borrower with a detailed statement of all reimbursements requested under this Section 10.7(A). (B) Indemnity. The Borrower further agrees to defend, protect, indemnify, and hold harmless the Agent, the Arranger and each and all of the Lenders and each of their respective Affiliates, and each of such Agent's, Arranger's, Lender's, or Affiliate's respective officers, directors, employees, attorneys and agents (including, without limitation, those retained in connection with the satisfaction or attempted satisfaction of any of the conditions set forth in Article V) (collectively, the "INDEMNITEES") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, reasonable costs and expenses of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding, whether or not such Indemnitees shall be designated a party thereto), imposed on, incurred by, or asserted against such Indemnitees in any manner relating to or arising out of: (i) this Agreement, the other Loan Documents, or any act, event or transaction related or attendant thereto or to the making of the Loans, and the issuance of and participation in Letters of Credit hereunder, the participation in Outstanding Acceptances, the management of such Loans, Letters of Credit or Outstanding Acceptance, the use or intended use of the proceeds of the Loans, Letters of Credit or Outstanding Acceptance hereunder, or any of the other transactions contemplated by the Loan Documents; or (ii) any liabilities, obligations, responsibilities, losses, damages, personal injury, death, punitive damages, economic damages, consequential damages, treble damages, intentional, willful or wanton injury, damage or threat to the environment, natural resources or public health or welfare, costs and expenses (including, without limitation, reasonable attorney, expert and consulting fees and costs of investigation, feasibility or remedial action studies), fines, penalties and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future relating to violation of any Environmental, Health or Safety Requirements of Law arising from or in connection with the past, present or future operations of the Borrower, its Subsidiaries or any of their respective predecessors in interest, or, the past, present or future environmental, health or safety condition of any respective property of the Borrower or its Subsidiaries, the presence of asbestos-containing materials at any respective property 82 of the Borrower or its Subsidiaries or the Release or threatened Release of any Contaminant into the environment (collectively, the "INDEMNIFIED MATTERS"); provided, however, the Borrower shall have no obligation to an Indemnitee hereunder with respect to Indemnified Matters arising from and to the extent caused by or resulting from the willful misconduct or Gross Negligence of such Indemnitee or breach of contract by such Indemnitee with respect to the Loan Documents, in each case, as determined by the final non- appealed judgment of a court of competent jurisdiction. If the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. (C) Waiver of Certain Claims; Settlement of Claims. The Borrower further agrees to assert no claim against any of the Indemnitees on any theory of liability seeking consequential, special, indirect, exemplary or punitive damages in an amount which exceeds $100,000. No settlement shall be entered into by the Borrower or any if its Subsidiaries with respect to any claim, litigation, arbitration or other proceeding relating to or arising out of the transactions evidenced by this Agreement or the other Loan Documents (whether or not the Agent or any Lender or any Indemnitee is a party thereto) unless such settlement releases all Indemnitees from any and all liability with respect thereto. (D) Survival of Agreements. The obligations and agreements of the Borrower under this Section 10.7 shall survive the termination of this Agreement. 10.8 Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders. 10.9 Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. 10.10 Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 10.11 Nonliability of Lenders. The relationship between the Borrower and the Lenders and the Agent shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. 83 10.12 GOVERNING LAW. THE AGENT ACCEPTS THIS AGREEMENT, ON BEHALF OF ITSELF AND THE LENDERS, AT CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. ANY DISPUTE BETWEEN THE BORROWER AND THE AGENT OR ANY LENDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS. 10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL. (A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE. (B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE AGENT, OR ANY LENDER SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO OBTAIN PERSONAL JURISDICTION OVER THE BORROWER OR IN ORDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION (B). (C) VENUE. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE. 84 (D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. ARTICLE XI: THE AGENT 11.1 Appointment; Nature of Relationship. The First National Bank of Chicago is appointed by the Lenders as the Agent hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article XI. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement and that the Agent is merely acting as the representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Agent (i) does not assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender waives. 11.2 Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties or fiduciary duties to the Lenders, or any obligation to the Lenders to take any action hereunder or under any of the other Loan Documents except any action specifically provided by the Loan Documents required to be taken by the Agent. Without limiting the foregoing, the Agent is hereby authorized to execute and deliver the Collateral Sharing Agreement and the Intercreditor Agreement, in each case, in substantially the same form as last distributed to the Lenders prior to the Closing Date and shall be authorized to enter into amendments thereto on behalf of each of the Lenders upon the direction of or with the consent of the Required Lenders. 85 11.3 General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is found in a final judgment by a court of competent jurisdiction to have arisen from and to the extent of the Gross Negligence, willful misconduct or breach of this Agreement or any other Loan Documents by such Person. 11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document; (iii) the satisfaction of any condition specified in Article V, except receipt of items required to be delivered solely to the Agent; (iv) the existence or possible existence of any Default or (v) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith. The Agent shall not be responsible to any Lender for any recitals, statements, representations or warranties herein or in any of the other Loan Documents, or for the execution, effectiveness, genuineness, validity, legality, enforceability, collectibility, or sufficiency of this Agreement or any of the other Loan Documents or the transactions contemplated thereby, or for the financial condition of any guarantor of any or all of the Obligations, the Borrower or any of its Subsidiaries. 11.5 Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders (or all of the Lenders in the event that and to the extent that this Agreement expressly requires such), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all holders of Notes. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 11.6 Employment of Agents and Counsel. The Agent may execute any of its duties as the Agent hereunder and under any other Loan Document by or through employees, agents, and attorney-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent's duties hereunder and under any other Loan Document; provided, however, it is expressly understood and agreed that the expense reimbursement provisions of Section 10.7(A) shall not be applicable to the expenses for such counsel to the extent such expenses do not arise out of any action or omission on the part of the Borrower or any of its Subsidiaries or any request of the Borrower or its Subsidiaries hereunder or under any of the Loan Documents. 86 11.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent; provided, however, it is expressly understood and agreed that the expense reimbursement provisions of Section 10.7(A) shall not be applicable to the expenses for counsel rendering such opinion to the extent it relates to matters other than resulting from any action or omission on the part of the Borrower or any of its Subsidiaries or any request of the Borrower or its Subsidiaries hereunder or under any of the Loan Documents. 11.8 The Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Agent ratably in proportion to their respective Revolving Loan Commitments (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the Gross Negligence or willful misconduct of the Agent. 11.9 Rights as a Lender. With respect to its Revolving Loan Commitment, its Term Loan Commitment, Loans made by it and the Notes issued to it, the Agent shall have the same rights and powers hereunder and under any other Loan Document as any Lender and may exercise the same as through it were not the Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which such Person is not prohibited hereby from engaging with any other Person. 11.10 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 87 11.11 Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty days after the retiring Agent's giving notice of resignation, then the retiring Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent. Notwithstanding anything herein to the contrary, so long as no Default has occurred and is continuing, each such successor Agent shall be subject to approval by the Borrower, which approval shall not be unreasonably withheld. Such successor Agent shall be a commercial bank having capital and retained earnings of at least $500,000,000. Upon the acceptance of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article XI shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. ARTICLE XII: SETOFF; RATABLE PAYMENTS 12.1 Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Default occurs and is continuing, any indebtedness from any Lender to the Borrower (including all account balances, whether provisional or final and whether or not collected or available) may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 12.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Loans (other than payments received pursuant to Sections 4.1, 4.2 or 4.4) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligation or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to the obligations owing to them. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. 12.3 Application of Payments. Subject to the provisions of Section 9.2, the Agent shall, unless otherwise specified at the direction of the Required Lenders which direction shall be consistent with the last sentence of this Section 12.3, apply all payments and prepayments in respect of any Obligations in the following order: 88 (A) first, to pay interest on and then principal of any portion of the Loans which the Agent may have advanced on behalf of any Lender for which the Agent has not then been reimbursed by such Lender or the Borrower; (B) second, to pay interest on and then principal of any advance made under Section 10.3 for which the Agent has not then been paid by the Borrower or reimbursed by the Lenders; (C) third, to pay Obligations in respect of any fees, expense reimbursements or indemnities then due to the Agent; (D) fourth, to pay Obligations in respect of any fees, expenses, reimbursements or indemnities then due to the Lenders, the issuer(s) of Letters of Credit and the Lenders which created the Outstanding Acceptances; (E) fifth, to pay interest due in respect of Swing Line Loans; (F) sixth, to pay interest due in respect of Loans (other than Swing Line Loans) and Credit Support Obligations; (G) seventh, to the ratable payment or prepayment of principal outstanding on Swing Line Loans; (H) eighth, to the ratable payment or prepayment of principal outstanding on Loans (other than Swing Line Loans), Reimbursement Obligations, Acceptance Obligations and Hedging Obligations under Hedging Agreements in such order as the Agent may determine in its sole discretion; (I) ninth, to provide required cash collateral, if required pursuant to Section 3.10 and (J) tenth, to the ratable payment of all other Obligations. Unless otherwise designated (which designation shall only be applicable prior to the occurrence of a Default) by the Borrower, all principal payments in respect of Loans (other than Swing Line Loans) shall be applied first, to repay outstanding Floating Rate Loans, and then to repay outstanding Eurodollar Rate Loans with those Eurodollar Rate Loans which have earlier expiring Interest Periods being repaid prior to those which have later expiring Interest Periods. The order of priority set forth in this Section 12.3 and the related provisions of this Agreement are set forth solely to determine the rights and priorities of the Agent, the Lenders, the Swing Line Bank and the issuer(s) of Letters of Credit as among themselves. The order of priority set forth in clauses (D) through (J) of this Section 12.3 may at any time and from time to time be changed by the Required Lenders without necessity of notice to or consent of or approval by the Borrower, or any other Person; provided, that the order of priority of payments in respect of Swing Line Loans 89 may be changed only with the prior written consent of the Swing Line Bank. The order of priority set forth in clauses (A) through (C) of this Section 12.3 may be changed only with the prior written consent of the Agent. 12.4 Relations Among Lenders. (A) Except with respect to the exercise of set-off rights of any Lender in accordance with Section 12.1, the proceeds of which are applied in accordance with this Agreement, and except as set forth in the following sentence, each Lender agrees that it will not take any action, nor institute any actions or proceedings, against the Borrower or any other obligor hereunder or with respect to any Loan Document, including, without limitation, under the Collateral Sharing Agreement or the Intercreditor Agreement, without the prior written consent of the Required Lenders or, as may be provided in this Agreement or the other Loan Documents, at the direction of the Agent. (B) The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Agent) authorized to act for, any other Lender. The Agent shall have the exclusive right on behalf of the Lenders to enforce on the payment of the principal of and interest on any Loan after the date such principal or interest has become due and payable pursuant to the terms of this Agreement. ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 13.1 Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrower and the Lenders and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 13.3 hereof. Notwithstanding clause (ii) of this Section 13.1, any Lender may at any time, without the consent of the Borrower or the Agent, assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank; provided, however, that no such assignment shall release the transferor Lender from its obligations hereunder. The Agent may treat the payee of any Note as the owner thereof for all purposes hereof unless and until such payee complies with Section 13.3 hereof in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Agent. Any assignee or transferee of a Note agrees by acceptance thereof to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor. 90 13.2 Participations. (A) Permitted Participants; Effect. Subject to the terms set forth in this Section 13.2, any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("PARTICIPANTS") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Revolving Loan Commitment of such Lender, any L/C Interest of such Lender or any other interest of such Lender under the Loan Documents on a pro rata or non-pro rata basis. Notice of such participation to the Borrower and the Agent and, prior to the occurrence of a Default, the prior written consent of the Borrower (which shall not be unreasonably withheld) shall be required prior to any participation becoming effective with respect to a Participant which is not a Lender or an Affiliate thereof. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Note for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents except that, for purposes of Article IV hereof, the Participants shall be entitled to the same rights as if they were Lenders. (B) Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan, Outstanding Acceptance, Letter of Credit or Revolving Loan Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable pursuant to the terms of this Agreement with respect to any such Loan, Outstanding Acceptance, Letter of Credit or Revolving Loan Commitment, postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan, Outstanding Acceptance, Letter of Credit or Revolving Loan Commitment, or releases all or substantially all of the Collateral, if any, securing any such Loan Letter of Credit or Outstanding Acceptance. (C) Benefit of Setoff. The Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 12.1 hereof in respect to its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 12.1 hereof with respect to the amount of participating interests sold to each Participant except to the extent such Participant exercises its right of setoff. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 12.1 hereof, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 12.2 as if each Participant were a Lender. 91 13.3 Assignments. (A) Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("PURCHASERS") all or a portion of its rights and obligations under this Agreement (including, without limitation, its Revolving Loan Commitment, all Loans owing to it, all Acceptance Obligations owing to it, all of its participation interests in existing Letters of Credit and Outstanding Acceptances, and its obligation to participate in additional Letters of Credit hereunder) in accordance with the provisions of this Section 13.3. Each assignment shall be of a constant, and not a varying, ratable percentage of all of the assigning Lender's rights and obligations under this Agreement. Such assignment shall be substantially in the form of Exhibit E hereto and shall not be permitted hereunder unless such assignment is either for all of such Lender's rights and obligations under the Loan Documents or, without the prior written consent of the Agent, involves loans and commitments in an aggregate amount of at least $5,000,000 (which minimum amount may be waived by the Required Lenders after the occurrence of a Default). The consent of the Agent and, prior to the occurrence of a Default, the Borrower (which consent, in each such case, shall not be unreasonably withheld), shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof. (B) Effect; Effective Date. Upon (i) delivery to the Agent of a notice of assignment, substantially in the form attached as Appendix I to Exhibit E hereto (a "NOTICE OF ASSIGNMENT"), together with any consent required by Section 13.3.(A) hereof, and (ii) payment of a $3,500 fee to the Agent for processing such assignment, such assignment shall become effective on the effective date specified in such Notice of Assignment. The Notice of Assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment, Loans and Credit Support Obligations under the applicable assignment agreement are "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser, if not already a Lender, shall for all purposes be a Lender party to this Agreement and any other Loan Documents executed by the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Revolving Loan Commitment, Loans, Outstanding Acceptances and Letter of Credit participations assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 13.3(B), the transferor Lender, the Agent and the Borrower shall make appropriate arrangements so that replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their Revolving Loan Commitment and their Term Loans, as adjusted pursuant to such assignment. (C) The Register. The Agent shall maintain at its address referred to in Section 14.1 a copy of each assignment delivered to and accepted by it pursuant to this Section 13.3 and a 92 register (the "REGISTER") for the recordation of the names and addresses of the Lenders and the Revolving Loan Commitment of and principal amount of the Loans owing to, each Lender from time to time and whether such Lender is an original Lender or the assignee of another Lender pursuant to an assignment under this Section 13.3. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower and each of its Subsidiaries, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 13.4 Confidentiality. Subject to Section 13.5, the Agent and the Lenders shall hold all nonpublic information obtained pursuant to the requirements of this Agreement and identified as such by the Borrower in accordance with such Person's customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices and in any event may make disclosure reasonably required by a prospective Transferee in connection with the contemplated participation or assignment or as required or requested by any Governmental Authority or representative thereof or pursuant to legal process and shall require any such Transferee to agree (and require any of its Transferees to agree) to comply with this Section 13.4. In no event shall the Agent or any Lender be obligated or required to return any materials furnished by the Borrower; provided, however, each prospective Transferee shall be required to agree that if it does not become a participant or assignee it shall return all materials furnished to it by or on behalf of the Borrower in connection with this Agreement; provided, further, however if any such disclosure is to be made pursuant to legal process, the Agent or Lender, as applicable, which may make such disclosure shall use its reasonable efforts to notify the Borrower of such legal process prior to making such disclosure, provided the failure to provide such notice shall not result in any liability on the part of such Person. 13.5 Dissemination of Information. The Borrower authorizes each Lender to disclose to any permitted Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any prospective Transferee any and all information in such Lender's possession concerning the Borrower and its Subsidiaries; provided that prior to any such disclosure, such prospective Transferee shall agree to preserve in accordance with Section 13.4 the confidentiality of any confidential information described therein. 13.6 Guaranty Terminations and Pledge Releases. Each of the Lenders, Issuing Banks and the Agent agrees that upon the consummation of any transaction involving the sale of all or substantially all of the assets or stock of a Material Subsidiary, which sale is permitted pursuant to the terms of Section 7.3(B), the Agent, for itself and on behalf of the Lenders and the Issuing Banks, shall release and terminate the Guaranty with respect to such Material Subsidiary which is the subject of such transaction or, as applicable, release the stock of such Material Subsidiary from the pledge to the Agent. 93 ARTICLE XIV: NOTICES 14.1 Giving Notice. Except as otherwise permitted by Section 2.14 with respect to borrowing notices, all notices and other communications provided to any party hereto under this Agreement or any other Loan Documents shall be in writing or by telex or by facsimile and addressed or delivered to such party at its address set forth below its signature hereto or at such other address as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid, shall be deemed given when received; any notice, if transmitted by telex or facsimile, shall be deemed given when transmitted (answerback confirmed in the case of telexes). 14.2 Change of Address. The Borrower, the Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto. 94 ARTICLE XV: COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrower, the Agent and the Lenders and each party has notified the Agent by telex or telephone, that it has taken such action. [Remainder of This Page Intentionally Blank] 95 IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this Agreement as of the date first above written. BINKS SAMES CORPORATION, as the Borrower By:/s/JEFFREY W. LEMAJEUR ------------------------- Jeffrey W. Lemajeur Vice President, Chief Financial Officer Address: 9201 Belmont Avenue Franklin Park, IL 60131-2887 Attention: Jeffrey W. Lemajeur Telephone No.: 847/671-3000 Facsimile No.: 847/671-5690 THE FIRST NATIONAL BANK OF CHICAGO, as Agent and as a Lender By:/s/RICHARD T. BEDELL ----------------------- Name: Richard T. Bedell Title: Assistant Vice President Address: One First National Plaza Suite 0085 Chicago, Illinois 60670-0085 Attention: Richard T. Bedell Telephone No.: 312/732-2413 Facsimile No.: 312/732-4033 Signature Page to Binks Sames Corporation Credit Agreement 9/23/97 96 NBD BANK, as a Lender By:/s/RICHARD T. BEDELL ----------------------- Name: Richard T. Bedell Title: Assistant Vice President Address: One First National Plaza Suite 0085 Chicago, Illinois 60670-0085 Attention: Richard T. Bedell Telephone No.: 312/732-2413 Facsimile No.: 312/732-4033 Signature Page to Binks Sames Corporation Credit Agreement 9/23/97 97 LASALLE NATIONAL BANK, as a Lender By:/s/STEVEN M. COHEN --------------------- Name: Steven M. Cohen Title: First Vice President Address: 135 South LaSalle Street Chicago, Illinois 60603 Attention: Steven M. Cohen Telephone No.: 312/904-7039 Facsimile No.: 312/904-6242 Signature Page to Binks Sames Corporation Credit Agreement 9/23/97 98 COMERICA BANK, as a Lender By:/s/GREGORY N. BLOCK ---------------------- Name: Gregory N. Block Title: Vice President Address: 2 MidAmerica Plaza Suite 616 Oak Brook Terrace, Illinois 60181 Attention: Greg Block Telephone No.: 630/645-7374 Facsimile No.: 630/575-2164 Signature Page to Binks Sames Corporation Credit Agreement 9/23/97 99 EX-27 5 FDS --
5 1,000 9-MOS Nov-30-1997 Dec-01-1996 Aug-31-1997 8,547 0 710470 0 77,884 170,373 63,452 38,419 210,081 71,484 54,156 3,089 0 0 71,773 210,081 185,064 185,064 130,952 130,952 0 0 3,567 (4,287) (1,224) (3,063) 0 0 0 (3,063) (.99) (.99)
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