-----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, M+k7eA3Z/eSiOGtPAgBhTr6DmGN+4vLecLrK4tnHPGElKDI0UT234Ogu4/LtRG/8 aJI44puRr0TmuUbqBjlFAg== 0000846919-96-000030.txt : 19961115 0000846919-96-000030.hdr.sgml : 19961115 ACCESSION NUMBER: 0000846919-96-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BCP/ESSEX HOLDINGS INC CENTRAL INDEX KEY: 0000846919 STANDARD INDUSTRIAL CLASSIFICATION: DRAWING AND INSULATING NONFERROUS WIRE [3357] IRS NUMBER: 133496934 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10211 FILM NUMBER: 96661404 BUSINESS ADDRESS: STREET 1: 1601 WALL ST CITY: FT WAYNE STATE: IN ZIP: 46802 BUSINESS PHONE: 2194614000 FORMER COMPANY: FORMER CONFORMED NAME: MS ESSEX HOLDINGS INC DATE OF NAME CHANGE: 19920703 10-Q 1 UNITED STATES 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 September 30, 1996 ------------------ or [ ] 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 1-10211 -------- BCP/ESSEX HOLDINGS INC. -------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-3496934 -------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1601 WALL STREET, FORT WAYNE, INDIANA 46802 -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (219) 461-4000 -------------- None ------------------------------------------------------------------ (Former name, former address and former fiscal year, if changed since last report) 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. [X ] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Number of Shares Outstanding Common Stock As of September 30, 1996 ------------- ------------------- Class A, par value $.01 46,038,698 Class B, par value $.01 1,199,000 2 BCP/ESSEX HOLDINGS INC. FORM 10-Q INDEX FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets . . . . . . . . . . . . . 3 Consolidated Statements of Income . . . . . . . . . . 5 Consolidated Statements of Cash Flows . . . . . . . . 6 Notes to Consolidated Financial Statements . . . . . . 8 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . 13 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 20 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements BCP/ESSEX HOLDINGS INC. CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1996 1995 In Thousands of Dollars (Unaudited) -------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents . . . . . . . . . . . . . . $ 3,974 $ 3,195 Accounts receivable (net of allowance of $4,409 and $3,930) . . . . . . . . . . . . . . . . . 169,302 154,584 Inventories . . . . . . . . . . . . . . . . . . . . . 172,599 166,076 Other current assets . . . . . . . . . . . . . . . . . 17,210 10,545 -------- -------- Total current assets . . . . . . . . . . . . . 363,085 334,400 Property, plant and equipment, (net of accumulated depreciation of $105,546 and $84,341) . . . . . . . . 264,542 270,546 Excess of cost over net assets acquired (net of accumulated amortization of $16,343 and $13,221) . . 127,665 129,943 Other intangible assets and deferred costs (net of accumulated amortization of $4,846 and $3,102) . . . 7,443 9,187 Other assets . . . . . . . . . . . . . . . . . . . . . 3,525 1,987 -------- -------- $766,260 $746,063 ======== ======== See Notes to Consolidated Financial Statements 3 BCP/ESSEX HOLDINGS INC. CONSOLIDATED BALANCE SHEETS - Continued September 30, December 31, 1996 1995 In Thousands of Dollars, Except Per Share Data (Unaudited) -------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks . . . . . . . . . . . . . . . . $ 10,536 $ 11,760 Current portion of long-term debt . . . . . . . . . . 11,576 24,734 Accounts payable . . . . . . . . . . . . . . . . . . . 51,847 66,797 Accrued liabilities . . . . . . . . . . . . . . . . . 55,082 44,598 Deferred income taxes . . . . . . . . . . . . . . . . 16,377 15,345 Total current liabilities . . . . . . . . . . . 145,418 163,234 Long-term debt . . . . . . . . . . . . . . . . . . . . 401,334 388,016 Deferred income taxes . . . . . . . . . . . . . . . . 63,114 66,809 Other long-term liabilities . . . . . . . . . . . . . 12,812 10,081 Redeemable preferred stock . . . . . . . . . . . . . . - 48,820 Common stock subject to put: 1,655,787 and 1,680,787 shares issued and outstanding at September 30, 1996 and December 31, 1995, respectively . . . . . . . . . . . . . . . . . . . . 8,279 4,803 Other stockholders' equity: Common stock, par value $.01 per share; authorized 150,000,000 shares: Class A: 44,382,911 and 33,637,415 shares issued and outstanding at September 30, 1996 and December 31, 1995, respectively . . . . . . . . . . . . . . . . . 444 336 Class B: 1,199,000 shares issued and outstanding at September 30, 1996 . . . . . . . . . . . . . . . . . 12 - Additional paid in capital . . . . . . . . . . . . . . 133,268 85,611 Carryover of Predecessor basis . . . . . . . . . . . . (15,259) (15,259) Retained earnings (deficit) . . . . . . . . . . . . . 16,838 (6,388) ------- -------- Total other stockholders' equity . . . . . . . 135,303 64,300 -------- -------- $766,260 $746,063 ======== ========
See Notes to Consolidated Financial Statements 4 BCP/ESSEX HOLDINGS INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Month Period Nine Month Period Ended September 30, Ended September 30, ------------------- -------------------- In Thousands of Dollars, Except Per Share Data 1996 1995 1996 1995 ----------------------------------------------------------------------------------------- REVENUES: Net sales . . . . . . . . . . . . . . . . . . $328,777 $308,288 $974,720 $886,471 Interest income . . . . . . . . . . . . . . 113 10 161 390 Other income . . . . . . . . . . . . . . . . 305 (91) 870 1,238 -------- -------- -------- -------- 329,195 308,207 975,751 888,099 -------- -------- -------- -------- COSTS AND EXPENSES: Cost of goods sold . . . . . . . . . . . . . 269,813 263,523 813,106 761,682 Selling and administrative . . . . . . . . . 28,926 21,923 86,463 65,275 Interest expense . . . . . . . . . . . . . . 9,555 10,284 29,879 38,839 Other expense . . . . . . . . . . . . . . . . 819 1,991 1,235 2,551 -------- -------- -------- -------- 309,113 297,721 930,683 868,347 -------- -------- -------- -------- Income before income taxes and extraordinary charge . . . . . . . . . . . . . 20,082 10,486 45,068 19,752 Provision for income taxes . . . . . . . . . . 8,500 4,400 19,500 9,580 -------- -------- -------- -------- Income before extraordinary charge . . . . . . 11,582 6,086 25,568 10,172 Extraordinary charge - debt retirement, net of income tax benefit . . . . . . . . . . - - - 2,971 -------- -------- -------- -------- Net income . . . . . . . . . . . . . . . . . . $ 11,582 $ 6,086 $ 25,568 $ 7,201 ======== ======== ======== ======== Net income . . . . . . . . . . . . . . . . . . $ 11,582 $ 6,086 $ 25,568 $ 7,201 Preferred stock redemption premium . . . . . . (4,105) - (4,105) - Preferred stock dividend requirement . . . . . (363) (1,771) (4,248) (5,124) Preferred stock accretion . . . . . . . . . . . (1,666) (176) (2,024) (526) -------- -------- -------- -------- Net income applicable to common stock . . . . . $ 5,448 $ 4,139 $ 15,191 $ 1,551 ======== ======== ======== ======== Income per common and common equivalent share: 5 Three Month Period Nine Month Period Ended September 30, Ended September 30, ------------------- -------------------- In Thousands of Dollars, Except Per Share Data 1996 1995 1996 1995 ----------------------------------------------------------------------------------------- REVENUES: Income before extraordinary charge . . . . . . $ .10 $ .11 $ .35 $ .12 Extraordinary charge . . . . . . . . . . . . . - - - (.08) ----- ------ ------ ------ Net income . . . . . . . . . . . . . . . . . . $ .10 $ .11 $ .35 $ .04 ===== ====== ====== ======
See Notes to Consolidated Financial Statements 6 BCP/ESSEX HOLDINGS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Month Period Ended September 30, ------------------------ In Thousands of Dollars 1996 1995 ------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income . . . . . . . . . . . . . . . . . . . . . $ 25,568 $ 7,201 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . 25,489 24,493 Non cash interest expense . . . . . . . . . . . . . 1,585 5,977 Non cash pension expense . . . . . . . . . . . . . 2,170 1,710 Loss on debt retirement . . . . . . . . . . . . . . - 4,951 Provision for losses on accounts receivable . . . . 958 372 Provision (benefit) for deferred income taxes . . . (2,664) 1,174 Loss on disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . 1,045 2,093 Changes in operating assets and liabilities: Increase in accounts receivable . . . . . . . . . (15,572) (25,878) (Increase) decrease in inventories . . . . . . . . (1,813) 14,354 Increase (decrease) in accounts payable and accrued liabilities . . . . . . . . . . . . . . . (3,860) 18,734 Net (increase) decrease in other assets and liabilities . . . . . . . . . . . . . . . . . . . (7,820) 7,027 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . 25,086 72,208 -------- -------- INVESTING ACTIVITIES Additions to property, plant and equipment . . . . . (15,677) (18,069) Proceeds from disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . 405 1,151 Acquisitions and other investments . . . . . . . . . (7,993) (25,392) Issuance of equity interest in a subsidiary . . . . - 1,063 -------- -------- NET CASH USED FOR INVESTING ACTIVITIES . . . . . . . (23,265) (41,247) -------- -------- See Notes to Consolidated Financial Statements 7 BCP/ESSEX HOLDINGS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued (Unaudited) Nine Month Period Ended September 30, ------------------------ In Thousands of Dollars 1996 1995 ------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from long-term debt . . . . . . . . . . . . 110,800 374,040 Repayment of long-term debt . . . . . . . . . . . . (110,640) (157,665) Proceeds from notes payable to banks . . . . . . . . 390,259 72,345 Repayment of notes payable to banks . . . . . . . . (391,483) (56,945) Preferred stock redemption . . . . . . . . . . . . . (59,238) - Common stock issuance . . . . . . . . . . . . . . . 59,260 - Repurchase of debentures . . . . . . . . . . . . . . - (272,850) Debt issuance costs . . . . . . . . . . . . . . . . - (4,437) -------- -------- NET CASH USED FOR FINANCING ACTIVITIES . . . . . . . (1,042) (45,512) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 779 (14,551) Cash and cash equivalents at beginning of period . . 3,195 16,938 -------- -------- Cash and cash equivalents at end of period . . . . . $ 3,974 $ 2,387 ======== ========
See Notes to Consolidated Financial Statements 8 BCP/ESSEX HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) In Thousands of Dollars ----------------------- NOTE 1 BASIS OF PRESENTATION The unaudited interim consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, which are, in the opinion of the management of BCP/Essex Holdings Inc. ("Holdings"), necessary to present fairly the consolidated financial position of Holdings as of September 30, 1996, and the consolidated results of operations for the three month and nine month periods ended September 30, 1996 and 1995, respectively, and cash flows of Holdings for the nine month periods ended September 30, 1996 and 1995, respectively. Results of operations for the periods presented are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Holdings' Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1995. NOTE 2 INVENTORIES The components of inventories are as follows:
September 30, December 31, 1996 1995 ------------- ------------- Finished goods . . . . . . . . . . . . $128,066 $146,821 Raw materials and work in process . . 43,955 52,366 -------- -------- 171,961 199,187 LIFO reserve . . . . . . . . . . . . . 638 (33,111) -------- -------- $172,599 $166,076 ======== ========
Holdings values a major portion of its inventories at the lower of cost or market based on a last-in, first-out ("LIFO") method. Principal elements of cost included in Holdings' inventories are copper, purchased materials, direct labor and manufacturing overhead. Inventories valued using the LIFO method amounted to $166,519 and $161,449 at September 30, 1996 and December 31, 1995, respectively. 9 BCP/ESSEX HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) In Thousands of Dollars ----------------------- NOTE 3 DEBT ARRANGEMENTS Long-term debt consists of the following:
September 30, December 31, 1996 1995 ------------- ------------- 10% Senior notes . . . . . . . . . . . . $200,000 $200,000 Revolving loan . . . . . . . . . . . . . 157,000 135,000 Term loan . . . . . . . . . . . . . . . . 34,035 54,000 Lease obligation . . . . . . . . . . . . 21,875 23,750 -------- -------- 412,910 412,750 Less current portion . . . . . . 11,576 24,734 -------- -------- $401,334 $388,016 ======== ========
Essex Bank Financing In April 1995, in connection with the redemption (the "Redemption") of all of Holdings' outstanding 16% Senior Discount Debentures due 2004 (the "Debentures"), Essex Group, Inc. ("Essex"), Holdings' wholly owned subsidiary, terminated its previous credit agreement (the "Former Credit Agreement") and entered into three new facilities: (i) a $260,000 revolving credit agreement, dated as of April 12, 1995, by and among Essex, Holdings, the Lenders named therein, and Chemical Bank, as agent (the "Essex Revolving Credit Agreement"); (ii) a $60,000 senior unsecured note agreement, dated as of April 12, 1995, by and among Essex, Holdings, as guarantor, the Lenders named therein, and Chemical Bank, as administrative agent (the "Essex Term Loan", together with the Essex Revolving Credit Agreement, the "Essex Credit Facilities"); and (iii) a $25,000 agreement and lease, dated as of April 12, 1995, by and between Essex and Mellon Financial Services Corporation #3 (the "Essex Sale and Leaseback Agreement"). Essex recognized an extraordinary charge of $2,971, net of applicable tax benefit ($1,980), in the second quarter 1995 for the write-off of unamortized deferred debt expense in connection with the termination of its Former Credit Agreement. On May 12, 1995, Essex borrowed the full amount available under the Essex Term Loan and the Essex Sale and Leaseback Agreement. These funds, together with available cash and borrowings under the Essex Revolving Credit Agreement, were paid to Holdings in the form of a cash dividend ($238,748) and repayment of a portion of an intercompany liability 10 ($34,102) totaling $272,850. Holdings applied such funds to redeem all of its outstanding Debentures at 100% of their principal amount of $272,850 on May 15, 1995. The Essex Revolving Credit Agreement provides for up to $260,000 in revolving loans, subject to specified percentages of eligible assets, reduced by outstanding borrowings under Essex' Canadian credit agreement and unsecured bank lines of credit ($4,476 and $6,060, respectively, at September 30, 1996), as described below. The Essex Revolving Credit Agreement also provides a $25,000 letter of credit subfacility. Essex' ability to borrow under the Essex Revolving Credit Agreement is restricted by the financial covenants contained therein as well as those contained in the Essex Term Loan and to certain debt limitation covenants contained in the indenture under which the 10% Senior Notes due 2003 (the "Essex Senior Notes") were issued BCP/ESSEX HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) In Thousands of Dollars ----------------------- (the "Essex Senior Note Indenture"). The Essex Revolving Credit Agreement terminates five years from its effective date of April 12, 1995. Essex Revolving Credit Agreement loans bear floating rates of interest, at Essex' option, at bank prime plus 1.25% or a reserve adjusted Eurodollar rate (LIBOR) plus 2.25%. The effective interest rate can be reduced by 0.25% to 1.25%, in 0.25% increments, if certain specified financial conditions are achieved. Commitment fees during the revolving loan period are .375% or .5% of the average daily unused portion of the available credit based upon certain specified financial conditions. Indebtedness under the Essex Revolving Credit Agreement is guaranteed by Holdings and all of Essex' subsidiaries, and is secured by a pledge of the capital stock of Essex and its subsidiaries and by a first lien on substantially all assets. See Note 6 for further information. The Essex Term Loan provides for an aggregate of $60,000 in term loans, the last payment of which is due in May 2000. Borrowings under the Essex Term Loan bear floating rates of interest at bank prime plus 2.75% or LIBOR plus 3.75%. Principal payments on the term loans will be made in 20 equal quarterly installments, subject to the loan's excess cash provision, commencing August 15, 1995. The Essex Term Loan requires 50% of excess cash, as defined, to be applied against the outstanding term loan balance. The excess cash calculation for the year ended December 31, 1995 required Essex to repay $12,427 of the term loan. Such payment was made in March 1996. After the 1996 excess cash repayment, principal payments will be made in 17 equal quarterly installments of $2,269. Amounts repaid with respect to the excess cash provision may not be reborrowed. The Essex Sale and Leaseback Agreement provides $25,000 for the sale and leaseback of certain of Essex' fixed assets. The Essex Sale and Leaseback Agreement has a seven-year term expiring in May 2002. The principal component of the rental is to be paid quarterly, with the amount of each of the first 27 payments to be equal to 2.5% of lessor's cost of the equipment, and the balance due at the final payment. The interest component 11 is to be paid on the unpaid principal balance and is to be calculated by lessor at LIBOR plus 2.5%. The effective interest rate can be reduced by 0.25% to 1.125% if certain specified financial conditions are achieved. On May 30, 1996, a subsidiary of Essex entered into a $12,000 (Canadian dollar) credit agreement by and between the subsidiary and a Canadian chartered bank (the "Canadian Credit Agreement"). Borrowings are restricted to meeting the working capital requirements of the subsidiary and are secured by the subsidiary's accounts receivable. As of September 30, 1996, $4,476 was outstanding under the Canadian Credit Agreement and denoted as notes payable to banks in the Consolidated Balance Sheets. The Canadian Credit Agreement bears interest at rates similar to the Essex Revolving Credit Agreement and terminates one year from its effective date of May 30, 1996, although it may be extended for successive one year periods upon the mutual consent of the subsidiary and lending bank. In addition, Essex also has uncommitted bank lines of credit which provide for unsecured borrowings for working capital of up to $25,000, of which $6,060 and $11,760 were outstanding at September 30, 1996 and December 31, 1995, respectively. Amounts outstanding under these lines of credit are also denoted as notes payable to banks in the Consolidated Balance Sheets and bear interest at rates subject to agreement between Essex and the lending banks. At September 30, 1996 and December 31, 1995, such rates of interest averaged 6.7%. Essex has purchased interest rate cap protection through May 15, 1997 with respect to $150,000 of debt with a strike rate of 10.0% (three month LIBOR). Essex Senior Notes In May 1993, Essex issued $200,000 aggregate principal amount of its Essex Senior Notes which bear interest at 10% per annum, payable semiannually and are due in May 2003. The Essex Senior Notes rank pari passu in right of payment with all other senior indebtedness of Essex. To the extent that any other senior indebtedness of Essex is secured by liens on the assets of Essex, the holders of such secured senior indebtedness will have a claim prior to any claim of the holders of the Essex Senior Notes as to those assets. Holdings Senior Discount Debentures In May 1989, Holdings (then known as MS/Essex Holdings Inc.) issued $342,000 aggregate principal amount ($135,117 aggregate proceeds amount) of its Debentures. The Debentures accreted to their full face value (an aggregate principal amount of $272,850) on May 15, 1995. On May 15, 1995, Holdings redeemed all of its outstanding Debentures at 100% of their principal amount with cash received from Essex in the form of a cash dividend and repayment of a portion of an intercompany liability totalling $272,850. NOTE 4 HOLDINGS PREFERRED STOCK AND WARRANTS On July 3, 1996, Holdings called for redemption all of its outstanding 15% Series B Cumulative Redeemable Exchangeable Preferred Stock, Liquidation Preference $25 Per Share (the "Series B Preferred Stock"). The Series B Preferred stock was redeemed at the close of business on July 15, 1996, at a redemption price of $26.875 per share, plus accrued and 12 BCP/ESSEX HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) In Thousands of Dollars, Except Per Share Data ---------------------------------------------- unpaid dividends through the redemption date of $0.166 per share, for a total redemption price of $27.041 per share or $59,238 in the aggregate including redemption expenses. The redemption of the outstanding Series B Preferred Stock was financed by Holdings through a private offering of 11,860,000 shares of its common stock, $59,260 net proceeds amount after issuance expenses, to certain of its current common stockholders and their affiliates. This offering was not registered under the Securities Act of 1933, and such common stock may not be offered or sold in the United States absent such registration or an applicable exemption from registration. At September 30, 1996, Holdings had outstanding 5,666,738 warrants to purchase an equivalent number of shares of common stock of Holdings at a per share exercise price of approximately $2.86. NOTE 5 CONTINGENT LIABILITIES There are various environmental claims and legal proceedings pending against Essex which have arisen out of the ordinary course of its business. Pursuant to the February 29, 1988 acquisition of Essex by Holdings from United Technologies Corporation ("UTC"), UTC agreed to indemnify Essex against all losses (as defined) resulting from or in connection with damage or pollution to the environment and arising from events, operations, or activities of Essex prior to February 29, 1988 or from conditions or circumstances existing at February 29, 1988. Except for certain matters relating to permit compliance, Essex is fully indemnified with respect to conditions, events or circumstances known to UTC prior to February 29, 1988. The sites covered by this indemnity are handled directly by UTC and all payments required to be made are paid directly by UTC. The amounts related to this environmental contingency are not material to Holdings' consolidated financial statements. UTC also provided a second environmental indemnity which deals with losses related to environmental events, conditions or circumstances existing at or prior to February 29, 1988, which only became known in the five year period commencing February 29, 1988. As to any such losses, Essex is responsible for the first $4,000 incurred. Management and its legal counsel periodically review the probable outcome of pending proceedings and the costs reasonably expected to be incurred. Essex accrues for these costs when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. After consultation with counsel during the current quarter, in the opinion of management, the ultimate cost to Essex, exceeding amounts provided, will not materially affect the consolidated financial position or results of operations. NOTE 6 SUBSEQUENT EVENT On October 31, 1996, Essex acquired substantially all of the assets of Triangle Wire and Cable, Inc. of Lincoln, Rhode Island ("Triangle"), 13 BCP/ESSEX HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) In Thousands of Dollars ----------------------- related to the sales, marketing, manufacturing and distribution of electrical wire and cable and the assets of its Canadian affiliate, FLI Royal Wire and Cable. The acquisition included four manufacturing facilities which produce a broad range of building and industrial wire and cable. The total purchase price for the net assets of Triangle approximated $75,000, subject to post closing adjustment. The acquisition was financed from proceeds received under Essex' new revolving credit agreement as detailed in the following paragraph. In connection with the Triangle acquisition, Essex terminated the Essex Revolving Credit Agreement and entered into a new revolving credit agreement, dated as of October 31, 1996, by and among Essex, Holdings, the Lenders named therein, and The Chase Manhattan Bank, as administrative agent (the "New Essex Revolving Credit Agreement"). The New Essex Revolving Credit Agreement provides for up to $370,000 in revolving loans and bears terms and conditions similar to the terminated Essex Revolving Credit Agreement. Essex will recognize an extraordinary charge of approximately $1,183 ($1,971 before applicable income tax benefit) in the fourth quarter 1996 for the write-off of unamortized deferred debt expense associated with the termination of the Essex Revolving Credit Agreement. 14 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Introduction In October 1992, MS/Essex Holdings Inc. ("Holdings") was acquired (the "Acquisition") by merger (the "Merger") of B E Acquisition Corporation ("BE") with and into Holdings with Holdings surviving under the name BCP/Essex Holdings Inc. ("Holdings"). BE was a newly organized Delaware corporation formed for the purpose of effecting the Acquisition. Shareholders of BE included Bessemer Holdings, L.P. (an affiliate and successor in interest to Bessemer Capital Partners, L.P. ["BCP"]) ("BHLP"), affiliates of Goldman, Sachs & Co. ("Goldman Sachs"), affiliates of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Chemical Equity Associates, A California Limited Partnership ("CEA") and members of management. As a result of the Merger, the stockholders of BE became stockholders of Holdings. Holdings is the holding company of Essex Group, Inc. ("Essex"). The principal asset of Holdings is all of the outstanding common stock of Essex. Holdings acquired Essex from United Technologies Corporation ("UTC") in February 1988. Essex, founded in Detroit, Michigan in 1930, is engaged in one principal line of business, the development, production and marketing of electrical wire and cable and electrical insulation products. Among Essex' products are building wire for residential and commercial applications; magnet wire for electromechanical devices such as motors, transformers and electrical controls; voice and data communication wire; automotive wire and specialty wiring assemblies for automobiles and trucks; industrial wire for applications in appliances, construction and recreational vehicles and insulation products including mica paper and mica-based composites. Results of Operations Three Month Period Ended September 30, 1996 Net sales for the third quarter 1996 were $328.8 million or 6.6% higher than the comparable period in 1995, resulting primarily from improved sales volumes and increased sales attributable to the distribution operations acquired in September 1995, partially offset by lower copper prices, Essex' principal raw material. During the third quarter 1996, the average price of copper on the New York Commodity Exchange, Inc. ("COMEX") was 33.0% lower than the comparable period in 1995. Copper costs are generally passed on to customers through product pricing. Third quarter 1996 sales volumes were at record levels with respect to historical third quarter operating performance and exceeded the third quarter 1995 by 16.5%. Sales volumes improved due primarily to increased demand for Essex' building wire and magnet wire products. Building wire sales for the third quarter 1996 increased as compared to the third quarter 1995 due primarily to higher sales volumes and an increase in product pricing (without regard to copper costs), partially offset by decreased copper prices. Although the building wire market has been experiencing very competitive conditions due primarily to excess industry capacity, product pricing improved during the third quarter 1996. Essex believes this improvement to be the result of higher end user demand coupled with low distributor inventories. Sales of magnet wire during the third quarter 1996 improved from the comparable 1995 period due to improved sales volumes partially offset by declining copper prices. Improved sales volumes were attributable to increased demand for magnet wire in the 15 transformer market as well as increased sales to distributors. Voice and data communication wire sales for the third quarter 1996 declined from the comparable period in 1995 due to lower copper prices, decreased sales to regional Bell operating companies and reduced export sales. Continued strong growth in premise wire sales, however, have partially offset those unfavorable sales conditions. Automotive wire sales in the third quarter 1996 were below the comparable 1995 period due primarily to the decline in copper prices as sales volumes were essentially unchanged. Cost of goods sold for the third quarter 1996 was 2.4% higher than the same period in 1995 due primarily to higher sales volumes and increased sales attributable to the distribution operations acquired in September 1995, partially offset by lower copper prices. Essex' cost of goods sold as a percentage of net sales was 82.1% and 85.5% in the third quarter 1996 and 1995, respectively. The cost of goods sold percentage decrease resulted primarily from the sharp decline in copper prices, improved building wire product prices (without regard to copper costs), a change in product mix associated with the distribution operations acquired in September 1995 and higher manufacturing volumes. Selling and administrative expenses for the third quarter 1996 were 31.9% above the comparable 1995 period, due primarily to increased overhead expenses related to the distribution operations acquired in September 1995. Interest expense in the third quarter 1996 was $0.7 million lower than the same period in 1995 due primarily to lower interest rates. Income tax expense was 42.3% of pretax income in the third quarter 1996 compared with 42.0% for the same period in 1995. The effective income tax rate of Holdings is higher than the approximate statutory rate of 40% due to the effect of the amortization of excess of cost over net assets acquired which is not deductible for income tax purposes. Nine Month Period Ended September 30, 1996 Net sales for the first nine months of 1996 were $974.7 million or 10.0% higher than the comparable period in 1995, resulting primarily from improved sales volumes and increased sales attributable to the distribution operations acquired in September 1995, partially offset by lower copper prices, Essex' principal raw material. During the first nine months of 1996, the average COMEX price of copper was 20.2% lower than the comparable period in 1995. Copper costs are generally passed on to customers through product pricing. Sales volumes for the first nine months of 1996 were at record levels with respect to historical first nine months operating performance and exceeded the comparable 1995 period by 13.4%. Improved sales volumes resulted primarily from increased demand for Essex' building wire and magnet wire products. Building wire sales for the first nine months of 1996 increased as compared to the first nine months of 1995 due primarily to an increase in sales volumes, partially offset by declining copper prices. Building wire market demand has exhibited continued growth during 1996 on the strength of new non- residential construction and sustained expansion of the repair and remodeling segment of the market. Essex believes this continued growth in demand coupled with low distributor inventories, has led to an improvement in the depressed market conditions of the most recent quarters resulting in improved product pricing during the third quarter 1996. Essex cannot, however, provide assurances that such favorable market conditions will continue into 1997. Sales of magnet wire during the first nine months of 16 1996 improved from the comparable 1995 period due to improved sales volumes partially offset by declining copper prices. Improved sales volumes were attributable to increased demand for magnet wire in the electric motor and transformer markets as well as increased sales to distributors. Communication wire sales for the first nine months of 1996 are below the comparable period in 1995 due to the decrease in copper prices partially offset by improved product pricing, increased domestic sales volume and sales of premise wire products, which are up 18% as compared to year-to-date 1995, reflecting continued strong growth in this segment of the communication wire market. Automotive wire sales in the first nine months of 1996 were below the comparable 1995 period due to the decrease in copper prices partially offset by improved sales volumes. Cost of goods sold for the first nine months of 1996 was 6.8% higher than the same period in 1995 due primarily to higher sales volumes and increased sales attributable to the distribution operations acquired in September 1995, partially offset by lower copper prices. Essex' cost of goods sold as a percentage of net sales was 83.4% and 85.9% in the first nine months of 1996 and 1995, respectively. The cost of goods sold percentage decrease resulted primarily from the marked decline in copper costs, improved building wire and communications product pricing (without regard to copper costs), a change in product mix associated with the distribution operations acquired in September 1995 and higher manufacturing volumes. Selling and administrative expenses for the first nine months of 1996 were 32.5% above the comparable 1995 period, due primarily to increased overhead expenses attributable to the distribution operations acquired in September 1995. Interest expense in the first nine months of 1996 was $9.0 million lower than the same period in 1995 due primarily to the May 1995 redemption (the "Redemption") of all of Holdings' outstanding Senior Discount Debentures due 2004 (the "Debentures"). The Debentures, which bore interest at 16% per annum, were refinanced with bank debt under Essex' new credit facilities carrying significantly lower rates of interest. See "Liquidity, Capital Resources and Financial Condition" under this caption. Income tax expense was 43.3% of pretax income in the first nine months of 1996 compared with 48.5% for the same period in 1995. The effective income tax rate of Holdings is higher than the approximate statutory rate of 40% due to the effect of the amortization of excess of cost over net assets acquired which is not deductible for income tax purposes. Holdings recorded net income of $25.6 million for the first nine months of 1996 compared to net income of $7.2 million for the comparable period last year. The 1995 results include an extraordinary charge of $3.0 million ($5.0 million before applicable tax benefit) for the write-off of unamortized deferred debt expense associated with Essex' former revolving credit agreement. Liquidity, Capital Resources and Financial Condition The Essex debt agreements place certain restrictions on Holdings' ability to obtain funds from Essex. Consequently, the following discussion presents liquidity, capital resources and financial condition of Holdings followed by a presentation of the matters pertaining to Essex. As of September 30, 1996, Essex was in compliance with all covenants under 17 the agreements governing their outstanding indebtedness. Liquidity and capital resources continue to be adequate. Holdings Holdings is a holding company with no operations and has virtually no assets other than its ownership of the outstanding common stock of Essex. All of such stock is pledged, however, to the lenders under the Essex revolving credit facility. Accordingly, Holdings' ability to meet its cash obligations is dependent on Essex' ability to pay dividends, to loan, or otherwise advance or transfer funds to Holdings in amounts sufficient to service Holdings' cash obligations. Holdings' financial position at September 30, 1996 was highly leveraged. Holdings' aggregate notes payable to banks plus long-term debt totalled $423.4 million and the total of other stockholders' equity ($135.3 million) and stock subject to put ($8.3 million) was $143.6 million at September 30, 1996. Holdings' ratio of debt to stockholders' equity was approximately 2.9 to 1 at September 30, 1996 and 3.6 to 1 at December 31, 1995. On July 3, 1996, Holdings called for redemption all of its outstanding 15% Series B Cumulative Redeemable Exchangeable Preferred Stock, Liquidation Preference $25 Per Share, (the "Series B Preferred Stock"). The Series B Preferred Stock was redeemed at the close of business on July 15, 1996, at a redemption price of $26.875 per share, plus accrued and unpaid dividends through the redemption date of $0.166 per share, for a total redemption price of $27.041 per share or $59,238 in the aggregate including redemption expense. The redemption of the outstanding Series B Preferred Stock, $59.2 million, was financed by Holdings through a private offering of 11,860,000 shares of its common stock, $59,260 net proceeds amount after issuance expenses, to certain of its current common stockholders and their affiliates. This offering has not been registered under the Securities Act of 1933, and such common stock may not be offered or sold in the United States absent such registration or an applicable exemption from registration. Other Considerations Relating To Holdings' Cash Obligations Holdings expects that it may receive certain cash payments from Essex from time to time to the extent cash is available and to the extent it is permitted under the terms of the new Essex credit facilities and the indenture under which the 10% Senior Notes due 2003 (the "Essex Senior Notes") were issued (the "Essex Senior Note Indenture"). Such payments may include (i) an amount necessary under the tax sharing agreement between Essex and Holdings to enable Holdings to pay Essex' taxes as if computed on an unconsolidated basis; (ii) an annual management fee to an affiliate of BHLP of up to $1.0 million; (iii) amounts necessary to repurchase management stockholders' shares of Holdings' common stock under certain specified conditions; and (iv) other amounts to meet ongoing expenses of Holdings (such amounts are considered to be immaterial both individually and in the aggregate, however, because Holdings has no operations, other than those conducted through Essex, or employees). To the extent Essex makes any such payments, it will do so out of operating cash flow, borrowings under the new Essex credit facilities or other sources of funds it may obtain in the future subject to the extent such 18 payments are permitted under the terms of the new Essex credit facilities and the Essex Senior Note Indenture. Essex The following sets forth a discussion and analysis of the liquidity, capital resources and financial condition principally of Essex. Essex' financial position at September 30, 1996 was highly leveraged. Essex' aggregate notes payable to banks plus long-term debt was $423.4 million and its stockholder's equity was $140.3 million. Essex' ratio of debt to stockholders' equity was approximately 3.0 to 1 at September 30, 1996 and 3.7 to 1 at December 31, 1995. In general, Essex requires liquidity for working capital, capital expenditures, debt repayments, interest and taxes. Of particular significance to Essex is its working capital requirements which increase whenever it experiences strong incremental demand in its business and/or a significant rise in copper prices. Historically, Essex has satisfied its liquidity requirements through a combination of funds generated from operating activities together with funds available under its credit facilities. Based upon historical experience and the availability of funds under its credit facilities, Essex expects that its usual sources of liquidity will be sufficient to enable it to meet its cash requirements for working capital, capital expenditures, debt repayments, interest and taxes for the remainder of 1996 and for 1997. In April 1995, in connection with the Redemption of all of Holdings' outstanding Debentures at their principal amount of $272.9 million, Essex terminated its previous credit agreement (the "Former Credit Agreement") and entered into three new facilities: (i) a $260.0 million revolving credit agreement, dated as of April 12, 1995 by and among Essex, Holdings, the lenders named therein and Chemical Bank, as agent (the "Essex Revolving Credit Agreement"); (ii) a $60.0 million senior unsecured note agreement, dated as of April 12, 1995 by and among Essex, Holdings, as guarantor, the lenders named therein and Chemical Bank, as administrative agent (the "Essex Term Loan", together with the Revolving Credit Agreement, the "Essex Credit Facilities"); and (iii) a $25.0 million agreement and lease dated as of April 12, 1995 by and between Essex and Mellon Financial Services Corporation #3 (the "Essex Sale and Leaseback Agreement"). Essex recognized an extraordinary charge of approximately $3.0 million, net of applicable tax benefit, in the second quarter 1995 for the write-off of unamortized deferred debt expense in connection with the termination of its Former Credit Agreement. On May 12, 1995 Essex borrowed the full amounts available under the Essex Term Loan and Essex Sale and Leaseback Agreement. These funds, together with available cash and borrowings under the Essex Revolving Credit Agreement, were paid to Holdings in the form of a cash dividend ($238.8 million) and repayment of a portion of an intercompany liability ($34.1 million) totaling $272.9 million. Holdings applied such funds to effect the redemption of its Debentures, at 100% of their principal amount of $272.9 million, on May 15, 1995. On October 31, 1996, Essex acquired substantially all of the assets of Triangle Wire and Cable, Inc. of Lincoln, Rhode Island ("Triangle") and the assets of its Canadian affiliate, FLI Royal Wire and Cable. See "Subsequent Event" under this caption for further information. In 19 connection with the Triangle acquisition, Essex terminated the Essex Revolving Credit Agreement and entered into a new revolving credit agreement, dated as of October 31, 1996, by and among Essex, Holdings, the Lenders named therein, and The Chase Manhattan Bank, as administrative agent (the "New Essex Revolving Credit Agreement"). The New Essex Revolving Credit Agreement provides for up to $370.0 million in revolving loans, subject to specified percentages of eligible assets reduced by outstanding borrowings under Essex' Canadian credit facility and unsecured bank lines of credit. The New Essex Revolving Credit Agreement also provides a $25.0 million letter of credit subfacility. Essex' ability to borrow under the New Essex Revolving Credit Agreement is restricted by the financial covenants contained therein as well as those contained in the Essex Term Loan (together with the New Essex Revolving Credit Agreement, the "New Essex Credit Facilities") and by debt limitation covenants contained in the Essex Senior Note Indenture. The New Essex Revolving Credit Agreement terminates five years from its effective date of October 31, 1996. The New Essex Revolving Credit Agreement loans bear floating rates of interest, at Essex' option, at bank prime plus 1.25% or a reserve adjusted Eurodollar rate (LIBOR) plus 2.25%. The effective interest rate can be reduced by 0.25% to 1.50%, in 0.25% increments, if certain specified financial conditions are achieved. Commitment fees during the revolving loan period are .25%, .375% or .5% of the average daily unused portion of the available credit based upon certain specified financial conditions. Holdings is a party to the New Essex Credit Facilities and has guaranteed Essex' obligations under the New Essex Revolving Credit Agreement. Holdings has secured its obligations pursuant to the guarantee of the New Essex Revolving Credit Agreement by a pledge of all of the outstanding stock of Essex to the lending banks. The Essex Term Loan provides for an aggregate $60.0 million in term loans, and is to be repaid in 20 equal quarterly installments, subject to the loan's excess cash provision, beginning August 15, 1995 and ending May 15, 2000. The Essex Term Loan bears floating rates of interest at bank prime plus 2.75% or LIBOR plus 3.75%. The Essex Term Loan requires 50% of excess cash, as defined, to be applied against the outstanding term loan balance. The excess cash calculation for the year ended December 31, 1995 required Essex to repay $12.4 million of the term loan. Such payment was made in March 1996. After the 1996 excess cash repayment, the remaining principal payments will be made in 17 equal quarterly installments of $2.3 million. Amounts repaid with respect to the excess cash provision may not be reborrowed. The Essex Sale and Leaseback Agreement provides $25.0 million for the sale and leaseback of certain of Essex' fixed assets. The lease obligation has a seven-year term expiring in May 2002. The principal component of the rental is paid quarterly, with the amount of each of the first 27 payments equal to 2.5% of Lessor's cost of the equipment, and the balance due at the final payment. The interest component is paid on the unpaid principal balance and is calculated by Lessor at LIBOR plus 2.5%. The effective interest rate can be reduced by 0.25% to 1.125% if certain specified financial conditions are achieved. On May 30, 1996, a subsidiary of Essex entered into a $12.0 million (Canadian dollar) credit agreement by and between the subsidiary and a Canadian chartered bank (the "Canadian Credit Agreement"). Borrowings are restricted to meeting the working capital requirements of the subsidiary and are secured by the subsidiary's accounts receivable. As of September 30, 1996, $4.5 million was outstanding under the Canadian Credit Agreement 20 and denoted as notes payable to banks in the Consolidated Balance Sheets. The Canadian Credit Agreement bears interest at rates similar to the New Essex Revolving Credit Agreement and terminates one year from its effective date of May 30, 1996, although it may be extended for successive one year periods upon the mutual consent of the subsidiary and lending bank. Essex also has uncommitted bank lines of credit which provide for unsecured borrowings for working capital of up to $25.0 million of which $6.0 million was outstanding at September 30, 1996 and also denoted as notes payable to banks in the Consolidated Balance Sheets. These lines of credit bear interest at rates subject to agreement between Essex and the lending banks. At September 30, 1996, such rates of interest averaged 6.7%. Essex has purchased interest rate cap protection through May 15, 1997 with respect to $150.0 million of debt with a strike rate of 10.0% (three month LIBOR). The New Essex Revolving Credit Agreement restricts incurrence of indebtedness, liens, guarantees, mergers, sales of assets, lease obligations, payment of dividends, capital expenditure and investments and, with certain exceptions, limits prepayment of indebtedness, including the Essex Senior Notes. Transactions with affiliates are also restricted subject to certain exceptions. The Essex Term Loan and the Essex Senior Note Indenture prohibit, with certain exceptions, the incurrence by Essex of any secured indebtedness unless such indebtedness is equally and ratably secured. The failure by Holdings or Essex to comply with any of the foregoing covenants, if such failure is not timely cured or waived, could lead to acceleration of the indebtedness covered by the applicable agreement and to cross-defaults and cross-acceleration of other indebtedness of Holdings. Net cash provided by operating activities of Essex through the first nine months of 1996 was $25.0 million, compared to $38.1 million during the same period in 1995. The decrease in cash provided was due to a reduction in accounts payable and accrued liabilities, increased inventory levels to accommodate higher sales volumes, and the collection in 1995 of a miscellaneous receivable. Partially offsetting the decrease in cash provided by operating activities was the 1995 repayment of an intercompany liability with Holdings in the amount of $34.1 million coupled with reduced growth in accounts receivable attributable to a marked decline in copper prices. Capital expenditures of $15.7 million in the first nine months of 1996 were $2.4 million less than the comparable period in 1995. Capital expenditures for the remainder of 1996 and for 1997 will be used for modernization projects, to enhance efficiency, expand capacity and ensure continued compliance with regulatory requirements. At September 30, 1996, approximately $5.4 million was committed to outside vendors for capital expenditures. On March 25, 1996, Essex acquired the Canadian building wire operations of BICC Phillips, Inc. The acquisition consisted primarily of inventory and equipment and was financed from proceeds received under Essex' Revolving Credit Agreement. Future cash requirements of this and the Triangle operations are expected to be satisfied through Essex' traditional sources of liquidity as previously discussed. 21 Regarding long-term liquidity issues, future capital expenditures are anticipated to be at recent historical levels while the Essex Senior Notes mature in 2003 and are expected to be replaced by similar financing at that time. The terms of the Essex Sale and Leaseback Agreement include a balloon payment of $8.1 million in 2002. Essex expects that its traditional sources of liquidity will enable it to meet its long-term cash requirements for working capital, capital expenditures, interest and taxes, as well as its debt repayment obligations under both the Essex Term Loan and the Essex Sale and Leaseback Agreement. Essex' operations involve the use, disposal and clean-up of certain substances regulated under environmental protection laws. Essex has accrued $0.9 million for environmental remediation and restoration costs. The accruals were based upon management's best estimate of Essex' exposure in light of relevant available information including the allocations and remedies set forth in applicable consent decrees, third party estimates of remediation costs, the estimated ability of other potentially responsible parties to pay their proportionate share of remediation costs, the nature of each site and the number of participating parties. Subject to the difficulty in estimating future environmental costs, Essex expects that any sum it may have to pay in connection with environmental matters in excess of the amounts recorded or disclosed will not have a material adverse effect on its financial position, results of operations or cash flows. General Economic Conditions and Inflation Holdings, through Essex, faces various economic risks ranging from an economic downturn adversely impacting Essex' primary markets to marked fluctuations in copper prices. In the short-term, pronounced changes in the price of copper tend to affect gross profits within the building wire product line because such changes affect raw material costs more quickly than those changes can be reflected in the pricing of building wire products. In the long-term, however, copper price changes have not had a material adverse effect on gross profits because cost changes generally have been passed through to customers over time. In addition, Essex believes that its sensitivity to downturns in its primary markets is less significant than it might otherwise be due to its diverse customer base and its strategy of attempting to match its copper purchases with its needs. Essex cannot predict either the continuation of current economic conditions or future results of its operations in light thereof. Holdings believes that it is not particularly affected by inflation except to the extent that the economy in general is thereby affected. Should inflationary pressures drive costs higher, Holdings believes that general industry competitive price increases would sustain operating results, although there can be no assurance that this will be the case. Subsequent Event On October 31, 1996, Essex acquired substantially all of the assets of Triangle related to the sales, marketing, manufacturing and distribution of electrical wire and cable and the assets of its Canadian affiliate, FLI Royal Wire and Cable. The acquisition included four manufacturing facilities which produce a broad range of building and industrial wire and cable. The total purchase price for the net assets of Triangle approximated $75 million, subject to post closing adjustment. The acquisition was financed from proceeds received under Essex' New Revolving 22 Credit Agreement. See "Liquidity, Capital Resources and Financial Condition" under this caption. 23 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Item Exhibit Index ---- ------------- 3.1 Conformed Restated Certificate of Incorporation of the registrant. 10.1 Credit Agreement dated as of October 31, 1996, among the registrant, Essex Group, Inc., the Lenders named therein and The Chase Manhattan Bank, as administrative agent. 11.1 Calculation of net income per common share. 27.1 Financial Data Schedule. (b) Reports on Form 8-K: A Current Report on Form 8-K (Items 5 and 7) was filed on July 25, 1996 to report second quarter 1996 earnings. A Current Report on Form 8-K (Items 5 and 7) was filed on July 25, 1996 to report the call for redemption of all Holdings outstanding Series B Cumulative Redeemable Exchangeable Preferred Stock, par value $0.01, effective at the close of business on July 15, 1996, at a redemption price of $26.875 per share, plus accrued and unpaid dividends through the redemption date of $0.166 per share, for a total redemption price of $27.041 per share. 24 SIGNATURE 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. BCP/ESSEX HOLDINGS INC. (Registrant) November 13, 1996 /s/ David A. Owen --------------------------------- David A. Owen Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer) 25 EXHIBIT 11.1 BCP/ESSEX HOLDINGS INC. CALCULATION OF NET INCOME PER COMMON SHARE
Three Month Period Nine Month Period Ended September 30, Ended September 30, ----------------------- ---------------------- In Thousands of Dollars 1996 1995 1996 1995 ------------------------------------------------------------------------------------- Income applicable to common and common equivalent shares: Income before extraordinary charge $ 11,582 $ 6,086 $ 25,568 $ 10,172 Less: Series B preferred stock redemption premium . . . . 4,105 - 4,105 - Series B preferred stock dividend requirement . . . 363 1,771 4,248 5,124 Series B preferred stock accretion . . . . . . . . . 1,666 176 2,024 526 ---------- --------- ---------- ----------- Income before extraordinary charge applicable to common stock 5,448 4,139 15,191 4,522 Extraordinary charge - debt retirement, net of income tax benefit . . . . . . . . . . . . . . - - - 2,971 ---------- ---------- ---------- ----------- Net income applicable to common stock . . . . . . . . . . . $ 5,448 $ 4,139 $ 15,191 $ 1,551 ========== ========== ========== =========== Weighted average common shares outstanding . . . . . . . . . . . . 46,823,040 35,197,957 39,186,969 35,188,665 Common shares issuable in respect to common stock equivalents, with a dilutive effect based on the modified Treasury Stock method . . 5,579,810 2,497,545 3,883,474 2,529,415 ---------- ---------- ---------- ---------- Weighted average number of common and common equivalent shares . . . 52,402,850 37,695,502 43,070,443 37,718,080 ========== ========== ========== ========== Income per common and common equivalent share*: Income before extraordinary $ .10 $ .11 $ .35 $ .12 charge . . . . . . . . . . . . . . . Three Month Period Nine Month Period Ended September 30, Ended September 30, ----------------------- ---------------------- In Thousands of Dollars 1996 1995 1996 1995 ------------------------------------------------------------------------------------- Income applicable to common and common equivalent shares: Extraordinary charge . . . . . . . . - - - (.08) ----- ------ ------ ------ Net income . . . . . . . . . . . . . $ .10 $ .11 $ .35 $ .04 ===== ====== ====== ======
*The computation of fully diluted income per share has not been presented herein since the per share amounts do not differ from the primary computation outlined above. EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AS OF SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000846919 BCP/ESSEX HOLDINGS INC. 1,000 9-MOS DEC-31-1996 SEP-30-1996 3,974 0 173,711 4,409 172,599 363,085 370,088 105,546 766,260 145,418 401,334 0 0 456 134,847 766,260 974,720 975,751 813,106 813,106 0 0 29,879 45,068 19,500 25,568 0 0 0 25,568 .35 .35
EX-3 3 CONFORMED RESTATED CERTIFICATE OF INCORPORATION OF BCP/ESSEX HOLDINGS INC. BCP/Essex Holdings Inc. (the "Corporation"), a corporation organized and existing under the laws of the State of Delaware, does hereby certify as follows: FIRST: The name of the Corporation is BCP/Essex Holdings Inc. BCP/Essex Holdings Inc. was originally incorporated under the name MS/Essex Group Inc., and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 16, 1988. SECOND: Pursuant to Sections 242, 245 and 228 of the General Corporation Law of the State of Delaware, this Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Certificate of Incorporation of the Corporation. THIRD: The Certificate of Incorporation of the Corporation is hereby amended and restated to read in its entirety as follows: ARTICLE FIRST The name of the corporation is BCP/Essex Holdings Inc. (The "Corporation"). ARTICLE SECOND The address of the registered office of the Corporation in the State of Delaware is 1013 Centre Road, City of Wilmington, County of New Castle. The name of the registered agent of the Corporation at such address is Corporation Service Company. ARTICLE THIRD The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE FOURTH The total number of shares of stock that the Corporation shall have authority to issue is 5,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred Stock"), and 150,000,000 shares of common stock, divided into two classes consisting of Class A Common Stock, par value $0.01 per share ("Class A Common Stock") and Class B Common Stock, par value $0.01 per share ("Class B Common Stock"). Class A Common Stock and Class B Common Stock are hereinafter sometimes collectively referred to as "Common Stock". The Corporation may issue, from time to time, shares of Common Stock either as Class A Common Stock or Class B Common Stock; provided that the total number of shares of both classes issued at any time shall not exceed 150,000,000 shares. (a) Preferred Stock. Shares of the Preferred Stock of the Corporation may be issued from time to time in one or more classes or series, each of which class or series shall have such distinctive designation or title as shall be fixed by the Board of Directors of the Corporation prior to the issuance of any shares thereof. Each such class or series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issuance of such class or series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it, all in accordance with the laws of the State of Delaware. The initial series of Preferred Stock has been designated as a series of 3,100,000 shares of Series A Cumulative Redeemable Exchangeable Preferred Stock (the "Series A Preferred Stock") as set forth in the Certificate of Designation of the Series A Preferred Stock filed with the Secretary of State of Delaware. (b) Class A and Class B Common Stock. Except as otherwise provided herein, all shares of Class A Common Stock and Class B Common Stock will be identical and will entitle the holders thereof to the same rights and privileges. (i) Dividends. The Board of Directors may cause dividends to be paid to holders of shares of Common Stock out of funds legally available for the payment of dividends. Any dividend or distribution on Common Stock shall be payable on shares of Class A Common Stock and Class B Common Stock share and share alike; provided that in the case of dividends payable in shares of Common stock of the Corporation, or options, warrants or rights to acquire shares of such Common Stock, or securities convertible into or exchangeable for shares of such Common Stock, the shares, options, warrants, rights or securities so payable shall be payable in shares of, options, warrants or rights to acquire, or securities convertible into or exchangeable for, Common Stock of the same class upon which the dividend or distribution is being paid. (ii) Conversion. Conversion of Class A Common Stock. Subject to this paragraph (ii), any Class A Common Stock may be converted into the same number of shares of Class B Common Stock. This paragraph shall not restrict the ability of the Corporation to issue Class B Common Stock. Conversion of Class B Common Stock. Subject to this paragraph (ii), each record holder of Class B Common Stock (a) must convert any of or all the shares of such holder's Class B Common Stock, as specified by the Corporation, into the same number of shares of Class A Common Stock (a "Mandatory Conversion") and (b) shall be entitled at any time and from time to time in such holder's sole discretion and at such holder's option, to convert any of or all the shares of such holder's Class B Common Stock into the same number of shares of Class A Common Stock. Notwithstanding clauses (a) and (b) of the preceding sentence, Class B Common Stock constituting Restricted Stock (defined below) with respect to a particular Regulated Stockholder (defined below) may not be converted into Class A Common Stock to the extent that immediately prior thereto, or as a result of such conversion, the number of shares of Class A Common Stock that constitute Restricted Stock with respect to such Regulated Stockholder would exceed the number of shares of Class A Common Stock that such Regulated Stockholder and its Affiliates (defined below) may own, control or have the power to vote under any law, regulation, rule or other requirement of any governmental authority at any time applicable to such Regulated Stockholder or its Affiliates, as determined by such Regulated Stockholder in its sole discretion; provided, however, that each holder of Class B Common Stock may convert such shares into Class A Common Stock if such holder reasonably believes that such converted shares will be transferred within 15 days pursuant to a Conversion Event (defined below) and such holder agrees not to vote any shares of Class A Common Stock prior to such Conversion Event and undertakes promptly to convert such shares back into Class B Common Stock if such shares are not transferred pursuant to a Conversion Event. Each Regulated Stockholder may provide for further restrictions upon the conversion of any shares of Restricted Stock by providing the Corporation with signed, written instructions specifying such additional restrictions and legending such shares as to the existence of such restrictions. Conversion Procedures. Each conversion (other than a Mandatory Conversion) of shares of Class A Common Stock into shares of Class B Common Stock, or shares of Class B Common Stock into shares of Class A Common Stock, shall be effected by the surrender of the certificate or certificates representing the shares to be converted (the "Converting Shares") and at the principal office of the Corporation at any time during its usual business hours together with written notice of the holder of such Converting Shares, stating that such holder desires to convert the Converting Shares, or a stated number of the shares represented by such certificate or certificates, into an equal number of shares of the other class of Common Stock (the "Converted Shares"). Such notice shall also state the name or names of (with addresses) and denominations in which the certificate or certificates or Converted Shares shall be issued and shall include instructions for the delivery thereof. The Corporation shall promptly notify each Regulated Stockholder of its receipt of such notice. Promptly after such surrender and the receipt of such notice, the Corporation shall issue and deliver in accordance with the surrendering holder's instructions the certificate or certificates evidencing the Converted Shares issuable upon such conversion, and the Corporation shall deliver to the converting holder a certificate representing any of the Converting Shares that were represented by the certificate or certificates that were delivered to the Corporation in connection with such conversion but that were not converted. Such conversion, to the extent permitted by law, shall be deemed to have been effected as of the close of business on the date on which such certificate or certificates shall have been surrendered and such notice shall have been received by the Corporation, and at such time the rights of the holder of the Converting Shares as such holder shall cease and the person or persons in whose name or names the certificate or certificates for the Converted Shares are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the Converted Shares. Upon issuance of shares in accordance with this paragraph (ii), such Converted Shares shall be deemed to be duly authorized, validly issued, fully paid and nonassessable. The Corporation shall take such actions that may be necessary to ensure that all of the Converted Shares may be issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which the Converted Shares may then be listed (except for official notice of issuance, which will be immediately transmitted to the Corporation upon issuance). The Corporation shall not close its books against the transfer of shares of Class A Common Stock or Class B Common Stock in any manner that would interfere with the timely conversion of any of the Converted Shares. The Mandatory Conversion of shares of Class B Common Stock into shares of Class A Common Stock shall (subject to the second sentence of the paragraph above headed "Conversion of Class B Common Stock") be effective upon the Corporation giving to the record holders of the Converted Shares written notice of such conversion, whereupon the Converted Shares shall represent the same number of shares of Class A Common Stock and the rights of any holder of the Converted Shares shall cease, except only the right of such holder to receive any previously declared but unpaid dividends on the Converted Shares, and the certificate or certificates for the Converted Shares shall be deemed to represent the same number of shares of Class A Common Stock. At any time after a Mandatory Conversion, the holders of the Converted Shares may surrender the certificate or certificates that previously represented such Converted Shares for a certificate or certificates representing the same number of shares of Class A Common Stock in the manner set forth above. As used in this paragraph (ii): "Affiliate" shall mean, with respect to any person, any other person that is (a) directly or indirectly controlling, controlled by or under common control with such person and (b) subject to the provisions of Regulation Y of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such regulation). For the purpose of the above definition, the term "control" (including, with correlative meaning, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or by contract or otherwise. "Conversion Event" shall mean (a) any public offering or public sale of securities of the Corporation (including a public offering registered under the Securities Act of 1933 and a public sale pursuant to Rule 144 of the Securities and Exchange Commission or any similar rule then in force), (b) any sale of securities of the Corporation to a person or group or persons (within the meaning of the Securities Exchange Act of 1934, as amended (the "1934 Act")) if, after such sale, such person or group of persons in the aggregate would own or control securities that possess in the aggregate the ordinary voting power to elect a majority of the Corporation's directors (provided that such sale has been approved by the Corporation's Board of Directors or a committee thereof), (c) any sale of securities of the Corporation to a person or group of persons (within the meaning of the 1934 Act) if, after such sale, such person or group of persons in the aggregate would own or control securities of the Corporation (excluding any Class B Common Stock being converted and disposed of in connection with such Conversion Event) that possess in the aggregate the ordinary voting power to elect a majority of the Corporation's directors, (d) any sale of securities of the Corporation to a person or group of persons (within the meaning of the 1934 Act) if, after such sale, such person or group of persons would not, in the aggregate, own, control or have the right to acquire more than 2% of the outstanding securities of any class of voting securities of the Corporation, and (e) a merger, consolidation or similar transaction involving the Corporation if, after such transaction, a person or group of persons (within the meaning of the 1934 Act) in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority of the surviving corporation's directors (provided that the transaction has been approved by the Corporation's Board of Directors or a committee thereof). "Regulated Stockholder" shall mean any person (a) that is subject to the provisions of Regulation Y of the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such regulation), (b) that is acquiring or holds of record shares of Class A Common Stock or Class B Common Stock and (c) that has provided notice to the Corporation of its status as a "Regulated Stockholder" hereunder. "Restricted Stock" shall mean, with respect to any Regulated Stockholder, any outstanding shares of Class A Common Stock and/or Class B Common Stock ever held of record by such Regulated Stockholder or its Affiliates, excluding treasury shares; provided, however, that any such shares shall cease to be Restricted Stock with respect to such Regulated Stockholder when such shares are transferred in a transaction that is a Conversion Event or are acquired by the Corporation or any subsidiary of the Corporation. The Corporation shall have no responsibility for determining whether any outstanding shares of Class A Common Stock and/or Class B Common Stock constitute Restricted Stock with respect to any particular Regulated Stockholder, but shall instead be entitled to receive, and rely exclusively upon, a written notice provided by such Regulated Stockholder designating such shares as Restricted Stock. (iii) Subdivision and Combination of Shares. If the Corporation shall in any manner subdivide (by stock split, stock dividend or otherwise) or combine (by reverse stock split or otherwise) the outstanding shares of any class of Common Stock, or shall increase or decrease the number of shares of any class of Common Stock by reclassification thereof, then the outstanding shares of the other classes of Common Stock shall be subdivided or combined, as the case may be, to the same extent, share and share alike, and effective provision shall be made for the protection of the conversion rights hereunder. (iv) Distribution of Assets. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of Common stock will be entitled to receive, and will participate equally in, all of the remaining assets of the Corporation available for distribution to its stockholders after payment or provision for payment of the debts and other liabilities of the Corporation and all amounts to which the holders of Preferred Stock are entitled have been paid or set aside for payment. (v) Voting Rights. The holders of Class A Common stock shall have the general right to vote for all purposes, including the election of directors, as provided by law. Each holder of Class A Common Stock shall be entitled to one vote for each share thereof held. Except as otherwise provided herein or required by law, the holders of Class B Common stock shall have no voting rights and shares of Class B Common Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters. On any matter on which the holders of shares of Class A Common Stock and the holders of Class B Common Stock are entitled to vote, except as otherwise required by law, all classes of Common Stock entitled to vote shall vote together as a single class, and each holder of shares of Class B Common stock entitled to vote shall be entitled to one vote for each share of such stock held by such holder; provided, however, that holders of shares of the Class B Common Stock shall be entitled to vote as a separate class on any amendment to this Article FOURTH (b)(v) and on any amendment, repeal or modification of any provision of this Certificate of Incorporation that adversely affects the powers, preferences or special rights of holders of Class B Common Stock. (vi) Merger, etc. In connection with any merger, consolidation, reclassification or recapitalization in which holders of Class A Common stock generally receive, or are given the opportunity to receive, consideration for their shares, all holders of Class B Common Stock shall be given the opportunity to receive the same form of consideration for their shares as is received by holders of Class A Common Stock." ARTICLE FIFTH For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders, it is further provided that: (a) the number of directors of the Corporation shall be fixed by, or in the manner provided in, the By-laws of the Corporation; (b) in furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized and empowered to make, alter, amend or repeal the By-laws of the Corporation in any manner not inconsistent with the laws of the State of Delaware or this Certificate of Incorporation, subject to the power of the stock- holders of the Corporation having voting power to alter, amend or repeal the By-laws of the Corporation; (c) in addition to the powers and authorities herein or by statute expressly conferred upon it, the Board of directors may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provision of the laws of the State of Delaware, this Certificate of Incorporation and the By-laws of the Corporation; (d) any director or any officer elected or appointed by the stockholders or by the Board of Directors, or any Committee thereof, may be removed at any time by a unanimous consent of the stockholders or in such other manner as shall be provided in the By- laws of the Corporation (e) unless and except to the extent that the By-laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot; and (f) Stockholders of the Corporation shall not have any preemptive rights to subscribe for additional issues of stock of the Corporation except as may be agreed from time to time by the Corporation and any such stockholders. Copies of any agreements granting any stockholder preemptive rights, as amended from time to time, will be kept on file with the Secretary of the Corporation. ARTICLE SIXTH No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) pursuant to Section 174 of the Delaware General Corporation Law or (d) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article SIXTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. ARTICLE SEVENTH No contract or transaction between the Corporation and one or more of its directors or officers (or between the Corporation and any other corporation, partnership, associa-tion or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest) shall be void or voidable solely for such reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof that authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose, if: (a) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of disinterested directors, even though the disinterested directors be less than a quorum; (b) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors shall be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes any such contract or transaction. No director of officer shall be liable to account to the Corporation for any profit realized by him or her from or through such contract or transaction solely by reason of the fact that he or she or any other corporation, partnership, association or other organization in which he or she is a director or officer, or has a financial interest, was interested in such contract or transaction. ARTICLE EIGHTH The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts in connection with such action, suit or proceeding, in accordance with the laws of the State of Delaware, and to the full extent permitted by such laws except as the By-laws of the Corporation may otherwise provide. Such indemnification shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law agreement, vote of stockholders or disinterested directors or otherwise, including insurance purchased and maintained by the Corporation, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ARTICLE NINTH The corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation (including provisions as may hereafter be added or inserted in this Certificate of Incorporation as authorized by the laws of the State of Delaware) in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its current form or as hereafter amended are granted subject to the right reserved in this Article NINTH. FOURTH: That the foregoing amendment has been duly adopted in accordance with the provisions of Sections 242, 245 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, BCP/Essex Holdings Inc. has caused this Restated Certificate of Incorporation to be executed in its corporate name as of this 9th day of October, 1992. BCP/ESSEX HOLDINGS INC. By /s/ Robert D. Lindsay --------------------------- Name: Robert D. Lindsay Title: President ATTEST: By /s/ Richard R. Davis ----------------------- Name: Richard R. Davis Title: Secretary EX-10 4 1 CREDIT AGREEMENT, dated as of October 31, 1996, among BCP/ESSEX HOLDINGS INC., a Delaware corporation ("BCP Holdings"), ESSEX GROUP, INC., a Michigan corporation (the "Company"), the several banks and other financial institutions from time to time parties to this Agreement (the "Lenders"; individually a "Lender") and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders hereunder. PRELIMINARY STATEMENTS: (1) BCP Holdings, the Company, the banks and other financial institutions parties thereto and The Chase Manhattan Bank, as agent, are parties to the Credit Agreement, dated as of April 12, 1995 (as amended through the date hereof, the "Existing Credit Agreement"). BCP Holdings and the Company have requested that the Existing Credit Agreement be terminated on the Effective Date (as hereinafter defined). (2) The Company has requested that (a) the Lenders make Loans (as hereinafter defined) to the Company, the proceeds of which shall be used (A) to refund loans outstanding under the Existing Credit Agreement on the Effective Date, (B) to finance the working capital requirements of the Company and its Subsidiaries (as hereinafter defined), (C) to finance the acquisition and assumption (the "Triangle Acquisition") of substantially all of the assets and certain related liabilities of certain businesses of Triangle Wire & Cable, Inc. ("Triangle") and related costs and expenses, (D) to pay reasonable fees and expenses in connection with the transactions contemplated hereby and (E) for general corporate purposes and (b) the Issuing Lender (as hereinafter defined) issue Letters of Credit (as hereinafter defined) for the account of the Company in an aggregate amount not to exceed $25,000,000 at any time outstanding. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "ABR Loans": Revolving Credit Loans the rate of interest applicable to which is based upon the Alternate Base Rate. "Accounts": as defined in the definition of "Eligible Receivables". "Administrative Agent": The Chase Manhattan Bank, together with its affiliates, as the arranger of the Revolving Credit Commitments and as the administrative agent for the Lenders under this Agreement and the other Loan Documents, and any successor administrative agent appointed and approved pursuant to Section 9.9. "Affiliate": as to any Person, (a) any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person or (b) any Person who is a director, officer, shareholder or partner (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in 2 the preceding clause (a). For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (i) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (ii) direct or cause the direction of the management and policies of such Person whether by contract or otherwise. For the purposes of Section 7.12, shareholders and Affiliates of BSC or BS that would not be Affiliates of Holdings, the Company or any of its Subsidiaries other than by reason of being shareholders or Affiliates of BSC or BS, and that none in fact participate in the management of any of BSC, BS, BP Co., Holdings, the Company or any of its Subsidiaries, nor are controlled by BSC, BS, BP Co., Holdings, the Company or any of its Subsidiaries, or any of their respective Affiliates who in fact participate in the management of any of BSC, BS, BP Co., Holdings, the Company or any of its Subsidiaries, shall not be deemed to be Affiliates of Holdings, the Company or any of its Subsidiaries. "Aggregate Outstanding Extensions of Credit": at any time, an amount equal to the sum of (a) the Aggregate Outstanding Revolving Extensions of Credit at such time and (b) the aggregate principal amount of the Competitive Loans then outstanding. "Aggregate Outstanding Revolving Extensions of Credit": at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans then outstanding, (b) the aggregate amount of all L/C Obligations then outstanding and (c) the aggregate principal amount of all Specified Basket Debt then outstanding. "Agreement": this Credit Agreement, as amended, supplemented or otherwise modified from time to time. "Alternate Base Rate": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by Chase as its prime rate in effect at its principal office in New York City; "Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the C/D Reserve Percentage and (b) the Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York City time, on such day (or, if such day shall not be a Business Day, on the next 3 preceding Business Day) by the Administrative Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it; and "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate, or both, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (b) or (c), or both, of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate, the C/D Reserve Percentage, the Assessment Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate, the C/D Reserve Percentage, the Assessment Rate or the Federal Funds Effective Rate, respectively. "Applicable Margin": for each Type of Revolving Credit Loan, on any date, the rate per annum set forth below opposite the Level then in effect:
Level Eurodollar Loans ABR Loans ----- ---------------- --------- I 3/4% 0% II 1% 0% III 1-1/4% 1/4% IV 1-1/2% 1/2% V 1-3/4% 3/4% VI 2% 1% VII 2-1/4% 1-1/4%
"Application": an application, in such form as the Issuing Lender may specify from time to time, requesting the Issuing Lender to open a Letter of Credit. 4 "Assessment Rate": for any day, as applied to any ABR Loan, the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation or any successor (the "FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. Section 327.3(d) (or any successor provision) to the FDIC for the FDIC's insuring time deposits at offices of such institution in the United States. "Assignment and Acceptance": an Assignment and Acceptance entered into by a Lender and an assignee, and consented to by the Administrative Agent, the Issuing Lender and the Company, substantially in the form of Exhibit I. "Available Revolving Credit Commitment": as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender's Revolving Credit Commitment over (b) such Lender s Outstanding Revolving Extensions of Credit. "Bank of Montreal Credit Facility": the credit agreement, dated as of May 30, 1996, between Bank of Montreal and Essex International, as amended, supplemented or otherwise modified from time to time. "BCP/Company Merger": as defined in Section 7.5(c). "Bessemer Group": the collective reference to BSC, BH, BS, Bessec, any Control Affiliate of any of them (collectively, the "Bessemer Affiliates"), any partner, member, stockholder, manager, director, officer or employee of BSC, BH, BS, Bessec, or a Bessemer Affiliate or of any such partner, member, stockholder or manager (collectively, "Bessemer Associates"), the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any Bessemer Associate and a trust, the beneficiaries of which, or a corporation or partnership, the stockholders, members or partners of which, include BSC, BH, BS, Bessec, Bessemer Affiliates, Bessemer Associates, their spouses or their lineal descendants, provided, however, that "Bessemer Group" shall exclude any operating company "controlled" (as defined in the definition of "Control Affiliate") by Bessemer Holdings, L.P., Bessemer Capital Partners, L.P. or any partnership or similar entity under common "control" (as defined in the definition of "Control Affiliate") with Bessemer Holdings, L.P. "Bessec": Bessec Holdings, L.P. and any Person which is a Subsidiary or Control Affiliate thereof. "BH": Bessemer Holdings, L.P. (as successor in interest to Bessemer Capital Partners, L.P.) and any Person which is a Subsidiary or Control Affiliate thereof. "BICC Phillips Purchase Agreement": the purchase agreement between Essex International and BICC Phillips, Inc. to purchase certain equipment, finished goods, inventory and contracts for an aggregate purchase price expected to be approximately $8,000,000. 5 "BS": Bessemer Securities LLC and any Person which is a Subsidiary or Control Affiliate thereof. "Board": the Board of Governors of the Federal Reserve System of the United States (or any successor). "Borrowing Base": as of any date of determination, an amount equal to the sum of (a) 85% of Eligible Receivables as of such date (the "Eligible Receivables Borrowing Base Value") and (b) the lesser of (i) the sum of (x) 65% of Eligible Inventory (other than Eligible Consigned Inventory and Raw Materials) as of such date, (y) 50% of Eligible Consigned Inventory that constitutes Eligible Inventory as of such date and (z) 30% of Raw Materials that constitute Eligible Inventory as of such date and (ii) the Eligible Receivables Borrowing Base Value as of such date. The amounts described in the preceding sentence shall be determined by reference to the most recent monthly Borrowing Base Certificate delivered to the Lenders pursuant to Section 6.2(e). Notwithstanding anything to the contrary in this Agreement, the portion of the Borrowing Base attributable to the Inventory and Accounts of Triangle shall be deemed to equal $62,000,000 until the first date after the 30th day after the Effective Date on which a Borrowing Base Certificate is scheduled to be delivered, at which time (i) the Company shall deliver a new Borrowing Base Certificate reflecting the Inventory and Accounts of Triangle and (ii) the Administrative Agent shall have received a satisfactory report on the examination by the internal staff of the Administrative Agent of the Inventory and Accounts of Triangle (which examination shall not be commenced prior to the Effective Date unless otherwise agreed by the Company). "Borrowing Base Certificate": a certificate substantially in the form of Exhibit B-1, with such changes as the Administrative Agent may from time to time reasonably request for the purpose of monitoring the Borrowing Base. "Borrowing Date": any Business Day specified in a notice pursuant to Section 2.2 or 2.3, as the case may be, as a date on which the Company requests the Lenders to make Loans hereunder. "BP Co.": Bessemer Partners & Co. "BSC": Bessemer Securities Corporation. "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided, however, that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which commercial banks are not open for dealings in Dollar deposits in the London interbank market. "Capital Expenditures": for any period and with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries, 6 excluding (a) any such expenditure made with the proceeds of any sale of fixed or capital assets, so long as (i) such proceeds are so applied within twelve months of such sale and (ii) the assets acquired pursuant to such expenditure constitute Collateral as to which the Administrative Agent, for the benefit of the Lenders, has a fully perfected Lien, prior and superior in right to any other Person, other than with respect to Liens expressly permitted by Section 7.3 (other than Section 7.3(g)(iii)) and (b) any such expenditure made to restore, replace or rebuild property to the condition of such property immediately prior to any damage, loss or destruction of such property, to the extent such expenditure is made with insurance proceeds relating to any such damage, loss or destruction. For the purpose of this definition, the purchase price of equipment which is purchased simultaneously with the trade-in of existing equipment owned by such Person or any of its Subsidiaries shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price less the credit granted by the seller of such equipment for such equipment being traded in at such time. "Capital Lease Financing Facility": the collective reference to (a) the Agreement and Lease dated as of April 12, 1995, between the Company, as lessee, and Mellon Financial Services Corporation #3, as lessor and (b) any other lease financing facility entered into by the Company or any of its Subsidiaries (provided, that the assets subject thereto, and the pricing, tenor and other terms thereof, shall be reasonably satisfactory to the Required Lenders), in each case as amended, supplemented or otherwise modified from time to time in accordance with Section 7.11. "Capital Lease Obligations": as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. "Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "Cash Equivalents": (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof; (b) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits, bankers acceptances and repurchase agreements having maturities of one year or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof having combined capital and surplus of not less than $100,000,000; and (c) commercial paper of an issuer rated at least A-1 by Standard & Poor's Ratings Services or P-1 by Moody's 7 Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and, in either case, maturing within six months from the date of acquisition. "C/D Reserve Percentage": for any day, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board, for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding one billion Dollars in respect of new non-personal time deposits in Dollars in New York City having a maturity approximately equal to three months and in an amount of $100,000 or more. "Chase": The Chase Manhattan Bank, a New York banking corporation. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Collateral": all property and interests in property and proceeds thereof now owned or hereafter acquired by Holdings, the Company or any of its Subsidiaries in or upon which a Lien is or will be granted or purported to be granted under any of the Security Documents. "Commercial Letters of Credit": the collective reference to Sight Letters of Credit and Usance Letters of Credit. "Commitment Percentage": as to any Lender at any time, the percentage of the aggregate Revolving Credit Commitments then constituted by such Lender's Revolving Credit Commitment. "Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with the Company within the meaning of Section 4001 of ERISA or is part of a group which includes the Company and which is treated as a single employer under Section 414(b) or (c) of the Code. "Company Pledge Agreement": the Pledge Agreement made by the Company in favor of the Administrative Agent for the benefit of the Lenders substantially in the form of Exhibit D-1, as the same may be amended, supplemented or otherwise modified from time to time. "Company Security Agreement": the Security Agreement made by the Company in favor of the Administrative Agent for the benefit of the Lenders substantially in the form of Exhibit E-1, as the same may be amended, supplemented or otherwise modified from time to time. "Competitive Advance Accept/Reject Letter": a notification made by the Company pursuant to Section 2.3(f), substantially in the form of Exhibit C-1. "Competitive Advance Invitation": an invitation made by the Company pursuant to Section 2.3(c), substantially in the form of Exhibit C-2. 8 "Competitive Advance Offer": an offer by a Lender to make a Competitive Loan pursuant to Section 2.3(d), substantially in the form of Exhibit C-3. "Competitive Advance Rate": (a) in the case of a Eurodollar Competitive Loan, the applicable Eurodollar Rate plus (or minus) the Margin, and (b) in the case of a Fixed Rate Competitive Loan, the fixed rate of interest offered by the relevant Lender pursuant to the related Competitive Advance Offer. "Competitive Advance Request": a request made pursuant to Section 2.3(b), substantially in the form of Exhibit C-4. "Competitive Borrowing": a borrowing consisting of a Competitive Loan or concurrent Competitive Loans from the Lender or Lenders whose Competitive Advance Offers for such borrowing have been accepted by the Company pursuant to Section 2.3(f). "Competitive Loan": a Loan (which shall be a Eurodollar Competitive Loan or a Fixed Rate Competitive Loan) made by a Lender pursuant to Section 2.3. "Competitive Loan Maturity Date": as to any Competitive Loan, the date specified by the Company pursuant to Section 2.3(b) pursuant to the relevant Competitive Advance Request. "Competitive Loan Period": as to any Competitive Loan, the period from the applicable Borrowing Date to the applicable Competitive Loan Maturity Date. "Compliance Certificate": a certificate duly executed by a Responsible Officer of each of Holdings and the Company in the form of Exhibit K. "Confidential Information": written information that Holdings, the Company, any of their Subsidiaries or Affiliates, or any of their authorized representatives furnishes to the Administrative Agent or any Lender on a confidential basis, other than any such information that becomes generally available to the public other than as a result of a breach by the Administrative Agent or any Lender of its obligations hereunder or that is or becomes available to the Administrative Agent or such Lender from a source other than Holdings, the Company, any of their Subsidiaries or Affiliates, or any of their authorized representatives and that is not, to the actual knowledge of the recipient thereof, subject to obligations of confidentiality with respect thereto. "Confidential Information Memorandum": the Confidential Information Memorandum dated September 1996 and furnished to the Lenders. "Consolidated Current Assets": at a particular date, with respect to any Person, all amounts (other than cash and Cash Equivalents) which would, in conformity with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of such Person and its Subsidiaries at 9 such date, plus the amount of the LIFO reserve applied to such Person's Inventory as of such date. "Consolidated Current Liabilities": at a particular date, with respect to any Person, all amounts which would, in conformity with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of such Person and its Subsidiaries at such date, but excluding (a) the current portion of any Funded Debt of such Person and its Subsidiaries and (b) without duplication of clause (a) above, all Indebtedness consisting of Loans to the extent otherwise included therein. "Consolidated EBITDA": for any period, with respect to any Person, Consolidated Net Income of such Person for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (i) total income tax expense, (ii) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Loans, L/C Obligations and Non-Facility L/C Obligations), (iii) depreciation and amortization expense, (iv) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (v) other non-cash charges (including changes in inventory valuations) and (vi) any extraordinary expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business) and minus, without duplication and to the extent reflected as a credit in the statement of such Consolidated Net Income for such period, the sum of (a) any extraordinary income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) total cash interest income of such Person and its consolidated Subsidiaries for such period, all as determined on a consolidated basis in accordance with GAAP; provided, that for the purposes of calculating the Leverage Ratio and the Senior Secured Leverage Ratio pursuant to Section 7.1, for any period ending on any date set forth below, Consolidated EBITDA will be increased by the corresponding amount set forth below:
Date Amount ---- ------ September 30, 1996 . . . . . . . . Add $10,583,000 December 31, 1996 . . . . . . . . . Add $7,937,000 March 31, 1997 . . . . . . . . . . Add $8,452,000 June 30, 1997 . . . . . . . . . . . Add $6,950,000 10
"Consolidated Net Cash Interest Expense": for any period as to any Person, (a) total cash interest expense (including that attributable to Capital Lease Obligations) of such Person and its consolidated Subsidiaries for such period with respect to all outstanding Indebtedness of such Person and its consolidated Subsidiaries, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit (including Participation Fees but excluding fronting fees payable solely to the issuer of any such letter of credit) and bankers' acceptance financing and net costs under Interest Rate Protection Agreements (which net costs may be allocated over the term of any Interest Rate Protection Agreement in any manner reasonably deemed appropriate by the Company) minus (b) total cash interest income of such Person and its consolidated Subsidiaries for such period, in each case determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income": for any period as to any Person, the consolidated net income (or loss) of such Person and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded the income (or deficit) of any other Person (other than a Subsidiary of such Person) in which such Person or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by such Person or such Subsidiary in the form of dividends or similar distributions. "Consolidated Net Worth": of any Person means, at any date, the excess of total assets of such Person and its consolidated Subsidiaries over total liabilities of such Person and its consolidated Subsidiaries on such date. "Consolidated Working Capital": the excess of Consolidated Current Assets over Consolidated Current Liabilities. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Control Affiliate": as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Default": any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Defaulted Account": as defined in the definition of "Eligible Receivables". 11 "DLJ": Donaldson, Lufkin & Jenrette, Inc. and any Person which is a Subsidiary or Control Affiliate thereof. "Dollars" and "$": dollars in lawful currency of the United States of America. "EBITDA Basket Amount": for any fiscal year of Holdings, an amount equal to the excess, if any, of (a) Consolidated EBITDA of Holdings for the immediately preceding fiscal year over (b) the product of 1.25 times Consolidated Net Cash Interest Expense of Holdings for the immediately preceding fiscal year. "Effective Date": the date on which the conditions specified in Section 5.1 shall have been satisfied. "Eligible Consigned Inventory": (a) Inventory (i) which is consigned to and located at the premises of a Person for incorporation in the ordinary course of such Person's business into such Person's manufacturing process, (ii) which is segregated from inventory not owned by the Company or the relevant Subsidiary and identifiable as Inventory and (iii) in respect of which an Eligible Receivable will be created immediately upon the use or incorporation of such Inventory by such Person, and (b) Inventory which is consigned to and located at the premises of a Person who is an agent or distributor approved by the Administrative Agent in writing for the purposes of this definition; provided, that the Company or the relevant Subsidiary, as the case may be, in its capacity as consignor, shall have filed appropriate Uniform Commercial Code financing statements with respect to such Inventory; and provided, further, that the Person holding such Inventory has entered into an agreement, satisfactory in form and substance to the Administrative Agent, providing a waiver of any applicable Lien and of any right of offset on the part of such Person with respect to such Inventory and providing the Administrative Agent with the right to repossess such Inventory upon the occurrence and during the continuance of a Default or Event of Default. "Eligible Inventory": all inventory of the Company or any of its Subsidiaries ("Inventory"), valued at the lower of (i) cost determined in accordance with GAAP (excluding any LIFO reserve) and stated on a basis consistent with the historical practices of the Company and its Subsidiaries as of the Effective Date or (ii) market value, that the Administrative Agent, in its reasonable discretion, shall deem eligible, reduced (or, in the case of any positive adjustment pursuant to clause (x) below, increased) by (x) an adjustment, positive or negative, equivalent to the sum of the previous two months' purchase price variances that result when standard costs and actual costs differ, (y) the value of reserves which have been recorded by the Company or any of its Subsidiaries with respect to obsolete, slow-moving or excess Inventory and (z) such other reserves as the Administrative Agent, in its reasonable discretion after consultation with the Company, shall deem appropriate. Without in any way limiting the discretion of the Administrative Agent to deem an item of Inventory eligible or ineligible, the Administrative Agent does not currently intend to treat any item of Inventory as eligible if: 12 (a) such item of Inventory is not assignable or a first priority security interest in such item of Inventory in favor of the Administrative Agent for the benefit of the Lenders has not been obtained and fully perfected by filing Uniform Commercial Code financing statements against the Company or the relevant Subsidiary, as the case may be or, in the case of Inventory located in Canada, by completing all steps required to fully perfect a first priority security interest in such Inventory; (b) such item of Inventory is subject to any Lien whatsoever, other than Liens in favor of the Administrative Agent for the benefit of the Lenders; (c) such item of Inventory (i) is damaged or not in good condition (to the extent not provided for by reserves as described above) or (ii) does not meet all material standards imposed by any Governmental Authority having regulatory authority over such item of Inventory, its use or its sale; (d) such item of Inventory is not currently either readily usable or salable, at prices approximating at least the cost thereof, in the normal course of the business of the Company or the relevant Subsidiary, as the case may be (to the extent not provided for by reserves as described above); (e) any event shall have occurred or any condition shall exist with respect to such item of Inventory which would substantially impede the ability of the Company or the relevant Subsidiary, as the case may be, to continue to use or sell such item of Inventory in the normal course of business; (f) any claim disputing the title of the Company or the relevant Subsidiary, as the case may be, to, or right to possession of or dominion over, such item of Inventory shall have been asserted; (g) any representation or warranty contained in this Agreement or in any other Loan Document applicable to either Inventory in general or to any such specific item of Inventory has been breached with respect to such item of Inventory; (h) the Company or the relevant Subsidiary, as the case may be, does not have good and marketable title as sole owner of such item of Inventory; (i) such item of Inventory is not Eligible Consigned Inventory, is owned by the Company or any of its Subsidiaries, and has been consigned to other Persons, or is located at, or in the possession of, a vendor of the Company or such Subsidiary, or is in transit to or from, or held or stored by, third parties; 13 (j) such item of Inventory is work-in-process (other than (i) the copper content of such item of Inventory and (ii) Raw Materials); (k) such item of Inventory is located on a leasehold as to which the lessor has not entered into a landlord's waiver and consent, satisfactory in form and substance to the Administrative Agent, providing a waiver of any applicable Lien and providing the Administrative Agent with the right to receive notice of default, the right to repossess such item of Inventory at any time upon the occurrence or during the continuance of a Default or Event of Default and such other rights as may be acceptable to the Administrative Agent; (l) such item of Inventory is located outside of the United States, Puerto Rico, any United States possession or protectorate which has adopted the Uniform Commercial Code or Canada; (m) such item of Inventory is evidenced by an Account; (n) such item of Inventory is subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third party from whom the Company or any of its Subsidiaries has received notice of a dispute in respect of any such agreement; (o) such item of Inventory consists of chemicals, enamels or other raw materials (other than (i) the copper content of such item of Inventory and (ii) Raw Materials); (p) such item of Inventory consists of packing, packaging and/or shipping supplies or materials; or (q) such item of Inventory has been otherwise determined by the Administrative Agent (after consultation with the Company), exercising its commercially reasonable discretion, to be unacceptable because the Administrative Agent believes that such item of Inventory is not readily salable under the customary terms on which it is usually sold. Notwithstanding anything to the contrary in this Agreement, Inventory having an aggregate value (as determined pursuant to the first sentence of this definition) of up to $30,000,000 that does not constitute Eligible Inventory solely as a result of the failure to obtain (i) an agreement of the kind referred to in the second proviso of the definition of "Eligible Consigned Inventory" or (ii) a landlord's waiver and consent of the kind referred to in clause (k) above may be included as Eligible Inventory in any determination of the Borrowing Base; provided that the aggregate value of Inventory described in clause (i) above which is included as 14 Eligible Inventory pursuant to this paragraph shall not exceed $25,000,000. In addition, notwithstanding anything to the contrary in this Agreement, until October 31, 1997, Triangle Inventory that does not constitute Eligible Inventory solely as a result of the failure to obtain a landlord's waiver and consent of the kind referred to in clause (k) above may be included as Eligible Inventory in any determination of the Borrowing Base. "Eligible Receivables": the gross outstanding balance, determined in accordance with GAAP and stated on a basis consistent with the historical practices of the Company and its Subsidiaries as of the Effective Date, of accounts receivable of the Company or any of its Subsidiaries arising out of sales of goods or services made by the Company or any of its Subsidiaries in the ordinary course of business ("Accounts") that the Administrative Agent, in its reasonable discretion, shall deem eligible, less all finance charges, late fees and other fees that are unearned, and less (i) the value of any accrual which has been recorded by the Company or any of its Subsidiaries with respect to downward price adjustments and (ii) such other reserves as the Administrative Agent, in its reasonable discretion after consultation with the Company, shall deem appropriate. Without in any way limiting the discretion of the Administrative Agent to deem an Account eligible or ineligible, the Administrative Agent does not currently intend to treat an Account as eligible if: (a) the Company and its Subsidiaries have not complied with all material Requirements of Law, including, without limitation, all laws, rules, regulations and orders of any governmental or judicial authority relating to truth in lending, billing practices, fair credit reporting, equal credit opportunity, debt collection practices and consumer debtor protection, applicable to such Account (or any related contracts) or affecting the collectability of such Account; (b) such Account is not assignable or a first priority security interest in such Account in favor of the Administrative Agent for the benefit of the Lenders has not been obtained and fully perfected by filing Uniform Commercial Code financing statements against the Company or the relevant Subsidiary, as the case may be; (c) such Account is subject to any Lien whatsoever, other than Liens in favor of the Administrative Agent for the benefit of the Lenders; (d) the Company or the relevant Subsidiary, as the case may be, in order to be entitled to collect such Account, is required to perform any additional service for, or perform or incur any additional obligation to, the Account debtor in respect of such Account; 15 (e) such Account does not constitute a legal, valid and binding irrevocable payment obligation of the Account debtor in respect of such Account to pay the balance thereof in accordance with its terms or is subject to any defense, setoff, recoupment or counterclaim; (f) the Account debtor in respect of such Account is the Company or an Affiliate, Subsidiary, division or employee of the Company or any of its Subsidiaries (other than (i) any Account that is otherwise an Eligible Receivable arising from a transaction entered into in the ordinary course of business on an arms'-length basis with (x) Femco or (y) any other joint venture in which the Company or any of its Subsidiaries owns an interest approved by the Administrative Agent in writing for the purposes of this paragraph (f), in each case, with respect to clauses (x) and (y) above, upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtained in a comparable transaction with a Person not an Affiliate and (ii) any Account having an outstanding principal amount of less than $5,000 as to which the Account debtor in respect of such Account is an employee of the Company or any of its Subsidiaries); (g) such Account is an account of the United States government, the government of any state of the United States or any political subdivision thereof, or any agency or instrumentality of any of the foregoing; (h) an estimated or actual loss has been recognized in respect of such Account, as determined in accordance with the Company's usual business practice (each such Account, a "Defaulted Account"); (i) 20% or more of the aggregate outstanding amount of all Accounts from the Account debtor in respect of such Account and its Affiliates constitute Defaulted Accounts; (j) any representation or warranty contained in this Agreement or in any other Loan Documents applicable either to Accounts in general or to any such specific Account has been breached with respect to such Account; (k) 50% or more of the outstanding amount of all Accounts from the Account debtor in respect of such Account have become, or have been determined by the Administrative Agent to be, ineligible; (l) the Account debtor in respect of such Account has filed a petition for relief under the United States Bankruptcy Code (or similar action under any successor law or under any comparable law), made a general assignment for the benefit of creditors, had filed against it any petition or other application for relief 16 under the United States Bankruptcy Code (or similar action under any successor law or under any comparable law), failed, suspended business operations, become insolvent, called a meeting of its creditors for the purpose of obtaining any financial concession or accommodation, or had or suffered a receiver or a trustee to be appointed for all or a significant portion of its assets or affairs; (m) any portion of such Account has remained unpaid for a period exceeding 90 days from the due date (but only to the extent of such overdue portion) or the Company or any of its Subsidiaries has reason to believe such Account is uncollectible; (n) the sale represented by such Account is to an Account debtor organized or located outside one of the states of the United States, Puerto Rico, any United States possession or protectorate which has adopted the Uniform Commercial Code or Canada, unless (i) a letter of credit deemed acceptable by the Administrative Agent is held against such Account or (ii) such Account debtor has a Dun & Bradstreet rating of at least 5A2 (or any equivalent successor rating); (o) the Account debtor in respect of such Account is a supplier or creditor of the Company or any of its Subsidiaries (but only to the extent of the lesser of (i) the amount owing from such Account debtor to the Company or the relevant Subsidiary, as the case may be, pursuant to Accounts that are otherwise eligible and (ii) the amount owing to such Account debtor by the Company or the relevant Subsidiary, as the case may be), provided that the aggregate amount of ineligible Accounts under this clause (o) shall be deemed to be $15,000 until such time as the Administrative Agent, in its reasonable discretion, (x) determines that the foregoing provisions of this clause (o) shall be applied for purposes of calculating the Borrowing Base or (y) determines that such amount shall otherwise be changed; (p) such Account is not denominated in Dollars (unless a currency swap or similar hedge has been entered into with respect to such Account, the effect of which is to cause payments in respect of such Account to be denominated in Dollars) or is payable outside the United States; (q) the sale represented by such Account is on a bill-and-hold, undelivered sale, guaranteed sale, sale- or-return, consignment, or sale on approval basis or is subject to any right of return, setoff or charge-back; (r) the Administrative Agent believes, in its reasonable discretion (after consultation with the Company), that the collection of such Account is insecure or that such Account may not be paid; 17 (s) the Company or the relevant Subsidiary, as the case may be, or any other party to such Account, is in default in the performance or observance of any of the terms thereof in any material respect; (t) the Company or the relevant Subsidiary, as the case may be, does not have good and marketable title to such Account as sole owner of such Account; (u) such Account does not arise from the sale and delivery of goods or rendition of services in the ordinary course of business to the Account debtor in respect of such Account; (v) such Account is on terms other than those normal or customary in the business of the Company or the relevant Subsidiary, as the case may be; (w) such Account has associated payment terms exceeding 100 days from invoice date; (x) if such Account were to constitute an Eligible Receivable, more than 15% of all Eligible Receivables would be owing from the Account debtor in respect of such Account or any of its Affiliates; (y) any amounts payable under or in connection with such Account are evidenced by chattel paper, promissory notes or other instruments, unless such chattel paper, promissory notes or instruments have been endorsed and delivered to the Administrative Agent; (z) such Account has been paid by a check which has been returned for insufficient funds if such check is in an amount of at least $100,000, provided that, in addition to the foregoing, a reserve in connection with Accounts which have been paid by checks which have been returned for insufficient funds shall be subtracted for purposes of calculating the Borrowing Base, which reserve shall equal $15,000 or such other amount as the Administrative Agent, in its reasonable discretion, shall determine; or (aa) such Account has been placed with an attorney or other third party for collection. "Eligible Receivables Borrowing Base Value": as defined in the definition of Borrowing Base. "Environmental Claim": any written notice of any Governmental Authority alleging potential liability for damage to the environment or by any Person alleging potential liability for personal injury (including sickness, disease or death), in either case, resulting from or based upon (a) the presence or Release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental leaks or spills) of any Hazardous Material at, in or from property, whether or not owned or 18 leased by Holdings, the Company or any of its Subsidiaries, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "Environmental Laws": any and all foreign, federal, state, local and municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority and requirements of law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment as now or may at any time hereafter be in effect. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "Essex International": Essex International, Inc., a Delaware corporation. "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of the maximum reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member bank of the Federal Reserve System. "Eurodollar Base Rate": in the case of any Eurodollar Loan, with respect to each day during each Interest Period or Competitive Loan Period pertaining to such Eurodollar Loan, the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period or Competitive Loan Period commencing on the first day of such Interest Period or Competitive Loan Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period or Competitive Loan Period, provided, that in the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on the Telerate Service), the "Eurodollar Base Rate" shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Administrative Agent and the Company. In the absence of such agreement, the "Eurodollar Base Rate" shall instead be the rate per annum equal to the average (rounded upward, if necessary, to the nearest 1/16th of 1%) of the respective rates notified to the Administrative Agent by each of the Reference Lenders as the rate at which such Reference Lender is offered Dollar deposits at or about 10:00 A.M., New York time, two Business Days prior to the beginning of the relevant Interest Period or Competitive Loan Period, in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period or Competitive Loan Period for the number of days comprised therein and in an amount comparable to the amount of its Eurodollar Revolving Credit 19 Loan to be outstanding during such Interest Period or the amount of the relevant Competitive Loan, as the case may be. "Eurodollar Competitive Loan": any Competitive Loan the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Loans": any Eurodollar Competitive Loan or Eurodollar Revolving Credit Loan. "Eurodollar Rate": with respect to each day during each Interest Period or Competitive Loan Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/16th of 1%): Eurodollar Base Rate -------------------- 1.00 - Eurocurrency Reserve Requirements "Eurodollar Revolving Credit Loan": any Revolving Credit Loan the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Tranche": the collective reference to Eurodollar Revolving Credit Loans the Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). "Event of Default": any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Excess Cash Flow": for any period , the excess of (a) the sum, without duplication, of (i) Consolidated Net Income of the Company for such period, (ii) an amount equal to the amount of all non-cash charges deducted in arriving at such Consolidated Net Income, (iii) the amount of returned surplus assets of any Plan during such period to the extent not included in arriving at such Consolidated Net Income, (iv) decreases in Consolidated Working Capital of the Company for such period, and (v) an amount equal to the aggregate net non-cash loss on the sale, lease, transfer or other disposition of assets by the Company and its Subsidiaries during such period (other than sales of Inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income over (b) the sum, without duplication, of (i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Company and its Subsidiaries in cash during such period on account of Capital Expenditures and Investment Expenditures (excluding the principal amount of Indebtedness incurred in connection with such expenditures), (iii) the aggregate amount of all payments or prepayments of the Senior Unsecured Term Loans during such period (other than pursuant to any mandatory excess cash flow prepayment provision of the Senior Unsecured Term Loan Agreement) and the aggregate amount of all prepayments of the Revolving Credit Loans made during such period to the extent 20 accompanied by a reduction of the Revolving Credit Commitments, (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt (including payments of Capital Lease Obligations of the Company or any of its Subsidiaries (other than any portion thereof allocable to cash interest expense) made during such period) of the Company and its Subsidiaries made during such period, (v) increases in Consolidated Working Capital of the Company for such period, and (vi) an amount equal to the aggregate net non-cash gain on the sale, lease, transfer or other disposition of assets by the Company and its Subsidiaries during such period (other than sales of Inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income. "Existing Credit Agreement": as defined in the Preliminary Statements. "Femco": Femco Magnet Wire Corporation, an Indiana corporation. "Fixed Rate Competitive Loan": any Competitive Loan bearing interest at a fixed percentage rate per annum specified by the Lender making such Loan in its Competitive Advance Offer (as opposed to a rate comprised of the Eurodollar Rate plus or minus a Margin). "Foreign Subsidiary": any Subsidiary of the Company organized under the laws of any jurisdiction outside the United States of America. "Funded Debt": as to any Person, all Indebtedness of such Person (including Capital Lease Obligations but excluding Indebtedness consisting of letters of credit) that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of the debtor, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including, without limitation, all amounts of Funded Debt required to be paid or prepaid within one year from the date of its creation and, in the case of the Company, Indebtedness in respect of the Loans. "GAAP": generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, as in effect from time to time. For the purpose of certain calculations hereunder, GAAP shall be modified in the manner described in Section 1.2(e). "Goldman": Goldman, Sachs & Co. and any Person which is a Subsidiary or Control Affiliate thereof. "Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity exercising 21 executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Company in good faith. "Hazardous Materials": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials, or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls, and urea- formaldehyde insulation. "Holdings": BCP Holdings or any successor thereto (including, without limitation, New Holdings). "Holdings Common Equity Offering": any primary offering or sale (public or private) of shares of, or rights to purchase, common stock of Holdings. "Holdings Pledge Agreement": the Pledge Agreement made by Holdings in favor of the Administrative Agent for the benefit of the Lenders substantially in the form of Exhibit D-2, as the same may be amended, supplemented or otherwise modified from time to time. 22 "Holdings Security Agreement": the Security Agreement made by Holdings in favor of the Administrative Agent for the benefit of the Lenders substantially in the form of Exhibit E-2, as the same may be amended, supplemented or otherwise modified from time to time. "Indebtedness": of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person's business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations, contingent or otherwise, of such Person as an account party under acceptance, letter of credit or similar facilities, (g) all obligations of such Person to purchase, redeem, retire or otherwise acquire for value any Capital Stock of such Person or any warrants, rights or options to acquire such Capital Stock, (h) all Guarantee Obligations of such Person in respect of Indebtedness of any other Person and (i) all Indebtedness referred to in clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. "Information": the information contained in the Confidential Information Memorandum and the financial statements referred to in Sections 4.1(a) and (b). "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. "Intercompany Loans": as defined in Section 7.2(b). "Intercompany Notes": promissory notes, substantially in the form of Exhibit A, evidencing Intercompany Loans or Joint Venture Loans. "Interest Coverage Ratio": the ratio of (a) Consolidated EBITDA of Holdings for the relevant Interest Coverage Test Period to (b) Consolidated Net Cash Interest Expense of Holdings for such Interest Coverage Test Period. "Interest Coverage Test Period": as of any date of determination, the period of four consecutive fiscal quarters of Holdings ending on such date. 23 "Interest Payment Date": (a) as to any ABR Loan, the last day of each March, June, September and December to occur while such Loan is outstanding, (b) as to any Eurodollar Revolving Credit Loan, the last day of the related Interest Period or, in the case of any Eurodollar Revolving Credit Loan having an Interest Period longer than three months, each day which is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (c) as to any Competitive Loan, the last day of the related Competitive Loan Period and, if specified in the relevant Competitive Advance Request, in the case of any Competitive Loan having a Competitive Loan Period longer than three months, each day which is three months, or a whole multiple thereof, after the first day of such Competitive Loan Period and the last day of such Competitive Loan Period. "Interest Period": with respect to any Eurodollar Revolving Credit Loan: (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Revolving Credit Loan and ending one, two, three or six months thereafter (or, if deposits of such duration are available to all Lenders and all Lenders consent thereto, ending nine or twelve months thereafter), as selected by the Company in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Revolving Credit Loan and ending one, two, three or six months thereafter (or, if deposits of such duration are available to all Lenders and all Lenders consent thereto, ending nine or twelve months thereafter), as selected by the Company by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (1) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (2) no Interest Period shall extend beyond the Revolving Credit Termination Date; (3) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and 24 (4) the Company shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Revolving Credit Loan during an Interest Period for such Loan. "Interest Rate Protection Agreement": any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect any Person against fluctuations in interest rates. "Inventory": as defined in the definition of "Eligible Inventory". "Investment Expenditures": the cost or principal amount, as the case may be, of any capital contribution to, acquisition of a business (whether through the purchase of Capital Stock or assets) of, or other similar investment in, any Person; provided that if any such investment is made by the contribution of assets to another Person, such assets shall, for the purpose of determining the cost of such investment, be valued at fair market value. "Investors": the collective reference to BSC, BH, DLJ, Goldman and any officer or employee of Holdings, the Company or any of its Subsidiaries, so long as a Management Proxy shall be in full force and effect with respect to such officer or employee. "Issue Date": the date of issuance of the Senior Notes. "Issuing Lender": Comerica Bank, in its capacity as issuer of any Letter of Credit. "Issuing Lender Loans": as defined in Section 3.5(a). "Joint Venture": any Person (other than a Subsidiary Guarantor) in which the Company or any of its Subsidiaries has an equity interest, including, without limitation, Femco. "Joint Venture Loans": as defined in Section 7.10(e). "L/C Commitment": $25,000,000. "L/C Fee Payment Date": the last day of each March, June, September and December and the first Business Day following the last day of the Revolving Credit Commitment Period. "L/C Obligations": at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 3.5. "L/C Participants": the collective reference to all the Lenders other than the Issuing Lender. "Letters of Credit": as defined in Section 3.1(a). 25 "Level": as of any date of determination, the level set forth below then in effect, as determined in accordance with the following provisions of this definition: [CAPTION] Level Leverage Ratio Interest Coverage Ratio ----- -------------- ----------------------- I Less than or equal to 2.0 to 1.0 Greater than or equal to 4.00 to 1.0 II Less than or equal to 3.25 to 1.0 Greater than or equal to 3.50 to 1.0 III Less than or equal to 3.75 to 1.0 Greater than or equal to 3.00 to 1.0 IV Less than or equal to 4.00 to 1.0 Greater than or equal to 2.50 to 1.0 V Less than or equal to 4.25 to 1.0 Greater than or equal to 2.25 to 1.0 VI Less than or equal to 4.50 to 1.0 Less than 2.25 to 1.0 VII Greater than 4.50 to 1.0 Less than 2.25 to 1.0
For the purposes of this definition, the Level shall be determined as at the end of each of the first three quarterly periods of each fiscal year of Holdings and as at the end of each fiscal year of Holdings, for the period (a "Level Test Period") of four consecutive fiscal quarters ending on the last day of such quarterly period or fiscal year, as the case may be, based on the relevant financial statements delivered pursuant to Section 6.1; changes in the Level shall become effective on the date on which such financial statements are delivered to the Lenders (but in any event not later than the 50th day after the end of each of the first three quarterly periods of each fiscal year or the 105th day after the end of each fiscal year, as the case may be) and shall remain in effect until the next change to be effected pursuant to this definition, provided, that, until the effectiveness of any change in the Level based upon the financial statements of Holdings for the fiscal year ending December 31, 1996, the Level shall be deemed to be Level IV, and provided, further, that if any financial statements referred to above are not delivered within the time periods specified above, then, until such financial statements are delivered, the Level as at the end of the fiscal period that would have been covered thereby shall be deemed to be Level VII. In the event that the Level corresponding to the Leverage Ratio and the Interest Coverage Ratio shall differ in respect of any Level Test Period, the higher- numbered Level (with Level VII being the highest-numbered Level) shall govern until the next determination of the Level pursuant to this definition. For the purposes of this definition, in the event that Holdings shall consummate a Holdings Common Equity Offering, the Interest Coverage Ratio shall be calculated after giving effect on a pro forma basis to the discharge of any Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such offering (but only to the extent, in the case of revolving Indebtedness, accompanied by a commitment reduction) as if such discharge had occurred on the first day of such Level Test Period. 26 "Leverage Ratio": as of the last day of any period of four consecutive fiscal quarters of Holdings, the ratio of (a) Total Debt on such day to (b) Consolidated EBITDA of Holdings for such period. "Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or other), or charge of any kind or nature whatsoever, or any preference, priority, or other security agreement or preferential arrangement of any kind or nature whatsoever having substantially the same effect as any of the foregoing (including, without limitation, any conditional sale or other title retention agreement, any capital lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction in respect of any of the foregoing). "Loan": any loan made by any Lender pursuant to this Agreement. "Loan Documents": this Agreement, the Applications, the Subsidiary Guarantee, the Security Documents, and any Interest Rate Protection Agreement referred to in Section 7.2(l), together with any amendment, supplement or other modification to any of the foregoing. Notwithstanding the foregoing, the Interest Rate Protection Agreements referred to above shall not be deemed to constitute "Loan Documents" for the purposes of any provision of this Agreement or any other Loan Document other than (a) the definition of "Obligations" contained herein or in any other Loan Document and (b) Section 10. "Loan Parties": the collective reference to Holdings, the Company and any Subsidiary of the Company which is a party to any Loan Document. "Management Proxy": any proxy of any officer or employee of Holdings, the Company or any of its Subsidiaries, directly or indirectly, giving BH the right to vote the shares of Capital Stock of Holdings owned by such officer or employee, substantially identical in form and substance to the Management Proxies delivered to the Administrative Agent prior to the Effective Date. "Margin": as to any Eurodollar Competitive Loan, the margin to be added to or subtracted from the Eurodollar Rate in order to determine the interest rate applicable to such Loan, as specified in the Competitive Advance Offer relating to such Loan. "Material Adverse Effect": a material adverse effect on (a) the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of Holdings, the Company and its Subsidiaries taken as a whole, (b) the ability of the Company or any other Loan Party to perform its obligations under this Agreement or any of the other Loan Documents, or (c) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder. 27 "Maximum Investment Amount": as of any date of determination, the amount set forth below opposite the Level then in effect: Level Amount I $100,000,000 II 100,000,000 III 80,000,000 IV 60,000,000 V 40,000,000 VI 40,000,000 VII 40,000,000 "Modified Aggregate Outstanding Extensions of Credit": at any time, an amount equal to (a) the Aggregate Outstanding Extensions of Credits at such time minus (b) the lesser of (i) the L/C Commitment and (ii) the sum of (x) the aggregate amount of all L/C Obligations then outstanding and (y) an amount which shall be increased each time Loans are made to reimburse drawings under the Letters of Credit pursuant to Section 3.5, by an amount equal to the principal amount of the Loans so made, and which shall be reduced (but not below zero) each time Loans are prepaid pursuant to Section 2.7 or 2.8, by an amount equal to the principal amount of the Loans so prepaid. "Mortgage": each of the mortgages and deeds of trust made by any Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, substantially in the form of Exhibit J (with such changes thereto as shall be advisable under the law of the jurisdiction in which such mortgage or deed of trust is to be recorded), as the same may be amended, supplemented or otherwise modified from time to time. "Mortgaged Properties": the real properties or leasehold interests therein, listed on Schedule 1.1B, as to which the Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the Mortgages. "Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Cash Proceeds": in connection with any issuance or sale by any Person of equity securities, the cash proceeds received by such Person from such issuance, net of investment banking fees, reasonable and documented attorneys' fees, accountants' fees, underwriting discounts and commissions and other customary fees actually incurred in connection therewith. "New Holdings": as defined in Section 7.5(c). "Non-Facility L/C Obligations": at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding letters of credit issued pursuant to Section 7.2(d) and (b) the aggregate amount of drawings under such letters of credit which have not then been reimbursed in accordance with the terms thereof. 28 "Obligations": the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Company to the Administrative Agent or to any Lender (or, in the case of any Interest Rate Protection Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the Letters of Credit or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by the Company pursuant hereto) or otherwise. "Outstanding Revolving Extensions of Credit": as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding, (b) such Lender's Commitment Percentage of the L/C Obligations then outstanding and (c) such Lender's Commitment Percentage of the aggregate principal amount of all Specified Basket Debt then outstanding; provided, that for the purpose of determining such Lender's Available Revolving Credit Commitment pursuant to Section 2.4(a), the aggregate unpaid principal amount of Specified Basket Debt then outstanding shall be deemed to be zero. "Participant": as defined in Section 11.6(f). "Participation Fee": any participation fee payable pursuant to Section 3.3(a) or (b). "PBGC ": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor thereto). "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": any employee benefit plan which is covered by ERISA and in respect of which the Company or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreements": collectively, the Holdings Pledge Agreement, the Company Pledge Agreement and the Subsidiary Pledge Agreement. "Preferred Stock": any preferred stock of Holdings issued for the purpose of prepaying, refinancing or redeeming, or issued in 29 exchange for, (a) the Senior Unsecured Term Loans or (b) other preferred stock of Holdings, in each case in accordance with Section 7.11(a). "Preliminary Statements": the clauses that appear after the preamble of this Agreement under the title "Preliminary Statements". "Prime Rate": as defined in the definition of "Alternate Base Rate". "Raw Materials": raw materials which are located at the Marion, Indiana, PVC processing facility, the Lafayette, Indiana, rubber compounding facility or the Fort Wayne, Indiana, chemical processing facility. "Reference Lenders": Chase and Bank of America Illinois. "Register": as defined in Section 11.6(d). "Regulation U ": Regulation U of the Board. "Reimbursement Obligation": as defined in Section 3.5. "Release": any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration of Hazardous Materials into the indoor or outdoor environment or into or out of any property owned or operated by Holdings, the Company or any of its Subsidiaries, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or other media. "Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under PBGC Reg. Section 2615. "Required Lenders": at any date, the holders of 51% of the aggregate Revolving Credit Commitments, or, if the Revolving Credit Commitments have been terminated or for the purposes of determining whether to accelerate the Loans pursuant to Section 8, the aggregate unpaid principal amount of the Loans. "Requirement of Law": as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer": the chief executive officer, president, chief financial officer or treasurer of Holdings or the Company, as the case may be, but in any event, with respect to 30 financial matters, the chief financial officer or treasurer of Holdings or the Company, as the case may be. "Revolving Credit Commitment": as to any Lender, the obligation of such Lender to make Revolving Credit Loans to and/or issue or participate in Letters of Credit issued on behalf of the Company hereunder in an aggregate principal and/or face amount not to exceed the amount set forth under the heading "Revolving Credit Commitment" opposite such Lender's name on Schedule 1.1A, as the same may be changed from time to time pursuant to the terms hereof. "Revolving Credit Commitment Period": the period from and including the Effective Date to but not including the Revolving Credit Termination Date or such earlier date on which the Revolving Credit Commitments shall terminate as provided herein. "Revolving Credit Loans": as defined in Section 2.1(a). "Revolving Credit Termination Date": October 31, 2001. "Section 7.2(n) Indebtedness": any Indebtedness incurred pursuant to Section 7.2(n). "Section 7.2(p) Indebtedness": any Indebtedness incurred pursuant to Section 7.2(p). "Security Agreements": collectively, the Holdings Security Agreement, the Company Security Agreement and the Subsidiary Security Agreement. "Security Documents": the collective reference to the Pledge Agreements, the Security Agreements, the Mortgages, and any other collateral security document from time to time executed and delivered in connection herewith or therewith. "Senior Note Indenture": the Indenture dated as of May 7, 1993 between the Company and NBD Bank, a Michigan banking corporation (formerly known as NBD Bank, N.A.), as trustee, as amended, supplemented or otherwise modified from time to time in accordance with Section 7.11. "Senior Note Indenture Revolving Credit Incurrence Limit": as of any date of determination, the maximum aggregate principal amount of Revolving Credit Loans which would be permitted to be incurred, in accordance with this Agreement, on such date pursuant to Sections 4.04(b)(i) and 4.04(b)(x) of the Senior Note Indenture (after taking into account any Indebtedness (other than L/C Obligations and Specified Basket Debt) then outstanding pursuant to said Sections). "Senior Note Indenture Revolving Credit Incurrence Limit Certificate": a certificate substantially in the form of Exhibit B- 2, with such changes as the Administrative Agent may from time to time reasonably request for the purpose of monitoring the Senior Note Indenture Revolving Credit Incurrence Limit. "Senior Notes": the Company's 10% Senior Notes Due 2003. 31 "Senior Secured Leverage Ratio": as of the last day of any period of four consecutive fiscal quarters of Holdings, the ratio of (a) Total Senior Secured Debt on such day to (b) Consolidated EBITDA of Holdings for such period. "Senior Unsecured Term Loans": as defined in Section 7.2(k). "Senior Unsecured Term Loan Agreement": the collective reference to (a) the Senior Unsecured Note Agreement, dated as of April 12, 1995, among Holdings, the Company, the lenders parties thereto and The Chase Manhattan Bank, as administrative agent, as in effect on the Effective Date and (b) any other agreement governing unsecured term Indebtedness of the Company so long as the pricing and other terms thereof are no less favorable to the Company and the Lenders than those then contained in the agreement referred to in clause (a) above, in each case as amended, supplemented or otherwise modified from time to time in accordance with Section 7.11. "Sight Letter of Credit": as defined in Section 3.1(a). "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Solvent": when used with respect to any Person, means that, as of any date of determination, (a) the amount of the "present fair saleable value" of the assets of such Person will, as of such date, exceed the amount of all "liabilities of such Person, contingent or otherwise", as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured. "Specified Basket Debt": (a) any Indebtedness of the Company or any of its Subsidiaries incurred pursuant to Section 7.2(o), other than, in the case of any such Indebtedness which consists of term loans or term notes, that portion (if any) of the principal amount of such Indebtedness for which there are no scheduled repayments, prepayments or redemptions prior to the Revolving Credit Termination Date and (b) any Section 7.2(p) Indebtedness. "Specified Properties": the plants and real properties owned by the Company or its Subsidiaries located in Florence, Alabama; Glendale, Arizona; Chicago, Illinois; Sikeston, Missouri; New 32 Market, New Hampshire; Pawtucket, Rhode Island; and Bennettsville, South Carolina. "Specified Required Lenders": at any date, the holders of 51% of the sum of (a) the aggregate Revolving Credit Commitments (or, if the Revolving Credit Commitments have been terminated, the aggregate unpaid principal amount of the Loans) and (b) the aggregate outstanding principal amount of Indebtedness under the Capital Lease Financing Facility. "Standby Letter of Credit": as defined in Section 3.1(a). "Subsidiary": with respect to any Person, any corporation, partnership, joint venture, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding Voting Stock, (b) the interest in the capital or profits of such partnership or joint venture or (c) the beneficial interest in such trust or estate, is at the time directly or indirectly owned or controlled by such Person and/or by one or more of such Person's other Subsidiaries. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. "Subsidiary Guarantee": the Guarantee made by the Subsidiaries of the Company party thereto in favor of the Administrative Agent for the benefit of the Lenders substantially in the form of Exhibit F, as the same may be amended, supplemented or otherwise modified from time to time. "Subsidiary Guarantor": each of the Subsidiaries of the Company which is a party to the Subsidiary Guarantee. "Subsidiary Pledge Agreement": the Pledge Agreement made by each Subsidiary Guarantor in favor of the Administrative Agent for the benefit of the Lenders substantially in the form of Exhibit D-3, as the same may be amended, supplemented or otherwise modified from time to time. "Subsidiary Security Agreement": the Security Agreement made by each Subsidiary Guarantor in favor of the Administrative Agent for the benefit of the Lenders substantially in the form of Exhibit E-3, as the same may be amended, supplemented or otherwise modified from time to time. "Supermajority Lenders": at any date shall mean the holders of 66-2/3% of the aggregate Revolving Credit Commitments, or, if the Revolving Credit Commitments have been terminated, the aggregate unpaid principal amount of the Loans. "Tax Sharing Agreement": the tax sharing agreement dated effective as of January 1, 1991 between Holdings and the Company, as in effect on the Effective Date. "Total Debt": as of any date of determination, all Funded Debt of Holdings and its consolidated Subsidiaries at such date, determined on a consolidated basis in conformity with GAAP. 33 "Total Senior Secured Debt": as of any date of determination, the aggregate then outstanding principal amount of all secured Funded Debt incurred by the Company or any of its Subsidiaries pursuant to Section 7.2(a), (c)(iii), (f), (g), (m) or (n). "Transferee": as defined in Section 11.6(g). "Triangle": as defined in the Preliminary Statements. "Triangle Acquisition": as defined in the Preliminary Statements. "Triangle Acquisition Documents": as defined in Section 5.1(d). "Triangle Inventory": Inventory located at any leased facility listed on Schedule 1.1C. "Type": (a) as to any Revolving Credit Loan, its nature as an ABR Loan or a Eurodollar Loan, and (b) as to any Competitive Loan, its nature as a Eurodollar Competitive Loan or a Fixed Rate Competitive Loan. "Uniform Customs": the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended, supplemented or otherwise modified from time to time. "Usance Letter of Credit": as defined in Section 3.1(a). "Voting Stock": Capital Stock issued by any Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. 1.2 Other Definitional Provisions; Financial Calculations. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto. (b) As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to Holdings, the Company and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 34 (e) Notwithstanding anything to the contrary herein, calculations in connection with the covenants contained in Section 7.1 shall utilize accounting principles and policies (including those in respect of accounting for income taxes) in conformity with those used to prepare the financial statements referred to in Section 4.1(b) for the fiscal year of Holdings or the Company, as the case may be, ended December 31, 1995. SECTION 2. THE REVOLVING CREDIT COMMITMENTS 2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions hereof (including, without limitation, the applicable conditions specified in Section 5), each Lender severally agrees to make revolving credit loans ("Revolving Credit Loans") to the Company from time to time during the Revolving Credit Commitment Period. During the Revolving Credit Commitment Period the Company may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. (b) The Revolving Credit Loans may from time to time be (i) Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the Company and notified to the Administrative Agent in accordance with Sections 2.2 and 2.9, provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Revolving Credit Termination Date. 2.2 Procedure for Revolving Credit Borrowing. The Company may borrow under the Revolving Credit Commitments during the Revolving Credit Commitment Period on any Business Day; provided that the Company shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to (a) 12:00 Noon, New York City time, three Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be initially Eurodollar Revolving Credit Loans or (b) 11:00 A.M., New York City time, on the requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Revolving Credit Loans, ABR Loans or a combination thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar Revolving Credit Loans, the respective amounts of each such Loan and the respective lengths of the initial Interest Periods therefor. Each borrowing under the Revolving Credit Commitments shall be in an amount equal to (x) in the case of ABR Loans, $500,000 or a whole multiple of $100,000 in excess thereof (or, if the then Available Revolving Credit Commitments are less than $500,000, such lesser amount) and (y) in the case of Eurodollar Revolving Credit Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from the Company, the Administrative Agent shall promptly notify each Lender thereof. Each Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Company at the office of the Administrative Agent specified in Section 11.2 prior to 11:00 A.M., New York City time, in the case of Eurodollar Revolving Credit Loans, and 2:00 P.M., New York City time, in the case of ABR Loans, on the Borrowing Date requested by the Company in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Company by the Administrative Agent 35 crediting the account of the Company on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent. 2.3 Competitive Borrowings. (a) The Competitive Advance Option. In addition to the Revolving Credit Loans which may be made available pursuant to the foregoing provisions of this Section 2, the Company may, as set forth in this Section 2.3, request the Lenders to make offers to make Competitive Loans to the Company during the Revolving Credit Commitment Period. The Lenders may, but shall have no obligation to, make such offers, and the Company may, but shall have no obligation to, accept any such offers in the manner set forth in this Section 2.3. (b) Competitive Advance Request. When the Company wishes to request offers to make Competitive Loans under this Section 2.3, it shall transmit to the Administrative Agent a Competitive Advance Request to be received no later than 12:00 Noon (New York City time) on (x) the fourth Business Day prior to the date of borrowing proposed therein, in the case of a borrowing of Eurodollar Competitive Loans or (y) the Business Day immediately preceding the date of borrowing proposed therein, in the case of Fixed Rate Competitive Loans, specifying: (i) the proposed date of the Competitive Borrowing, which shall be a Business Day; (ii) the aggregate principal amount of such borrowing, which shall be $5,000,000 or a whole multiple of $1,000,000 in excess thereof; (iii) the Competitive Loan Maturity Date applicable to the Competitive Loans to be made pursuant thereto, provided, that the Competitive Loan Maturity Date for each Fixed Rate Competitive Loan shall be not less than 7 days nor more than 360 days after the Borrowing Date therefor and the Competitive Loan Maturity Date for each Eurodollar Competitive Loan shall be not less than one month nor more than twelve months after the Borrowing Date therefor, and in any event shall be not later than the Revolving Credit Termination Date; and (iv) whether the Competitive Borrowing then being requested is to be of Eurodollar Competitive Loans or Fixed Rate Competitive Loans. A Competitive Advance Request that does not conform substantially to the format of Exhibit C-4 may be rejected by the Administrative Agent in its sole discretion, and the Administrative Agent shall promptly notify the Company of such rejection. The Company may request offers to make Competitive Loans having any one or more Competitive Loan Maturity Dates in a single Competitive Advance Request. No Competitive Advance Request shall be given within three Business Days of any other Competitive Advance Request pursuant to which the Company has borrowed a Competitive Loan. (c) Competitive Advance Invitation. Promptly after its receipt of a Competitive Advance Request (but, in any event, no later than 3:00 P.M., New York City time, on the date of such receipt) conforming to the 36 requirements of paragraph (b) above, the Administrative Agent shall send to each of the Lenders a Competitive Advance Invitation which shall constitute an invitation by the Company to each such Lender to offer, on the terms and conditions of this Agreement, to make Competitive Loans pursuant to the Competitive Advance Request. (d) Submission and Contents of Competitive Advance Offers. (i) Each Lender may submit a Competitive Advance Offer containing an offer or offers to make Competitive Loans in response to such Competitive Advance Invitation. Each Competitive Advance Offer must comply with the requirements of this paragraph (d) and must be submitted to the Administrative Agent at its offices specified in Section 11.2 not later than (x) 9:30 A.M. (New York City time) on the third Business Day prior to the proposed date of borrowing, in the case of a borrowing of Eurodollar Competitive Loans or (y) 9:30 A.M. (New York City time) on the date of the proposed borrowing, in the case of a Fixed Rate Loan; provided, that any Competitive Advance Offers submitted by the Administrative Agent in the capacity of a Lender may only be submitted if the Administrative Agent notifies the Company of the terms of the offer or offers contained therein not later than fifteen minutes prior to the deadline for the other Lenders. A Competitive Advance Offer submitted by a Lender pursuant to this paragraph (d) shall be irrevocable. (ii) Each Competitive Advance Offer shall be in substantially the form of Exhibit C-3 and shall specify: (A) the date of the proposed Competitive Borrowing, (B) the principal amount of the Competitive Loan for which each such offer is being made, which principal amount (w) may be greater than, equal to or less than the Revolving Credit Commitment of the quoting Lender, (x) must be in a minimum principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof, (y) may not exceed the principal amount of Competitive Loans for which offers were requested and (z) may be subject to a limitation as to the maximum aggregate principal amount of Competitive Loans for which offers being made by such quoting Lender may be accepted, (C) in the case of a borrowing of Eurodollar Competitive Loans, the Margin offered for each such Competitive Loan, expressed as a percentage (specified in increments of 1/10,000th of 1%) to be added to or subtracted from the Eurodollar Rate, (D) in the case of a borrowing of Fixed Rate Competitive Loans, the rate of interest per annum (specified in increments of 1/10,000th of 1%) offered for each such Competitive Loan, and (E) the identity of the quoting Lender. A Competitive Advance Offer may set forth up to five separate offers by the quoting Lender with respect to each Competitive Loan requested in the related Competitive Advance Invitation. Any Competitive Advance Offer may be disregarded by the Administrative Agent if the Administrative Agent determines that it: (A) is not substantially in the form of Exhibit C-3 37 or does not specify all of the information required by Section 2.3(d)(ii); (B) contains qualifying, conditional or similar language (except for a limitation on the maximum principal amount which may be accepted); (C) proposes terms other than or in addition to those set forth in the applicable Competitive Advance Invitation or (D) arrives after the time set forth in Section 2.3(d)(i). (e) Notice to Company. The Administrative Agent shall promptly (and, in any event, by 10:00 A.M., New York City time) notify the Company, by telecopy, of all the Competitive Advance Offers made (including all disregarded offers), the Competitive Advance Rate and the principal amount of each Competitive Loan in respect of which a Competitive Advance Offer was made and the identity of the Lender that made each offer. The Administrative Agent shall send a copy of all Competitive Advance Offers (including all disregarded offers) to the Company for its records as soon as practicable after completion of the offering process set forth in this Section 2.3. (f) Acceptance and Notice by Company. The Company may in its sole discretion, subject only to the provisions of this paragraph (f), accept or reject any Competitive Advance Offer (other than any disregarded offer) referred to in paragraph (e) above. The Company shall notify the Administrative Agent by telephone, confirmed thereafter by telecopy in the form of a Competitive Advance Accept/Reject Letter, whether and to what extent it wishes to accept any or all of the offers referred to in paragraph (e) above not later than (x) 10:30 A.M. (New York City time) on the third Business Day prior to the proposed date of borrowing, in the case of Eurodollar Competitive Loans or (y) 10:30 A.M. (New York City time) on the proposed date of borrowing, in the case of Fixed Rate Competitive Loans; provided that: (i) the failure by the Company to give such notice shall be deemed to be a rejection of all the offers referred to in paragraph (e) above; (ii) the aggregate principal amount of the Competitive Advance Offers accepted by the Company may not exceed the lesser of (A) the principal amount set forth in the related Competitive Advance Request and (B) the excess, if any, of the aggregate Revolving Credit Commitments of all Lenders then in effect over the aggregate principal amount of the Aggregate Outstanding Extensions of Credit immediately prior to the making of such Competitive Loans (and after giving effect to the use of proceeds thereof), (iii) the principal amount of each Competitive Borrowing must be $5,000,000 or a whole multiple of $1,000,000 in excess thereof, (iv) unless there are any limitations contained in a quoting Lender's Competitive Advance Offer, the Company may not accept a Competitive Advance Offer made at a particular Competitive Advance Rate if it has decided to reject any portion of a offer made at a lower Competitive Advance Rate for the same Type of Competitive Loan and the same Competitive Loan Period, and (v) the Company may not accept any Competitive Advance Offer that is disregarded by the Administrative Agent pursuant to Section 38 2.3(d)(ii) or that otherwise fails to comply with the requirements of this Agreement. A notice given by the Company pursuant to this paragraph (f) shall be irrevocable. (g) Allocation by Administrative Agent. If offers are made by two or more Lenders with the same Competitive Advance Rates for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Competitive Loan Period, the principal amount of Competitive Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Lenders as nearly as possible (in integral multiples of $1,000,000, as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. (h) Notification of Acceptance. The Administrative Agent shall promptly (and, in any event, by 11:00 A.M., New York City time) notify each offering Lender whether or not its Competitive Advance Offer has been accepted (and if so, in what amount and at what Competitive Advance Rate), and each successful offering Lender will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Loan in respect of which its offer has been accepted. 2.4 Fees. (a) The Company agrees to pay to the Administrative Agent a commitment fee for the account of the Lenders for the period from and including the Effective Date to the Revolving Credit Termination Date, computed at a rate equal to (i) 0.250% per annum on any date on which Level I or Level II is in effect, (ii) 0.375% per annum on any date on which Level III, Level IV or Level V is in effect or (iii) 0.500% per annum on any date on which Level VI or Level VII is in effect, on the average daily amount of the Available Revolving Credit Commitment of each Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Credit Termination Date or such earlier date as the Revolving Credit Commitments shall terminate as provided herein, commencing on the first of such dates to occur after the Effective Date. (b) The Company agrees to pay to the Administrative Agent, for its own account and, to the extent mutually agreed upon by the Administrative Agent and the Lenders, for the account of the Lenders, the fees in the amounts and on the dates previously agreed to in writing by the Company and the Administrative Agent. 2.5 Evidence of Loans; Repayment. 1. Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Company to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (b) The Administrative Agent shall maintain the Register pursuant to Section 11.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder, whether such Loan is a Revolving Credit Loan or a Competitive Loan, the Type thereof and each Interest Period or Competitive Loan Period (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or 39 to become due and payable from the Company to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Company and each Lender's share thereof. (c) The entries made in the Register and the accounts of each Lender maintained pursuant to Section 2.5(a) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Company therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) the Loans made to the Company by such Lender in accordance with the terms of this Agreement. (d) The Company shall repay all outstanding Revolving Credit Loans on the Revolving Credit Termination Date or such earlier date as the Revolving Credit Commitments shall terminate hereunder. The Company shall repay each Competitive Loan on the Competitive Loan Maturity Date applicable thereto. 2.6 Termination or Reduction of Revolving Credit Commitments. The Company shall have the right, upon not less than three Business Days' notice to the Administrative Agent, to terminate the Revolving Credit Commitments or, from time to time, to reduce the amount of the Revolving Credit Commitments; provided that no such termination or reduction of Revolving Credit Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Loans made on the effective date thereof, (a) the Aggregate Outstanding Extensions of Credit would exceed the Revolving Credit Commitments then in effect or (b) the Outstanding Revolving Extensions of Credit of any Lender would exceed such Lender's Revolving Credit Commitment then in effect. Any such reduction shall be in an amount equal to $1,000,000 or a whole multiple thereof and shall reduce permanently the Revolving Credit Commitments then in effect. Upon receipt of any notice referred to above, the Administrative Agent shall promptly notify each Lender thereof. 2.7 Optional Prepayments. The Company may on the last day of any Interest Period with respect thereto (or on any other day if the prepayment referred to herein is accompanied by all amounts payable by the Company pursuant to Section 2.17), in the case of Eurodollar Revolving Credit Loans, or at any time and from time to time, in the case of ABR Loans, prepay the Revolving Credit Loans, in whole or in part, without premium or penalty, provided that the Company shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to (a) 12:00 Noon, New York City time, three Business Days prior to such prepayment, in the case of Eurodollar Revolving Credit Loans or (b) 11:00 A.M., New York City time, on the date of such prepayment, in the case of ABR Loans) specifying the date and amount of prepayment and whether the prepayment is of Eurodollar Revolving Credit Loans, ABR Loans or a combination thereof, and, if a combination thereof, the amount allocable to each. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with (except in the case of ABR Loans) accrued interest to such date on the amount prepaid. Partial prepayments shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof. Notwithstanding anything to the 40 contrary contained herein, the Company shall not prepay any Competitive Loan without the consent of the holder or holders thereof (which consent may be withheld in its or their sole discretion), except in connection with an acceleration of the maturity thereof pursuant to Section 8. 2.8 Mandatory Prepayments. (a) If on any date (including any date on which a Borrowing Base Certificate is delivered pursuant to Section 6.2(e)) the Modified Aggregate Outstanding Extensions of Credit as of such date exceed the then applicable Borrowing Base, then, without notice or demand, the Company shall, on such date, prepay the Revolving Credit Loans and, if necessary, cash collateralize the Letters of Credit and/or the Competitive Loans in an aggregate principal amount equal to such excess; provided that if the amount of the Aggregate Outstanding Extensions of Credit is less than the amount of such excess (because Specified Basket Debt constitutes a portion thereof), the Company shall, to the extent of the balance of such excess, repay such Specified Basket Debt. The Company may, subject to the terms and conditions of this Agreement, reborrow the amount of any prepayment made under this Section 2.8(a). (b) If on any date (including any date on which a Senior Note Indenture Revolving Credit Incurrence Limit Certificate is delivered pursuant to Section 6.2(e)) the sum of (i) the aggregate L/C Obligations then outstanding and (ii) the aggregate principal amount of Specified Basket Debt then outstanding exceeds the then applicable Senior Note Indenture Revolving Credit Incurrence Limit, then, without notice or demand, the Company shall, on such date, prepay the Revolving Credit Loans and, if necessary, cash collateralize the Competitive Loans to the extent necessary to eliminate such excess; provided that if any such excess remains after giving effect to such prepayment and cash collateralization, the Company shall, to the extent of the balance of such excess, terminate outstanding Letters of Credit, repay Specified Basket Debt and/or deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the Lenders. The Company may, subject to the terms and conditions of this Agreement, reborrow the amount of any prepayment made under this Section 2.8(b). (c) The application of any prepayment pursuant to this Section 2.8 shall be made first to ABR Loans and second to Eurodollar Revolving Credit Loans; provided, that if on the date on which such prepayment is required to be made the aggregate outstanding amount of ABR Loans and Eurodollar Revolving Credit Loans having an Interest Period expiring on such date is less than the amount required to be prepaid, then, on such date, the Company may, at its option, (i) prepay other Eurodollar Revolving Credit Loans selected by the Company in an amount up to the remaining amount required to be prepaid and/or (ii) if no Default or Event of Default shall have occurred and be continuing, place any amounts which the Company would otherwise be required to use to prepay such other Eurodollar Revolving Credit Loans in an interest-bearing cash collateral account established with the Administrative Agent for the benefit of the Lenders until the expiration of the Interest Periods applicable thereto, at which time such amounts shall be applied to prepay such Eurodollar Revolving Credit Loans. Each prepayment of the Loans under this Section 2.8 (other than ABR Loans) shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid. 41 2.9 Conversion and Continuation Options. (a) The Company may elect from time to time to convert Eurodollar Revolving Credit Loans to ABR Loans, by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election; provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto (or on any other day if on the date of such conversion the Company pays to the Administrative Agent for the account of the Lenders accrued interest on such Eurodollar Loans to the date of such conversion together with all amounts payable pursuant to Section 2.17). The Company may elect from time to time to convert ABR Loans to Eurodollar Revolving Credit Loans by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Revolving Credit Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. All or any part of outstanding Eurodollar Revolving Credit Loans or ABR Loans may be converted as provided herein; provided that (i) no Loan may be converted into a Eurodollar Revolving Credit Loan when any Default or Event of Default has occurred and is continuing and the Administrative Agent or the Required Lenders have determined that such a conversion is not appropriate, (ii) any such conversion may only be made if, after giving effect thereto, Section 2.10 shall not have been contravened and (iii) no Loan may be converted into a Eurodollar Revolving Credit Loan after the date that is one month prior to the Revolving Credit Termination Date. (b) Any Eurodollar Revolving Credit Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Company giving notice to the Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans; provided that no Eurodollar Revolving Credit Loan may be continued as such (i) when any Default or Event of Default has occurred and is continuing and the Administrative Agent or the Required Lenders have determined that such a continuation is not appropriate, (ii) if, after giving effect thereto, Section 2.10 would be contravened or (iii) after the date that is one month prior to the Revolving Credit Termination Date and provided, further, that if the Company shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any notice referred to above, the Administrative Agent shall promptly notify the Lenders thereof. 2.10 Minimum Amounts and Maximum Number of Eurodollar Tranches. All borrowings, conversions and continuations of Eurodollar Revolving Credit Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, (a) the aggregate principal amount of the Eurodollar Revolving Credit Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) there shall be no more than ten Eurodollar Tranches. 2.11 Interest Rates and Payment Dates. (a) Each Eurodollar Revolving Credit Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin. 42 (b) Each ABR Loan shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin. (c) (i) each Eurodollar Competitive Loan shall bear interest for each day during the Competitive Loan Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus (or minus, as the case may be) the Margin offered by the Lender making such Loan and accepted by the Company pursuant to Section 2.3, and (ii) each Fixed Rate Competitive Loan shall bear interest at a rate per annum equal to the fixed rate of interest offered by the Lender making such Loan and accepted by the Company pursuant to Section 2.3. (d) During the continuation of any Event of Default pursuant to Section 8(a), the Company shall pay, on demand, interest (after as well as before judgment to the extent permitted by law) on (i) the principal amount of all outstanding Loans at a rate per annum equal to the rate of interest otherwise applicable in respect of such Loans pursuant to Section 2.11(a), (b), or (c) as the case may be, plus 2% and (ii) to the extent permitted by applicable law, all interest and other amounts due and unpaid hereunder, at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%; provided, however, that, on and after the expiration of the Interest Period applicable to any Eurodollar Revolving Credit Loan outstanding on the date of occurrence of such Event of Default, the principal amount of such Loan shall, during the continuation of such Event of Default, bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%. (e) Interest shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (d) of this Section 2.11 shall be payable on demand. 2.12 Computation of Interest and Fees. (a) Interest on the Loans, commitment fees, Participation Fees and fronting fees shall be calculated on the basis of the actual number of days elapsed over a year of 360 days or, on any date when the Alternate Base Rate is determined by reference to the Prime Rate, a year of 365 or 366 days, as appropriate. Any change in the interest rate on a Loan resulting from a change in the Alternate Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change in the Alternate Base Rate is announced or such change in the Eurocurrency Reserve Requirements becomes effective, as the case may be. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Company and the Lenders in the absence of manifest error. (c) If any Reference Lender's Revolving Credit Commitment shall terminate or all its Loans shall be assigned for any reason whatsoever, such Reference Lender shall thereupon cease to be a Reference Lender, and the Administrative Agent (after consultation with the Company and the Lenders) shall, by notice to the Company and the Lenders, designate another Lender as a Reference Lender so that there shall at all times be at least two Reference Lenders. (d) Each Reference Lender shall use its best efforts to furnish quotations of rates to the Administrative Agent as contemplated hereby. If any of the Reference Lenders shall be unable or shall otherwise fail to 43 supply such rates to the Administrative Agent upon its request, the rate of interest shall, subject to the provisions of Section 2.13, be determined on the basis of the quotations of the remaining Reference Lender. 2.13 Inability to Determine Interest Rate. In the event that prior to the first day of any Interest Period: (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Company) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or (b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Eurodollar Revolving Credit Loans during such Interest Period, the Administrative Agent shall give telex, telecopy or telephonic notice thereof to the Company and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Revolving Credit Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Revolving Credit Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Revolving Credit Loans shall be converted, on the first day of such Interest Period, to ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Revolving Credit Loans shall be made or continued as such, nor shall the Company have the right to convert Loans to Eurodollar Revolving Credit Loans. 2.14 Pro Rata Treatment and Payments. (a) Except as otherwise expressly provided herein, each borrowing by the Company from the Lenders hereunder, each payment by the Company on account of any commitment fee hereunder and any reduction of the Revolving Credit Commitments of the Lenders shall be made pro rata according to the respective Commitment Percentages of the Lenders. Except as otherwise expressly provided herein, each payment (including each prepayment) by the Company on account of principal of and interest on the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Credit Loans then held by the Lenders. All payments (including prepayments) to be made by the Company hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 1:30 P.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Administrative Agent's office specified in Section 11.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other 44 than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day (in which case interest thereon shall be payable at the then applicable rate during such extension) unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. (b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a Borrowing Date that such Lender will not make the amount that would constitute its share of the borrowing on such date available to the Administrative Agent, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon such assumption, make available to the Company a corresponding amount. If such amount is made available to the Administrative Agent on a date after such Borrowing Date, such Lender shall pay to the Administrative Agent on demand an amount equal to the product of (i) the daily average federal funds rate during such period as quoted by the Administrative Agent, times (ii) the amount of such Lender's share of such borrowing, times (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to the date on which such Lender's share of such borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 2.14 shall be conclusive in the absence of manifest error. If such Lender's share of such borrowing is not in fact made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans hereunder, on demand, from the Company. 2.15 Requirements of Law. 2. In the event that any change after the Effective Date in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for taxes covered by Section 2.16 and changes in the rate of tax on the net income or earnings of such Lender (including, without limitation, changes in the U.S. branch profits tax)); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender any other condition; 45 and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Company shall promptly pay such Lender, within 15 days after its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender has demanded compensation under this Section 2.15(a) with respect to any Eurodollar Revolving Credit Loan, the Company shall have the option to convert immediately such Eurodollar Revolving Credit Loan into an ABR Loan until the circumstances giving rise to such demand for compensation no longer apply; provided, that (i) no such conversion shall affect the Company's obligation to pay compensation as provided herein which is due with respect to the period prior to such conversion and (ii) on the date of such conversion the Company shall pay to the Administrative Agent for the benefit of the relevant Lender accrued interest on such Eurodollar Revolving Credit Loan to the date of conversion, together with any amounts payable pursuant to Section 2.17. (b) In the event that any Lender shall have determined that any change after the Effective Date in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the Effective Date does or shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Company (with a copy to the Administrative Agent) of a written request therefor, the Company shall pay to such Lender or such corporation, within 15 days after its demand, such additional amount or amounts as will compensate such Lender for such reduction. (c) Prior to making any demand for payment pursuant to this Section 2.15 with respect to Eurodollar Loans, any Lender making a demand for payment shall designate a different lending office with respect to Eurodollar Loans if such designation will avoid the need for making such demand and will not, in the sole judgment of such Lender, be illegal or otherwise disadvantageous to such Lender. (d) A certificate as to any additional amounts payable pursuant to this Section 2.15 submitted by any Lender, through the Administrative Agent, to the Company shall be conclusive in the absence of manifest error. The covenants contained in this Section 2.15 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.16 Taxes. (a) All payments made by the Company under this Agreement to the Administrative Agent or any Lender shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, 46 levied, collected, withheld or assessed by any Governmental Authority, excluding taxes imposed on or with respect to or measured by the net income of the Administrative Agent or any Lender and franchise taxes imposed on the Administrative Agent or any Lender, as the case may be, if the Administrative Agent or such Lender is subject to such net income or franchise tax by reason of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Administrative Agent or such Lender (excluding a connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement) or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender after making all required deductions (including deductions applicable to additional sums payable under this Section 2.16) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement. Whenever any Taxes are payable by the Company, as promptly as practicable thereafter the Company shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Company showing payment thereof if such a receipt is issued by the relevant taxing authority and, if not, other documentation reasonably satisfactory to the Administrative Agent or such Lender, as the case may be, evidencing such payment. If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent such required receipts or other documentary evidence, the Company shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (b) Each Lender (or Transferee) that is not a citizen or resident of the United States of America, a corporation, partnership or other entity created or organized in or under the laws of the United States of America (or any state thereof or the District of Columbia), or any estate or trust that is subject to U.S. federal income taxation regardless of the source of its income (a "Non-U.S. Lender") shall deliver to the Company and the Administrative Agent (i) two copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8 pursuant to this clause (i) in lieu of a Form 1001 or Form 4224, an annual certificate representing that such Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Company and is not a controlled foreign corporation related to the Company (within the meaning of Section 864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from U.S. federal withholding tax on all payments by the Company under this Agreement and 47 the other Loan Documents, (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable forms and (iii) any other documentation as may be required under applicable U.S. tax law and regulations to evidence complete exemption from U.S. federal withholding tax on all payments by the Company under this Agreement and the other Loan Documents. Such forms and other documentation shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). Each such Lender shall certify, in the case of a Form W-8 or W-9, that it is entitled to an exemption from United States backup withholding tax. In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form or other documentation previously delivered by it, and shall deliver such additional forms and documentation as may subsequently be required under applicable U.S. tax law and regulations to evidence complete exemption from U.S. federal withholding tax on all payments by the Company under this Agreement and the other Loan Documents unless in any such case any Tax Law Change (as defined below) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms and other documentation previously delivered by it inapplicable or which would prevent such Lender from duly completing and delivering any such form or other documentation previously delivered by it with respect to it and such Lender so advises the Company and the Administrative Agent. Unless the Administrative Agent or the relevant Lender shall have delivered to the Company the forms and other documentation referred to above, the Company or the Administrative Agent shall withhold taxes from payments to such Lender hereunder at the applicable statutory rate and the Company shall not be required to pay any additional amounts to such Lender pursuant to Section 2.16(a); provided that this sentence shall not apply, and the Company shall be required to pay additional amounts to such Lender pursuant to Section 2.16(a), if the Administrative Agent or such Lender is unable to deliver such forms and other documentation as a result of a Tax Law Change. For purposes of this Section 2.16(b), "Tax Law Change" means, with respect to any Lender, a change in or amendment to the Code or any tax treaty to which the United States is a party that occurs after the date such Lender became a Lender hereunder the effect of which is to cause any payment to such Lender to be subject to U.S. federal withholding tax. Where, because of a Tax Law Change, the Administrative Agent or any Lender is no longer entitled to a complete exemption from U.S. federal withholding tax on payments by the Company to it but is entitled to a reduced rate of taxation with respect to such payments, the Administrative Agent or such Lender shall deliver to the Company such documentation (including, without limitation, a Form 1001, if applicable) as may be required under applicable U.S. tax law and regulations to evidence such reduced rate of taxation, and, if the Administrative Agent or such Lender fails to do so, the Company shall not be required to pay additional amounts to the Administrative Agent or such Lender pursuant to this Section 2.16(b) in an amount in excess of the additional amounts it would have been required to so pay if the Administrative Agent or such Lender had provided such documentation. (c) If any Lender (or Transferee) shall have determined that it is entitled to claim a refund from a Governmental Authority in respect of Taxes with respect to which the Company has paid additional amounts pursuant to Section 2.16(a), it shall promptly notify the Company of the availability of such refund claim and shall, within 30 days after receipt of a request by the Company, make a claim to such Governmental Authority 48 for such refund at the Company's expense. If any Lender (or Transferee) receives a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) in respect of any Taxes with respect to which the Company has paid additional amounts pursuant to Section 2.16(a), it shall within 30 days from the date of such receipt pay over such refund to the Company (but only to the extent of additional amounts paid by the Company under Section 2.16(a) with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses of the Lender (or Transferee) and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the Company, upon the request of the Lender (or Transferee), agrees to repay the amount paid over to the Company (plus penalties, interest or other charges) to the Lender (or Transferee) in the event the Lender (or Transferee) is required to repay such refund to such Governmental Authority. (d) Notwithstanding anything to the contrary in this Section 2.16, if the Internal Revenue Service determines that a Lender (or Transferee) is a conduit entity knowingly participating in a conduit financing arrangement as defined in Section 7701(1) of the Code and the regulations thereunder and unless the Company expressly consented to such arrangement with full knowledge of the relevant facts of such arrangement at the time it was entered into (a "Conduit Financing Arrangement"), then the Company shall have no obligation to pay additional amounts to the Lender (or Transferee) for any Taxes with respect to any payments hereunder to the extent the amount of such Taxes exceeds the amount that would have otherwise been withheld or deducted had the Internal Revenue Service not made such a determination. Each Lender (or Transferee) represents and agrees that, at all times during the term of this Agreement, it is not and will not be a conduit entity participating in a conduit financing arrangement (as defined in Section 7701(1) of the Code and the regulations thereunder) with respect to any borrowings hereunder. The agreement in this Section 2.16(d) shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.17 Indemnity. The Company agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense (including, but not limited to, any such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain its Eurodollar Revolving Credit Loans or Competitive Loans, but excluding loss of the Applicable Margin or any positive Margin applicable to Eurodollar Loans), which such Lender may sustain or incur as a consequence of (a) default by the Company in payment when due of the principal amount of or interest on any Eurodollar Revolving Credit Loan or Competitive Loan, (b) default by the Company in making a borrowing of, conversion into or continuation of Eurodollar Revolving Credit Loans or Competitive Loans after the Company has given a notice requesting (or, in the case of Competitive Loans, accepting) the same in accordance with the provisions of this Agreement, (c) default by the Company in making any prepayment after the Company has given a notice thereof in accordance with the provisions of this Agreement or (d) the making of a prepayment or conversion of Eurodollar Revolving Credit Loans or a Competitive Loans on a day which is not the last day of an Interest Period or the Competitive Loan Period, as the case may be, with respect thereto, including, without limitation, in each case, any such loss or expense arising from the reemployment of funds obtained by it or from fees payable to terminate the deposits from which such funds were obtained. Calculation of all amounts 49 payable to a Lender under this Section 2.17 with respect to Eurodollar Loans shall be made as though such Lender had actually funded its relevant Eurodollar Loan through the purchase of a deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of such Eurodollar Loan and having a maturity comparable to the relevant Interest Period or Competitive Loan Period; provided, however, that each Lender may fund each of its Eurodollar Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this Section 2.17. The Company shall endeavor to arrange the borrowings and repayments pursuant to this Agreement so as to minimize any amounts which would become payable pursuant to this Section 2.17. A certificate as to any amounts payable pursuant to this Section 2.17 submitted by any Lender, through the Administrative Agent, shall be conclusive in the absence of manifest error. The agreements in this Section 2.17 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.18 Replacement Lenders. In the event that the Company becomes obligated to pay additional amounts to any Lender pursuant to Section 2.15 or 2.16 (other than solely with respect to Competitive Loans), then, unless such Lender has theretofore removed or cured the conditions which resulted in the obligation to pay such additional amounts, the Company may, on ten Business Days' prior written notice to the Administrative Agent and such Lender, cause such Lender to (and such Lender shall) assign pursuant to Section 11.6 all of its rights and obligations under this Agreement to another Person which is willing to become a Lender and is acceptable (which acceptance shall not be unreasonably withheld) to the Administrative Agent, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans, any accrued but unpaid commitment fees in respect of such Lender's Revolving Credit Commitment and any other amounts payable to such Lender under this Agreement, provided that any expenses or other amounts owing to such Lender pursuant to any indemnification provision hereof (including, if applicable, Section 2.17) shall be for the account of the Company. SECTION 3. LETTERS OF CREDIT 3.1 L/C Commitment. (a) Subject to the terms and conditions hereof (including, without limitation, the applicable conditions specified in Section 5), the Issuing Lender, in reliance on the agreements of the other Lenders set forth in Section 3.4, agrees to issue letters of credit ("Letters of Credit") for the account of the Company on any Business Day during the Revolving Credit Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the aggregate amount of L/C Obligations and Non-Facility L/C Obligations would exceed $25,000,000. Each Letter of Credit shall (i) be denominated in Dollars and shall be either (x) a standby letter of credit issued (1) for the benefit of insurance companies to guarantee insurance claims and premiums, (2) to provide bid and performance guarantees or (3) to guarantee contested appeals (a "Standby Letter of Credit"), or (y) a documentary sight letter of credit (a "Sight Letter of Credit") or documentary time letter of credit (a "Usance Letter of Credit") in respect of the purchase of goods or services by the Company 50 and its Subsidiaries in the ordinary course of business and (ii) expire no later than the Revolving Credit Termination Date. (b) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York. (c) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law. (d) The terms of the Letters of Credit and the Company's relationship with the Issuing Lender under this Agreement may be set forth in a separate agreement among the Company, the Issuing Lender and the Administrative Agent, provided that the provisions of such agreement are not inconsistent with the provisions of this Agreement. 3.2 Procedure for Issuance of Letters of Credit. The Company may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at its address for notices specified herein an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may request. Upon receipt of any Application, the Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit unless it has received the Application therefor and all such other certificates, documents and other papers and information relating thereto by 12:00 Noon, New York City time, on the Business Day immediately preceding the day on which such Letter of Credit is to be issued) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Company. The Issuing Lender shall furnish a copy of such Letter of Credit to the Administrative Agent and the Company promptly following the issuance thereof. 3.3 Fees and Other Charges. (a) The Company shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a participation fee with respect to the Commercial Letters of Credit (other than Usance Letters of Credit in respect of which a banker's acceptance has been issued or a deferred payment has been created) at a per annum rate equal to the Applicable Margin from time to time in effect with respect to Eurodollar Revolving Credit Loans minus 0.25% on the average daily aggregate amount available to be drawn under such Commercial Letters of Credit during the period for which payment is made. Such participation fee shall be payable to the Lenders to be shared ratably among them in accordance with their respective Commitment Percentages. Such participation fee shall be payable quarterly in arrears on each L/C Fee Payment Date and shall be nonrefundable. (b) The Company shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a participation fee with respect to the Standby Letters of Credit and the Usance Letters of Credit in respect of which a banker's acceptance has been issued or a 51 deferred payment has been created, at a per annum rate equal to the Applicable Margin from time to time in effect with respect to Eurodollar Revolving Credit Loans on the average daily aggregate amount available to be drawn under such Letters of Credit during the period for which payment is made. Such participation fee shall be payable to the Lenders to be shared ratably among them in accordance with their respective Commitment Percentages. Such participation fee shall be payable quarterly in arrears on each L/C Fee Payment Date and shall be nonrefundable. (c) In addition to the foregoing fees, (i) the Company shall pay to the Issuing Lender, for its own account, a fronting fee in respect of each Letter of Credit equal to a per annum rate agreed upon between the Company and the Issuing Lender on the average daily aggregate amount available to be drawn under such Letter of Credit during the period for which payment is made; such fronting fee shall be payable quarterly in arrears on each L/C Fee Payment Date and shall be nonrefundable; and (ii) the Company shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. (d) The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all fees received by the Administrative Agent for their respective accounts pursuant to this Section. 3.4 L/C Participations. The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Commitment Percentage of the Issuing Lender's obligations and rights under or in respect of each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. 3.5 Drawing and Reimbursement. (a) The payment by the Issuing Lender of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by the Issuing Lender on the date of such payment of a Revolving Credit Loan ("Issuing Lender Loans"), which shall be an ABR Loan, in the amount of such draft (but without any requirement for compliance with the provisions of Sections 2.1 and 2.2 or the conditions set forth in Section 5). It is understood that, notwithstanding anything to the contrary in this Section 3.5, interest on any unreimbursed Issuing Lender Loan shall be payable by the Company from the date on which such Loan is deemed to be made, at the interest rate then applicable to ABR Loans. In the event that a drawing under any Letter of Credit is not reimbursed by the Company by 12:00 Noon, New York City time, on the first Business Day after such drawing, the Issuing Lender shall promptly notify the Administrative Agent and, upon receipt of such notice, the Administrative Agent will in turn notify each L/C Participant. Each L/C Participant shall, on the first Business Day following such notification, make a Revolving Credit Loan, which shall be an ABR Loan, in an amount equal to its Commitment Percentage of such drawing for application to reimburse the Issuing Lender (but without any requirement for compliance with the provisions of Sections 2.1 and 2.2 or 52 the conditions set forth in Section 5) and shall make available to the Administrative Agent for the account of the Issuing Lender, by deposit to the Administrative Agent's account, in same day funds, the amount of such Loan. If and to the extent that any Lender shall not have so made the amount of such Loan available to the Administrative Agent, such L/C Participant and the Company severally agree to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Issuing Lender until the date such amount is paid to the Administrative Agent (such obligation on the part of the Company, together with any comparable obligation with respect to participating interests pursuant to Section 3.5(b), being referred to herein as a "Reimbursement Obligation"), at (a) in the case of the Company, the interest rate then applicable to ABR Loans and (b) in the case of such L/C Participant, the daily average federal funds rate during the relevant period as quoted by the Administrative Agent, calculated on the basis of the actual number of days elapsed during such period over a year of 360 days. If such L/C Participant shall pay to the Administrative Agent such amount, such amount so paid shall constitute such L/C Participant's Revolving Credit Loan for purposes of this Agreement. (b) If, for any reason (including as a result of the occurrence of an Event of Default with respect to the Company pursuant to Section 8(f)), ABR Loans may not be made pursuant to Section 3.5(a) by the L/C Participants to repay Issuing Lender Loans, then, effective on the date such ABR Loans would otherwise have been made, each L/C Participant severally agrees that it shall unconditionally and irrevocably, without regard to the occurrence of any Default or Event of Default, to the extent of such L/C Participant's Commitment Percentage, purchase a participating interest in such Issuing Lender Loans. Each L/C Participant will immediately transfer to the Administrative Agent, in same day funds, the amount of its participation, and the proceeds of such participation shall be distributed by the Administrative Agent to the Issuing Lender. Each L/C Participant shall share on a pro rata basis (calculated by reference to its participating interest in such Issuing Lender Loans) in any interest which accrues thereon and in all repayments thereof. If and to the extent that any Lender shall not have so made the amount of such participating interest available to the Administrative Agent, such L/C Participant and the Company severally agree to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Issuing Lender until the date such amount is paid to the Administrative Agent, at (a) in the case of the Company, the interest rate then applicable to ABR Loans and (b) in the case of such L/C Participant, the daily average federal funds rate during the relevant period as quoted by the Administrative Agent, calculated on the basis of the actual number of days elapsed during such period over a year of 360 days. If such L/C Participant shall pay to the Administrative Agent such amount, such amount so paid shall constitute such L/C Participant's participating interest in the relevant Issuing Lender Loans for purposes of this Agreement. 3.6 Obligations Absolute. The Company's obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Company may have or have had against the Issuing Lender, any L/C Participant or any beneficiary of a Letter of Credit. The Company also agrees with the Issuing Lender and the L/C Participants that the Issuing Lender and the L/C Participants shall not be responsible for, and 53 the Company's obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Company and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Company against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender and the L/C Participants shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except, in the case of the Issuing Lender, for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. The Company agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence of willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Company and shall not result in any liability of the Issuing Lender or any L/C Participant to the Company. 3.7 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Company of the date and amount thereof. The responsibility of the Issuing Lender to the Company in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. 3.8 Application. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply. 3.9 Notices and Reports. The Issuing Lender shall furnish (a) to the Administrative Agent notice of any failure to issue, any extension or expiration of, or any drawing under any Letter of Credit prior to 11:00 A.M. (New York City time) on the day of such extension, expiration or drawing or, in the case of a failure to issue, on the day on which the Issuing Lender determines not to issue a Letter of Credit and (b) to the Administrative Agent on the last Business Day (or such other day as is agreed between the Administrative Agent and the Issuing Lender) of each month a written report setting forth the average daily aggregate maximum amount available to be drawn (assuming compliance with all conditions to drawing) during such month under all Letters of Credit and summarizing issuance and expiration dates of Letters of Credit issued during such month and drawings during such month under all Letters of Credit. Upon receipt of any report referred to in clause (b) above, the Administrative Agent shall deliver a copy thereof to each L/C Participant, together with a calculation of each L/C Participant's participation in each Letter of Credit referred to in such report. SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Lenders to enter into this Agreement and to make or maintain the Loans and issue or participate in the Letters of Credit, 54 Holdings and the Company hereby jointly and severally represent and warrant to the Administrative Agent and each Lender that: 4.1 Financial Condition. (a) The unaudited pro forma consolidated balance sheet of Holdings and its consolidated Subsidiaries as at September 30, 1996 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies of which have heretofore been furnished to each Lender, has been prepared giving effect (as if such events had occurred on such date) to (i) the borrowings under this Agreement contemplated to be made, and other Indebtedness of the Company and its Subsidiaries contemplated to be incurred, on the Effective Date, (ii) the repayment or defeasance of any Indebtedness of Holdings, the Company or its Subsidiaries contemplated to occur on the Effective Date, (iii) the consummation of the Triangle Acquisition and (iv) the payment of fees and expenses in connection with the foregoing. The Pro Forma Balance Sheet is based on the best information available to Holdings and the Company as of the date of delivery thereof, and presents fairly on a pro forma basis the estimated financial position of Holdings and its consolidated Subsidiaries as at September 30, 1996, assuming that the events specified in the preceding sentence had actually occurred at September 30, 1996. (b) The consolidated balance sheets of Holdings and its consolidated Subsidiaries and of the Company and its consolidated Subsidiaries as at December 31, 1994 and December 31, 1995 and the related consolidated statements of income and stockholders' equity and cash flows for the fiscal years ended on such dates, reported on by Ernst & Young, copies of which have heretofore been furnished to each Lender, present fairly the consolidated financial condition of Holdings and its consolidated Subsidiaries or the Company and its consolidated Subsidiaries, as the case may be, as at such dates, and the consolidated results of their operations and cash flows for the fiscal years then ended. The unaudited consolidated balance sheets of Holdings and its consolidated Subsidiaries and of the Company and its consolidated Subsidiaries as at June 30, 1996, and the related unaudited consolidated statements of income and stockholder's equity and cash flows for the six- month period ended on such date, certified by a Responsible Officer, copies of which have heretofore been furnished to each Lender, present fairly the consolidated financial condition of Holdings and its consolidated Subsidiaries or the Company and its consolidated Subsidiaries, as the case may be, as at such date, and the consolidated results of their operations and cash flows for the six-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or such Responsible Officer, as the case may be, and as disclosed therein). Neither Holdings, the Company, nor any of their respective consolidated Subsidiaries had, at the date of the most recent balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto other than such obligations which are not required to be disclosed under GAAP (which obligations are described on Schedule 4.1(b)). During the period from December 31, 1995 to and including the Effective Date there has been no sale, transfer or other disposition by Holdings, the Company, or any of 55 their respective consolidated Subsidiaries of any material part of its business or property and no purchase or other acquisition of any business or property (including any Capital Stock of any other Person) material in relation to the consolidated financial condition of Holdings and its consolidated Subsidiaries or the Company and its consolidated Subsidiaries, as the case may be, at December 31, 1995 (except in connection with the Triangle Acquisition). (c) The projections dated September 12, 1996 furnished to the Lenders were prepared based on good faith assumptions and the best information available to Holdings and the Company on the date thereof, and all assumptions and estimates set forth therein, on such date, were believed by management of Holdings and the Company to be reasonable in light of then current conditions and reflected Holdings' and the Company's reasonable estimate of the results of operations and other information projected therein, it being recognized by the Lenders that such projections as they relate to future events are not to be viewed as fact and that actual results during the period or periods covered by such projections may differ from the projected results set forth therein. 4.2 No Change. Since December 31, 1995 (a) there has been no development or event, which has had or could reasonably be expected to have a Material Adverse Effect and (b) except as disclosed in the Confidential Information Memorandum, no dividends or other distributions have been declared, paid or made upon the Capital Stock of Holdings or the Company nor has any of the Capital Stock of the Company been redeemed, retired, purchased or otherwise acquired for value by Holdings, the Company or any of its Subsidiaries, except as expressly permitted by Section 7.8. 4.3 Corporate Existence; Compliance with Law. Each of Holdings, the Company and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate power and authority, and the legal right, to own, pledge, mortgage and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except where the failure to be so qualified and/or in good standing, in the aggregate, could not reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 4.4 Corporate Power; Authorization; Enforceable Obligations. (a) Each Loan Party has the corporate power and authority, and the legal right, to make, deliver and perform each Loan Document to which it is a party and, in the case of the Company, to borrow hereunder and to request the issuance of Letters of Credit for its account, and has taken all necessary corporate action to authorize the execution, delivery and performance of each such Loan Document and, in the case of the Company, to authorize the borrowings and the issuance of Letters of Credit for its account on the terms and conditions of this Agreement. 56 (b) No consent or authorization of, filing with or other act by or in respect of any Governmental Authority or any other Person is required in connection with the borrowings hereunder or the issuance of Letters of Credit or with the execution, delivery, performance, validity or enforceability of this Agreement or any other Loan Document, other than filings necessary to perfect the Administrative Agent's security interest in the Collateral for the benefit of the Lenders (which consents, authorizations and filings have been obtained or made and are in full force and effect). (c) This Agreement and the other Loan Documents have been duly executed and delivered on behalf of each Loan Party party thereto. This Agreement and the other Loan Documents constitute a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 4.5 No Legal Bar. Except as set forth in Schedule 4.5, the execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and the use of the proceeds thereof, will not violate any Requirement of Law or material Contractual Obligation of Holdings, the Company or of any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation (other than the Liens created by the Security Documents). The consummation of the Triangle Acquisition will not violate any material Requirement of Law. 4.6 No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Holdings or the Company, threatened by or against Holdings, the Company or any of its Subsidiaries or against any of their respective properties or revenues (a) with respect to this Agreement or any other Loan Document, the Loans or the use of the proceeds thereof, any Letter of Credit, or any Lien contemplated by the Loan Documents or (b) which has a reasonable possibility of an adverse determination and, if adversely determined, (i) would affect the legality, validity or enforceability of any Loan Document or (ii) would have a Material Adverse Effect. 4.7 No Default. Neither Holdings, the Company nor any of its Subsidiaries is in default or has received any notice of default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 4.8 Ownership of Property; Liens. Set forth on Schedule 4.8 is a complete and accurate list of all real property owned by any Loan Party or any of its Subsidiaries as of the Effective Date, showing as of the Effective Date the street address, county or other jurisdiction and state thereof. Also set forth on Schedule 4.8 is a complete and accurate list of all leases of real property under which any Loan Party or any of its 57 Subsidiaries is the lessee, showing as of the Effective Date the street address, county or other relevant jurisdiction, state, lessor, lessee and expiration date. Each such lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms, except as could not reasonably be expected to have a Material Adverse Effect. Each of Holdings, the Company and each of its Subsidiaries has good record and marketable (subject to Liens expressly permitted by Section 7.3) title in fee simple to, or a valid leasehold interest in, all its real property, and good title to all its other property, and none of such property is subject to any Lien except as expressly permitted by Section 7.3. 4.9 Intellectual Property. Set forth on Schedule 4.9 is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of any Loan Party or any of its Subsidiaries as of the Effective Date, showing as of the Effective Date the jurisdiction in which registered, the registration number, the date of registration and the expiration date. Each of Holdings, the Company and each of its Subsidiaries owns, or is licensed to use, all trademarks, trade names, service marks, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted (the "Intellectual Property") except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect. No claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does Holdings or the Company know of any valid basis for any such claim, the use of such Intellectual Property by Holdings, the Company and its Subsidiaries does not infringe on the rights of any Person, and, to the knowledge of Holdings and the Company, no Intellectual Property has been infringed, misappropriated or diluted by any other Person, except for such claims, infringements, misappropriations and dilutions that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.10 No Burdensome Restrictions. No Requirement of Law or Contractual Obligation applicable to Holdings, the Company or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect. 4.11 Taxes. Each of Holdings, the Company and its Subsidiaries has filed or caused to be filed all tax returns which are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of Holdings, the Company or its Subsidiaries, as the case may be, and the non-payment of which does not have a reasonable likelihood of having a Material Adverse Effect); no tax Lien has been filed with respect to any material tax liability on the part of Holdings, the Company or any of its Subsidiaries; and, to the knowledge of Holdings or the Company, no proposed material tax assessment is pending against Holdings, the Company or any of its Subsidiaries and all potential tax liabilities are adequately provided for on the books of Holdings, the Company or its Subsidiaries, as the case may be. 58 4.12 Federal Regulations. No part of the proceeds of any Loans or Letters of Credit will be used for "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation G, T, U or X of the Board as now and from time to time hereafter in effect or for any purpose which violates the provisions of the Regulations of the Board. If requested by any Lender or the Administrative Agent, the Company will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of the appropriate FR Form referred to in said Regulation G, T, U or X. 4.13 Labor Matters. There are no strikes or other labor disputes against Holdings, the Company or any of its Subsidiaries pending or, to the knowledge of Holdings or the Company, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of Holdings, the Company and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. All payments due from Holdings, the Company or any of its Subsidiaries on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of Holdings, the Company or such Subsidiary. 4.14 ERISA. No Reportable Event has occurred since March 1, 1990 with respect to any Plan which, if then terminated, has had or could reasonably be expected to have a Material Adverse Effect, and each Plan has complied in all respects with the applicable provisions of ERISA and the Code except where such failure to comply could not reasonably be expected to have a Material Adverse Effect. The actuarial present value of all accrued benefits under each Single Employer Plan maintained by the Company or any Commonly Controlled Entity (based on those assumptions used to fund the Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan. Neither the Company nor any Commonly Controlled Entity has had or could reasonably be expected to have a complete or partial withdrawal from any Multiemployer Plan, and neither the Company nor any Commonly Controlled Entity would become subject to any liability under ERISA if the Company or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made where such withdrawal or liability could reasonably be expected to have a Material Adverse Effect. No such Multiemployer Plan is in a Reorganization or an Insolvency where the effect of such Reorganization or Insolvency could reasonably be expected to have a Material Adverse Effect. 4.15 Investment Company Act; Other Regulations. No Loan Party is an "investment company", or a company "controlled" by an "investment company" (other than one which is exempt from the provisions of the Investment Company Act of 1940, as amended), within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any federal or state statute or regulation which limits its ability to incur Indebtedness. 59 4.16 Subsidiaries. The Subsidiaries of Holdings listed on Schedule 4.16 constitute all the Subsidiaries of Holdings on the Effective Date. 4.17 Purpose of Loans. The proceeds of the Loans will be used for the purposes identified in the second Preliminary Statement. 4.18 Environmental Matters. (a) The Mortgaged Properties do not contain any Hazardous Materials in amounts or concentrations which (i) constitute or constituted a violation of, or (ii) could reasonably be expected to give rise to liability under, Environmental Laws, except to the extent that such violations and liabilities, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (b) (i) The Mortgaged Properties and all operations at the Mortgaged Properties are in compliance in all respects and in the last three years have been in compliance in all respects with all Environmental Laws, and (ii) there is no contamination at or under the Mortgaged Properties, or violation of any Environmental Law with respect to the Mortgaged Properties or the business of Holdings, the Company or any of its Subsidiaries, except to the extent that any instance of non-compliance referred to in clause (i) above or any instance of contamination or violation referred to in clause (ii) above, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (c) Neither Holdings, the Company nor any of its Subsidiaries has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to the Mortgaged Properties or the business of Holdings, the Company or any of its Subsidiaries or with regard to any Person or entity whose liabilities for environmental matters Holdings, the Company or any of its Subsidiaries has retained or assumed, in whole or in part, contractually, by operation of law or otherwise, which, in the aggregate, could reasonably be expected to have a Material Adverse Effect, nor does Holdings or the Company have knowledge or reason to believe that any such notice will be received or is being threatened. (d) Hazardous Materials have not been transported or disposed of from the Mortgaged Properties, nor have Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Mortgaged Properties in violation of any Environmental Law or in a manner that could reasonably give rise to liability under any Environmental Law, nor do Holdings, the Company or any of its Subsidiaries reasonably believe that they have retained or assumed any liability, contractually, by operation of law or otherwise, with respect to the generation, treatment, storage or disposal of Hazardous Materials, except to the extent that the foregoing, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (e) (i) No material judicial proceedings or governmental or administrative action is pending, or, to the knowledge of Holdings or the Company, threatened, under any Environmental Law to which Holdings, the Company or any of its Subsidiaries is or will be named a party with respect to (x) the Mortgaged Properties, (y) the business of Holdings, the Company or any of its Subsidiaries or (z) any liabilities pursuant to Environmental Laws reasonably believed by Holdings, the Company or any of its Subsidiaries to be retained or assumed by Holdings, the Company or any 60 of its Subsidiaries, contractually, by operation of law or otherwise, and (ii) there are no material consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to (x) the Mortgaged Properties, (y) the business of Holdings, the Company or any of its Subsidiaries or (z) any liabilities pursuant to Environmental Laws reasonably believed by Holdings, the Company or any of its Subsidiaries to be retained or assumed by Holdings, the Company or any of its Subsidiaries, contractually, by operation of law or otherwise. (f) There has been no Release or threat of Release of Hazardous Materials at or from the Mortgaged Properties, or arising from or in connection with the Mortgaged Properties or otherwise in connection with the business of Holdings, the Company or its Subsidiaries in violation of any Environmental Law in a manner that, in the aggregate, could reasonably be expected to have a Material Adverse Effect. (g) Each of the representations and warranties set forth in paragraphs (a) through (f) above is true and correct with respect to each parcel of real property owned or operated by Holdings, the Company or any of its Subsidiaries (other than the Mortgaged Properties). 4.19 Accuracy of Information. No factual statement or information contained in this Agreement, any other Loan Document, the Confidential Information Memorandum (as the same may have been supplemented prior to the Effective Date) or any other document, certificate or written statement furnished to the Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in connection with the transactions contemplated by this Agreement or the other Loan Documents (including, without limitation, any financial information furnished pursuant to Section 6.1), other than trade data contained in the Confidential Information Memorandum which relates to any Person which is not a Loan Party or an Affiliate thereof, contained as of the date such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memorandum, as of the Effective Date) any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Company to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein. There is no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memorandum or in such other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents. 4.20 Security Documents. (a) Each of the Pledge Agreements is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Pledged Securities described therein and proceeds thereof and, when the Pledged Notes described therein and stock certificates representing the 61 Pledged Stock described therein are delivered to the Administrative Agent, each such Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the relevant Loan Party in such Pledged Securities and the proceeds thereof, in each case (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally) prior and superior in right to any other Person. (b) Each of the Security Agreements is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof; when financing statements in appropriate form are filed in the offices specified on Schedule 4.20(b), each such Security Agreement constitutes a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and, to the extent provided therein, the proceeds thereof, in each case (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally) prior and superior in right to any other Person, other than with respect to Liens expressly permitted by Section 7.3. (c) Each of the Mortgages is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable Lien on the Mortgaged Properties described therein and, to the extent provided therein, the proceeds thereof; when recorded in the offices specified on Schedule 4.20(c), each such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties and, to the extent provided therein, the proceeds thereof, in each case (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally) prior and superior in right to any other Person, other than with respect to Liens expressly permitted by Section 7.3. 4.21 Solvency. Each Loan Party is, and after giving effect to the incurrence or assumption of all Indebtedness and obligations being incurred or assumed in connection herewith will be and will continue to be, Solvent. 4.22 Insurance. Holdings, the Company and each of its Subsidiaries maintain with financially sound and reputable insurance companies insurance on all its properties in at least such amounts and against at least such risks (but, including in any event, public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business. 4.23 Regulation H. No Mortgage encumbers improved real property which is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968, except for the real property located in Jonesboro, Indiana, on which the Company maintains flood insurance. SECTION 5. CONDITIONS PRECEDENT 62 5.1 Conditions to Effectiveness. The effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent on or prior to the Effective Date: (a) Agreement. The Administrative Agent shall have received this Agreement, duly executed and delivered by a duly authorized officer of Holdings and the Company, with a counterpart for each Lender. (b) Financial Statements. The Administrative Agent and each Lender shall have received copies of (i) each of the financial statements referred to in Section 4.1 and (ii) audited financial statements of Triangle for the fiscal years ended December 31, 1994 and December 31, 1995 and unaudited financial statements of Triangle for the fiscal quarter ended June 30, 1996. (c) Existing Credit Agreement. (i) Any outstanding "Loans" (as defined in the Existing Credit Agreement) shall have been refunded with the proceeds of the Loans hereunder and all other Indebtedness and other amounts (to the extent invoiced prior to the Effective Date) owing by the Company or any other Loan Party under the Existing Credit Agreement and any instrument or document delivered in connection therewith shall have been paid in full and (ii) to the extent requested by the Administrative Agent, the Administrative Agent shall have received appropriately executed termination statements and releases, in proper form for filing in the relevant jurisdictions, in respect of the security interests granted pursuant to the "Loan Documents" under and as defined in the Existing Credit Agreement. Without affecting any terms of the Existing Credit Agreement or the other "Loan Documents" under and as defined in the Existing Credit Agreement which expressly survive the termination thereof, each of the Administrative Agent and each Lender party to the Existing Credit Agreement hereby waives any requirement of advance notice of commitment termination contained in the Existing Credit Agreement and each of Holdings, the Company, the Administrative Agent and each Lender hereby agrees that the Existing Credit Agreement and the commitments thereunder, together with the "Loan Documents" under and as defined in the Existing Credit Agreement and all Liens and other security interests created thereby, shall terminate simultaneously with the satisfaction of the conditions to effectiveness set forth in this Section 5.1. (d) Triangle Acquisition. The Triangle Acquisition shall have been consummated pursuant to a structure and terms (including without limitation those set forth in an asset purchase agreement and other related documentation (the "Triangle Acquisition Documents") reasonably satisfactory to the Administrative Agent; and the Triangle Acquisition Documents shall in each case not have been waived (except in respect of any survey requirements in connection with the Triangle Acquisition), amended, supplemented or otherwise modified in any material respect unless otherwise agreed to by the Required Lenders. (e) Closing Certificates. The Administrative Agent shall have received a Closing Certificate of each Loan Party, substantially in the form of Exhibit H, with appropriate insertions 63 and attachments (which attachments shall be in form and substance reasonably satisfactory to the Administrative Agent). (f) Payment of Fees. The Administrative Agent shall have received the fees to be received on the Effective Date referred to in Section 2.4(b), and the Administrative Agent shall have been reimbursed for all syndication, legal and other fees, costs and expenses of the kind described in Section 11.5 to the extent invoiced on or prior to the Effective Date. (g) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Lender, the following executed legal opinions: (i) the executed legal opinion of Cravath, Swaine & Moore, counsel to Holdings, substantially in the form of Exhibit G-1; (ii) the executed legal opinion of the general counsel of the Company, substantially in the form of Exhibit G-2; and (iii) the executed legal opinion of each local counsel listed on Schedule 5.1(g), substantially in the form of Exhibit G-3. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement and the other Loan Documents as the Administrative Agent may reasonably require. (h) Subsidiary Guarantee. The Administrative Agent shall have received the Subsidiary Guarantee, duly executed and delivered by a duly authorized officer of each Subsidiary Guarantor. (i) Pledge Agreements; Pledged Stock; Intercompany Notes. The Administrative Agent shall have received (i) each Pledge Agreement, duly executed and delivered by a duly authorized officer of the pledgor or pledgors named therein, (ii) (x) stock certificates representing the Pledged Stock pledged pursuant to each such Pledge Agreement, together with undated stock powers endorsed in blank for each stock certificate representing such Pledged Stock, (y) Intercompany Notes issued by each Loan Party to each other Loan Party, duly executed and delivered by the issuer thereof and endorsed in blank by the payee thereof and (z) any other documents or notifications required by such Pledge Agreement, and (iii) an acknowledgement and consent executed by each of the Issuers referred to in each such Pledge Agreement. (j) Security Agreements. The Administrative Agent shall have received each of the Security Agreements, duly executed and delivered by a duly authorized officer of the grantor or grantors named therein. (k) Mortgages. The Administrative Agent shall have received each Mortgage, duly executed and delivered by a duly authorized officer of the relevant Loan Party. 64 (l) Title Insurance Policies. The Administrative Agent shall have received in respect of each parcel of Mortgaged Property specified by the Administrative Agent, a mortgagee's title insurance policy or marked up unconditional binder for such insurance dated the Effective Date. Such policy shall (i) be in an amount satisfactory to the Administrative Agent, (ii) insure that each Mortgage creates a valid first mortgage lien on the Mortgaged Property described therein free and clear of all defects and encumbrances, except as otherwise specified therein and acceptable to the Administrative Agent and except as otherwise expressly permitted by Section 7.3, (iii) name the Administrative Agent, for the benefit of the Lenders, as the insured thereunder, (iv) be in the form of ALTA Loan Policy - 1990, if available, (v) contain such endorsements and affirmative coverage as the Administrative Agent may reasonably request and (vi) be issued by First American Title Insurance Company or such other title company as shall be satisfactory to the Administrative Agent. The Administrative Agent shall also have received evidence satisfactory to it that all premiums in respect of each such policy have been paid or will be paid with proceeds of the initial extension of credit. (m) Lien Searches. The Administrative Agent shall have received satisfactory results of a recent search by a Person acceptable to it of Uniform Commercial Code filings which may have been filed with respect to any Loan Party in those jurisdictions listed on Schedule 4.20(b), to the extent relating to assets acquired in connection with the Triangle Acquisition, specified by the Administrative Agent. (n) Filings, Registrations and Recordings. Each document (including, without limitation, any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 7.3), shall be in proper form for filing, registration or recordation in each jurisdiction in which the filing, registration or recordation thereof is so required or requested. (o) Certificates. The Administrative Agent shall have received (i) a Borrowing Base Certificate, dated the Effective Date and setting forth a calculation of the Borrowing Base as of September 30, 1996, showing that the Modified Aggregate Outstanding Extensions of Credit outstanding on the Effective Date (after giving effect to the making of any extensions of credit on the Effective Date), shall not exceed the Borrowing Base as set forth in such Certificate and (ii) a Senior Note Indenture Revolving Credit Incurrence Limit Certificate, dated the Effective Date and setting forth a calculation of the Senior Note Indenture Revolving Credit Incurrence Limit as of September 30, 1996, showing that the sum of (x) the aggregate L/C Obligations then outstanding and (y) the aggregate principal amount of Specified Basket Debt then outstanding (after giving effect to the making of any extensions of credit on 65 the Effective Date), shall not exceed the Senior Note Indenture Revolving Credit Incurrence Limit as set forth in such Certificate. (p) Insurance. The Administrative Agent shall have received evidence satisfactory to it as to the adequacy of the insurance program of the Loan Parties and that each Loan Party has obtained the insurance coverage required by the Security Documents, including appropriate evidence showing the Administrative Agent, for the benefit of the Lenders, as an additional named insured or loss payee. (q) Environmental Report. The Administrative Agent shall have received (i) copies of the existing Phase I environmental assessments with respect to each property acquired pursuant to the Triangle Acquisition (the properties located in Florence, Alabama; Glendale, Arizona; Sikeston, Missouri; and Pawtucket, Rhode Island) and (ii) copies of the existing Phase II environmental audits with respect to the Pawtucket, Rhode Island and Sikeston, Missouri facilities acquired pursuant to the Triangle Acquisition. (r) Bank of Montreal Credit Facility. The Administrative Agent shall have received satisfactory evidence that the terms of the Bank of Montreal Credit Facility have been, or shall promptly after the Effective Date be, conformed to the terms of this Agreement. 5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any Loan or to issue any Letter of Credit requested to be made or issued by it on any date is subject to the satisfaction of the following conditions precedent: (a) Representations and Warranties. Each of the representations and warranties made by the Company and the other Loan Parties in or pursuant to the Loan Documents shall be true and correct on and as of such date as if made on and as of such date. (b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extension of credit requested to be made on such date. (c) Credit Limitations. After giving effect to such extension of credit, (i) the Aggregate Outstanding Extensions of Credit shall not exceed the aggregate Revolving Credit Commitments in effect on such date, (ii) the Outstanding Revolving Extensions of Credit of each Lender shall not exceed such Lender's Revolving Credit Commitment in effect on such date and (iii) no prepayment shall be required to be made pursuant to Section 2.8. Each borrowing by and issuance of a Letter of Credit on behalf of the Company hereunder shall constitute a representation and warranty by the Company as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied. SECTION 6. AFFIRMATIVE COVENANTS Holdings and the Company hereby jointly and severally agree that, so long as the Revolving Credit Commitments remain in effect, any Loan or 66 Letter of Credit remains outstanding and unpaid or any other amount is owing to any Lender or the Administrative Agent hereunder, Holdings and the Company shall, and shall cause each of their respective Subsidiaries to, unless the Required Lenders shall otherwise consent in writing: 6.1 Financial Statements. In the case of Holdings and the Company, furnish to each Lender: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of Holdings or the Company, as the case may be, a copy of the consolidated balance sheet of Holdings and its consolidated Subsidiaries and of the Company and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and stockholders' equity and cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on by Ernst & Young or other independent certified public accountants acceptable to the Required Lenders (which report shall not be qualified in any material respect); and (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of Holdings or the Company, as the case may be, the unaudited consolidated balance sheet of Holdings and its consolidated Subsidiaries and of the Company and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and stockholders' equity and cash flows for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer of Holdings or the Company, as applicable, as fairly presenting the financial condition and results of operations of Holdings or the Company, as the case may be, on a consolidated basis in accordance with GAAP (subject to normal year-end audit adjustments); all such financial statements to be complete and correct in all material respects and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). It is understood that the obligation to deliver any items described above which are contained in Holdings' Form 10-K, as filed with the Securities and Exchange Commission (in the case of Section 6.1(a)) or Holdings' Form 10-Q, as filed with the Securities and Exchange Commission (in the case of Section 6.1(b)), may be satisfied by delivery of such Form 10-K or Form 10-Q, as the case may be. 6.2 Certificates; Other Information. In the case of the Company, or, if applicable, Holdings, furnish to each Lender: (a) concurrently with the delivery of the financial statements referred to in Section 6.1(a), (i) a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate and (ii) copies of any management 67 letters when delivered to Holdings or the Company in connection with such examination; (b) concurrently with the delivery of the financial statements referred to in Sections 6.1(a) and 6.1(b), (i) a certificate of a Responsible Officer of each of Holdings and the Company stating that, to the best of each such Responsible Officer's knowledge, each Loan Party during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and in the other Loan Documents to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate and (ii) a Compliance Certificate containing all information necessary for determining compliance by Holdings, the Company and its Subsidiaries with the provisions of this Agreement referred to therein as of the last day of the fiscal quarter or fiscal year of Holdings or the Company, as the case may be; (c) by December 31 of each year, a copy of the projections by Holdings and the Company of the operating budget and cash flow budget and revenues of Holdings, the Company and its Subsidiaries for the next succeeding fiscal year in form and substance reasonably satisfactory to the Administrative Agent, setting forth in reasonable detail the basis for all projections contained therein, such projections to be accompanied by a certificate of a Responsible Officer of each of Holdings and the Company to the effect that such projections have been prepared in good faith using assumptions believed by management to be reasonable and that such Responsible Officer has no reason to believe they are misleading in any material respect; (d) within five days after the same are sent, copies of all financial statements and reports which Holdings or the Company sends to holders of any issue of its equity securities or debt securities generally, and within five days after the same are filed, copies of all financial statements and reports which Holdings or the Company may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority or any national securities exchange; (e) as soon as practicable, but in no event later than 20 days after the end of each month, (i) a Borrowing Base Certificate, certifying in reasonable detail the Borrowing Base as of the last day of such month and (ii) a Senior Note Indenture Revolving Credit Incurrence Limit Certificate, certifying in reasonable detail the Senior Note Indenture Revolving Credit Incurrence Limit as of the last day of such month, which certificates shall be complete and correct as of the date thereof; (f) within five days after the same are received, copies of any notices received by Holdings or the Company from any holder of the Senior Notes; (g) within five days after the Company or any of its Subsidiaries enters into a joint venture, notice thereof accompanied 68 by a description in reasonable detail of the business in which such joint venture is engaged; and (h) promptly, such additional financial and other information as any Lender may from time to time reasonably request through the Administrative Agent. 6.3 Payment of Obligations. (a) Pay, discharge, perform, comply with or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of Holdings, the Company or its Subsidiaries, as the case may be; (b) comply in all material respects with all applicable Requirements of Law, except where such Requirement of Law is being contested in good faith, a bona fide dispute exists with respect thereto and the failure to comply therewith has no reasonable likelihood of having a Material Adverse Effect; and (c) comply with all applicable Contractual Obligations, except where the failure to comply therewith has no reasonable likelihood of having a Material Adverse Effect. 6.4 Conduct of Business and Maintenance of Existence. Continue to engage in business of the same general type as now conducted by it and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges, licenses and franchises necessary or desirable in the normal conduct of its business except as otherwise expressly permitted pursuant to Section 7.5. 6.5 Maintenance of Property; Insurance. Keep all property useful and necessary in its business in good working order and condition; preserve all of its registered trademarks, trade names and service marks, the non-preservation of which has a reasonable likelihood of having a Material Adverse Effect; maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to each Lender, upon written request, full information as to the insurance carried. 6.6 Inspection of Property; Books and Records; Discussions. Keep proper books of record and account in which complete and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of the Administrative Agent (and, if an Event of Default shall have occurred and be continuing, any Lender) to visit and inspect any of its properties and examine and make copies of or abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired (including examinations of the Accounts and Inventory by representatives of the Administrative Agent (and, if an Event of Default shall have occurred and be continuing, any Lender)) and to discuss the business, operations, properties and financial and other condition of Holdings, the Company and its Subsidiaries with officers and employees of Holdings, the Company and its Subsidiaries and with the independent certified public accountants of Holdings or the Company. 69 6.7 Notices. In the case of the Company or, if applicable, Holdings, promptly give notice to the Administrative Agent and each Lender of: (a) the occurrence of any Default or Event of Default; (b) any (i) default or event of default under any Contractual Obligation of Holdings, the Company or any of its Subsidiaries, (ii) dispute between Holdings, the Company or any of its Subsidiaries and any Governmental Authority or (iii) litigation, investigation or proceeding which may exist at any time between Holdings, the Company or any of its Subsidiaries and any Governmental Authority, which in each case, if not cured or resolved or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect; (c) any litigation or proceeding (and any material development in respect thereof) affecting Holdings, the Company or any of its Subsidiaries in which (i) the amount involved is $3,000,000 or more (or its equivalent in another currency or currencies) and not covered by insurance as to which the relevant insurance company has not disputed coverage or (ii) injunctive or similar relief is sought; (d) the following events, as soon as possible and in any event within 30 days after Holdings or the Company knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Single Employer Plan, or any withdrawal from, or the termination, Reorganization or Insolvency of any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Plan; provided that notice under this Section 6.7(d) will only be required if, individually or in the aggregate, the amount of the liability of the Loan Parties which could reasonably be expected would equal or exceed $3,000,000; (e) any event or condition which, on any day, to the knowledge of the Company, has caused the Borrowing Base to change since the date of the most recent Borrowing Base Certificate delivered pursuant to Section 6.2(e) if as a result of such change the Aggregate Outstanding Extensions of Credit exceed the Borrowing Base determined as of such day; and (f) a development or event which has had or could reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action Holdings or the Company, as the case may be, proposes to take with respect thereto. 6.8 Environmental Laws. (a) Comply with, and use its best efforts to insure compliance by all tenants and subtenants, if any, with, all 70 Environmental Laws and obtain and comply in all material respects with and maintain, and use its best efforts to insure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, registrations or permits required by Environmental Laws, except to the extent that failure to do so would not have any reasonable likelihood of having a Material Adverse Effect; (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities respecting Environmental Laws, except to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings would not have any reasonable likelihood of having a Material Adverse Effect; (c) Without limiting the generality of the provisions of Section 6.7, notify the Administrative Agent and each Lender of any of the following which is reasonably likely to have a Material Adverse Effect: (i) any Environmental Claim which Holdings, the Company or any of its Subsidiaries receives, including one to take or pay for any remedial, removal, response or clean-up or other action with respect to any Hazardous Materials contained on any property presently or formerly owned or leased by Holdings, the Company or any of its Subsidiaries; (ii) any notice of any alleged violation of or knowledge by Holdings, the Company or any of its Subsidiaries of a condition which might reasonably result in a violation of any law or regulation involving environmental, health or safety matters; and (iii) any commencement or threatened commencement of any judicial or administrative proceeding or investigation alleging a violation or potential violation of any requirement of Environmental Law; and (d) Defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, subsidiaries, affiliates, employees, agents, officers and directors, from and against any and all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to, the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of Holdings, the Company or any of its Subsidiaries or to the Mortgaged Properties, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct 71 of the party seeking indemnification therefor. Notwithstanding anything to the contrary in this Agreement, this indemnity shall continue in full force and effect regardless of the termination of this Agreement. 6.9 Interest Rate Protection. In the case of the Company, effect interest rate hedging arrangements reasonably satisfactory to the Administrative Agent in respect of the Company's floating rate Indebtedness. 6.10 Additional Collateral. (a) With respect to any assets acquired after the Effective Date by any Loan Party (other than any assets described in paragraph (b) or (c) below) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien (i) execute and deliver to the Administrative Agent such amendments to this Agreement or the relevant Security Agreement or such other documents as the Administrative Agent or the Required Lenders deem necessary or advisable in order to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such assets, and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority (subject to Liens expressly permitted by Section 7.3) security interest in such assets, including without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the appropriate Security Agreement or by law or as may be requested by the Administrative Agent. (b) With respect to any fee or leasehold interest in any real estate having a value (together with improvements thereof) of at least $2,500,000 acquired after the Effective Date by the Company or any of its Subsidiaries, (i) execute a first priority mortgage or deed of trust, as the case may be (subordinate only to such mortgages or deeds of trust as are necessary to permit the Company or such Subsidiary to purchase such real estate and any other Liens expressly permitted by Section 7.3), in favor of the Administrative Agent, for the benefit of the Lenders, covering such real estate, in form and substance reasonably satisfactory to the Administrative Agent, (ii) provide the Lenders with title and extended coverage insurance covering such real estate in an amount equal to the purchase price of such real estate as well as a current ALTA survey thereof, together with a surveyor's certificate in form and substance reasonably satisfactory to the Administrative Agent and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described in the preceding clauses (i) and (ii), which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (c) With respect to any new Subsidiary (other than a Foreign Subsidiary) created or acquired after the Effective Date by Holdings, the Company or any of its Subsidiaries, (i) execute and deliver to the Administrative Agent such amendments to the relevant Pledge Agreement as the Administrative Agent or the Required Lenders deem necessary or advisable in order to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Subsidiary which is owned by Holdings, the Company or any of its Subsidiaries, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly 72 authorized officer of the Company or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a party to the Subsidiary Guarantee, the Subsidiary Pledge Agreement and the Subsidiary Security Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority (subject to Liens expressly permitted by Section 7.3) security interest in the Collateral described in the Subsidiary Security Agreement with respect to such new Subsidiary, including, without limitation, the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Subsidiary Security Agreement or by law or as may be requested by the Administrative Agent, and (C) to issue Intercompany Notes to each Loan Party (which in turn shall be endorsed in blank and pledged by the relevant Loan Party to the Administrative Agent for the benefit of the Lenders pursuant to the relevant Pledge Agreement), (iv) in the case of the Company and each existing Subsidiary, issue Intercompany Notes to such new Subsidiary (which in turn shall be endorsed in blank and pledged by such new Subsidiary to the Administrative Agent for the benefit of the Lenders pursuant to the Subsidiary Pledge Agreement), and (v) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described in the preceding clauses (i), (ii), (iii) and (iv), which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. (d) With respect to any Foreign Subsidiary created or acquired after the Effective Date by Holdings, the Company or any of its Subsidiaries, (i) execute and deliver to the Administrative Agent such amendments to the relevant Pledge Agreement as the Administrative Agent or the Required Lenders deem necessary or advisable in order to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Subsidiary which is owned by Holdings, the Company or any of its Subsidiaries (provided that in no event shall Capital Stock representing more than 65% of the voting power of the Capital Stock of any such new Subsidiary be required to be so pledged) and (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of Holdings, the Company or such Subsidiary, as the case may be. (e) The provisions of this Section 6.10 shall not apply to any assets subject to any Lien permitted by Section 7.3 which secures Indebtedness permitted by Section 7.2, to the extent compliance with such provisions is prohibited by the terms of the documentation governing such Lien or Indebtedness, but, in each case, only so long as any such prohibition remains in effect. (f) Notwithstanding anything to the contrary in this Agreement, no dormant Subsidiary or non-wholly owned Subsidiary designated as such on Schedule 4.16 shall be required to become a party to the Subsidiary Guaranty, the Subsidiary Security Agreement or the Subsidiary Pledge Agreement unless and until, (i) in the case of any such dormant Subsidiary, such Subsidiary holds assets having an aggregate value in excess of $500,000 and (ii) in the case of any such non-wholly owned Subsidiary, such Subsidiary becomes a wholly owned direct or indirect Subsidiary of the Company. If at any time the applicable conditions specified in clause (i) or (ii) of the preceding sentence apply to any such Subsidiary, the Company shall take or cause to be taken all of the 73 applicable actions specified in Section 6.10(c) with respect to such Subsidiary. In addition, prior to satisfaction of such applicable conditions, the Company shall have the option to take or cause to be taken those actions specified in Section 6.10(c) which, in the reasonable opinion of the Administrative Agent, are necessary to enable the Accounts and Inventory of such Subsidiary to be included in the Borrowing Base. SECTION 7. NEGATIVE COVENANTS Holdings and the Company hereby jointly and severally agree that, so long as the Revolving Credit Commitments remain in effect, any Loan or Letter of Credit remains outstanding and unpaid or any other amount is owing to any Lender or the Administrative Agent hereunder, Holdings and the Company shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, unless the Required Lenders shall otherwise agree in writing: 7.1 Financial Condition Covenants. (a) Maintenance of Current Ratio. Permit the ratio of Consolidated Current Assets of Holdings to Consolidated Current Liabilities of Holdings at the end of any fiscal quarter of Holdings to be less than 2.0 to 1.0. (b) Consolidated Net Worth. Permit the Consolidated Net Worth of Holdings at any time to be less than the sum, without duplication, of (i) $80,000,000, (ii) 50% of the Consolidated Net Income of Holdings for each fiscal quarter of Holdings (beginning with the fiscal quarter ending March 31, 1995) for which such Consolidated Net Income is positive, (iii) 100% of the Net Cash Proceeds of any Holdings Common Equity Offering consummated after the Effective Date and (iv) 100% of any capital contribution made to Holdings or the Company after the Effective Date by any holder of its Capital Stock; provided, that for the purposes of clauses (iii) and (iv) above, the amount of any Net Cash Proceeds and capital contributions referred to in said clauses shall be reduced to the extent (x) such proceeds or contributions are concurrently applied to repurchase equity in accordance with this Agreement and (y) Consolidated Net Worth (without giving effect to such proceeds or contributions) would be reduced as a result of such repurchase. (c) Interest Coverage. Permit the Interest Coverage Ratio as at the end of any Interest Coverage Test Period to be less than 2.0 to 1.0. (d) Leverage Ratio. Permit the Leverage Ratio on the last day of any period of four consecutive fiscal quarters of Holdings ending during any period set forth below to be greater than the corresponding ratio set forth below: 74 [CAPTION] Period Ending Ratio After the Effective Date and prior 5.00 to 1.0 to March 31, 1998 . . . . . . . . . . On or after March 31, 1998 and prior to March 31, 1999 . . . . . . . 4.50 to 1.0 On or after March 31, 1999 and prior to March 31, 2000 . . . . . . . 4.25 to 1.0 March 31, 2000 and thereafter . . . . . 4.00 to 1.0
(e) Senior Secured Leverage Ratio. Permit the Senior Secured Leverage Ratio on the last day of any period of four consecutive fiscal quarters of Holdings ending during any period set forth below to be greater than the corresponding ratio set forth below: [CAPTION] Period Ending Ratio After the Effective Date and prior to March 31, 1998 . . . . . . . . . . 3.0 to 1.0 On or after March 31, 1998 and prior to March 31, 1999 . . . . . . . 2.75 to 1.0 On or after March 31, 1999 and prior to March 31, 2000 . . . . . . . 2.50 to 1.0 March 31, 2000 and thereafter . . . . . 2.25 to 1.0
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist any Indebtedness or enter into or become liable for any obligations in respect of any Interest Rate Protection Agreement, except: (a) Indebtedness in respect of the Loans, the Letters of Credit and the other obligations of the Loan Parties under the Loan Documents; (b) (i) Indebtedness of the Company to Holdings or any Subsidiary Guarantor or any Subsidiary Guarantor to the Company or any Subsidiary Guarantor and (ii) Indebtedness of Holdings to the Company in connection with the loan made by the Company to Holdings with a portion of the proceeds of the loans under the Existing Credit Agreement (collectively, "Intercompany Loans"); provided that (x) all such Indebtedness shall be evidenced by an Intercompany Note and (y) each such Intercompany Note shall be pledged to the Administrative Agent for the benefit of the Lenders pursuant to the relevant Pledge Agreement; (c) (i) Indebtedness of the Company in respect of the Senior Notes, and (ii) other Indebtedness of the Company or any of its Subsidiaries outstanding on the Effective Date and listed on Schedule 7.2(c) and, in the case of this clause (ii), any replacement, extension or renewal (without increase in the outstanding principal amount) thereof; 75 (d) Indebtedness of the Company in connection with the issuance of letters of credit (i) for the benefit of insurance companies to guarantee insurance claims and premiums; (ii) to provide bid and performance guarantees; (iii) to guarantee contested appeals; (iv) constituting commercial letters of credit in the ordinary course of business and (v) for any other purpose of a similar nature acceptable to the Required Lenders; provided that (x) no Liens shall be incurred in respect of any letter of credit described in clause (i), (ii), (iii) or (v) above and (y) the aggregate amount of L/C Obligations and Non-Facility L/C Obligations shall not exceed $25,000,000 at any time outstanding; (e) Indebtedness of the Company resulting from the delivery of a promissory note in the maximum amount of $10,000,000 to support Indebtedness of the Company, in connection with the requirements of the Company's insurance carriers to recognize casualty insurance premiums; provided, however, that if Indebtedness pursuant to any such promissory note is also supported by a letter of credit permitted under Section 7.2(d), the principal amount of such promissory note (to the extent supported by such letter of credit) shall not be included in the computation of Total Debt for the purposes of Section 7.1(a) or (d); (f) (i) Indebtedness which is secured by Liens expressly permitted by Section 7.3(g)(i) and (ii) Indebtedness which is (x) secured by Liens expressly permitted by clause (iii) of Section 7.3(g) and (y) assumed in connection with the acquisition of the assets subject to such Liens; (g) Capital Lease Obligations expressly permitted by Section 7.7(a), (b) or (c); (h) Indebtedness of Holdings in respect of any Preferred Stock issued in accordance with Section 7.11; (i) Indebtedness of Holdings, the Company or any of its Subsidiaries consisting of Guarantee Obligations expressly permitted by Section 7.4; (j) any obligation of Holdings to repurchase common stock of Holdings or options with respect thereto from the officer or employee of Holdings, the Company or any of its Subsidiaries party thereto; (k) any unsecured term Indebtedness of the Company pursuant to any Senior Unsecured Term Loan Agreement (the "Senior Unsecured Term Loans") in an aggregate principal amount of up to $60,000,000; (l) (i) Interest Rate Protection Agreements in respect of the Senior Notes entered into by the Company with any one or more Lenders having an aggregate notional amount not to exceed $200,000,000 and such other terms and conditions as shall be reasonably satisfactory to the Administrative Agent and (ii) Interest Rate Protection Agreements referred to in Section 6.9; (m) Indebtedness of the Company or any of its Subsidiaries pursuant to the Capital Lease Financing Facility in an aggregate 76 principal amount of up to $25,000,000 minus the then outstanding aggregate principal amount of Indebtedness comprised of the assumed capital leases of Triangle listed on Schedule 7.2(c); (n) additional Indebtedness not otherwise permitted by this Section 7.2, which is either (i) unsecured, (ii) incurred in connection with the acquisition of assets and secured only by such assets or (iii) secured by assets acceptable to the Required Lenders, aggregating not more than $20,000,000 at any one time outstanding, provided, that any Indebtedness incurred pursuant to this paragraph (n) shall amortize in equal annual installments over a period of five years (or in a manner which, in the judgment of the Administrative Agent, is more favorable to the Company); (o) additional unsecured Indebtedness not otherwise permitted by this Section 7.2 aggregating not more than $25,000,000 at any one time outstanding (so long as, in the case of Specified Basket Debt, after giving effect to the incurrence thereof, no prepayment shall be required to be made pursuant to Section 2.8); and (p) additional Indebtedness of Essex International not otherwise permitted by this Section 7.2 aggregating not more than $15,000,000 (or the Dollar equivalent thereof in any other currency) at any one time outstanding (so long as, after giving effect to the incurrence thereof, no prepayment shall be required to be made pursuant to Section 2.8), provided, that any such Indebtedness shall be either (i) unsecured or (ii) secured only by assets owned by Essex International which are either located in Canada or which constitute accounts receivable generated in respect of assets located in Canada. 7.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for: (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of Holdings, the Company or its Subsidiaries, as the case may be, in conformity with GAAP; (b) statutory landlords' Liens and carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business for sums which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; 77 (e) easements, rights-of-way, restrictions, minor defects or minor irregularities in title and other similar encumbrances incurred in the ordinary course of business which do not in any case materially interfere with the ordinary conduct of the business of Holdings, the Company or any of its Subsidiaries or materially impair the value of the property subject thereto for the purposes of such business; (f) Liens in existence on the Effective Date listed on Schedule 7.3(f) and any replacement, extension or renewal thereof; provided that (i) no such Lien is spread to cover any additional property after the Effective Date and (ii) the amount of Indebtedness secured thereby is not increased (except, in the case of clauses (i) and (ii) above, to the extent expressly provided or required by any agreement governing the terms of any such Lien as such agreement is in effect on the Effective Date); (g) (i) Liens securing Indebtedness (other than Capital Lease Obligations) of the Company or any of its Subsidiaries incurred to finance the acquisition, construction or improvement of any asset, provided that (x) such Liens shall be created substantially simultaneously with the acquisition, construction or improvement of such asset, (y) such Liens do not at any time encumber any asset other than the asset acquired, constructed or improved with the proceeds of such Indebtedness and (z) the amount of Indebtedness secured thereby shall not exceed the purchase price of such asset or the amount expended solely to construct or improve such asset, as the case may be; (ii) any Lien on any asset securing Indebtedness permitted to be incurred in connection with sale-leaseback transactions expressly permitted by Section 7.7(b), provided that (x) the proceeds of such Indebtedness shall be at least equal to 80% of the fair market value of such asset and (y) at the time of incurrence of such Indebtedness, no Default or Event of Default shall have occurred and be continuing or would result therefrom; and (iii) any Lien on any asset acquired by the Company or any of its Subsidiaries after the Effective Date which is not incurred in contemplation of such acquisition; provided that the aggregate outstanding amount of Indebtedness secured by Liens incurred pursuant to this Section 7.3(g), when added to the aggregate outstanding amount of Capital Lease Obligations incurred pursuant to Section 7.7(c), shall not at any time exceed the sum of $25,000,000 and an amount equal to 10% of the Consolidated Net Worth of Holdings at such time; (h) Liens on equipment acquired in connection with the incurrence of Capital Lease Obligations expressly permitted by Section 7.7(c), provided that (x) such Liens shall be created substantially simultaneously with the acquisition of such equipment, (y) such Liens do not at any time encumber any asset other than the equipment financed by such Indebtedness and (z) the amount of Indebtedness secured thereby is not increased subsequent to the date of incurrence thereof; (i) Liens created by the Security Documents in favor of the Administrative Agent for the benefit of the Lenders; 78 (j) judgment Liens created by or resulting from any judgment not constituting an Event of Default under Section 8(h); (k) any interest or title of a lessor under any lease listed in Schedule 4.8 or expressly permitted by Section 7.7(a) or (b), as well as any Lien affecting the fee interest of such lessor or any underlying lessor; (l) Liens securing Indebtedness of the Company or any of its Subsidiaries pursuant to the Capital Lease Financing Facility; (m) Liens securing Indebtedness incurred pursuant to Section 7.2(n) which is permitted to be secured by said Section; (n) leases or subleases granted by the Company or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the conduct of the business of the Company or such Subsidiary; and (o) Liens securing Section 7.2(p) Indebtedness which is permitted to be secured by said Section. 7.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer to exist any Guarantee Obligation except: (a) Guarantee Obligations of Holdings pursuant to Section 10 or of any Subsidiary Guarantor pursuant to the Subsidiary Guarantee or of the Company in respect of the Letters of Credit; (b) guarantees made in the ordinary course of its business by the Company of obligations of any Subsidiary Guarantor, which obligations are otherwise permitted under this Agreement; (c) guarantees by the Company or any of its Subsidiaries of the obligations of Joint Ventures, not exceeding, when added to the aggregate principal amount of Joint Venture Loans, $25,000,000 in aggregate amount at any time outstanding; (d) surety, indemnity, performance, release and appeal bonds and guarantees thereof issued by the Company or any of its Subsidiaries, to the extent required in the ordinary course of business or in connection with the enforcement of rights or claims of the Company or its Subsidiaries or in connection with judgments that do not result in an Event of Default, not exceeding $10,000,000 in aggregate amount at any time outstanding; (e) reimbursement obligations of the Company pursuant to letters of credit expressly permitted by Section 7.2(d); (f) unsecured guarantee obligations of Holdings and any Subsidiary of the Company in respect of (i) the Capital Lease Financing Facility or (ii) the Senior Unsecured Term Loans and any other amounts owing by the Company under the Senior Unsecured Term Loan Agreement; and (g) unsecured guarantee obligations of the Company in respect of (i) Section 7.2(p) Indebtedness or (ii) purchase price adjustment 79 and indemnity obligations of Essex International under the BICC Phillips Purchase Agreement. 7.5 Limitations on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of all or substantially all of its property, business or assets, or engage in any businesses other than businesses engaged in by it on the Effective Date (or businesses reasonably related thereto), or make any material change in its method of conducting business on the Effective Date except: (a) any Subsidiary of the Company may be merged or consolidated with or into the Company (provided that the Company shall be the continuing or surviving corporation) or with or into any one or more Subsidiary Guarantors (provided that the Subsidiary Guarantor or Subsidiary Guarantors shall be the continuing or surviving corporation); (b) any Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Company or any Subsidiary Guarantor; (c) BCP Holdings may be merged with and into the Company (the "BCP/Company Merger"), provided that (i) the Company shall be the surviving corporation, (ii) no violation of or default under any material Requirement of Law or material Contractual Obligation applicable to Holdings, the Company or any of its Subsidiaries shall occur as a result thereof, and (iii) within three Business Days after the consummation of the BCP/Company Merger, the Administrative Agent shall have received (with, where applicable, sufficient copies for each Lender) (A) the Holdings Security Agreement and the Holdings Pledge Agreement (together with an appropriate undated stock power), in each case executed and delivered by a duly authorized officer of a holding company parent ("New Holdings") of the Company created simultaneously with the consummation of the BCP/Company Merger, (B) an assumption agreement in form and substance satisfactory to the Administrative Agent pursuant to which New Holdings shall become a party to this Agreement, (C) from New Holdings, all certificates and documents of the type delivered by Holdings on the Effective Date and described in Section 5.1 and (D) the unqualified executed legal opinion of Cravath, Swaine & Moore relating to the matters described in the preceding clauses (A) and (B), which opinion shall be in form and substance satisfactory to the Administrative Agent; and (d) pursuant to any sale of assets expressly permitted by Section 7.6. 7.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, except: (a) the sale or other disposition of any assets which have become obsolete, outdated or surplus to the business of the Company or any of its Subsidiaries, or have no remaining useful life, in 80 each case as reasonably determined in good faith by the Board of Directors or the senior management of the Company or such Subsidiary, as the case may be, in an aggregate amount not to exceed $3,000,000 in any fiscal year of the Company; (b) the sale of assets in connection with sale-leaseback transactions expressly permitted by Section 7.7(b); (c) the sale of Inventory in the ordinary course of business; (d) as expressly permitted by Section 7.5(b); (e) in connection with the Capital Lease Financing Facility; and (f) other sales or dispositions of assets by the Company or any of its Subsidiaries; provided that (i) at the time of such sale or disposition, no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) each such asset is sold or disposed of at fair market value and (iii) the aggregate fair market value of all assets so sold or disposed of by the Company and its Subsidiaries (excluding assets constituting all or any portion of any Specified Property) shall not exceed $30,000,000 in any fiscal year of the Company and shall not exceed $60,000,000 during the term of this Agreement. 7.7 Limitation on Leases. Create or suffer to exist any obligations for the payment or rental for any property under leases or agreements to lease (other than any arrangement pursuant to which the Company or any of its Subsidiaries is lessor), except: (a) (i) leases of the Company and its Subsidiaries in existence on the Effective Date and listed on Schedule 7.7(a) and any renewal, extension or refinancing thereof and (ii) operating leases entered into by the Company or any of its Subsidiaries in the ordinary course of business; provided that the aggregate amount of lease payments made pursuant to this clause (a) does not exceed $20,000,000 in the aggregate in any fiscal year; (b) subject to Section 7.3(g)(ii), Capital Lease Obligations incurred by the Company or any of its Subsidiaries in connection with sale-leaseback transactions; provided that (i) immediately prior to giving effect to such lease, the property or asset subject to such lease was sold by the Company or any Subsidiary to the lessor under such lease for at least its fair market value; and (ii) no Default or Event of Default would occur as a result of such sale and subsequent lease; (c) Capital Lease Obligations other than those expressly permitted by paragraph (a) or (b) above, incurred by the Company or any of its Subsidiaries to finance the acquisition of equipment; provided that the aggregate outstanding amount of all Capital Lease Obligations which would appear on a consolidated balance sheet of the Company and its consolidated Subsidiaries in accordance with 81 GAAP, when added to the aggregate outstanding principal amount of Indebtedness incurred pursuant to Section 7.2(f), shall not at any time exceed the sum of $25,000,000 and an amount equal to 10% of the Consolidated Net Worth of Holdings at such time; and (d) in connection with the Capital Lease Financing Facility. 7.8 Limitation on Dividends. Declare or pay any dividend (other than (i) dividends payable solely in common stock of Holdings or the Company, as the case may be, and (ii) dividends on the Preferred Stock payable solely in additional shares of Preferred Stock) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of Holdings or the Company or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of Holdings, the Company or any Subsidiary, except that: (a) the Company may pay cash dividends to Holdings to pay any taxes or expenses required to be paid by Holdings in the ordinary course of business, provided that in no event shall the aggregate proceeds of dividends made pursuant to this clause (a) which have not been applied to pay the obligations in respect of which such dividends were made exceed $200,000 for any period of five consecutive Business Days; (b) so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom (or, in the case of clause (ii) below (to the extent the repurchase or redemption referred to in said clause is being effected pursuant to Section 7.11(a)(ii)(x), (y) or (z)), so long as no Specified Event shall have occurred and be continuing), the Company may pay cash dividends to Holdings (i) to the extent necessary to enable Holdings to repurchase shares of its common stock or options to purchase such common stock, provided, that (x) the aggregate amount so distributed to Holdings in any fiscal year shall not exceed the sum of (I) $5,000,000 and (II) an amount equal to the aggregate Net Cash Proceeds of any sale of shares of common stock by Holdings to any officer or employee of Holdings, the Company or any of its Subsidiaries consummated after the Effective Date which have been contributed to the capital of the Company minus the aggregate amount distributed to Holdings pursuant to this clause (II) for the purpose of repurchasing common stock of Holdings or options to purchase such common stock during any preceding fiscal year and (y) the Net Cash Proceeds of any subsequent sale of shares of common stock by Holdings to any officer or employee of Holdings, the Company or any of its Subsidiaries shall promptly thereafter be contributed to the capital of the Company to the extent of the aggregate amount of cash distributions theretofore made pursuant to this clause (i), the Company shall deliver to the Administrative Agent a certified copy of each agreement in respect of which such dividend is being made; (ii) to the extent necessary to enable Holdings to pay any annual management fee expressly permitted by Section 7.12; (iii) constituting payments required to be made by the Company to Holdings pursuant to the Tax Sharing Agreement and (iv) to the 82 extent necessary to enable Holdings to pay cash dividends on the Preferred Stock in accordance with Section 7.8(c); provided that Holdings shall pay each obligation in respect of which a dividend is made pursuant to this clause (b) no later than five Business Days after the date on which such dividend is made; (c) so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, Holdings may pay cash dividends on the Preferred Stock in accordance with the terms thereof, provided, that (x) the aggregate amount so paid by Holdings shall not exceed (i) $5,000,000 in any fiscal year ending on or prior to December 31, 1998 or (ii) $10,000,000 in any fiscal year thereafter and (y) the aggregate amount so paid by Holdings in any fiscal year of Holdings, when added to the aggregate amount of Capital Expenditures made during such fiscal year pursuant to Section 7.10(g), shall not exceed the EBITDA Basket Amount for such fiscal year; (d) so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, Holdings may repurchase common stock of Holdings owned by former or existing employees of the Company, provided that, such repurchases are funded entirely with the proceeds of sales of newly issued common stock of Holdings to employees; and (e) Holdings may redeem or exchange any Preferred Stock to the extent expressly permitted by Section 7.11. 7.9 Limitation on Negative Pledge Clauses. Enter into any agreement, other than (a) in connection with purchase money Liens, the Capital Lease Financing Facility or Capital Lease Obligations expressly permitted by this Agreement (in which cases, any restriction referred to below shall only be effective against the assets financed thereby), (b) in connection with secured Section 7.2(n) Indebtedness or secured Section 7.2(p) Indebtedness (in which case, any restriction referred to below shall only be effective against the assets securing such Indebtedness) and (c) the Senior Note Indenture and the Senior Unsecured Term Loan Agreement, with any Person other than the Lenders pursuant hereto which in any way limits or imposes any condition on the ability of Holdings, the Company or any of its Subsidiaries to create, incur, assume or suffer to exist a perfected, first priority security interest upon any of its property, assets or revenues, whether now owned or hereafter acquired, securing the Obligations, any guarantee of the Obligations or any other obligations of any Loan Party under any Loan Document or any Indebtedness refinancing any of the foregoing. 7.10 Limitation on Capital Expenditures, Investments, Loans and Advances. Make or commit to make (by way of the acquisition of securities of a Person or otherwise) any Capital Expenditures or make or commit to make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make or commit to make any other investment in, any Person, except: (a) extensions of trade credit by the Company or any of its Subsidiaries in the ordinary course of business; 83 (b) investments by the Company or any of its Subsidiaries in Cash Equivalents; (c) loans and advances to employees of the Company or its Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business consistent with the historical practices of the Company and its Subsidiaries as of the Effective Date, in an aggregate amount for the Company and its Subsidiaries not to exceed $1,000,000 at any one time outstanding; (d) investments by the Company in any Subsidiary Guarantor and investments by Holdings or any Subsidiary of the Company in the Company or in any Subsidiary Guarantor; (e) (i) loans made by the Company to any Joint Venture ("Joint Venture Loans"), provided that (x) the aggregate principal amount thereof shall not exceed $18,000,000 at any one time outstanding, (y) all Indebtedness of Joint Venture resulting therefrom shall be evidenced by an Intercompany Note, and (z) such Intercompany Note shall be pledged to the Administrative Agent for the benefit of the Lenders pursuant to the Company Pledge Agreement and (ii) guarantees expressly permitted by Section 7.4(c); provided that the aggregate principal amount of Joint Venture Loans, when added to the aggregate amount of guarantees referred to in clause (ii) above, shall not exceed $25,000,000 at any time outstanding; (f) promissory notes issued to the Company or any of its Subsidiaries by the purchasers of assets sold in accordance with Section 7.6(f); (g) (i) Capital Expenditures of the Company and its Subsidiaries made in the ordinary course of business and (ii) Investment Expenditures of the Company and its Subsidiaries not otherwise permitted by this Section 7.10; provided that (w) the aggregate amount of such Capital Expenditures made during any fiscal year of Holdings shall not exceed the sum of (I) $40,000,000 (the "Basket Expenditure Amount") and (II) the aggregate amount of all unutilized Basket Expenditure Amounts in respect of each preceding fiscal year (including, without limitation, the unutilized Basket Expenditure Amount under the Existing Credit Agreement in respect of fiscal year 1995, which amount is equal to $19,800,000), (x) notwithstanding anything to the contrary in clause (w) above, the aggregate amount of such Capital Expenditures made during any fiscal year of Holdings, when added to the aggregate amount of dividends on the Preferred Stock paid by Holdings during such fiscal year pursuant to Section 7.8(c), shall not exceed the EBITDA Basket Amount for such fiscal year (provided that this clause (x) shall not be applicable in any fiscal year for which the aggregate amount of such Capital Expenditures is less than $30,000,000), (y) after giving effect to any such Investment Expenditure, the aggregate amount of Investment Expenditures made since the Effective Date shall not exceed the Maximum Investment Amount then in effect, and (z) in no event shall the aggregate amount of such Capital Expenditures and Investment Expenditures (excluding up to $5,000,000 of Investment Expenditures constituting capital contributions to any Joint Venture) which either (1) constitute capital contributions or other investments in any Person which is not a Subsidiary Guarantor 84 or (2) are otherwise made to acquire assets which do not constitute Collateral exceed $20,000,000 in any fiscal year and $30,000,000 during the term of this Agreement; and (h) (i) Capital Expenditures of the Company and its Subsidiaries made in the ordinary course of business and (ii) Investment Expenditures of the Company and its Subsidiaries not otherwise permitted by this Section 7.10, in each case made with the proceeds of any Holdings Common Equity Offering; provided, that (x) the aggregate amount of such Capital Expenditures and Investment Expenditures shall not exceed $100,000,000 during the term of this Agreement, (y) in no event shall the aggregate amount of such Capital Expenditures and Investment Expenditures which either (1) constitute capital contributions or other investments in any Person which is not a Subsidiary Guarantor or (2) are otherwise made to acquire assets which do not constitute Collateral exceed $50,000,000 during the term of this Agreement and (z) on the date on which any Investment Expenditure is made pursuant to this Section 7.10(h), the Company shall deliver to the Administrative Agent a certificate of a Responsible Officer of each of Holdings and the Company demonstrating that, on a pro forma basis determined as if such expenditure had been made on the date occurring twelve months prior to the last day of the most recently ended fiscal quarter, Holdings and its consolidated Subsidiaries would have been in compliance with Section 7.1 as of the last day of such fiscal quarter. Notwithstanding anything to the contrary contained herein, in no event shall the aggregate amount of any advance, loan, extension of credit (by way of guaranty or otherwise) or capital contribution to, or any other investment in, SX Mauritius Holding, Inc. or any of its Subsidiaries exceed $10,000,000. 7.11 Limitation on Optional Payments and Modifications of Certain Agreements. (a) Optionally prepay, retire, redeem, purchase, defease or exchange, or make any optional deposit or segregation of funds in respect of, any principal of or interest or dividends on or other amounts payable in respect of the Senior Notes, the Senior Unsecured Term Loans, any Section 7.2(n) Indebtedness or the Preferred Stock (other than (i) the refinancing, in whole or in part, of the Senior Notes with the proceeds of a Holdings Common Equity Offering, provided, that the aggregate amount so expended during the term of this Agreement (excluding any premium, accrued interest, fees or expenses payable in connection with any such refinancing) shall not exceed $100,000,000; (ii) the prepayment of the Senior Unsecured Term Loans and Section 7.2(n) Indebtedness pursuant to scheduled amortization payments; (iii) the prepayment, refinancing or redemption of the Senior Unsecured Term Loans in a principal amount not to exceed 75% of cumulative Excess Cash Flow for the period from the beginning of the fiscal quarter of Holdings ended September 30, 1995 to the last day of the most recent fiscal period for which financial statements have been delivered pursuant to Section 6.1; (iv)(1) the prepayment, refinancing or redemption, in whole or in part, of any Preferred Stock or the Senior Unsecured Term Loans with the proceeds of (x) a Holdings Common Equity Offering or (y) preferred stock of Holdings having terms no more onerous than those set forth on Schedule 7.11, or (2) the exchange, in whole or in part, of the Preferred Stock for preferred stock of Holdings having terms no more onerous than those set forth on Schedule 7.11, 85 (b) amend, modify or change, or consent or agree to any amendment, modification or change to, any of the terms of any Section 7.2(n) Indebtedness, the Senior Notes, the Senior Unsecured Term Loans or the Capital Lease Financing Facility (other than any such amendment, modification or change which (i) would extend the maturity date thereof or reduce the amount of any principal payments in respect thereof, (ii) would reduce the rate or extend the date for payment of interest thereon or (iii) is of a technical or clarifying nature, does not affect the interests of the Administrative Agent or any Lender under any Loan Document, such Section 7.2(n) Indebtedness, the Senior Notes, the Senior Unsecured Term Loans or the Capital Lease Financing Facility, as the case may be), or (c) amend, modify or change, or consent or agree to any amendment, modification or change to, any of the terms of any Preferred Stock (other than any such amendment, modification or change which (i) would extend the mandatory redemption date thereof or reduce the amount of any redemption payments in respect thereof, (ii) would reduce the rate or extend the date for payment of dividends thereon or (iii) does not affect the interests of the Administrative Agent or any Lender under any Loan Document in any material respect, provided, that no amendment, modification or change may be made pursuant to this clause (iii) which (w) affects dividend or redemption payments, (x) grants additional rights to the holders of the Preferred Stock in respect of the election of directors of Holdings, (y) causes the covenants or other terms of the Preferred Stock to be more restrictive with respect to Holdings in any material respect or (z) requires the payment of any fee to any holder of any Preferred Stock in connection with obtaining the consent of such holder to such amendment, modification or change, and provided, further, that a substantially final draft of any proposed amendment, modification or change to any Preferred Stock pursuant to this clause (iii) shall be delivered to the Administrative Agent at least five Business Days prior to the effectiveness thereof). 7.12 Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate other than any such transaction (a) between a Subsidiary Guarantor and the Company or any other Subsidiary Guarantor which is otherwise permitted by this Agreement or (b) entered into by Holdings, the Company or any of its Subsidiaries which is (i) otherwise permitted under this Agreement, (ii) in the ordinary course of Holdings', the Company's or such Subsidiary's business, and (iii) upon fair and reasonable terms no less favorable to Holdings, the Company or such Subsidiary, as the case may be, than it would obtain in a comparable arm's length transaction with a Person not an Affiliate; provided, that, (x) each of Holdings, the Company and its Subsidiaries may enter into employment arrangements with its officers in the ordinary course of business consistent with its historical practices as of the Effective Date and (y) so long as no Default or Event of Default shall have occurred and be continuing, (1) Holdings and the Company may pay to BP Co. or any of its Affiliates an annual management and advisory fee with respect to any fiscal year not to exceed $1,000,000 in the aggregate and may reimburse BP Co. or any of its Affiliates for any reasonable out of pocket expenses (with respect to services associated with or incurred on behalf of the Company), (2) the Company may make payments to Holdings required to be made pursuant to the Tax Sharing Agreement, (3) Holdings may repurchase shares of its common stock or 86 options to purchase such common stock, (4) Holdings may sell shares of, or rights to purchase shares of, its common stock to any of its Affiliates, provided, that any such sale to an operating company "controlled" (as defined in the definition of "Control Affiliate") by Bessemer Holdings, L.P., Bessemer Capital Partners, L.P. or any partnership or similar entity under common "control" (as defined in the definition of "Control Affiliate") with Bessemer Holdings, L.P. shall be on an arm's-length basis and (5) Holdings may exchange, in whole or in part, any Preferred Stock held by an Affiliate of Holdings for preferred stock of Holdings having terms no more onerous than those governing the Preferred Stock and may execute and deliver, and perform its obligations under, any and all agreements, instruments and documents relating to the secondary offering of the Preferred Stock or such exchange, including the registration of the Preferred Stock and any such preferred stock issued in any such exchange under the Securities Act of 1933. 7.13. Corporate Documents. Amend its certificate of incorporation (except (a) to increase the number of authorized shares of common stock or (b) to the extent necessary to consummate the BCP/Company Merger). 7.14 Fiscal Year. Permit the fiscal year of Holdings or the Company to end on a day other than December 31. 7.15 Limitation on Activities of Holdings. In the case of Holdings, (a) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than (i) those incidental to its ownership of the Capital Stock of the Company and (ii) those incidental to any exchange, refinancing or redemption of its Indebtedness or Preferred Stock expressly permitted by this Agreement or any Holdings Common Equity Offering; (b) incur, create, assume or suffer to exist any Indebtedness, Guarantee Obligations or other liabilities or financial obligations, except (i) nonconsensual obligations imposed by operation of law, (ii) pursuant to the Loan Documents to which it is a party, (iii) obligations with respect to its Capital Stock, (iv) the obligation to pay any management or advisory fee expressly permitted by Section 7.12, (v) in connection with Intercompany Loans made by the Company to Holdings in accordance with Section 7.2(b), (vi) in connection with the matters described in clause (a)(ii) above and (vii) pursuant to any guarantee entered into pursuant to Section 7.4(f); or (c) own, lease, manage or otherwise operate any properties or assets (including cash and cash equivalents) other than the ownership of (i) shares of Capital Stock of the Company and (ii) additional assets having an aggregate value not to exceed $1,000,000. SECTION 8. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Company shall fail to pay any principal of any Loan or any Reimbursement Obligation when due in accordance with the terms hereof; or the Company shall fail to pay any interest on any Loan, or any other amount payable hereunder, within three days after any such interest or other amount becomes due in accordance with the terms hereof; or (b) Any representation or warranty made or deemed made by the Company or any other Loan Party herein or in any other Loan Document 87 or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) (i) Any Loan Party shall default in the observance or performance of any agreement contained in Section 6.7(a) or 7 of this Agreement, Section 5(f), 5(g), 5(h), 5(i) or 5(n) of the Holdings Security Agreement, Section 5(f), 5(g), 5(h), 5(i) or 5(n) of the Company Security Agreement, Section 5(f), 5(g), 5(h), 5(i) or 5(n) of the Subsidiary Security Agreement, Paragraph 5(a) or 5(b) of the Holdings Pledge Agreement, Paragraph 5(a) or 5(b) of the Company Pledge Agreement, Paragraph 5(a) or 5(b) of the Subsidiary Pledge Agreement or Paragraph 11 of the Subsidiary Guarantee (to the extent such Paragraph 11 incorporates by reference the covenants contained in Section 6.7(a) or 7 of this Agreement) or (ii) an Event of Default (as defined in any Mortgage) shall have occurred; or (d) The Company or any other Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after the earlier of (i) the date on which a senior officer of Holdings or the Company first knew or reasonably should have known of such default or (ii) the date on which written notice thereof shall have been given to the Company by the Administrative Agent or the Required Lenders; or (e) (i) Holdings, the Company or any of its Subsidiaries shall (x) default in any payment when due of principal of or interest on any Indebtedness (other than the Loans) or in the payment of any Guarantee Obligation; or (y) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable; provided, however, that a default, event or condition described in subclause (x) or (y) of this clause (i) shall not constitute an Event of Default under this Agreement unless, at the time of such default, defaults, events or conditions of the type described in subclauses (x) and (y) of this clause (i) shall have occurred and be continuing with respect to Indebtedness and/or Guarantee Obligations the outstanding principal amount of which exceeds in the aggregate $5,000,000 or (ii) a "Default" under and as defined in the Senior Note Indenture shall have occurred and be continuing as a result of the taking by any Loan Party of any action, the consummation by any Loan Party of any transaction, or the occurrence or existence of any other event or circumstance, expressly permitted by Section 7 of this Agreement; or 88 (f) (i) Holdings, the Company or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or Holdings, the Company or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Holdings, the Company or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against Holdings, the Company or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) Holdings, the Company or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings, the Company or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could, in the judgment of the Required Lenders, have a Material Adverse Effect; or (h) One or more judgments or decrees shall be entered against Holdings, the Company or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance as to 89 which the relevant insurance company has not disputed coverage) of $2,000,000 or more and (i) all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof or (ii) enforcement proceedings shall have been commenced by any creditor upon such judgment or order; or (i) Any Security Document shall, at any time, cease to be in full force and effect or shall be declared null and void, or the validity or enforceability thereof shall be contested by any Loan Party, or any of the Liens intended to be created by any Security Document shall cease to be or shall not be a valid and perfected Lien having the priority contemplated thereby, or the Subsidiary Guarantee or the guarantee contained in Section 10 shall cease for any reason to be in full force and effect or any Loan Party shall so assert in writing; or (j) (i) The Bessemer Group shall cease to own in the aggregate, of record and beneficially, free and clear of all Liens (other than Liens created by any provision of any agreement entered into among any holders of the Capital Stock of Holdings, as in effect on the Effective Date), directly, that percentage of the common stock of Holdings representing at least 70% of the common stock of Holdings owned by the Bessemer Group on the Effective Date; or (ii) the Investors, collectively, shall cease to have the power to vote or direct the voting of securities having at least 51% of the ordinary voting power for the election of directors of Holdings unless (x) the failure to have such power occurs solely as a result of the primary sale of shares of common stock of Holdings pursuant to any one or more public offerings thereof and (y) no Person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Commission as in effect on the Effective Date), other than any Person or group consisting solely of one or more Investors, shall, directly or indirectly, have the power to vote or direct the voting of securities representing more than 20% of the ordinary voting power for the election of directors of Holdings; or (iii) Holdings shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of the Company free and clear of all Liens (except Liens created by the Holdings Pledge Agreement); or (iv) the Company shall issue any Capital Stock (or any security convertible into any of its Capital Stock) which is not pledged to the Administrative Agent for the benefit of the Lenders; or (v) a "Change of Control" (as defined in the Senior Note Indenture) shall occur; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Company, automatically the Revolving Credit Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Company declare the Revolving 90 Credit Commitments to be terminated forthwith, whereupon the Revolving Credit Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice of default to the Company, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, the Company shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other Obligations of the Company. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other Obligations of the Company shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Company. Except as expressly provided above in this Section 8, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 9. THE ADMINISTRATIVE AGENT 9.1 Appointment. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. 9.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 91 9.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Company or any other Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of the Company or any other Loan Party to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Company or any other Loan Party. 9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (except as otherwise expressly provided in Section 11.1) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (except as otherwise expressly provided in Section 11.1), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 9.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received notice from a Lender or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (except as otherwise expressly provided in Section 11.1); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with 92 respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 9.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Company or any other Loan Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Company and the other Loan Parties and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Company and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Company or any other Loan Party which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 9.7 Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to the respective amounts of their Revolving Credit Commitments or, if the Revolving Credit Commitments have terminated, ratably according to the respective amounts of their Loans, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement, any of the other Loan Documents or any documents contemplated hereby or thereby or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Administrative Agent's gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder. 93 9.8 Administrative Agent in Its Individual Capacity. The Administrative Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Company as though the Administrative Agent were not the Administrative Agent hereunder and under the other Loan Documents. With respect to its Loans made or renewed by it and any Letter of Credit issued or participated in by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. 9.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 10 days' notice to the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall be approved by the Company (which approval shall not be unreasonably withheld), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall mean such successor agent effective upon its appointment, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of this Section shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents. 9.10 Co-Lead Agent and Co- Agents. Neither the Co-Lead Agent nor any Co-Agent in its capacity as such shall have any rights, duties or responsibilities hereunder, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Co-Lead Agent or any Co-Agent in its capacity as such. SECTION 10. GUARANTEE 10.1 Guarantee. In order to induce the Administrative Agent and the Lenders to execute and deliver this Agreement and to make or maintain the Loans hereunder, and in consideration thereof, Holdings hereby unconditionally and irrevocably guarantees to the Administrative Agent, for the ratable benefit of the Lenders, the prompt and complete payment and performance by the Company when due (whether at stated maturity, by acceleration or otherwise) of the Obligations, and Holdings further agrees to pay any and all expenses (including, without limitation, all reasonable fees, charges and disbursements of counsel) which may be paid or incurred by the Administrative Agent or by the Lenders in enforcing, or obtaining advice of counsel in respect of, any of their rights under the guarantee contained in this Section 10. The guarantee contained in this Section 10, subject to Section 10.5, shall remain in full force and effect until the Obligations are paid in full, the Revolving Credit Commitments are terminated and no Letters of Credit are outstanding, notwithstanding that from time to time prior thereto the Company may be free from any Obligations. 94 Holdings agrees that whenever, at any time, or from time to time, it shall make any payment to the Administrative Agent or any Lender on account of its liability under this Section 10, it will notify the Administrative Agent and such Lender in writing that such payment is made under the guarantee contained in this Section 10 for such purpose. No payment or payments made by the Company or any other Person or received or collected by the Administrative Agent or any Lender from the Company or any other Person by virtue of any action or proceeding or any setoff or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Holdings under this Section 10 which, notwithstanding any such payment or payments, shall remain liable for the Obligations until, subject to Section 10.5, the Obligations are paid in full, the Revolving Credit Commitments are terminated and no Letters of Credit are outstanding. 10.2 No Subrogation, Contribution, Reimbursement or Indemnity. Notwithstanding anything to the contrary in this Section 10, Holdings hereby irrevocably waives all rights which may have arisen in connection with the guarantee contained in this Section 10 to be subrogated to any of the rights (whether contractual, under the Bankruptcy Code, including Section 509 thereof, under common law or otherwise) of the Administrative Agent or any Lender against the Company or against the Administrative Agent or any Lender for the payment of the Obligations, until the Obligations have been paid in full and the Revolving Credit Commitments have been terminated. Holdings hereby further irrevocably waives all contractual, common law, statutory and other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Company or any other Person which may have arisen in connection with the guarantee contained in this Section 10, until the Obligations have been paid in full and the Revolving Credit Commitments have been terminated. So long as the Obligations remain outstanding, if any amount shall be paid by or on behalf of the Company to Holdings on account of any of the rights waived in this Section 10.2, such amount shall be held by Holdings in trust, segregated from other funds of Holdings, and shall, forthwith upon receipt by Holdings, be turned over to the Administrative Agent in the exact form received by Holdings (duly indorsed by Holdings to the Administrative Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. The provisions of this Section 10.2 shall survive the term of the guarantee contained in this Section 10 and the payment in full of the Obligations and the termination of the Revolving Credit Commitments. 10.3 Amendments, etc. with respect to the Obligations. Holdings shall remain obligated under this Section 10 notwithstanding that, without any reservation of rights against Holdings, and without notice to or further assent by Holdings, any demand for payment of or reduction in the principal amount of any of the Obligations made by the Administrative Agent or any Lender may be rescinded by the Administrative Agent or such Lender, and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Lender, and this Agreement, any other Loan Document, and any other documents executed and delivered in 95 connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Lenders (or the Required Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Lender for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for the guarantee contained in this Section 10 or any property subject thereto. 10.4 Guarantee Absolute and Unconditional. Holdings waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon the guarantee contained in this Section 10 or acceptance of the guarantee contained in this Section 10; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 10; and all dealings between the Company or Holdings, on the one hand, and the Administrative Agent and the Lenders, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 10. Holdings waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company or Holdings with respect to the Obligations. The guarantee contained in this Section 10 shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to (a) the validity or enforceability of this Agreement or any other Loan Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) any defense, setoff or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Company against the Administrative Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company or Holdings) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of Holdings under the guarantee contained in this Section 10, in bankruptcy or in any other instance. When the Administrative Agent or any Lender is pursuing its rights and remedies under this Section 10 against Holdings, the Administrative Agent or any Lender may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Company or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Lender to pursue such other rights or remedies or to collect any payments from the Company or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Company or any such other Person or of any such collateral security, guarantee or right of offset, shall not relieve Holdings of any liability under this Section 10, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent and the Lenders against Holdings. 10.5 Reinstatement. The guarantee contained in this Section 10 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative 96 Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any substantial part of its property, or otherwise, all as though such payments had not been made. 10.6 Payments. Holdings hereby agrees that any payments in respect of the Obligations pursuant to this Section 10 will be paid to the Administrative Agent without setoff or counterclaim in Dollars at the office of the Administrative Agent specified in Section 11.2. SECTION 11. MISCELLANEOUS 11.1 Amendments and Waivers. Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section. With the written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Company or the other Loan Parties hereunder or thereunder or waiving, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, that no such waiver and no such amendment, supplement or modification shall directly (a) (i) release all or substantially all of the Collateral or release all or substantially all of the Subsidiary Guarantors from their obligations under the Subsidiary Guarantee (except, in each case, in connection with any sale or other disposition of assets expressly permitted by Section 7.6) or (ii) amend, modify or waive any provision of Section 8(j) without the written consent of the Supermajority Lenders; (b) forgive the principal amount or extend the final stated maturity of any Loan, or reduce the stated rate of interest on any Loan or extend the scheduled time of payment of interest thereon, or reduce any fee or letter of credit commission payable to any Lender hereunder, or release the Company from its obligation to repay any of the amounts described in this clause (b), or increase the amount of any Lender's Revolving Credit Commitment, in each case without the written consent of each Lender directly affected thereby; (c) so long as the covenants contained in Section 7.1(b) or 7.1(c) are incorporated by reference in the Capital Lease Financing Facility, amend, modify or waive any provision of Section 7.1(b) or 7.1(c), as the case may be, without the written consent of the Specified Required Lenders; (d) amend, modify or waive any provision of this Section 11.1 or reduce the percentage specified in the definition of Required Lenders, Specified Required Lenders or Supermajority Lenders, or consent to the assignment or transfer by Holdings or the Company of any of its rights and obligations under this Agreement and the other Loan Documents (except, in the case of Holdings, as expressly contemplated by Section 7.5(c)), in each case without the written consent of all the Lenders; (e) amend, modify or waive any provision of Section 3 without the written consent of the Issuing Lender; or (f) amend, modify or waive any provision of Section 9 without the written consent of the then Administrative Agent; and provided, further, that no exercise by the Administrative Agent of its discretion pursuant to the introductory paragraphs of the definitions of "Eligible Inventory" and 97 "Eligible Receivables" which would significantly, and from the point of view of the Lenders adversely, alter (a) the basis upon which Inventory or Accounts are considered "Eligible Inventory" or "Eligible Receivables" or (b) the calculation of any reserve in respect of Eligible Inventory or Eligible Receivables, shall be effective unless the Required Lenders shall have consented to such exercise in writing (which consent shall not be unreasonably withheld). Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Company, the other Loan Parties, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the Company, the other Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 11.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy, telegraph or telex), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, or, in the case of telegraphic notice, when delivered to the telegraph company, or, in the case of telex notice, when sent, answerback received, addressed as follows in the case of Holdings, the Company and the Administrative Agent, and as set forth in the administrative questionnaire delivered to the Administrative Agent on or prior to the Effective Date in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Loans: Holdings: BCP/Essex Holdings Inc. c/o Bessemer Holdings, L.P. 630 Fifth Avenue New York, New York 10111 Attention: Robert D. Lindsay Telecopy: 212-969-9032 with copies to: Essex Group, Inc. (at the address set forth below) and Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: Kris F. Heinzelman, Esq. Telecopy: 212-474-3700 The Company: Essex Group, Inc. 1601 Wall Street Fort Wayne, Indiana 46802 Attention: David A. Owen Telecopy: 219-461-4762 98 with copies to: BCP/Essex Holdings Inc. (at the address set forth above) and Cravath, Swaine & Moore (at the address set forth above) The Administrative Agent: The Chase Manhattan Bank c/o Chase Securities Inc. 10 South LaSalle Street Chicago, Illinois 60603 Attention: Jonathan E. Twichell Telecopy: 312-807-4550 with copies to: Chase Agent Bank Services Group Grand Central Tower 140 East 45th Street New York, New York 10017 Attention: Jesus Sang Telecopy: 212-622-0122 provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to Section 2.2, 2.3, 2.6, 2.7, 2.9, 2.11 or 3.2 shall not be effective until received. 11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.4 Survival of Representations and Warranties. All representations and warranties made hereunder, under the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery of this Agreement and the other Loan Documents. 11.5 Payment of Expenses and Taxes. The Company agrees (a) to pay or reimburse the Administrative Agent for all its out-of-pocket costs and expenses and internally allocated charges and reasonable fees incurred in connection with the development, preparation and execution of this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, the consummation and administration of the transactions contemplated hereby and thereby and the syndication of the credit facilities contained herein, including, without limitation, the reasonable fees, charges and disbursements of counsel (including any local or special counsel) to the Administrative Agent and of any professionals or consultants acting on behalf of the Administrative Agent in connection with any audit or other review of the business, assets or financial condition of the Loan Parties (including any examination of Accounts, Inventory or other Collateral), (b) to pay or reimburse the Administrative Agent for all its reasonable costs and expenses incurred in connection with any amendment, supplement or other modification to this Agreement, any other Loan Documents or any other documents prepared in connection 99 herewith or therewith, including, without limitation, reasonable fees, charges and disbursements of counsel to the Administrative Agent, (c) to pay or reimburse each Lender and the Administrative Agent for all its reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents, the Letters of Credit, and any other documents prepared in connection herewith or therewith, including, without limitation, reasonable fees, charges and disbursements of counsel to the Administrative Agent and to each Lender (including the reasonable allocated costs of in-house counsel for any Lender), (d) to pay, indemnify each Lender and the Administrative Agent against, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any other documents prepared in connection herewith or therewith, and (e) to pay, and indemnify and hold harmless each Lender and the Administrative Agent and their respective officers, directors, employees, affiliates, agents and controlling persons (each, an "indemnitee") from and against, any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, charges and disbursements of any kind or nature whatsoever (including, without limitation, reasonable fees, charges and disbursements of counsel to such indemnitee) with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, or the use of the proceeds of the Loans or the loans made pursuant to the Existing Credit Agreement, or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any indemnitee is a party thereto or whether any such claim, litigation, investigation or proceeding is brought by the Company or by any other Person, and to reimburse each indemnitee upon demand for any legal or other reasonable expenses incurred in connection with investigating or defending any of the foregoing (all the foregoing, collectively, the "indemnified liabilities"); provided that the Company shall have no obligation hereunder to any indemnitee with respect to indemnified liabilities to the extent such indemnified liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct of such indemnitee. The agreements in this Section shall survive repayment of the Loans and all other amounts payable hereunder. 11/6 Successors and Assigns; Assignments and Participations. (a) This Agreement shall be binding upon and inure to the benefit of Holdings, the Company, the Lenders, the Administrative Agent, all future holders of the Loans, and their respective successors and assigns, except that neither Holdings nor the Company may assign or transfer any of its rights or obligations under this Agreement (except, in the case of Holdings, as expressly contemplated by Section 7.5(c)) without the prior written consent of each Lender. (b) Each Lender may, with the prior consent of the Company, the Issuing Lender and the Administrative Agent (such consent not to be unreasonably withheld but in the case of the Company it shall be deemed 100 reasonable for the Company to withhold its consent if as a result of any assignment (x) the total number of Lenders would be greater than 20 or (y) the Company would be required to pay any additional amounts pursuant to Section 2.15 or 2.16), assign to one or more banks or other entities all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of its Revolving Credit Commitment and the Loans owing to it); provided, however, that (i) in the case of each assignment of a Revolving Credit Commitment, except in the case of an assignment of all of a Lender's Revolving Credit Commitment, (x) the amount of the Revolving Credit Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 or such lesser amount as the Company may consent to and (y) after giving effect to each such assignment, the amount of the Revolving Credit Commitment of the assigning Lender shall in no event be less than $5,000,000, and (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance and pay to the Administrative Agent a processing and recordation fee of $4,000. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). Upon the effectiveness of any Assignment and Acceptance, Schedule 1.1A shall be deemed amended to reflect the identities and Revolving Credit Commitments of the Lenders after giving effect thereto. (c) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or any other Loan Party or the performance or observance by the Company or any other Loan Party of any of its obligations under this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.1 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender or 101 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, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (v) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers and discretion as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender. (d) The Administrative Agent, on behalf of the Company, shall maintain at the address of the Administrative Agent referred to in Section 11.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Revolving Credit Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Company, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Loan Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation hereunder shall be effective only upon appropriate entries with respect thereto being made in the Register. The Register shall be available for inspection by the Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance accepted by an assigning Lender and an assignee, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit I, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. (f) Each Lender may sell participations to one or more banks or other entities (each, a "Participant") in all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Revolving Credit Commitment and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Revolving Credit Commitment to the Company hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) for purposes of Section 2.16, such Lender shall continue to be treated as if it had not sold any such participation, such that no Participant shall have any right to any indemnity or additional payment under such Section, and such Lender shall be entitled to receive additional payments pursuant to such Section calculated on the assumption that it had not sold any such participation, (iv) the Company, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no Participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by any 102 Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Loans or any fees payable hereunder, in each case to the extent subject to such participation, or postpone the date of the final maturity of, or any date fixed for any payment of interest on, the Loans, in each case to the extent subject to such participation. Notwithstanding the foregoing, the Company agrees that each such Participant shall, to the extent provided in its participation, be entitled to the rights and benefits under Sections 2.14 and 2.16 and all rights to, or rights to request, information under this Agreement with respect to its participating interest, in each case as if such Participant were a Lender and in each case as with effect as from the date of effectiveness of the applicable participation. (g) The Company authorizes each Lender to disclose to any Participant or assignee (each, a "Transferee") and any prospective Transferee any and all financial information in such Lender's possession concerning the Company and its Affiliates which has been delivered to such Lender by or on behalf of the Company pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Company in connection with such Lender's credit evaluation of the Company and its Affiliates prior to becoming a party to this Agreement; provided, that, unless the Administrative Agent and the Company shall otherwise agree, prior to any such disclosure such Transferee shall have executed a Confidentiality Letter in the form of Exhibit L. (h) Nothing herein shall prohibit any Lender from pledging or assigning all or any portion of its Loans to any Federal Reserve Bank in accordance with applicable law. In order to facilitate such pledge or assignment, the Company hereby agrees that, upon request of any Lender at any time and from time to time, the Company shall provide to such Lender, at the Company's own expense, a promissory note, in form and substance reasonably satisfactory to the Company, evidencing the Loans so pledged or assigned Lender. (i) If, after the date that any Lender becomes a Lender, the long- term certificate of deposit rating of such Lender shall be downgraded by both Standard & Poor's Ratings Services ("S&P") and Moody's Investors Service, Inc. ("Moody's") (or, in the case of any Lender which is not so rated by both S&P and Moody's on the date on which it becomes a Lender, by Thompson's BankWatch and, if applicable, S&P or Moody's), and as a result of such downgrade such Lender shall be rated below BBB- by S&P and below Baa3 by Moody's, or the equivalent (or, in the case of any Lender which is not so rated by both S&P and Moody's on the date on which it becomes a Lender, below C by Thompson's BankWatch and, if applicable, below BBB- by S&P or below Baa3 by Moody's, or the equivalent), then the Issuing Lender shall have the right, but not the obligation, at its own expense, upon notice to such Lender and the Administrative Agent, to replace (or to request that the Company use its reasonable efforts to replace) such Lender with an assignee (in accordance with and subject to the restrictions contained in Section 11.6(b)), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 11.6(b)) all its interests, rights and obligations hereunder to such assignee; provided, that (i) no such assignment shall conflict with any Requirement of Law of any Governmental Authority and (ii) the Issuing Lender or such assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of 103 payment of the Loans made by such Lender hereunder and all other amounts accrued for such Lender's account or owed to it hereunder. 11.7 Adjustments; Setoff. (a) Except to the extent that this Agreement provides for payments to be allocated to Revolving Credit Loans or Competitive Loans, as the case may be, if any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of any category of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by setoff, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders such portion of each such other Lender's Loans, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Company agrees that each Lender so purchasing a portion of another Lender's Loans may exercise all rights of payment (including, without limitation, rights of setoff) with respect to such portion as fully as if such Lender were the direct holder of such portion. (b) In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of an Event of Default, each Lender shall have the right, without prior notice to Holdings or the Company, any such notice being expressly waived by Holdings and the Company to the extent permitted by applicable law, upon any amount becoming due and payable by Holdings or the Company hereunder (whether at the stated maturity, by acceleration or otherwise) to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of Holdings or the Company. Each Lender agrees promptly to notify Holdings, the Company and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application. 11.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Administrative Agent. 11.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and 104 any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 11.10 Releases. Each Lender hereby authorizes the Administrative Agent to execute such releases and termination statements as may be reasonably requested by the Company in connection with the incurrence of any Lien expressly permitted by Section 7.3 (as said Section may be amended from time to time in accordance with Section 11.1). 11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 11.12 Submission To Jurisdiction; Waivers. Each of Holdings and the Company hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to Holdings or the Company, as the case may be, at its address set forth in Section 11.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 11.12 any special, exemplary, punitive or consequential damages. 105 11.13 Acknowledgements. Each of Holdings and the Company hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (b) neither the Administrative Agent nor any Lender has any fiduciary relationship to Holdings or the Company, and the relationship between Administrative Agent and Lenders, on one hand, and Holdings and the Company, on the other hand, is solely that of creditor and debtor; and (c) no joint venture exists among the Lenders or among Holdings, the Company and the Lenders. 11.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 11.15 Confidentiality. Neither the Administrative Agent nor any Lender shall disclose any Confidential Information to any Person without the prior consent of the Company, other than (a) to the Administrative Agent's or such Lender's affiliates and their officers, directors, employees, agents and advisors, (b) to actual or prospective assignees and participants, and then only on a confidential basis as contemplated in Section 11.6(g) and upon the prior delivery of the confidentiality letter contemplated therein, (c) as required by any law, rule or regulation or judicial process and (d) as requested or required by any state, federal or foreign authority or examiner regulating or having jurisdiction over the Administrative Agent or any Lender. 11.16 New Lenders; Commitment Increases. (a) With the consent of the Company and the Administrative Agent (which, in the case of the Administrative Agent, shall not be unreasonably withheld), (i) one or more additional banks or other financial institutions may become a party to this Agreement by executing a supplement hereto, in form and substance satisfactory to such bank or other financial institution, the Company and the Administrative Agent, whereupon such bank or other financial institution (herein called a "New Lender") shall become a Lender for all purposes hereof and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and Schedule 1.1A hereto shall be deemed to be amended to add the name, address and Revolving Credit Commitment of such New Lender and (ii) any Lender may increase the amount of its Revolving Credit Commitment by executing a supplement hereto, in form and substance satisfactory to such Lender, the Company and the Administrative Agent, whereupon such Lender shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Revolving Credit Commitment as so increased, and Schedule 1.1A hereto shall be deemed to be amended to reflect such increase in the Revolving Credit Commitment of such Lender. In no event may the aggregate Revolving Credit Commitments be increased above $400,000,000 pursuant to any supplement described in this Section 11.16(a). 106 (b) If on the date upon which a bank or other financial institution becomes a New Lender or upon which a Lender's Revolving Credit Commitment is changed pursuant to Section 11.16(a), any Revolving Credit Loans are then outstanding, the Company shall borrow Revolving Credit Loans from such Lender in an amount such that, after giving effect thereto, the quotient of (x) the Revolving Credit Loans of such Lender of each Type (and, in the case of Eurodollar Revolving Credit Loans, of each Eurodollar Tranche) and (y) such Lender's Revolving Credit Commitment is equal to the comparable quotient of each other Lender. Any Eurodollar Revolving Credit Loans borrowed pursuant to the preceding sentence shall bear interest at a rate equal to the respective interest rates then applicable to the Eurodollar Revolving Credit Loans of the other Lenders in the same Eurodollar Tranche or such other rate as may be agreed upon by the Company and such Lender. 11.17 INTEGRATION. THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT OF HOLDINGS, THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS WITH RESPECT TO THE SUBJECT MATTER HEREOF, WHICH AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT BETWEEN OR AMONG ANY OF THE PARTIES HERETO, AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE ADMINISTRATIVE AGENT OR ANY LENDER RELATIVE TO THE SUBJECT MATTER HEREOF NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN OR IN THE OTHER LOAN DOCUMENTS. * * * 107 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in New York, New York by their proper and duly authorized officers as of the day and year first above written. BCP/ESSEX HOLDINGS INC. By: /s/ David A. Owen ----------------------------- Name: David A. Owen Title: Vice President ESSEX GROUP, INC. By: /s/ Debra F. Minott ----------------------------- Name: Debra F. Minott Title: Senior Vice President THE CHASE MANHATTAN BANK, as Administrative Agent and as a Lender By: /s/ Lawrence Palumbo, Jr. ----------------------------- Name: L. Palumbo Title: Vice President and Attorney-in-fact BANK OF AMERICA ILLINOIS, as Co-Lead Agent and as a Lender By: /s/ R. Guy Stapleton _____________________________ Name: R. Guy Stapleton Title: Managing Director THE BANK OF NEW YORK, as Co-Agent and as a Lender By: /s/ John M. Lokay, Jr. ----------------------------- Name: John M. Lokay, Jr. Title: Vice President THE BANK OF NOVA SCOTIA, as Co-Agent and as a Lender By: /s/ M.D. Smith ----------------------------- Name: M.D. Smith Title: Agent 108 COMERICA BANK, as Co-Agent and as a Lender By: /s/ Phillip A. Coosaia ----------------------------- Name: Phillip A. Coosaia Title: Vice President 109 NBD BANK, N.A., as Co-Agent and as a Lender By: /s/ John C. Otteson ----------------------------- Name: John C. Otteson Title: Vice President THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH, as Co-Agent and as a Lender By: /s/ Shuichi Tajima ---------------------------- Name: Shuichi Tajima Title: Deputy General Manager NATIONSBANK, N.A., as Co-Agent and as a Lender By: /s/ Wallace W. Harris ----------------------------- Name: Wallace W. Harris Title: Vice President FORT WAYNE NATIONAL BANK, as a Lender By: /s/ Robert C. Marshall ----------------------------- Name: Robert C. Marshall Title: Vice President MELLON BANK, N.A., as a Lender By: /s/ Roger N. Stanier ----------------------------- Name: Roger N. Stanier Title: Vice President NATIONAL CITY BANK OF INDIANA, as a Lender By: /s/ Reagan K. Rick ----------------------------- Name: Reagan K. Rick Title: Vice President UNITED STATES NATIONAL BANK OF OREGON, as a Lender 110 By: /s/ Chris J. Karlin ----------------------------- Name: Chris J. Karlin Title: Vice President NORWEST BANK INDIANA, NATIONAL ASSOCIATION, as a Lender By: /s/ Sook-Ja Hansen ----------------------------- Name: Sook-Ja Hansen Title: Asst. Vice President VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, as a Lender By: /s/ Jeffrey W. Maillet ----------------------------- Name: Jeffrey W. Maillet Title: Sr. Vice President, Portfolio Mgr. BANK OF MONTREAL, as a Lender By: /s/ Erin M. Keyser ----------------------------- Name: Erin M. Keyser Title: Director BHF-BANK AKTIENGELSELLSCHAFT, as a Lender By: /s/ John Sykes/Evon Contos ---------------------------- Name: John Sykes/Evon Contos Title: AVP/VP CAISSE NATIONALE DE CREDIT AGRICOLE, as a Lender By: /s/ Dean Balice ---------------------------- Name: Dean Balice Title: Senior Vice President, Branch Manager KEY BANK NATIONAL ASSOCIATION, as a Lender By: /s/ Matthew P. Tudhey 111 ---------------------------- Name: Matthew P. Tudhey Title: Assistant Vice President TABLE OF CONTENTS Page SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . 1 1.2 Other Definitional Provisions; Financial Calculations . . . . . . . . . . . . . . . . . . . 28 SECTION 2. THE REVOLVING CREDIT COMMITMENTS . . . . . . . . . 29 2.1 Revolving Credit Commitments . . . . . . . . . . . 29 2.2 Procedure for Revolving Credit Borrowing . . . . . 29 2.3 Competitive Borrowings . . . . . . . . . . . . . . 30 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . 33 2.5 Evidence of Loans; Repayment . . . . . . . . . . . 33 2.6 Termination or Reduction of Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . 33 2.7 Optional Prepayments . . . . . . . . . . . . . . . 33 2.8 Mandatory Prepayments . . . . . . . . . . . . . . . 34 2.9 Conversion and Continuation Options . . . . . . . . 35 2.10 Minimum Amounts and Maximum Number of Eurodollar Tranches . . . . . . . . . . . . . . . . . . . . . 35 2.11 Interest Rates and Payment Dates . . . . . . . . . 36 2.12 Computation of Interest and Fees . . . . . . . . . 36 2.13 Inability to Determine Interest Rate . . . . . . . 37 2.14 Pro Rata Treatment and Payments . . . . . . . . . . 37 2.15 Requirements of Law . . . . . . . . . . . . . . . . 38 2.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . 39 2.17 Indemnity . . . . . . . . . . . . . . . . . . . . . 41 2.18 Replacement Lenders . . . . . . . . . . . . . . . . 42 SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . 42 3.1 L/C Commitment . . . . . . . . . . . . . . . . . . 42 3.2 Procedure for Issuance of Letters of Credit . . . . 43 3.3 Fees and Other Charges . . . . . . . . . . . . . . 43 3.4 L/C Participations . . . . . . . . . . . . . . . . 44 3.5 Drawing and Reimbursement . . . . . . . . . . . . . 44 3.6 Obligations Absolute . . . . . . . . . . . . . . . 45 3.7 Letter of Credit Payments . . . . . . . . . . . . . 45 3.8 Application . . . . . . . . . . . . . . . . . . . . 45 3.9 Notices and Reports . . . . . . . . . . . . . . . . 45 SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 46 4.1 Financial Condition . . . . . . . . . . . . . . . . 46 4.2 No Change . . . . . . . . . . . . . . . . . . . . . 47 4.3 Corporate Existence; Compliance with Law . . . . . 47 4.4 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . 47 4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . 48 4.6 No Material Litigation . . . . . . . . . . . . . . 48 4.7 No Default . . . . . . . . . . . . . . . . . . . . 48 4.8 Ownership of Property; Liens . . . . . . . . . . . 48 4.9 Intellectual Property . . . . . . . . . . . . . . . 49 4.10 No Burdensome Restrictions . . . . . . . . . . . . 49 4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . 49 4.12 Federal Regulations . . . . . . . . . . . . . . . . 49 4.13 Labor Matters . . . . . . . . . . . . . . . . . . . 49 4.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . 50 4.15 Investment Company Act; Other Regulations . . . . . 50 4.16 Subsidiaries . . . . . . . . . . . . . . . . . . . 50 Page 4.17 Purpose of Loans . . . . . . . . . . . . . . . . . 50 4.18 Environmental Matters . . . . . . . . . . . . . . . 50 4.19 Accuracy of Information . . . . . . . . . . . . . . 51 4.20 Security Documents . . . . . . . . . . . . . . . . 52 4.21 Solvency . . . . . . . . . . . . . . . . . . . . . 52 4.22 Insurance . . . . . . . . . . . . . . . . . . . . . 52 4.23 Regulation H . . . . . . . . . . . . . . . . . . . 53 SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 53 5.1 Conditions to Effectiveness . . . . . . . . . . . . 53 5.2 Conditions to Each Extension of Credit . . . . . . 56 SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 56 6.1 Financial Statements . . . . . . . . . . . . . . . 56 6.2 Certificates; Other Information . . . . . . . . . . 57 6.3 Payment of Obligations . . . . . . . . . . . . . . 58 6.4 Conduct of Business and Maintenance of Existence . 58 6.5 Maintenance of Property; Insurance . . . . . . . . 58 6.6 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . . . 59 6.7 Notices . . . . . . . . . . . . . . . . . . . . . . 59 6.8 Environmental Laws . . . . . . . . . . . . . . . . 60 6.9 Interest Rate Protection . . . . . . . . . . . . . 61 6.10 Additional Collateral . . . . . . . . . . . . . . . 61 SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 62 7.1 Financial Condition Covenants . . . . . . . . . . . 63 7.2 Limitation on Indebtedness . . . . . . . . . . . . 63 7.3 Limitation on Liens . . . . . . . . . . . . . . . . 65 7.4 Limitation on Guarantee Obligations . . . . . . . . 67 7.5 Limitations on Fundamental Changes . . . . . . . . 67 7.6 Limitation on Sale of Assets . . . . . . . . . . . 68 7.7 Limitation on Leases . . . . . . . . . . . . . . . 69 7.8 Limitation on Dividends . . . . . . . . . . . . . . 69 7.9 Limitation on Negative Pledge Clauses . . . . . . . 70 7.10 Limitation on Capital Expenditures, Investments, Loans and Advances . . . . . . . . . . . . . . . . 70 7.11 Limitation on Optional Payments and Modifications of Certain Agreements . . . . . . . . . . . . . . . 72 7.12 Transactions with Affiliates . . . . . . . . . . . 73 7.13 Corporate Documents . . . . . . . . . . . . . . . . 73 7.14 Fiscal Year . . . . . . . . . . . . . . . . . . . . 73 7.15 Limitation on Activities of Holdings . . . . . . . 73 SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 74 SECTION 9. THE AGENT . . . . . . . . . . . . . . . . . . . . . 77 9.1 Appointment . . . . . . . . . . . . . . . . . . . . 77 9.2 Delegation of Duties . . . . . . . . . . . . . . . 77 9.3 Exculpatory Provisions . . . . . . . . . . . . . . 77 9.4 Reliance by Agent . . . . . . . . . . . . . . . . . 77 9.5 Notice of Default . . . . . . . . . . . . . . . . . 78 9.6 Non-Reliance on Agent and Other Lenders . . . . . . 78 9.7 Indemnification . . . . . . . . . . . . . . . . . . 78 9.8 Agent in Its Individual Capacity . . . . . . . . . 79 9.9 Successor Agent . . . . . . . . . . . . . . . . . . 79 9.10 Co-Lead Agent and Co-Agents . . . . . . . . . . . . 79 Page SECTION 10. GUARANTEE . . . . . . . . . . . . . . . . . . . . 79 10.1 Guarantee . . . . . . . . . . . . . . . . . . . . . 79 10.2 No Subrogation, Contribution, Reimbursement or Indemnity . . . . . . . . . . . . . . . . . . . . . 80 10.3 Amendments, etc. with respect to the Obligations . 80 10.4 Guarantee Absolute and Unconditional . . . . . . . 80 10.5 Reinstatement . . . . . . . . . . . . . . . . . . . 81 10.6 Payments . . . . . . . . . . . . . . . . . . . . . 81 SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 81 11.1 Amendments and Waivers . . . . . . . . . . . . . . 81 11.2 Notices . . . . . . . . . . . . . . . . . . . . . . 82 11.3 No Waiver; Cumulative Remedies . . . . . . . . . . 83 11.4 Survival of Representations and Warranties . . . . 83 11.5 Payment of Expenses and Taxes . . . . . . . . . . . 83 11.6 Successors and Assigns; Assignments and Participations . . . . . . . . . . . . . . . . . . 84 11.7 Adjustments; Setoff . . . . . . . . . . . . . . . . 87 11.8 Counterparts . . . . . . . . . . . . . . . . . . . 87 11.9 Severability . . . . . . . . . . . . . . . . . . . 87 11.10 Releases . . . . . . . . . . . . . . . . . . . . . 88 11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . 88 11.12 Submission To Jurisdiction; Waivers . . . . . . . . 88 11.13 Acknowledgements . . . . . . . . . . . . . . . . . 88 11.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . 88 11.15 Confidentiality . . . . . . . . . . . . . . . . . . 89 11.16 New Lenders; Commitment Increases . . . . . . . . . 89 11.17 INTEGRATION . . . . . . . . . . . . . . . . . . . . 89 Page SCHEDULES: 1.1A Revolving Credit Commitments, Addresses 1.1B Mortgaged Properties 1.1C Terms of Preferred Stock 4.1(b) Liabilities, etc. 4.5 Legal Bar 4.8 Owned and Leased Properties 4.9 Patents and Trademarks 4.16 Subsidiaries 4.20(b) UCC Filing Jurisdictions 4.20(c) Mortgage Filing Jurisdictions 5.1(g) Local Counsel 7.2(c) Existing Indebtedness 7.3(f) Existing Liens 7.7(a) Existing Leases 7.11 Terms of Preferred Stock EXHIBITS: A Form of Intercompany Note B-1 Form of Borrowing Base Certificate B-2 Form of Senior Note Indenture Revolving Credit Incurrence Limit Certificate C-1 Form of Competitive Accept/Reject Letter C-2 Form of Competitive Advance Invitation C-3 Form of Competitive Advance Offer C-4 Form of Competitive Advance Request D-1 Form of Company Pledge Agreement D-2 Form of Holdings Pledge Agreement D-3 Form of Subsidiary Pledge Agreement E-1 Form of Company Security Agreement E-2 Form of Holdings Security Agreement E-3 Form of Subsidiary Security Agreement F Form of Subsidiary Guarantee G-1 Form of Opinion of Cravath, Swaine & Moore G-2 Form of General Counsel Opinion G-3 Form of Local Counsel Opinion H Form of Closing Certificate I Form of Assignment and Acceptance J Form of Mortgage K Form of Compliance Certificate L Form of Confidentiality Letter EXECUTION COPY -------------------------------------------------------------------------- $370,000,000 CREDIT AGREEMENT Dated as of October 31, 1996 among BCP/ESSEX HOLDINGS INC., ESSEX GROUP, INC., THE LENDERS NAMED HEREIN and THE CHASE MANHATTAN BANK, as Administrative Agent -------------------------------------------------------------------------- EX-10 5 Schedule 1.1A ESSEX GROUP, INC. REVOLVING CREDIT COMMITMENTS $370,000,000
TITLE BANKS Commitment ----- ----- ---------- Administrative THE CHASE MANHATTAN BANK $30,000,000 Agent Co-Lead Agent: BANK OF AMERICA ILLINOIS $30,000,000 Co-Agents: THE BANK OF NEW YORK $30,000,000 THE BANK OF NOVA SCOTIA $30,000,000 COAMERICA BANK $30,000,000 NBD BANK N.A. $30,000,000 THE LONG-TERM CREDIT BANK OF JAPAN, $30,000,000 LIMITED, NEW YORK BRANCH NATIONSBANK, N.A. (CAROLINAS) $30,000,000 Lenders: FORT WAYNE NATIONAL BANK $16,500,000 MELLON BANK, N.A. $16,500,000 NATIONAL CITY BANK $16,500,000 UNITED STATES NATIONAL BANK OF OREGON $16,500,000 NORWEST BANK INDIANA, NATIONAL $12,000,000 ASSOCIATION VAN KAMPEN MERRITT $12,000,000 BANK OF MONTREAL $10,000,000 BHF - BANK AKTIENGESELLSCHAFT $10,000,000 CAISSE NATIONALE DE CREDIT AGRICOLE $10,000,000 KEY BANK $10,000,000 ----------- TOTALS $370,000,000 /TABLE Schedule 1.1B MORTGAGED PROPERTIES [CAPTION] Valuation Research Appraised Value ---------------------- 1601 Wall Street $ 10,930,000 Fort Wayne, IN Allen County U.S. Highway 30 W. $ 10,510,000 Columbia City, IN Whitley County West Pearl Street $ 1,130,000 Jonesboro, IN Grant County Decker Road $ 3,500,000 Vincennes, IN Knox County Franklin, IN $ 4,500,000 Johnson County 800 W. Mitchell St. $ 1,780,000 Kendallville, IN Noble County 2816 N. Main St. $ 2,580,000 Rockford, IL Winnebago County 301 E. 23rd St. $ 810,000 Marion, IN Grant County Rt. 29 and Bear Creek Rd. $ 2,250,000 Pana, IL Christian County E. Union & US 52 $ 2,700,000 Lafayette, IN Tippecanoe County 190 E. Polk St. $ 3,130,000 Orleans, IN Morgan County 803 York Road $ 3,850,000 Chester, SC Chester County 2 Valuation Research Appraised Value ---------------------- Rt. 4 North $ 5,460,000 Hoisington, KS Barton County University & East St. $ 6,020,000 Pauline, KS Shawnee County 1074 and 1075 Patt Street $ 4,790,000 Anaheim, CA Orange County 108 Elm $ 4,110,000 Tiffin, OH Seneca County 6588 Marbut Rd. $ 3,000,000 Lithonia, GA DeKalb County /TABLE SCHEDULE 1.1C LEASED TRIANGLE FACILITIES State Name and Address ----- ---------------- AL Triangle Wire & Cable 3112 Northington Court Florence, AL 35631 MO Triangle Wire & Cable 1620 East Malone Avenue Sikeston, MO 63801-0859 RI Triangle Wire & Cable (Dean Whse) One IGA Way Cumberland, RI 02864 AZ Triangle Wire & Cable (Economy Whse) 4002 West Turney Avenue Phoenix, AZ 85505 NJ Thea Enterprises, LLC 232 Entin Road Clifton, NJ 07014 NC The T.F. Farmer Company U.S. Highway 90 North Greensboro, NC 27405 FL Florida Electrical Sales 1101 North Ward Street Tampa, FL 33607 FL Michael Frisch Associates 9650 Solar Drive Tampa, FL 33619-4417 GA Berry-Eisberry Company 745 Trabert Avenue NW Atlanta, GA 30325 OH Allen Fields & Associates Building A, 2950 Robertson Avenue Cincinnati, OH 45209 IL Hanke Company 1001 Fargo Avenue Elk Grove Village, IL 60009-1166 MI Electrical Materials, Inc. 44262 Phoenix Drive Sterling Heights, MI 48314 TX Bell & McCoy 2633 Andjon Street Dallas, TX 75220 4 TX Bell & McCoy 3311 Canal Street Houston, TX 77003 UT Aurich Associates 2210 West Alexander Street Salt Lake City, UT 84119 CA Headline Sales, Inc. 7271 South Paramount Boulevard Pico Riviera, CA 90660 CA H&J Electrical Sales 30047 Ahern Street Union City, CA 94587 OR Cascade Western Representatives 2729 Southeast Sixth Avenue Portland, OR 97242 Quebec Fli-Royal Wire & Cable 368 Rue Isabey Saint Laurent, Quebec H4T 1W1 Ontario Intralec Electrical Products, Ltd. Unit 1, 1200 Cardiff Mississauga, Ontario L5S 1P6 British Columbia Ron Marshall Agencies 101-590 Ebury Place Delta, British Columbia V4M 6B7 Manitoba Electro-Tech Sales, Ltd. Unit 10, 2166 Notre Dame Avenue Winnepeg, Manitoba R3H 0K2 SCHEDULE 4.1(b) LIABILITIES, ETC. None Schedule 4.5 LEGAL BAR None Schedule 4.8 OWNED AND LEASED PROPERTIES ESSEX GROUP INC. REAL ESTATE INVENTORY [CAPTION]
Location EGI Owned -------- --------- 1601 Wall Street Yes Fort Wayne, IN Allen County U.S. Highway 30 W. Yes Columbia City, IN Whitley County West Pearl Street Yes Jonesboro, IN Grant County Decker Road Yes Vincennes, IN Knox County Youngs Lane Yes Newmarket, NH Rockingham County Main St./Bay Rd. Yes Newmarket, NH Rockingham County 3200 Earlywood Drive Yes Franklin, IN Johnson County Southeast Parkway Dr. No. Long-term lease Franklin, TN from Sycar Assoc. at Williamson County $1,077,000/yr. (ave.) Exp. 12/31/08 800 W. Mitchell St. Yes Kendallville, IN Noble County 2816 N. Main St. Yes Rockford, IL Winnebago County 2 Location EGI Owned -------- --------- Windcrest Rd. No. US Samica Rutland, VT Corporation Rutland County 5405 Valley Belt No. Leased from Suite D Valley Belt Industrial Independence, OH Mall for $4,256/mo. (Cleveland) 44131 Exp. 10/31/97 Cuyahoga County 1904 Engineers Rd. No. Leased from Belle Chase, LA 70037 Louis D. Hausser Plaquemines Parish Investments at $2,500/mo. Exp. 7/31/99 1409 Murray No. Leased from N. Kansas City, MO 64116 Northtown Devco at Clay County $1,175/mo. Exp. 4/30/00 39065 Webb Drive No. Leased from Aldo Westland, MI 48185 Launi for $4,400/mo. (ave.) Exp. 7/31/99 6808-C Cedar Ave. No. Leased from Lubbock, TX 79404 Albert Skibell for Lubbock County $1,000/mo. Exp. 4/30/98 4232 Charter Ave. No. Leased from #100 California Public Emp. Oklahoma City, OK 73108 Ret. System. Oklahoma County $1,551.75/mo. Exp. 6/30/01 3 Commerce Way No. Leased from Tewksbury, MA 01876 Tewksbury Assoc. at Middlesex County $3,937.50/mo. Exp. 6/30/98 Old Mike--Filthy Lucre Lode No. US Samica Black Hills Corporation Custer County, SD 24-Spur Drive No. Leased from El Paso, TX Lincoln National Life El Paso County at $16,104.27/mo. Exp. 7/31/01 3 Location EGI Owned -------- --------- 2601 S. Adams St. No. Leased from Marion, IN Cablec Corp. at Grant County $26,500/mo. on 90-day term notice. 214 E. 24th St. Yes. Via Process Marion, IN Materials, Inc. Grant County Dissolution 4/10/63 Rt. 294 and Bear Creek Rd. Yes Pama, IL Christian County E. Union & US 52 Yes Lafayette, IN Tippecanoe County 190 E. Polk St. Yes Orleans, IL Morgan County Attela Industrial Park No. Tract One: Kosciusko, MS 39090 Leased from Attala County at $3K/yr, year to year, w/nominal purchase option. Tract Two: Interstate Industries, Inc., formerly TAM, Inc. 803 York Road Yes Chester, SC Chester County Rt. 4 East Yes Hoisington, KS Barton County University & East St. Yes Pauline, KS Shawnee County 1075 Patt Street Yes Anaheim, CA Orange County 108 Elm Yes Tiffin, OH Seneca County 6588 Marbut Rd. Yes Lithonia, GA De Kalb County 4 Location EGI Owned -------- --------- 950 W. 40th St. Yes Chicago, IL Cook County 3959 S. Morgan Chicago, IL Cook County 6 Lee Blvd. Yes Frazer, PA 1230 Crestside Drive Yes Coppell, TX Dallas County 4600 Holly St. Yes Denver, CO Colorado County 23477 Cabot Blvd. No. Leased from Hayward, CA 94545 Lincoln Hayward VIII, Ltd. Partnership at $12,623/mo. Exp. 9/30/99 1704 Westbelt Dr. No. Leased from Columbus, OH National Life Ins. Co. Franklin County at $9,955/mo. Exp. 5/31/98 2172 Wharf St. Yes Memphis, TN Shelby County 2444 Enterprise Drive No. Leased from the Mendata Heights, MN 55120 2444 Transpar Drive Partnership at $9,558/mo. Exp. 7/31/98 1900 NE 181st St. Yes Portland, OR Multnomah County 6715 53rd St. Yes Tampa, FL Hillsborough County 2625 S. Wilson No. Estate of Jason Suite 102 Campbell at $5,288/mo. Tempe, AZ 85282 Exp. 7/31/97 Maricopa County 5 Location EGI Owned -------- --------- 620 N. Cook Yes. Presently for P.O. Box 500, Gibson Hwy. sale. 1/2 leased to Bennettsville, SC 29512 UTC to 2/28/96; 1/2 surplus 4667 Somerton Road No. Subleased from Bensalem Twp., PA (Trevose) Metro Ind'l Park. Bucks County Exp. 5/31/99 3028 - 7th Ave. So. No. Leased from Birmington, AL Jeffco Finance & Jefferson County Discount Co. @ $2,400/mo. Exp. 2/28/99 140 Southpointe Drive N. Subleased from Bridgeville, PA (Pittsburgh) Southpointe 79 Assoc. Allegheny County @ $2,912/mo. Exp. 9/29/97 3201 Woodpark Blvd. No. Subleased from Charlotte, NC 28207 The Lincoln Nat'l Life Mecklenburg County Ins Co. @ $10,150/mo. Exp. 1/31/2001 501 Busse Road No. Leased from Elk Grove Village, IL LaSalle National Cook County Trust, N.A. 5690 Southfield Court No. Leased from AMB Forest Park, GA Ind'l Income Fund LP. Clayton County Exp. 2/28/99 5601 Anglum Court No. Anglum Road Joint Hazelwood, MO 63042 Venture St. Louis County 376 Garden Oaks Blvd. No. Subleased from Houston, TX Houston Pine Forest, Harris County Ltd. @ $3,176/mo. Exp. 9/29/97 7001 S. 33rd St. No. Leased from McAllen, TX Wilson Partnership @ Hidalgo County $9,500/mo. Exp. 6850 NW 74th St. No. Subleased from Miami, FL Marcia M. Simon @ Cade County $5,430.76/mo. Exp. 9/29/98 6 Location EGI Owned -------- --------- 7 Rimini Mews Unit C No. Leased from A. Mississauga, Ontario Mantella & Sons Ltd. Canada L5N 4K1 Exp. 3/31/2001 Not Available 933 Lakeside Drive No. Subleased from Mobile, AL Carwie Properties @ Mobile County $2,300/mo. Exp. 6/29/00 555 Brick Church Park Dr. No. Subleased from Nashville, TN Brick Church Bus. Park Davidson County @ $9,633.33/mo. Exp. 1/30/98 4855 Brookside Court No. Subleased from Norfolk, VA Brookside Dev. Group @ Norfolk City County $3,007.58/mo. Exp. 6/29/97 3713 Vineland Road No. Subleased from Orlando, FL Vineland Commerce Ctr. Orange County @ $2,018.98/mo. Exp. 9/29/97 525 Wall Street No. Leased from Tiffin, OH Tiffin Wall Street Seneca Properties Ltd. @ $1,350/mo.; mo-to-mo basis TRIANGLE OWNED AND LEASED PROPERTIES ------------------------------------ 3112 Northington Ct. No Florence, AL Lauderdale County 1620 East Malone Ave. No Sikeston, MO Scott County One IGA Way No Cumberland, RI Providence County 4002 W. Turney Ave. No Phoenix, AZ Maricopa County 368 Rue Isabey No St. Laurent, Quebec Not available 7 Location EGI Owned -------- --------- 95 Grand Ave. Yes Pawtucket, RI Providence County 1620 E. Malone Ave. Yes Sikeston, MO Scott County 4251 Helton Dr. Yes Florence, AL Lauderdale County 6050 No. 55th Ave. Yes Glendale, AZ Maricopa County /TABLE Schedule 4.9 PATENTS AND TRADEMARKS Patent Docket [CAPTION]
Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4290929 Aqueous Solutions of 9/22/81 Polyesterimides and Methods of Making the Same US 4253570 Reinforced Spool for Storing and 3/3/81 Transporting Strand Material and a Package Assembly Utilizing the Same US 4190319 Fiber Option Ribbon and Cable Made 2/26/80 Tehrefrom CAN 1116903 Fiber Option Ribbon and Cable Made 1/26/82 Therefrom US 4196032 Splice for Optical Ribbon Having 4/1/80 Elongated Strain Relief Elements in the Ribbon and Method of Splicing the Same CAN 1104395 Splice for Optical Ribbon Having 7/7/81 Elongated Strain Relief Elements in the Ribbon and Method of Splicing the Same US 4253569 Reinforced Spol for Storing and 3/3/81 Transporting Strand Material and a Package Assembly Utilizing the Same US 4286010 Insulated Mica Paper and Tapes 8/25/81 Thereof CAN 1157323 Insulated Mica Paper and Tapes 11/22/83 Thereof US 4358202 Apparatus and Method for Monitoring 11/9/82 and Surface Character US 4389510 Water Soluble Polymide Prepared 6/21/83 from 1,2,3,4 Butane Tetracarboxylic Acid and Method of Preparation 2 Patent Country Number Title Issue Date ------- ------- ----- ---------- CAN 1175598 Water Soluble Polymide Prepared 10/2/84 from 1,2,3,4 Butane Tetracarboxylic Acid and Method of Preparation US 4606870 Preparing Magnet Wire Having 8/19/86 Electron Beam Curable Wire Enamels US 4447472 Magnet Wire Coating Method and 5/8/84 Article US 4374221 High Solids Polyamide-Imide Magnet 2/15/83 Wire Enamel CAN 1193044 High Solids Polyamide-Imide Magnet 9/3/85 Wire Enamel US 4396145 Self-Locking Carton 8/2/83 US 4374892 Moisture Resistant Insulating Mica 2/22/83 Tape Comprising a Monoalkoxy Titanate CAN 1171349 Moisture Resistant Insulating Mica 7/24/84 Tape Comprising a Monoalkoxy Titanate US 4350738 Power Insertable Polyamide-Imide 9/21/82 Coated Magnet Wire CAN 1192797 Power Insertable Polyamide-Imide 9/3/85 Coated Magnet Wire US 4348460 Power Insertable Polyamide-Imide 9/7/82 Coated Magnet Wire CAN 1179216 Power Insertable Polyamide-Imide 12/11/84 Coated Magnet Wire US 4385437 Method of Power Inserting 5/31/83 Polyamide-Imide Coated Magnet Wire US 4389587 Unitary Sleeving Insulation 6/21/83 US 4385436 Method of Power Inserting Nylon 5/31/83 Coated Magnet Wire CAN 1209765 Dielectric Films from Water Soluble 8/19/86 Polyimides US 4471161 Conductor Strand Formed of Solid 9/11/84 Wires and Method for Making the Conductor Strand 3 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4471920 Tapered Flange Wire Spool 9/18/84 US 4493462 Spool with Lifting Handles 1/15/85 US 4563095 Method and Apparatus for Monitoring 1/7/86 the Surface of Elongated Objects US 4576207 Texturized Heat Shrinkable Tubing 3/18/86 Having Radial and Longitudinal Shrinkage Memory US 4661314 Method of Making Texturized Heat 4/28/87 Shrinkable Tubing US 4485978 Method and Apparatus for Winding 12/4/84 Strand upon Spools Having Tapered End Flanges US 4521363 Extrusion of a Plastic Coating 6/4/85 about a Strand US 4476279 High Solids Theic Polyester Enamels 10/9/84 US 4571450 Moisture Impervious Power Cable and 2/18/86 Condui-System US 4704335 Highly Flexible Silicone Rubber 11/3/87 Coated Inorganic Yarn US 4693936 Low Coefficient of Friction Magnet 9/15/87 Wire Enamels US 4705657 Ethylene-Propylene Diene Terpolymer 11/10/87 Texturized Heat Shrinkable Tubing US 4551398 Tetraalkyl Titanate Modified Nylon 11/5/85 Magnet Wire Insulation Coating US 4599387 Tetraalkyl Titanate Modified Nylon 7/8/86 Magnet Wire Insulation Coating US 4707209 Method of Making High Density 11/17/87 Moisture Resistant Mica Sheet US 4601952 Method of Making High Density 7/22/86 Moisture Resistant Mica Sheet US 4601931 High Density, Moisture Resistant 7/22/86 Mica Cylinders US 4575016 Continuous Ribbon Feed Method and 3/11/86 System 4 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4588344 Roll Transfer Robot 5/13/86 US 4555070 Method and Apparatus for Unwinding 11/26/85 and Splicing Successive Rolls US 4586415 Assembly for Effecting Vertical and 5/6/86 Rotational Motion US 4575017 Paster Rab and Method of Use 3/11/86 US 4591084 Method and Apparatus for Feeding 5/27/86 and Accumulating Ribbon Material US 4545323 Felt Applicator 10/8/85 US 4622241 Method and Apparatus for Accurately 11/11/86 Dispensing a Solution US 4604300 Method for Applying High Solids 8/5/86 Enamels to Magnet Wire US 4574604 Process and Apparatus for High 3/11/86 Speed Fabrication of Copper US 4615195 Process and Apparatus for High 10/7/86 Speed Fabrication of Copper US 4568607 Aromatic Titanate Modified Nylon 2/4/86 Magnet Wire Insulation US 4588784 Aromatic Titanate Modified Nylon 5/13/86 Magnet Wire Insulation US 4614670 Method for Insulating a Magnet Wire 9/30/86 with an Aromatic Titanate Modified Nylon US 4550055 Titanium Chelate Modified Nylon 10/29/85 Magnet Wire Insulation Coating US 4563369 Titanium Chelate Modified Nylon 1/7/86 Magnet Wire Insulation Coating US 4637852 Neoalkoxy Titanate in High Density 1/20/87 Mica Laminates US 4603088 Neoalkoxy Titanate in High Density 7/29/86 Mica Laminates US 4582198 Wire Shipping and Dispensing 4/15/86 Package 5 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4704322 Resin Rich Mica Tape 11/3/87 US 4839444 High Solids Enamel 6/13/89 US D291172 Container Insert 8/4/87 US 4988980 Low Cost Verbal Annunciator 1/29/91 US 4599905 Method and Apparatus for 7/15/86 Determining the Elongation Property of Copper Wire US 4602751 Wire Spool with End Flange Having a 7/29/86 Wire Protection Groove US 4624718 Polyester-Polyamide Tape Insulated 11/25/86 Magnet Wire and Method of Making the Same US 4601918 Apparatus and Method for Applying 7/22/86 High Solids Enamels to Wire US 4629145 Control of Traversing Guide in 12/16/86 Strand Winding Apparatus US 4926928 Protective Device for Restraining 5/22/90 Rod Produced in a Continuous Casting and Rolling Process US 4775726 Method for Equilibrating Polyamide 10/4/88 Magnet Wire Coatings and Enamel Compositions US 4808436 A Method for Equilibrating 2/28/89 Polyamide Magnet Wire Coatings and Enamel Compositions US 4913963 Magnet Wire with Equilibrating 4/3/90 Polyamide Insulation Coatings and Enamel Compositions US 4635046 Wire Tangle Sensor 1/6/87 US 4695830 Wire Runtogether Sensor 9/22/87 US 4740756 Continuity Test Method and 4/26/88 Apparatus US 4700171 Ignition Wire 10/13/87 US 4775566 High Temperature Flexible Unitary 10/4/88 Sleeving Insulation 6 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 5032199 Method of Making a High Temperature 7/16/91 Flexible Unitary Sleeving Insulation US 4683162 Mica Product 7/28/87 US 783365 Mica Product 11/8/88 US 4752217 Wire Coating Oven Including Wire 6/21/88 Cooling Apparatus US 4725010 Control Apparatus and Method 2/16/88 US RE33240 Control Apparatus and Method 4/19/88 US 4725458 Urethane Modified Nylon Magnet Wire 2/16/88 Enamel US 4808477 Urethane Modified Nylon Magnet Wire 2/28/89 Enamel US 4689601 Multi-Layer Ignition Wire 8/25/87 US 4704596 Extrusion Coated Ignition Wire 11/03/87 US 4876316 High Temparature Magnet Wire Bond 10/24/89 Coat Polyamide/Aldehyde/ Aromatic Alocohol Reaction Product US 4891243 Die Bar Carrier 1/2/90 US 4826544 Hydrogen Cleaning of Hot Copper Rod 5/2/89 US 4836872 Method of Manufacturing a Fiber 6/6/89 Reinforced Heat Shrinkable Tubing Article US 4915139 Heat Shrinkable Tubing Article 4/10/90 US 4869199 Manifold for Distributing Wire 9/26/89 Coating Enamel US 4839205 Heated Supply Sheaves for Wire 6/13/89 Coating Apparatus US 4844283 Closure Mechanism for Wire Coating 7/4/89 Oven US 4839818 Magnet Wire Over Control Apparatus 6/13/89 US 4821880 Palletized Structure Containing 4/18/89 Spools 7 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 5045136 Heat Shrinkable Article 9/3/91 US 4851060 Multilayer Wrapped Insulated Magnet 7/25/89 Wire US 5106686 Multilayer Wrapped Insulated Magnet 4/21/92 Wire US 4966932 Ultra-High Solids Theic Polyester 10/30/90 Enamels US 4830689 Bonded Metallic Cable Sheathing 5/16/89 with Edge Forming US 5048572 Vibration Damping Heat Shrinkable 9/17/92 Tubing US 4705957 Wire Surface Monitor 11/10/87 US 4611747 Method for Producing Continuous 9/16/86 Length High Solids Enamel Coated Magnet Wire US 5023558 Ignition Wire Core Conductive 6/11/91 Irregularity Detector US 4938428 Wire Winding System with Mobile 7/3/90 Transfer Cart US 4964363 System of Assembly and Filling 10/23/90 Large Cables in a Single Pass at a Single Station US 4923133 Dancer Assembly 5/8/90 US 5304740 Fusible Link Wire 4/19/94 /TABLE 8 Duration US--17 Years (Subject to Maintenance Fees) CAN--17 Years 9 TRADEMARKS AND TRADE NAMES [CAPTION]
Trademark and/or Country Trade Name Registration Expiration ------- ---------------- ------------ ---------- US ACRYFLEX 1,092,803 06/06/98 US ACRYLEX 656,059 12/24/97 US ALLEX 717,483 06/27/01 US ALPIC 861,614 12/10/08 US ASTRA 1,083,505 01/24/98 US ASTRAMELT 1,266,308 02/07/04 US ASTRATITE 1,057,610 02/01/97 US BIPIC 1,218,947 12/07/02 US BONDEX 687,491 11/03/99 US BROWNELL ELECTRO 1,781,418 07/13/03 INC. & Design US CASPIC 1,189,207 02/09/02 US CL & Design 1,197,158 06/08/02 US CUPIC 861,615 12/10/08 Canada DIAMOND 192,723 07/13/03 US DIAMOND 676,255 03/31/99 US DIAMOND FIGURE Des 613,831 10/11/95 Argentina ESSEX 1,176,315 10/07/05 Brazil ESSEX 692,303 04/25/99 Canada ESSEX 193,620 08/31/03 China ESSEX 504,592 11/20/99 France ESSEX 1,331,108 11/15/95 Italy ESSEX 448,366 10/24/05 Italy ESSEX 356,324 03/23/98 Spain ESSEX 1,127,541 04/03/09 US ESSEX 961,503 06/19/03 US ESSEX 959,657 05/29/03 US ESSEX 954,253 03/06/03 US ESSEX 954,283 03/06/03 US ESSEX 1,411,176 09/30/06 US ESSEX 1,644,159 05/14/01 Mexico ESSEX 496,193 03/22/05 US ESSEX 618,128 12/27/95 US ESSEX 965,834 08/14/03 US ESSEX 536,430 01/16/01 US ESSEX 966,421 08/21/03 US ESSEX GROUP 1,313,285 01/08/05 US ESSEX GROUP 1,178,844 11/24/01 India ESSEX Application Mexico ESSEX 496,194 03/22/05 US ESSEX QTY MASTERS 1,205,233 08/17/02 China ESSEX (Chinese) 504,591 11/20/99 US ExCel & xl Des 780,919 12/01/04 US ExCelene 1,032,113 02/03/96 Renewal filed US FEMCO 1,584,450 02/27/00 US FLEXICONE 1,330,873 04/16/05 US GOPIC 969,536 10/02/03 10 Trademark and/or Country Trade Name Registration Expiration ------- ---------------- ------------ ---------- US HANDIWIRE 1,342,096 06/18/05 US IF IT'S P IT'S RIGHT 71,533,826 11/21/00 US IF IT'S P IT'S RIGHT 1,652,273 07/30/01 US ISOMICA 575,202 06/02/03 US IWI 635,106 10/02/96 Renewal filed US IWI Inv W/O Invest 658,007 02/04/98 US LELAND FARADAY 1,827,220 03/22/04 US LF Logo 1,830,155 04/12/04 US MACALLEN & Design 833,230 08/08/07 US MAGNAPAK 628,592 06/12/06 US MAGWIRE 861,613 12/10/08 US MICANITE and Drawing 22,623 03/07/03 US MR-200 1,234,416 04/12/03 US NYTHERM 702,858 08/16/00 US N-900 683,175 08/11/99 US PARAFLEX 586,117 02/23/04 US PARANITE 1,548,127 07/18/09 US PARANITE & Design 537,580 12/13/01 US PARANITE & Design 535,200 12/26/00 US PARASYN 529,926 08/29/00 US PAR-U-FLEX 674,901 03/03/99 US POLYBONDEX 1,172,079 10/06/01 US POLYFOAM 650,440 08/20/97 US REEL PAK 1,144,845 12/30/00 US RELI-A-BAND 1,286,015 07/17/04 US SAMICA 558,013 04/22/02 US SAMICAPOR 1,095,179 07/04/98 US SAMICATHERM 995,614 03/20/03 US SEALPIC 993,738 09/24/04 US SILVERFLEX 1,111,787 01/23/99 US SODERBOND 672,165 01/06/99 US SODEREX 672,138 01/06/99 US SODERON 672,164 01/06/99 US SOLIDEX 1,036,145 03/23/96 US SOLIDON 1,038,144 04/20/96 US SUFLEX 960,771 06/12/03 US SUFLEX Logo 1,308,019 12/04/04 Canada SX N.S. 2026 08/30/08 US SX 612,102 09/13/95 US SX 1,523,072 02/07/09 US SX & Design 1,525,063 02/21/09 US SX (Molder's Mark) 1,065,662 05/17/97 US TF 1,286,937 07/24/04 US THERMALEX 672,137 01/06/99 US THERMALEX 200 1,185,606 01/12/02 US TERHMALEX F 672,750 01/20/99 US THERMETEX GP200 844,472 02/20/08 US UTREX 1,326,775 03/26/05 US VINYLGLAS 965,445 08/07/03 Mexico SX 496,192 03/22/05 Mexico SX 496,195 03/22/05 India SX Application 11 Trademark and/or Country Trade Name Registration Expiration ------- ---------------- ------------ ---------- US ULTRASHIELD Application US VANGUARD 1,827,219 03/22/04 /TABLE 12 TECHNOLOGY LICENSING AGREEMENTS [CAPTION]
Parties Description ------- ----------- ESSEX GROUP, INC. Patent license for technology relating to American Telephone and coaxial cables and land lines Telegraph Co. ESSEX GROUP, INC. Cross license for intellectual property Aismalibar S.A. rights. ESSEX GROUP, INC. Agreement concerning intellectual property Cablec Corporation concerning transmission, distribution, power and control cable. ESSEX GROUP, INC. Agreement concerning intellectual property Chrysler Corporation relating to products used in the manufacture of or in motor vehicles. ESSEX GROUP, INC. Agreement for technology relating to magnet Femco Magnet Wire wire. Corporation ESSEX GROUP, INC. Agreement concerning intellectual property Ford Motor Company relating to products used in the manufacture of or in motor vehicles. ESSEX GROUP, INC. Patent license for technology relating to Groggins Plastic, Inc. spools and lifting handles. ESSEX GROUP, INC. Cross license for intellectual property Insulation Systems and rights. Machines, Ltd. ESSEX GROUP, INC. Cross license for intellectual property Isola Essex A.G. rights. ESSEX GROUP, INC. Agreement for technology concerning Windings, Inc. fabricating of packages and/or Reelex Machines. ESSEX GROUP, INC. Cross licenses for patents relating to Southwire Company shaft furnaces for melting copper and to apparatus for converting copper into copper bar and rod. /TABLE 13 PENDING APPLICATIONS [CAPTION]
Country Serial No. Filing Date ------- ---------- ----------- US 08/317506 10/03/94 US 08/261546 06/17/94 US 08/557513 11/14/95 /TABLE 14 Intellectual Property Triangle Wire & Cable, Inc. (a) 1. Master Lease Agreement No. 137815 dated as of February 16, 1995 between Computer Sales International, Inc. and Triangle Wire & Cable, Inc. 2. Master Lease Agreement No. 050394A between EMC Corporation and Triangle Wire & Cable, Inc., dated June 3, 1994. Assignment of Master Lease Agreement between EMC Corporation and Triangle Wire & Cable, Inc. and Supplement No. 3 thereto from EMC Corporation to MetLife Capital, dated April 25, 1996. 3. Software License Agreement between EMC Corporation and Triangle Wire & Cable, Inc., dated March 28, 1996. 4. Master Agreement dated September 7, 1995 between ADVANCED BusinessLink Corporation and Triangle Wire & Cable, Inc. 5. Master Communication Services Agreement No. 1 between Cylix Communications Corporation and Triangle Wire and Cable, Inc., dated June 7, 1994. 6. Software License Agreement between The Summit Group, Inc. and Triangle Wire & Cable, Inc. dated December 29, 1995. 7. Master License Agreement between Advance BusinessLink and Triangle Wire & Cable, Inc., and SubAgreement Customer Care Program dated September 5, 1995. 8. Software License Agreement between Allen Systems Group, Inc. and Triangle Wire & Cable, Inc., dated June 12, 1995 9. Term Software License Agreement between Sterling Software and Triangle Wire & Cable, Inc., dated April 29, 1994. 10. Software License Agreement between QCC and Triangle Wire & Cable, Inc., and Addendum to QCC Software License Agreement between QCC, Inc. and Triangle Wire & Cable, Inc., dated October 31, 1995. 11. Term Lease Master Agreement between IBM Credit Corporation and Triangle Wire & Cable, Inc. with Term Lease Supplement thereto, dated December 21, 1995. 12. License Agreement No. L950404 between RICOMM Systems, Inc. and Triangle Wire & Cable, Inc., dated May 5, 1995. 13. Nonexclusive License between Triangle Wire & Cable, Inc. and Lawson Associates, Inc. regarding General Accounting Software III (General Ledger/Report Writer/Accounts Payable/Payroll/Personnel/Fixed Assets). 14. Program Products License Agreement between Herbert Friedman & Associates, Inc. and Triangle PWC, dated December 19, 1990. 15 15. Invoice No. 28728 dated May 22, 1996 from hawkeye Information Systems, Inc. to Triangle Wire & Cable, Inc. for the purchase of Pathfinder Services Pathfinder Programmer Documentation Utility. 16. Maintenance Information sheet from Prodata Computer Services, Inc. regarding maintenance for DBU 4.1 (Database Utility). 17. Software License Agreement between Triangle Wire & Cable, Inc. and ShowCase Corporation regarding purchase of ShowCase Vista Pro Software with 10 concurrent users. 18. Agreement dated October 6, 1993 between Triangle Wire & Cable, Inc. and, by assignment from the Dow Chemical Company effective April 1, 1996, DuPont Dow Elastomers, L.L.C. regarding end use applications of Samples. 19. Agreement dated March 17, 1994 between Triangle Wire & Cable, Inc. and Cobra Wire & Cable, Inc. to develop new product. 20. Agreement dated June 17, 1996 between Triangle Wire & Cable, Inc. and DuPont Dow Elastomers regarding evaluation of polymers. 21. MBA License Agreement relating to Job Scheduler software. 16 Intellectual Property (a) Patents [CAPTION]
Patent No. Issue Date Title -------- ---------- ----------- 4,606,311 08/19/86 Fuel Injection Cleaning System and Apparatus 4,542,335 09/17/85 Electronic Control Circuit systems Analyzer 4,520,773 06/04/84 Fuel Injection Cleaning and Testing System and Apparatus 4,265,283 05/05/81 Work Bench Structure 4,029,234 06/14/77 Plastic Hinge Construction 3,793,160 02/19/74 Method for Forming Case Hardened Metals by Electrolysis 3,637,030 01/25/72 Case-Hardened Metals 4,319,800 03/16/82 Barrier for Molded Female Power cord Connector Bodies 3,668,602 06/06/72 Portable Safety Lamp Structure 3,832,666 08/27/74 Electric Fuse 3,940,228 02/24/76 Telephone Cord mundrel end retainer 3,945,708 03/23/76 Electrical connector with premold 3,998,517 12/21/76 Multiple outlet electrical connector 4,386,813 06/07/83 Current tap ground contact 4,861,288 08/29/89 Electrical cordset 3,346,887 10/17/67 Sanitary Drain System Method and fittings therefor 3,293,337 12/20/66 Apparatus and Method for Filling a Void with a Resinous Foan 3,287,885 11/29/66 Air Separator for Drain Pipes 3,211,818 10/12/65 Extruder and Method 3,166,441 1/19/65 Machine for Color Coding Strands 3,166,440 1/19/65 Apparatus for Coating Elongated Bodies 3,105,653 10/1/63 Coil Former 3,634,145 1/11/72 Case-Hardened Metals 4,861,288 8/29/89 Electrical Cordset 830,106 1969 Current Tap with Ground (Canada) 802,440 1968 Appliance Connector (Canada) 17 Patent No. Issue Date Title -------- ---------- ----------- 938,689 1973 Portable Safety Lamp (Canada) Structure Grantee Licensed Item The Dow Patent No. 4,861,288 Chemical (Electrical cordset) Company /TABLE 18 Intellectual Property Trademark Registration Date: 05/29/96 Status Report Page: 1 Time: 14:03:23 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ Canada POWERFLEX 779427 454023 04/04/95 02/09/96 Status: Registered Renewal Due: 02/09/11 Goods: ELECTRICAL WIRE AND CABLE ----------------------------------------------------------------------- Canada POWERFLEX 90 782161 05/08/95 Status: Pending Action Due: RESPONSE Due Date: 02/06/96 Goods: ELECTRICAL WIRE AND CABLE. Remarks: RESPONSE TO OFFICE ACTION FILED 6FEB96. AWAITING NOTICE OF ALLOWANCE. ----------------------------------------------------------------------- Canada ROYAL 782160 05/08/95 Status: Pending Action Due: RESPONSE Due Date: 07/27/96 Goods: ELECTRICAL WIRE AND CABLE. Remarks: EXAMINED (ASSOCIATES' 18OCT95 LETTER); AWAIT EXPUNCTION OF CITED MARK; RESPONSE DUE 27JUL96. FILE SENT TO CEJ 14MAY96. ----------------------------------------------------------------------- United States A-Z 034707 12/20/95 Status: Pending Intent to Use: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. Remarks: AWAITING EXAMINATION. ----------------------------------------------------------------------- 19 Date: 05/29/96 Status Report Page: 2 Time: 14:03:24 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States AMERICAN COPPER 204317 1780915 PRODUCTS CORP. 09/17/91 07/06/93 Status: Registered Renewal Due: 07/06/03 Affidavit Due: 07/06/99 Filed: no Classes: 9 Goods: ELECTRIC CABLE ----------------------------------------------------------------------- United States AMERICAN METAL 204472 1727222 MOULDING ...* 09/17/91 10/27/92 Status: Registered Renewal Due: 10/27/02 Affidavit Due: 10/27/98 Filed: no Classes: 9 Goods: ELECTRICAL CABLE. * COMPLETE MARK: AMERICAN METAL MOULDING COMPANY ----------------------------------------------------------------------- United States ARMA GARD 140067 1119935 09/06/77 06/12/79 Status: Registered Renewal Date: 06/12/99 Affidavit Due: 06/12/85 Filed: Yes Classes: 9 Goods: INSULATED ELECTRICAL CABLE AND WIRE. ----------------------------------------------------------------------- United States COBRA 375989 920113 11/13/70 09/14/71 Status: Renewed Renewal Due: 9/14/01 Affidavit Due: 09/14/77 Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- 20 Date: 05/29/96 Status Report Page: 3 Time: 14:03:25 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States CONTRACTOR POWER 075464 1736311 07/05/90 01/12/93 Status: Registered Renewal Due: 01/12/03 Affidavit Due: 01/12/99 Filed: no Classes: 9 Goods: ELECTRIC POWER CORDS. ----------------------------------------------------------------------- United States CROWN DESIGN 679492 1965739 05/23/95 04/02/96 Status: Registered Renewal Due: 04/02/06 Affidavit Due: 04/02/02 Filed: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- United States DOUBLE CROWN 679491 1965738 DESIGN 05/23/95 04/02/96 Status: Registered Renewal Date: 04/02/06 Affidavit Due: 04/02/02 Filed: No Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- United States E-Z DO 769145 1594939 12/09/88 05/08/90 Status: Registered Renewal Due: 05/08/00 Affidavit Due: 05/08/96 Filed: yes Classes: 9 Goods: ELECTRIC CABLE. Remarks: AFFIDAVIT OF USE FILED 4MAR96; AWAITING NOTICE OF ACCEPTANCE. ----------------------------------------------------------------------- 21 Date: 05/29/96 Status Report Page: 4 Time: 14:03:27 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States E-Z-C 452739 1305793 11/14/83 11/20/84 Status: Registered Renewal Due: 11/20/04 Affidavit Due: 11/20/90 Filed: yes Classes: 9 Goods: ELECTRIC CABLE. ----------------------------------------------------------------------- United States EVERENE 276716 865248 07/24/67 02/25/69 Status: Renewed Renewal Due: 02/25/99 Affidavit Due: 02/25/75 Filed: yes Classes: 9 Goods: INSULATED ELECTRICAL CONDUCTORS. ----------------------------------------------------------------------- United States EZC EXTRA 613877 1480522 08/08/86 03/15/88 Status: Registered Renewal Date: 03/15/08 Affidavit Due: 03/15/94 Filed: yes Classes: 9 Goods: ELECTRICAL POWER CORD. ----------------------------------------------------------------------- United States N-A 227956 814368 09/16/65 09/06/66 Status: Renewed Renewal Due: 09/06/06 Affidavit Due: 09/06/72 Filed: yes Classes: 9 Goods: ELECTRICAL CONDUCTORS AND CABLES. ----------------------------------------------------------------------- 22 Date: 05/29/96 Status Report Page: 5 Time: 14:03:28 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States NATC 634599 1450518 12/10/86 08/04/87 Status: Registered Renewal Due: 08/04/07 Affidavit Due: 08/04/93 Filed: yes Classes: 9 Goods: ELECTRICAL CONDUCTORS AND CABLES. Remarks: SECTION 8 and 15 DECLARATION FILED BY DARBY & DARBY. ----------------------------------------------------------------------- United States POWERFLEX 105 613843 1478355 PLUS 08/08/86 03/01/88 Status: Registered Renewal Due: 03/01/08 Affidavit Due: 03/01/94 Filed: yes Classes: 9 Goods: ELECTRICAL POWER CORD. ----------------------------------------------------------------------- United States POWERFLEX 90 679169 1965737 05/23/95 04/02/96 Status: Registered Renewal Date: 04/02/06 Affidavit Due: 04/02/02 Filed: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- United States PRIDE THROUGH 411509 1860321 QUALITY 07/09/93 10/25/94 Status: Registered Renewal Due: 10/25/04 Affidavit Due: 10/25/00 Filed: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- 23 Date: 05/29/96 Status Report Page: 6 Time: 14:03:29 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States PWC & DESIGN 444526 1850611 10/06/93 08/23/94 Status: Registered Renewal Due: 08/23/04 Affidavit Due: 08/23/00 Filed: no Classes: 9 Goods: ELECTRICAL WIRE, CABLE AND CORD SETS. ----------------------------------------------------------------------- United States QUAD-RATED 325817 908468 04/29/69 02/23/71 Status: Renewed Renewal Due: 02/23/01 Affidavit Due: 02/23/77 Filed: yes Classes: 9 Goods: ELECTRICAL WIRE. ----------------------------------------------------------------------- United States QUADRUPLE CROWN 679166 1965734 DESIGN 05/23/95 04/02/96 Status: Registered Renewal Date: 04/02/06 Affidavit Due: 04/02/02 Filed: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- United States QUINTUPLE CROWN 679168 1965736 DESIGN 05/23/95 04/02/96 Status: Registered Renewal Due: 04/02/06 Affidavit Due: 04/02/02 Filed: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- 24 Date: 05/29/96 Status Report Page: 7 Time: 14:03:30 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States ROYAL 235674 837470 01/03/66 10/24/67 Status: Renewed Renewal Due: 10/24/07 Affidavit Due: 10/24/73 Filed: yes Classes: 9 Goods: ELECTRICAL WIRE AND CABLE, FUSES AND WIRING DEVICES. ----------------------------------------------------------------------- United States ROYAL AND DESIGN 392267 1931948 05/18/93 10/31/95 Status: Registered Renewal Due: 10/31/05 Affidavit Due: 10/31/01 Filed: no Classes: 9 Goods: COPPER WIRE AND CABLE PRODUCTS, NAMELY, PORTABLE CORDS, POWER AND CONTROL CABLES, BUILDING WIRE-APPLIANCE WIRE, CORD SETS, RETRACTILE CORDS AND INDUSTRIAL CABLES. ----------------------------------------------------------------------- United States ROYAL ELECTRIC 392734 1824265 AND DESIGN 05/18/93 03/01/94 Status: Registered Renewal Date: 03/01/04 Affidavit Due: 03/01/00 Filed: no Classes: 9 Goods: COPPER WIRE AND CABLE PRODUCTS; NAMELY, PORTABLE CORDS, POWER AND CONTROL CABLES, BUILDING WIRE-APPLIANCE WIRE, CORD SETS, RETRACTILE CORDS AND INDUSTRIAL CABLES. ----------------------------------------------------------------------- United States ROYALOK 623681 605038 01/16/52 04/26/55 Status: Renewed Renewal Due: 04/26/05 Affidavit Due: 04/26/61 Filed: yes Classes: 9 Goods: ELECTRICAL RECEPTACLES, CAPS, CONNECTORS, PLUGS AND SOCKETS. ----------------------------------------------------------------------- 25 Date: 05/29/96 Status Report Page: 8 Time: 14:03:32 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States SDN 066491 1038746 10/20/75 05/04/76 Status: Registered Renewal Due: 05/04/96 Affidavit Due: 05/04/82 Filed: yes Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. Remarks: APPLICATION TO RENEW FILED 4MAR96; AWAITING CERTIFICATE OF RENEWAL. ----------------------------------------------------------------------- United States SDT 252373 1195561 03/03/80 05/18/82 Status: Registered Renewal Due: 05/18/02 Affidavit Due: 05/18/88 Filed: yes Classes: 9 Goods: ELECTRICAL CABLE. ----------------------------------------------------------------------- United States TEMPRACORD 310338 1191603 05/14/81 03/09/82 Status: Registered Renewal Date: 03/09/02 Affidavit Due: 03/09/88 Filed: yes Classes: 9 Goods: FLEXIBLE ELECTRICAL CORDS AND WIRES. ----------------------------------------------------------------------- United States THERMACURE 130052 1089623 06/13/77 04/18/78 Status: Registered Renewal Due: 04/18/98 Affidavit Due: 04/18/84 Filed: yes Classes: 9 Goods: PLASTIC COATED ELECTRICAL CONDUIT AND WIRE, FLAME AND HEAT RESISTANT CABLES. ----------------------------------------------------------------------- 26 Date: 05/29/96 Status Report Page: 9 Time: 14:03:33 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States THERMO-TRIEX 104962 717481 09/21/60 06/27/61 Status: Renewed Renewal Due: 06/27/01 Affidavit Due: 06/27/67 Filed: yes Classes: 9 Goods: NON-METALLIC SHEATHED ELECTRIC CABLE. ----------------------------------------------------------------------- United States TRIANGLE AND 680570 1484145 DESIGN 08/25/87 04/12/88 Status: Registered Renewal Due: 04/12/08 Affidavit Due: 04/12/94 Filed: yes Classes: 9 Goods: ELECTRIC WIRE, CABLE AND CONDUIT. ----------------------------------------------------------------------- United States TRIANGLE DESIGN 833117 1638209 10/23/89 03/19/91 Status: Registered Renewal Date: 03/19/01 Affidavit Due: 03/19/97 Filed: no Classes: 9 Goods: CL. 9: ELECTRICAL WIRE AND CABLE OF VARIOUS TYPES AND SIZES AND ELECTRICAL CONDUIT. CL.35: BUSINESS SERVICES CONSISTING OF PROVIDING CORPORATE MANAGEMENT SERVICES AND ACCOUNTING SERVICES. CL. 36 FINANCIAL ANALYSIS AND CONSULTING SERVICES, EMPLOYEE BENEFIT CONSULTING SERVICES. GOODS DELETED IN CL. 35 (AS OF 24SEP91): AND CORPORATE ACQUISITIONS AND DIVESTITURES CONSULTING SERVICES. ----------------------------------------------------------------------- United States TRIEX 034704 12/20/95 Status: Pending Intent to Use: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. Remarks: AWAITING EXAMINATION. ----------------------------------------------------------------------- 27 Date: 05/29/96 Status Report Page: 10 Time: 14:03:34 Client: Triangle Wire & Cable, Inc. Country Mark Application Registration Number/Date Number/Date ------------------------------------------------------------------------ United States TRIPLE CROWN 679167 1965735 DESIGN 05/23/95 04/02/96 Status: Registered Renewal Due: 04/02/06 Affidavit Due: 04/02/02 Filed: no Classes: 9 Goods: ELECTRICAL WIRE AND CABLE. ----------------------------------------------------------------------- United States ULTIMA 477148 1865679 01/07/94 12/06/94 Status: Registered Renewal Due: 12/06/04 Affidavit Due: 12/06/00 Filed: no Classes: 9 Goods: PORTABLE ELECTRICAL CORDS. ----------------------------------------------------------------------- United States X-50 166596 775616 04/11/63 08/25/64 Status: Renewed Renewal Due: 08/25/04 Affidavit Due: 08/25/70 Filed: yes Classes: 6 Goods: HEAT INSULATED CONDUIT. ----------------------------------------------------------------------- 28 2. Copyright protection 2.1 ITT Royal Electric: wide world of wire and cable & 2 other titles. Copyright assignment. Party of the first: Royal Electric, Inc. Party of the second: Royal Wire & Cable, Inc. Type of document: assignment of copyright Date of execution: 071891 Date of recordation: 012292 Microfilm: V002722P497 2.2 ITT Royal Electric: wide world of wire and cable & 1 other title. Certificate of amendment to certificate of incorporation of Royal Technologies USA, Inc. Party of the first: Royal Technologies USA, Inc., changed to Royal Electric, Inc. Type of document: assignment of copyright Date of execution: 121488 Dates of certification: 011392; 012092 Date of recordation: 012292 Microfilm: V002722P492 2.3 The Royal Electric product catalog & reference manual. Class: TX (Textual Works) LC retrieval code: B (Monographic works of a non-dramatic literary nature) Status: Registered Registration number: TX3007846 Date of registration: 011891 Date of creation: 1990 Date of publication: 022090 Author: Royal Electric, Inc. Owner: Royal Electric, Inc. Registration deposit: lv. 29 (b) 1. Patent Collateral Assignment and Security Agreement dated March 24, 1994 between Triangle Wire and Cable Inc. and Congress Financial Corporation. 2. Trademark Collateral Assignment and Security Agreement dated March 25, 1994 between Triangle Wire & Cable, Inc. and Congress Financial Corporation. 3. License Agreement between Triangle Wire & Cable, Inc. and the Dow Chemical Company relating to Patent No. 4,861,288 (electrical cordset). Schedule 4.16 SUBSIDIARIES Direct Subsidiaries of BCP/Essex Holdings Inc. ---------------------------------------------- Essex Group, Inc., a Michigan corporation (the "Company") Direct Subsidiaries of the Company ---------------------------------- Diamond Wire & Cable Co. Essex Group Export Inc. Essex International, Inc. US Samica Corporation SX Mauritius Holding, Inc. (Foreign) Dormant Subsidiaries (each a direct subsidiary of the Company): -------------------------------------------------------------- Essex Group, Inc., a Delaware corporation Essex Group Mexico Inc. Essex Group Mexico, S.A. de C.V. Essex Wire Corporation Non-Wholly Owned Subsidiaries: ---------------------------- Interstate Industries Holdings Inc. (80% directly owned by the Company) Interstate Industries, Inc. (100% directly owned by Interstate Industries Holdings Inc. and 80% indirectly owned by the Company) Schedule 4.20(b) UCC Filing Jurisdictions ---------------------- List of Debtors and Jurisdictions for UCC-1 Financing Statements BCP/Essex Holdings Inc. Indiana, Secretary of State Essex Group, Inc. (Michigan corporation) United States Alabama, Secretary of State Arizona, Secretary of State Arkansas, Secretary of State Arkansas, Clay County Arkansas, Cleburne County Arkansas, Craighead County California, Secretary of State Colorado, Secretary of State Connecticut, Secretary of State Florida, Secretary of State Georgia, Carroll County Georgia, Clayton County Georgia, DeKalb County Georgia, Fulton County Georgia, Gwinett County Illinois, Secretary of State Indiana, Secretary of State Indiana, Allen County Indiana, Grant County Indiana, Johnson County Indiana, Knox County Indiana, Noble County Indiana, Orange County Indiana, Tippecanoe County Indiana, Whitley County Kansas, Secretary of State Kentucky, Secretary of State Louisiana, Jefferson Parish Louisiana, Plaquemines Central Registry Massachusetts, Secretary of State Massachusetts, Town of Braintree Massachusetts, Town of Tewksbury Michigan, Secretary of State Minnesota, Secretary of State Missouri, Secretary of State Missouri, Clay County Missouri, City of St. Louis (City Register) Missouri, Dunklin County Missouri, Howell County Missouri, Laclede County Missouri, Scott County New Hampshire, Secretary of State New Hampshire, Rockingham County New Jersey, Secretary of State 2 New York, Secretary of State New York, Chenango County New York, Erie County New York, Madison County New York, Oneida County New York, Onondaga County North Carolina, Secretary of State North Carolina, Guilford County North Carolina, Mecklenberg County Ohio, Secretary of State Ohio, Cuyahoga County Ohio, Franklin County Ohio, Hamilton County Ohio, Seneca County Oklahoma, Oklahoma County Oregon, Secretary of State Pennsylvania, Secretary of State Pennsylvania, Allegheny County Pennsylvania, Bucks County Pennsylvania, Butler County Pennsylvania, Chester County Pennsylvania, Delaware County Pennsylvania, Luzerne County Pennsylvania, Philadelphia County Rhode Island, Secretary of State South Carolina, Secretary of State Tennessee, Secretary of State Texas, Secretary of State Utah, Secretary of State Virginia, Secretary of State Virgina, Independence City - Seat of Henrico County Virginia, Norfolk City County Virginia, Tazewall County Virginia, Washington County Washington, Secretary of State Wisconsin, Secretary of State Essex Group, Inc. (Michigan corporation) Canada British Columbia, Delta Manitoba, Winnipeg Ontario, Mississauga Quebec, Saint Laurent Diamond Wire & Cable Co. Indiana, Secretary of State Indiana, Allen County Essex Group Export Inc. Indiana, Secretary of State Indiana, Allen County Essex International, Inc. 3 United States Indiana, Secretary of State Indiana, Allen County Canada Ontario, Mississauga U.S. Samica Corporation Indiana, Secretary of State Indiana, Allen County South Dakota, Secretary of State South Dakota, Custer County Vermont, Secretary of State Vermont, Rutland County Interstate Industries Holdings Inc. Mississippi, Secretary of State Mississippi, Attala County Interstate Industries, Inc. Mississippi, Secretary of State Mississippi, Attala County 4 List of Debtors and Jurisdictions for UCC-2 Financing Statements Essex Group, Inc. (Michigan corporation) Indiana, Allen County Indiana, Grant County Indiana, Johnson County Indiana, Knox County Indiana, Noble County Indiana, Orange County Indiana, Tippecanoe County Indiana, Whitley County Schedule 4.20(c) List of Mortgage Filing Jurisdictions - Columbia City, Indiana - Fort Wayne, Indiana - Jonesboro, Indiana - Vincennes, Indiana - Franklin, Indiana - Kendallville, Indiana - Marion, Indiana - Lafayette, Indiana - Orleans, Indiana - Pana, Illinois - Rockford, Illinois - Anaheim, California - Lithonia, Georgia - Tiffin, Ohio - Hoisington, Kansas - Pauline, Kansas - Chester, South Carolina SCHEDULE 5.1(g) LOCAL COUNSEL INDIANA ------- ICE MILLER DONODIO & RYAN One American Square Post Office Box 82001 Indianapolis, IN 46282-0002 Telephone: 317-236-2100 Telecopier: 317-236-2219 Attention: Tim Sullivan KANSAS ------ BRYAN CAVE LLP 3500 One Kansas City Place 1200 Main Street Kansas City, Missouri 64105-2100 Telephone: 816-374-3200 Telecopier: 816-374-3300 Attention: Thomas Kreamer SCHEDULE 7.2(c) EXISTING INDEBTEDNESS Triangle Capital Leases: Lease Date Amount EMC June, 1994 $226,000 EMC January, 1995 32,000 IBM January, 1991 3,000 IBM June, 1994 516,000 IBM December, 1995 213,000 Schedule 7.3(f) [CAPTION]
NAME OF DESCRIPTION OF STATE and NAME OF SECURED COLLATERAL JURISDICTION DEBTOR PARTY COVERED ------------ ------- ------- --------------- Indiana, Secretary Essex Group, Storage Specified Electronic of State Inc. Technology Data Processing Corporation Equipment Indiana, SOS Essex Group, Storage Specified Equipment Inc. Technology Corporation Indiana, SOS Essex Group, Farmstead Specified Telephone Inc. Telephone system Group, Inc. d/b/a Farmstead Leasing Indiana, SOS Essex Group, Farmstead Specified Telephone Inc Telephone system Group, Inc. d/b/a Farmstead Leasing Indiana, SOS Essex Group, Fleet Credit Specified Farm Inc. Corporation Machinery Indiana, SOS Essex Group, BF Goodrich Specified Consigned Inc. Company Goods (Geon Resins) Indiana, SOS Essex Group, AT&T Credit Specified Inc. Corporation Telecommunications Equipment Indiana, SOS Essex Group, AT&T Credit Specified System Inc. Corporation Equipment and Wiring Indiana, SOS Essex Group, AT&T Credit Specified System Inc. Corporation Equipment and Wiring Indiana, SOS Essex Group, AT&T Credit Specified Inc. Corporation Telecommunications Equipment Indiana, SOS Essex Group, Indiana Various Assets Inc. Corporate Federal Credit Union Indiana, SOS Essex Group, First Fleet Specified Vehicles Inc. Corporation Indiana, SOS Essex Group, General Stocks of Copper Inc. Electric Company 2 NAME OF DESCRIPTION OF STATE and NAME OF SECURED COLLATERAL JURISDICTION DEBTOR PARTY COVERED ------------ ------- ------- --------------- Indiana, SOS Essex Group, AT&T Credit Specified Inc. Corporation Telecommunications Equipment Indiana, SOS Essex Group, First Fleet Specified Vehicles Inc. Corporation Indiana, SOS Essex Group, AT&T Credit Specified Inc. Corporation Telecommunications Equipment Indiana, SOS Essex Group, Fleet Credit Various Assets Inc. Corporation Indiana, SOS Essex Group, Pitney Bowes Specified Farm Inc. Credit Equipment Corporation Indiana, SOS Essex Group, Pitney Bowes Specified Inc. Credit Telephone/Radio System Corporation Indiana, SOS Essex Group, Meridian Specified Computer Inc. Leasing Equipment Corporation Indiana, SOS Essex Group, Meridian Specified Computer Inc. Leasing Equipment Corporation Indiana, SOS Essex Group, Meridian Specified Computer Inc. Leasing Equipment Corporation Indiana, SOS Essex Group, Pitney Bowes Not Listed Inc. Credit Corporation Indiana, SOS Essex Group, Pitney Bowes Specified Paging Inc. Credit Equipment Corporation Tennessee, Essex Group, Canon Specific Photocopying Secretary of State Inc. Financial Equipment Services, Inc. Texas, SOS Essex Group, Farmstead Specified Telephone Inc. Telephone System Group, Inc. d/b/a Farmstead Leasing 3 NAME OF DESCRIPTION OF STATE and NAME OF SECURED COLLATERAL JURISDICTION DEBTOR PARTY COVERED ------------ ------- ------- --------------- Texas, SOS Essex Group, Farmstead Collateral of above Inc. Telephone assigned to Chancellor Group, Inc. Asset Corporation d/b/a Farmstead Leasing Texas, SOS Essex Group, El Paso Ford Not Listed Inc. New Holland Illinois, SOS Essex Group, IBM Credit Specified Office Inc. Corporation Equipment Illinois, SOS Essex Group, Lexington Specified Office Inc. Capital equipment Corporation Illinois, SOS Essex Group, AT&T Credit Specific Inc. Corporation Telecommunications Equipment California, SOS Essex Group, BF Goodrich Specified Consigned Inc. Company-Geon Goods (Geon Resin) Vinyl Division California, SOS Essex Group, Farmstead Specified Telephone Inc. Telephone System Group, Inc. d/b/a Farmstead Leasing California, SOS Essex Group, Farmstead above collateral Inc. Telephone assigned to Chancellor Group, Inc. Asset Corporation d/b/a Farmstead Leasing Indiana, Allen Essex Group, Meridian Specified Computer County Inc. Leasing Equipment Corporation Indiana, Allen Essex Group, Meridian Specified Computer County Inc. Leasing Equipment Corporation Indiana, Allen Essex Group, Meridian Specified Computer County Inc. Leasing Equipment Corporation Indiana, Allen Essex Group, Fleet Credit Various Assets County Inc. Corporation 4 NAME OF DESCRIPTION OF STATE and NAME OF SECURED COLLATERAL JURISDICTION DEBTOR PARTY COVERED ------------ ------- ------- --------------- Indiana, Allen Essex Group, First Fleet Specified Farm County Inc. Corporation Vehicles Indiana, Allen Essex Group, AT&T Credit Specific County Inc. Corporation Telecommunications Equipment Indiana, Allen Essex Group, AT&T Credit Specific Systems County Inc. Corporation Equipment and Wiring Indiana, Allen Essex Group, AT&T Credit Specific Systems County Inc. Corporation Equipment and Wiring Indiana, Allen Essex Group, AT&T Credit Specified County Inc. Corporation Telecommunications Equipment Indiana, Allen Essex Group, Farmstead Assignment of County Inc. Telephone collateral to Group, Inc. Chancellor Asset d/b/a Corporation Farmstead Leasing Indiana, Allen Essex Group, Farmstead Specified Telephone County Inc. Telephone System Group, Inc. d/b/a Farmstead Leasing Indiana, Allen Essex Group, Farmstead Specified Telephone County Inc. Telephone System Group, Inc. d/b/a Farmstead Leasing Indiana, Allen Essex Group, Farmstead Specified Telephone County Inc. Telephone System Group, Inc. d/b/a Farmstead Leasing Massachusetts, Essex Group, Danvers Various Assets Secretary of the Inc. Savings Bank Commonwealth Massachusetts, Essex Group, Danvers Various Assets Secretary of the Inc. Savings Bank Commonwealth 5 NAME OF DESCRIPTION OF STATE and NAME OF SECURED COLLATERAL JURISDICTION DEBTOR PARTY COVERED ------------ ------- ------- --------------- New Hampshire, Essex Group, AT&T Credit Specified Secretary of State Inc. Corporation Telecommunications Equipment Kansas, Secretary Essex Group, Pitney Bowes Specified Paging of State Inc. Credit System Corporation Indiana, Secretary Essex Wire StarBank, Various Assets of State National Association Rhode Island, SOS Triangle Wire M & G Specified Vehicles 616540 & Cable Materials Handling Co. Rhode Island, SOS Triangle Wire IBM Credit Specified Equipment 624197 & Cable Corporation Rhode Island, SOS Triangle Wire IBM Credit Specified Equipment 646744 & Cable Corporation Rhode Island, SOS Triangle Wire EMC Specified Equipment 625837 & Cable Corporation (assigned to Romax Finance Corporation) Rhode Island, SOS Triangle Wire EMC Specified Equipment 635232 & Cable Corporation (assigned to Romax Finance Corporation) Rhode Island, SOS Triangle Wire EMC Specified Equipment 650415 & Cable Corporation (assigned to Metlife Capital Corporation) Arizona, SOS Triangle Wire Sanwa Leasing Specified Computer 709082 & Cable Corp. Equipment Arizona, SOS Triangle PWC Pitney Bowes Specified Equipment 927946 Incorporated Credit Corp. Missouri, SOS Triangle PWC Pitney Bowes Specified Equipment 2270047 Inc. Credit Corp. /TABLE SCHEDULE 7.7(a) EXISTING LEASES Real Property Leases -------------------- See Schedule 4.8 Personal Property Leases ------------------------
Lessor Date Equipment ------ ---- --------- AT&T Credit Corp Master Lease Telephone System Pitney Bowes Credit Corporation " " Machinery & Telephone Equipment IBM Credit Corp " " Computers and Data Systems Equip Fleet Credit Jan 1989 25 Truck Trailers First Fleet Credit Nov 1991 25 Truck Trailers Fleet Credit Nov 1988 15 Truck Tractors " " Feb 1990 5 Truck Tractors " " July 1993 4 Truck Tractors " " July 1993 6 Truck Tractors Pitney Bowes Aug 1994 12 Truck Tractors First Fleet Nov 1992 30 Truck Trailers Fleet Credit Jan 1994 62 Truck Trailers Meridian Leasing Technology Master Lease Disk Drive Equip First Fleet Oct 1995 20 Truck Tractors Jan 1996 36 Truck Trailers Copelco 1/30/94 Copiers Ikon Capital 5/23/96 " " " 2/28/96 " " " 3/31/96 " " " 9/17/96 " " " 9/17/96 " " " 9/30/93 " Copelco 1/7/93 " " 4/8/93 " Ikon Capital 10/28/92 " " " 4/6/95 " " " 10/27/92 " " " 12/28/92 " " " 12/21/93 " Needham's Business Machines 7/21/92 " Triangle Personal Property Leases: --------------------------------- Pawtucket, RI: ------------- Bonneville monthly Market monitor Pitney Bowes 2/94 Mail machine " " 5/93 6 fax machines 2 " " 2/95 2 copiers " " 12/95 1 copier " " 8/93 1 copier " " monthly 1 UL print head " " monthly 2 UL meters Amp monthly Var. Equip AT&T monthly Phone System GEIS monthly EDI mailbox Computer Sales CRT/Printers 5/95 Laser printers JBM 7/94 AS400 " 7/94 " " 12/95 " " 12/95 " " 7/94 " EMC 3/96 AS400 Sunguard monthly Tape storage Forsythe 2/95 PC equip Caterpillar 8/90 1 towmotor " 9/92 21 towmotors " 9/92 1 floor sweeper PHH 1/93 1 '93 Ford Taurus " 7/95 1 '95 Ford Taurus Florence, AL: ------------ Brask 6/95 Trash Compactor Pitney Bowes 2/94 1 mail machine " " 8/93 1 copier " " monthly 2 UL meters " " 8/93 1 copier " " 1 fax " " 1 fax Simplex Time clocks Yale Carolina 1 battery charger M&M monthly 1 towmotor Yale 8/92 1 towmotor " 12/92 1 towmotor " 10/92 1 towmotor " 12/93 1 towmotor " 8/92 1 towmotor " 10/92 1 towmotor " 10/92 1 towmotor Citicorp 12/93 1 towmotor " 12/93 1 towmotor " 12/93 1 towmotor Caterpillar 9/90 1 towmotor " 12/91 1 towmotor " 12/91 1 towmotor " 9/90 1 towmotor " 9/90 1 towmotor " 8/90 1 towmotor " 8/90 1 towmotor " 9/90 1 towmotor C&I Crane 7/95 Trailer GE Capital 12/95 Port. Bldg. 3 PHH 9/94 1 '95 Ford Taurus " 4/92 1 "92 Ford Pick-up AT&T Phone System Forsythe 2/95 1 PC Phoenix, AZ: ----------- Nauman Hobbs 9/91 1 towmotor " " 11/91 1 towmotor Pitney Bowes 4/93 1 fax machine " " 8/93 1 copier " " 2/94 1 postage meter AT&T monthly Phone system PHH 9/95 1 '96 Ford Taurus Air Liquide 1/96 1 Tank (liq. nitrogen) /TABLE Schedule 7.11 TERMS OF PREFERRED STOCK See attached 1992 Certificate of Designation with attached amendment Schedule 7.11 CERTIFICATE OF DESIGNATION OF SERIES A CUMULATIVE REDEEMABLE EXCHANGEABLE PREFERRED STOCK OF BCP/ESSEX HOLDINGS INC. ------------------------------ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ------------------------------ BCP/Essex Holdings Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES that pursuant to authority conferred upon the Board of Directors of the Corporation by the provisions of the Restated Certificate of Incorporation of the Corporation which authorize the issuance of up to 3,100,000 shares of a class of capital stock designated as preferred stock, $0.01 par value per share (the "Preferred Stock"), the Board of Directors of the Corporation has duly designated a series of the Preferred Stock, consisting of 3,100,000 shares, to be issued in a series entitled "Series A Cumulative Redeemable Exchangeable Preferred Stock" the preferences and privileges, relative, participating, optional and other special rights, and qualifications, limitations and restrictions of all shares of such series, in addition to those set forth in the Certificate of Incorporation of the Corporation, are as follows: SERIES A CUMULATIVE REDEEMABLE EXCHANGEABLE PREFERRED STOCK 1. NUMBER OF SHARES. (a) The designation of the series of Preferred Stock provided for herein shall be "Series A Cumulative Redeemable Exchangeable Preferred Stock" (hereinafter referred to as the "Series A Preferred"), and the number of authorized shares constituting Series A Preferred is 3,100,000. Unless specifically provided to the contrary, the term Series A Preferred shall include Additional Shares (as hereinafter defined). No shares of Series A Preferred shall be issued except pursuant to the Stock Subscription Agreement (as hereinafter defined), and pursuant to Section 2 hereof. (b) All shares of Series A Preferred redeemed, purchased, exchanged or otherwise acquired by the Corporation shall be retired and cancelled and, upon the taking of any action required by applicable law, shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of Series A Preferred (except as Additional Shares). (c) The Series A Preferred shall, with respect to dividend rights, rights upon liquidation, winding up or dissolution, and redemption rights, rank (i) junior to any other class or series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation in accordance herewith, the terms of which shall specifically provide that such series shall rank prior to the Series A Preferred as to the payment of dividends and distribution of assets upon liquidation (the "Senior Preferred Stock"), (ii) on a parity with any other class or series of Preferred Stock hereafter duly established by the Board of Directors of the Corporation in accordance herewith, the terms of which shall specifically provide that such class or series shall rank on a parity with the Series A Preferred as to the payment of dividends and distribution of assets upon liquidation (the "Parity Preferred Stock"), and (iii) prior to any other class or series of Preferred Stock or other class or series of capital stock of or other equity interests in the Corporation, including, without limitation, all classes of the common stock of the Corporation, whether now existing or hereafter created (the "Common Stock"; all of such classes or series of capital stock and other equity interests of the Corporation to which the Series A Preferred ranks prior, including, without limitation, the Common Stock, are collectively referred to herein as the "Junior Securities"). 2. DIVIDENDS. (a) The Holders (as hereinafter defined) shall be entitled to receive, when and as declared by the Board of Directors of the Corporation, dividends on the shares of Series A Preferred, cumulative from the date of issuance of such shares, at a rate per annum of 15% of the liquidation preference thereof (that is, at a rate of $3.75 per share per annum). Dividends on the shares of Series A Preferred shall be payable in equal quarterly amounts of $0.9375 on March 31, June 30, September 30 and December 31 of each year, commencing on December 31, 1992, or if any such date is not a Business Day (as hereinafter defined), on the next succeeding Business Day (each of such dates being a "Series A Dividend Payment Date"), in preference to and in priority over dividends on any Junior Securities. Such dividends shall be paid to the holders of record of the Series A Preferred at the close of business on the record date specified by the Board of Directors of the Corporation at the time such dividend is declared; provided, however, that such record date shall not be more than 60 days nor less than 10 days prior to the respective Series A Dividend Payment Date. Dividends on the shares of Series A Preferred shall be fully cumulative and shall accrue (whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) from the initial date of issuance of shares of Series A Preferred (the "Series A Initial Issuance Date"), or, with respect to any Additional Shares, from the respective initial date of issuance thereof, in each case based on a 91 day quarter and the actual number of days elapsed. (b) (i) On the first twenty-four (24) Series A Dividend Payment Dates after the Series A Initial Issuance Date (the twenty-fourth (24th) of such Series A Dividend Payment Dates being called the "Final Noncash Dividend Payment Date"), any dividend on the Series A Preferred accrued and payable as provided in this Section 2 shall be payable either, as elected by the Corporation, (x) in cash or (y) by issuing a number of additional shares (or fractional shares) of the Series A Preferred (the "Additional Shares") in respect of each such share (or fractional share) of Series A Preferred then outstanding equal to the dividend then payable on each such share (or fractional share) of Series A Preferred (expressed as a dollar amount) divided by the liquidation value of one share of Series A Preferred (expressed as a dollar amount) or (z) in any combination thereof; commencing on the twenty-fifth (25th) Series A Dividend Payment Date after the Series A Initial Issuance Date, all dividends on the Series A Preferred accrued after the Final Noncash Dividend Payment Date and payable as provided in this Section 2 -2- (including, without limitation, Default Dividends (as hereinafter defined)) shall be payable in cash. (ii) If at any time dividends with respect to the shares of Series A Preferred are not declared and paid in full on any Series A Dividend Payment Date, whether in cash or Additional Shares or any combination thereof (the "Omitted Dividends"), the Series A Preferred shall accrue additional dividends as though such Omitted Dividends had been paid in Additional Shares and such Additional Shares had thereafter accrued dividends in accordance herewith (the "Default Dividends"). Such Default Dividends shall be fully cumulative (whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) and shall be deemed to constitute accrued and unpaid dividends for all purposes hereof even if such additional dividends are not specifically mentioned in any particular context. (c) (i) No dividend shall be declared or paid or set apart for payment, directly or indirectly, upon any Parity Preferred Stock for any period unless all accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) have been or contemporaneously are declared and paid in full or as set forth in this paragraph and no cash dividends shall be declared or paid or set apart for payment, directly or indirectly, upon any Parity Preferred Stock for any period unless all accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) have been or contemporaneously are declared and paid in full in cash or as set forth in this paragraph. When dividends are not paid in full, as aforesaid, upon the shares of Series A Preferred, all dividends declared on the Series A Preferred (including Default Dividends) and any series of Parity Preferred Stock shall be declared and paid either (x) pro rata so that (A) the amount of dividends so declared on Series A Preferred (including Default Dividends) and such series of Parity Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends on the shares of Series A Preferred (including Default Dividends) and such series of Parity Preferred Stock bear to each other and (B) the cash portion of dividends so declared and paid on the Series A Preferred and such series of Parity Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends on the shares of Series A Preferred (including Default Dividends) and such series of Parity Preferred Stock bear to each other, or (y) on another basis that is more favorable to the Series A Preferred. So long as any shares of Series A Preferred are outstanding, (1) except for dividends with respect to any Parity Preferred Stock declared and paid in accordance with and to the extent authorized by the previous sentence, the Corporation shall not make any distributions in cash, property, securities or otherwise with respect to any shares of Parity Preferred Stock and (2) neither the Corporation nor any of its Subsidiaries shall, directly or indirectly, reclassify, redeem, repurchase or otherwise acquire any shares of Parity Preferred Stock, in any such case for any consideration, except in each case for cash, property or securities and reclassifications, redemptions, repurchases and other acquisitions pro rata so that the amounts received on the Series A Preferred and on such series of Parity Preferred Stock, or the aggregate liquidation preferences of the reclassified, redeemed, repurchased or otherwise acquired shares of Series A Preferred and of the reclassified, redeemed, repurchased or -3- otherwise acquired shares of such series of Parity Preferred Stock, shall in all cases bear to each other the same ratio that the aggregate liquidation preference plus accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) of the shares of Series A Preferred and such series of Parity Preferred Stock bear to each other, or on another basis that is more favorable to the Series A Preferred. (ii) No dividend shall be declared or paid or set apart for payment or other distribution declared or made (in each case, other than dividends or distributions paid in Junior Securities or options, warrants or rights to subscribe for or purchase Junior Securities), directly or indirectly, upon any Junior Securities, nor shall any Junior Securities (or any options, warrants or rights to subscribe for or purchase Junior Securities) be, directly or indirectly, reclassified, redeemed, purchased or otherwise acquired by the Corporation or any of its Subsidiaries (including pursuant to a merger, consolidation or similar transaction), in any such case for any consideration (other than Junior Securities or options, warrants or rights to subscribe for or purchase Junior Securities); provided, however, that at any time which is not during a Default Period (as hereinafter defined), at which there are no accrued but unpaid dividends with respect to the Series A Preferred, and at which dividends have been paid in full in cash on the most recent Series A Dividend Payment Date, the Corporation may pay cash dividends on Junior Securities in an aggregate amount not to exceed 50% of (x) the Consolidated Net Operating Income (as hereinafter defined) of the Corporation on a cumulative basis since the beginning of the first full fiscal quarter of the Corporation with respect to which dividends on the Series A Preferred were consecutively paid in full in cash less (y) all dividends paid or payable or accrued during such period with respect to any preferred stock of the Corporation. (iii) Nothing contained in this Certificate of Designation shall prevent the repurchase, redemption or other acquisition by the Corporation or any of its Subsidiaries of Junior Securities (including options, warrants or rights to purchase Junior Securities) from any present or former employee or director of the Corporation or any of its Subsidiaries (or from such employee's or director's respective heirs, legatees, personal representatives, successors and permitted assigns, and permitted transferees), in connection with the death, disability or termination of employment of such employee or director, or from any employee or director who, as determined in good faith by the Board of Directors of the Corporation, is suffering from bona fide financial hardship, in each case in accordance with the terms (or on terms no less favorable to the Corporation) of the Management Agreements as in effect on the Series A Initial Issuance Date and in the circumstances contemplated by such Management Agreements; provided, however, that (A) no such repurchases may be made during a Default Period and (B) the aggregate fair market value at the time of repurchase of the consideration (other than Junior Securities or options, warrants or rights to purchase Junior Securities) paid by the Corporation and its Subsidiaries in connection with all such repurchases shall not exceed the aggregate sum of $30,000,000 or the sum of $1O,000,000 during any twelve-month period. (d) Any dividend payment made on shares of Series A Preferred shall first be credited against the dividends accrued with respect to the earliest quarterly period for which dividends have not been paid. -4- (e) Additional Shares shall be identical in all respects to shares of Series A Preferred and shall be treated alike (except that such Additional Shares shall be dated as of the date of issuance thereof and shall accrue dividends from such date). (f) All dividends paid with respect to shares of Series A Preferred pursuant to this Section 2 shall be paid pro rata to the holders entitled thereto. 3. REDEMPTION. Shares of Series A Preferred shall be redeemable by the Corporation as provided below (with all references in this Section 3 to a redemption price per share to be adjusted proportionally in respect of fractional shares): (a) OPTIONAL REDEMPTION. At the option of the Corporation, shares of Series A Preferred may be redeemed at any time from and after September 30, 1995, as a whole or in part, at the redemption prices, payable in cash, equal to the percentage set forth below of the per share liquidation preference thereof for redemptions during the 12-month periods beginning on September 30 in each of the years indicated below, plus, in each case, an amount equal to accrued and unpaid dividends thereon (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to the date fixed for redemption. Year Percentage ---- ---------- 1995................................. 107.5% 1996................................. 105.0% 1997................................. 102.5% 1998 and thereafter.................. 100.0% (b) CHANGE OF CONTROL AND SIMILAR TRANSACTIONS. Prior to the occurrence of a Change of Control (as hereinafter defined) the Corporation shall offer (the "Change of Control Offer") to redeem or effect the redemption of, on the Change of Control Date (as hereinafter defined), all outstanding shares of Series A Preferred at a redemption price, payable in cash, equal to the per share liquidation preference thereof, plus an amount equal to accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to the Change of Control Date. Subject to compliance with any then applicable requirements of any federal or state securities laws, notice of a Change of Control Offer shall be mailed by the Corporation not less than 20 Business Days before the Change of Control Date to the Holders. Such notice shall be mailed, addressed to each Holder, by overnight mail, postage prepaid, or delivered to each Holder at such Holder's address as the same appears on the stock transfer books of the Corporation. Subject to compliance with any then applicable requirements of any federal or state securities laws, the Change of Control Offer shall remain open from the time of mailing until the Change of Control Date (and in any event not less than 20 Business Days). The notice, which shall govern the terms of the Change of Control Offer, shall state: -5- (A) that the Change of Control Offer is being made pursuant to this Section 3(b) and that, at the election of each Holder, some or all of such Holder's shares of Series A Preferred may be redeemed pursuant to such Change of Control Offer and the provisions hereof; (B) the redemption price and the Change of Control Date; (C) that any shares of Series A Preferred not surrendered pursuant to the Change of Control Offer will remain outstanding and continue to accrue dividends; (D) that Holders electing to have shares of Series A Preferred redeemed pursuant to the Change of Control Offer will be required to surrender the certificates representing such shares of Series A Preferred to the Corporation at the address specified in the notice prior to the close of business on the Change of Control Date; (E) that Holders will be entitled to withdraw their election to have the Corporation redeem some or all of their shares of Series A Preferred if the Corporation receives, not later than the close of business on the Change of Control Date, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the number of shares of Series A Preferred the Holder of Series A Preferred delivered for redemption and a statement that such Holder is withdrawing his election to have some or all of such shares of Series A Preferred redeemed; and (F) that Holders whose shares of Series A Preferred are redeemed only in part will be issued new certificates representing shares of Series A Preferred equal in number to the unredeemed number of the shares of Series A Preferred surrendered. Notice having been given as aforesaid, and if on or before the Change of Control Date an amount in cash sufficient to redeem in full on the Change of Control Date and at the applicable redemption price, together with an amount equal to accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to such Change of Control Date, all shares of Series A Preferred validly surrendered for redemption and not withdrawn as of the Change of Control Date shall have been set apart and deposited in trust so as to be available for such purpose and only for such purpose, or shall have been paid to the Holders thereof, then effective as of the close of business on such Change of Control Date, and unless there shall be a subsequent default in the payment of the redemption price, the shares of Series A Preferred so surrendered for redemption shall cease to accrue dividends, and said shares shall no longer be deemed to be outstanding and shall, upon the taking of any action required by applicable law, have the status of authorized but unissued shares of Preferred Stock, undesignated as to series, and all rights of the Holders thereof, as such, as stockholders of the Corporation (except the right to receive from the Corporation the redemption price and an amount equal to any accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to the Change of Control Date) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the notice shall so state), such shares shall be redeemed by -6- the Corporation at the redemption price as aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate of like terms and having the same date of original issuance shall be issued representing the unredeemed shares without cost to the Holder thereof. On the Change of Control Date, the Corporation shall accept for payment shares of Series A Preferred surrendered for redemption pursuant to the Change of Control Offer, promptly mail to the Holders of shares of Series A Preferred so accepted payment in an amount equal to the redemption price for all shares so accepted, and promptly mail to such Holders a new certificate representing a number of shares equal to any unredeemed portion of the shares of Series A Preferred surrendered. In the event a Change of Control shall, despite the provisions hereof, occur prior to the making of a Change of Control Offer, the Corporation shall nevertheless, immediately upon the occurrence of such a Change of Control, make a Change of Control Offer. In the event of any such Change of Control Offer, the provisions of this Section 3(b) shall apply, provided that such Change of Control Offer shall commence, and notice thereof shall be given in accordance herewith, immediately upon such Change of Control and such Change of Control Offer shall remain open for at least 20 Business Days after such notice. Notwithstanding the foregoing provision of this paragraph (b), in lieu of the Corporation making a Change of Control Offer, the Corporation may designate a third party to make an offer to purchase all the outstanding Shares of Series A Preferred Stock at a price equal to the price required to be paid pursuant to the Change of Control Offer, and otherwise on terms and subject to conditions and procedures no less favorable to the Holders than those set forth herein with respect to the Change of Control Offer; provided, however, that the Corporation shall be liable for any default by such third party to consummate such offer as if such offer were the Change of Control Offer. (c) OTHER MANDATORY REDEMPTIONS. The Corporation shall redeem all outstanding shares of Series A Preferred on September 30, 2004 (the "Mandatory Redemption Date") at a redemption price, payable in cash, equal to the per share liquidation preference thereof, plus an amount equal to accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to the redemption date therefor. (d) NOTICE OF REDEMPTION; OTHER REDEMPTION PROCEDURES. (i) Whenever shares of Series A Preferred are to be redeemed pursuant to Section 3(a) or 3(c), a notice of such redemption shall be mailed, addressed to each Holder, by overnight mail, postage prepaid, or delivered to each Holder of the shares to be redeemed at such Holder's address as the same appears on the stock transfer books of the Corporation. Such notice shall be mailed or delivered not less than 10 days and not more than 60 days prior to the date fixed for redemption. Each such notice shall state: (A) the date fixed for redemption; (B) the number of shares of Series A Preferred to be redeemed; (C) the redemption price; (D) the place or places where such shares of Series A Preferred are to be surrendered for payment of the redemption price; and (E) that dividends on the shares to be redeemed will cease to accrue on such date fixed for redemption. If fewer than all shares of Series A Preferred held by a -7- Holder are to be redeemed, the notice mailed to such Holder shall specify the number of shares to be redeemed from such Holder. (ii) Notice having been given as aforesaid, and if on or before the redemption date specified in such notice an amount in cash sufficient to redeem in full on the redemption date and at the applicable redemption price, together with an amount equal to accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to such redemption date, all shares of Series A Preferred called for redemption shall have been set apart and deposited in trust so as to be available for such purpose and only for such purpose, or shall have been paid to the Holders thereof, then effective as of the close of business on such redemption date, and unless there shall be a subsequent default in the payment of the redemption price, the shares of Series A Preferred so called for redemption shall cease to accrue dividends, and said shares shall no longer be deemed to be outstanding and shall have the status of authorized but unissued shares of Preferred Stock, undesignated as to series, and all rights of the Holders thereof, as such, as stockholders of the Corporation (except the right to receive from the Corporation the redemption price and an amount equal to any accrued and unpaid dividends (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to the redemption date) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price as aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate of like terms and having the same date of original issuance shall be issued representing the unredeemed shares without cost to the Holder thereof. (iii) In the event that fewer than all of the shares of Series A Preferred are to be redeemed pursuant to Section 3(a), the Corporation shall redeem shares of Series A Preferred pro rata among the Holders, based on the number of shares of Series A Preferred held by each Holder, except that the Corporation may redeem all of the shares of Series A Preferred held by any Holders of fewer than 100 shares of Series A Preferred (or all the shares of Series A Preferred held by Holders who would hold less than 100 shares of Series A Preferred as a result of such redemption). (e) NO LIMITATIONS ON RIGHT TO PURCHASE SERIES A PREFERRED. Nothing contained in this Certificate of Designation shall limit any legal right of the Corporation or any Subsidiary or Affiliate to purchase or otherwise acquire any shares of Series A Preferred at any price, whether higher or lower than the redemption price. 4. LIQUIDATION. (a) Upon a liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the Holders shall be entitled, before any assets of the Corporation shall be distributed among or paid over to the holders of Junior Securities, but after distribution of such assets among, or payment thereof over to, creditors of the Corporation and to holders of any Senior Preferred Stock, to receive from the assets of the Corporation available for distribution to stockholders, an amount in cash or property (valued at its fair market value), or a combination thereof, equal to $25 per share (pro rated for -8- fractional shares), plus, in each such case, an amount in cash or property (valued at its fair market value), equal to all accrued and unpaid dividends thereon (including Default Dividends and whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) to and including the date of final distribution. After any such payment in full, the Holders shall not, as such, be entitled to any further participation in any distribution of assets of the Corporation. As used in this Certificate of Designation, the terms "liquidation preference" and "liquidation value" (and other terms of similar import) shall mean $25 per share. (b) Neither the merger or consolidation of the Corporation into or with any other corporation or the merger or consolidation of any other corporation into or with the Corporation, nor the sale of all or substantially all of the assets of the Corporation, shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, for the purposes of this Section 4. (c) If, upon any such liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the assets of the Corporation shall be insufficient to make the full payments required by subsection (a) of this Section 4 and all full distributions with respect to all Parity Preferred Stock, no such distribution shall be made on account of any shares of any Parity Preferred Stock or Series A Preferred unless proportionate distributive amounts shall be paid on account of the shares of Series A Preferred and Parity Preferred Stock, ratably, in proportion to the full distributable amounts to which Holders and holders of all such Parity Preferred Stock are respectively entitled upon such dissolution, liquidation or winding up. 5. VOTING. (a) Except as required by law and except for any voting by the Holders as part of a separate class or series and except as otherwise provided in the Certificate of Incorporation of the Corporation, the Holders shall not be entitled to any voting rights as shareholders of the Corporation except as specified in this Section 5 or in Section 7. The affirmative vote of the Holders of at least seventy five percent of the outstanding shares of Series A Preferred, voting separately as a single class on a one vote per share basis (pro rated for fractional shares), in person or by proxy, at a special or annual meeting called for the purpose, or by written consent in lieu of a meeting, shall be required to liquidate, wind up or dissolve the Corporation and to amend, repeal or change any provisions of this Certificate of Designation or the Certificate of Incorporation of the Corporation in any manner which would adversely affect, alter or change the powers, preferences or rights of any share of Series A Preferred. (b) In addition, without the affirmative vote of the Holders of at least seventy five percent of the outstanding shares of Series A Preferred, voting separately as a single class on a one vote per share basis (pro rated for fractional shares), in person or by proxy, at a special or annual meeting called for the purpose, or by written consent in lieu of a meeting: (i) the Corporation shall not merge with or into any Person, or consolidate with any other Person, in one or a series of related transactions, unless (A) all of the shares of Series A Preferred shall continue to be or become duly and validly authorized securities of the corporation (including the Corporation, if -9- applicable) formed by or surviving any such consolidation or merger, fully paid and nonassessable, with rights, preferences and powers identical to the rights, preferences and powers set forth in this Certificate of Designation, all of the terms and provisions of this Certificate of Designation shall continue as, or become, a part of the Certificate of Incorporation of such corporation, and each reference herein to the Corporation shall be deemed to be a reference to such corporation, (B) the corporation (including the Corporation, if applicable) formed by or surviving any such consolidation or merger shall have Consolidated Net Worth (as hereinafter defined) immediately following and after giving effect to such transaction equal to or greater than the Consolidated Net Worth of the Corporation immediately prior to and without giving effect to such transaction, and (C) if the Consolidated Coverage Ratio (as hereinafter defined) of the Corporation immediately prior to and without giving effect to such transaction is within the range set forth in column (x) below, the pro forma Consolidated Coverage Ratio of the corporation (including the Corporation. if applicable) formed by or surviving any such consolidation or merger shall be at least equal to the percentage of the pre-transaction Consolidated Coverage Ratio of the Corporation set forth in column (y) below: (x) (y) --------------- ----- Below 1.11:1....................... 100% 1.11:1 to 1.99:1................... 90% 2.00:1 to 2.99:1................... 80% 3.00:1 to 3.99:1................... 70% 4.00:1 to 4.99:1................... 60% 5.00:1 or more..................... 50% provided, however, that if the pro forma Consolidated Coverage Ratio of the corporation (including the Corporation, if applicable) formed by or surviving any such consolidation or merger is 3.00 to 1 or greater, the ratio requirement in clause (C) above shall be inapplicable and such transaction shall be deemed to have complied with such requirement; provided, further, that the foregoing tests shall not apply to any merger or consolidation the sole purpose of which is (as determined in good faith by the Board of Directors of the Corporation and evidenced by a resolution of such Board of Directors) to change the state of incorporation of the Corporation, in which the stockholders of the Corporation receive no consideration (other than a corresponding interest in the surviving corporation, if the Corporation is not the surviving corporation in such merger, proportionate to their interest in the Corporation), and which transaction does not have as one of its purposes or effects the evasion of the limitation of this clause (i) and does not adversely affect the Series A Preferred or any Holders; and provided, further, that for the purposes of this clause (i) the provisions of clause (iii) of the definition of Consolidated Net Income shall not be taken into account in computing the Consolidated Coverage Ratio. (ii) the Corporation shall not, directly or indirectly, sell, lease, exchange, transfer or otherwise dispose of all or substantially all of its assets and property or all or substantially all of the assets and property of Essex to another Person or Persons (other than one or more wholly owned Subsidiaries of the -10- Corporation) in one transaction or a series of related transactions, unless the Corporation simultaneously redeems all of the shares of Series A Preferred then outstanding pursuant to the provisions of Section 3(a); provided, however, that nothing in this clause(ii) shall be deemed to prohibit any merger described in the second proviso to the foregoing clause (i); (iii) the Corporation shall not at any time (A) own (or take any action that would result in its owning) less than all of the capital stock of and all other equity interests in Essex and its direct and indirect Subsidiaries, other than (x) any minority interests existing as of the Series A Initial Issuance Date in Persons which are Subsidiaries of Essex as of such date, (y) any minority interests in any Subsidiary of the Corporation acquired after the Series A Initial Issuance Date, or (z) any minority interests in a Subsidiary of Essex that was not a Significant Subsidiary as of the Series A Initial Issuance Date or, if later, the date that such Person first became a Subsidiary of the Corporation, and, in the case of any such Subsidiary described in this clause (z), was not, at any time prior to the creation of such minority interest, a Significant Subsidiary by reason of additional investments in and/or advances to such Subsidiary thereafter, or (B) cause or allow any direct or indirect Subsidiary (other than a wholly owned Subsidiary) to, directly or indirectly, pay, make or effect any dividend, distribution or repurchase on or of any of the capital stock of or other equity interest in such Subsidiary other than on a pro rata basis among all of the holders of the class or classes of capital stock with respect to which such dividend, distribution or repurchase is effected (provided that this clause (B) shall not prohibit any repurchase, otherwise permitted by the terms of this Certificate of Designation, of any of the capital stock of or other equity interest in any Subsidiary that was not a Significant Subsidiary as of the Series A Initial Issuance Date or, if later, the date that such Person first became a Subsidiary of the Corporation, and, in the case of any such Subsidiary, was not, at any time prior to the creation of such minority interest, a Significant Subsidiary by reason of additional investments in and/or advances to such Subsidiary thereafter); (iv) the Corporation shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service or any loans or advances) with any Affiliate of the Corporation (other than transactions between the Corporation and any of its Subsidiaries (other than Subsidiaries in which any Affiliate of the Corporation has any interest other than through the Corporation's ownership interest in such Subsidiary) or between Subsidiaries (other than involving any Subsidiary in which any Affiliate of the Corporation has any interest other than through the Corporation's ownership interest in such Subsidiary) of the Corporation), unless (x) any such transaction is on terms no less favorable to the Corporation and its Subsidiaries than those that could be obtained in a comparable arm's length transaction with an independent third party, and (y) prior to consummating any such transaction which has a value equal to or greater than $10 million, either (1) the Corporation shall have obtained an opinion from a nationally recognized investment banking firm or other reputable third party -11- appraiser that the terms of such transaction are no less favorable to the Corporation and its Subsidiaries than those that could be obtained in a comparable arm's length transaction with an independent third party or (2) the terms of such transaction shall be approved by a majority of the disinterested members of the Board of Directors of the Corporation; provided, however, that nothing in this Section 5(b)(iv) shall be deemed to prohibit, or to require the Corporation to obtain the opinion referred to above from an investment banking firm or other appraiser prior to consummating, any of the following: (A) the payment of management fees not exceeding $1,000,000 per annum to Bessemer; (B) the provision by Bessemer or an Affiliate of Bessemer of asset portfolio management services or other investment advisory services to the Corporation or any of its benefit or compensation plans on a basis no less favorable to the Corporation than that on which Bessemer or such Affiliate provides such services to unrelated third parties; (C) the payment of ordinary and customary fees and expenses to directors of the Corporation who are not employees or otherwise Affiliated with the Corporation or Bessemer; (D) any transaction expressly contemplated pursuant to any of the Related Agreements (as such term is defined in the Stock Subscription Agreement), as in effect as of the date hereof; (E) any transaction with an Affiliate which is a joint venture or other bona fide business arrangement and of which no Affiliate of the Corporation and no non-wholly owned Subsidiary of the Corporation is an Affiliate; (F) the repurchase of shares of capital stock or options, rights or warrants to acquire shares of capital stock of the Corporation or any of its subsidiaries from any present or former employee or director of the Corporation or any of its Subsidiaries (or from such employee's or director's respective heirs, legatees, personal representatives, successors and permitted assigns, and permitted transferees) in connection with the death, disability or termination of employment of such employee or director, or from any employee or director who, as determined in good faith by the Board of Directors of the Corporation, is suffering from bona fide financial hardship, in each case in accordance with the terms (or on terms no less favorable to the Corporation) of the Management Agreements (as defined in the Stock Subscription Agreement) as in effect on the Series A Initial Issuance Date and in the circumstances contemplated by such Management Agreements, to the extent otherwise permitted by this Certificate of Designation; (G) the payment of fees to Bessemer or any of its Affiliates in connection with the Acquisition, in an amount not to exceed $3,800,000, and the reimbursement of the -12- reasonable legal fees and out-of-pocket expenses of Bessemer or any of its Affiliates in connection with the Acquisition; (H) any transaction with Goldman, Sachs & Co. ("GS") or Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC") or any of their respective Affiliates, DLJSC and GS and their respective Affiliates hereby disclaiming that any of them are Affiliates of the Corporation; (I) any transaction with an Affiliate of DLJSC or GS which is primarily engaged in an active operating business (not including any investment banking, money management, consulting or similar service business) and which is a Subsidiary of DLJSC or GS or a Person organized by DLJSC or GS or one of their Affiliates to invest in active operating companies and which transaction is on terms no less favorable to the Corporation and its Subsidiaries than those that could be obtained in a comparable arm's length transaction with an independent third party, is in the ordinary course of such Affiliate's business, and is entered into by such Affiliate at the direction of operating management of such Affiliate and not at the direction of DLJ or Goldman Sachs, as the case may be; or (J) any payment or other transaction pursuant to any tax sharing agreement between the Corporation and Essex or any other Person with which the Corporation is required to, or is permitted to, file a consolidated tax return or with which the Corporation is or could be part of a consolidated group for tax purposes; (v) the Corporation shall not create, authorize or issue any class or series of Senior Preferred Stock or Parity Preferred Stock; provided, however, that the Corporation shall, despite the prohibition of this clause, be permitted, without the vote or consent of the Holders, to create, authorize and issue Senior Preferred Stock or Parity Preferred Stock if: (A) the proceeds of such issuance are used to refinance any indebtedness of the Corporation or Essex that is existing immediately prior to the consummation of the Acquisition or incurred by the Corporation or Essex in connection with the Acquisition to fund the Acquisition (or any subsequent refinancing of any such indebtedness); and (B) such issuance would not, on a pro forma basis, cause the Corporation's Consolidated Coverage Ratio to decrease (provided that for the purposes of this clause (B) the provisions of clause (iii) of the definition of Consolidated Net Income shall not be taken into account in computing the Consolidated Coverage Ratio); or (vi) prior to any exchange of Series A Preferred for Exchange Debt, the Corporation shall not effect or allow any amendment, alteration or repeal of any of the provisions of Exchange Debt (as hereinafter defined) from those contained in the form of indenture which is on file with the Secretary of the Corporation and available to each Holder without charge upon request (the "Exchange Debt Indenture"), other than such changes (A) which would be allowed under the terms of the Exchange Debt Indenture without the vote or consent of the holders of Exchange Debt if any Exchange Debt were issued and outstanding, (B) which would make any provision of the -13- Exchange Debt more (1) restrictive to the Corporation or (2) beneficial to the holders of the Exchange Debt, (C) which add to the covenants and agreements of the Corporation contained in the Exchange Debt or remove any right or power therein reserved to or conferred upon the Corporation, or (D) which are requested by the Corporation in the event of any amendment to this Certificate of Designation that effects a change in the terms of the Series A Preferred, to conform (as nearly as may be possible taking into account the differences between debt securities and equity securities) the provisions of the Exchange Debt to the terms of the Series A Preferred as so changed, and in each case does not have any additional effects which are not permitted or in any way adversely affects the rights and preferences of the Exchange Debt. Notwithstanding the provisions hereof, this Certificate of Designation shall not prohibit, (x) the merger of B E Acquisition Corporation with and into MS/Essex Holdings, Inc. or (y) any merger involving only the Corporation and Essex (the "Essex Merger") so long as, in either such case, no consideration is received by the stockholders of the Corporation in connection therewith (other than a corresponding interest in the surviving corporation, if the Corporation is not the surviving corporation in such merger, or a corresponding interest in a newly formed corporation (a "New Holding Company") which shall, from and after the Essex Merger, own all of the capital stock of and all other equity interests in the surviving corporation and which shall have no other business, assets or liabilities, in each case proportionate to their interest in the Corporation), and provided that, in the event a New Holding Company is formed in connection with the Essex Merger, each share of Series A Preferred will be converted into one fully paid and nonassessable share of preferred stock of the New Holding Company with rights, preferences and powers identical to the rights, preferences and powers set forth in this Certificate of Designation, all of the terms and provisions of this Certificate of Designation shall become a part of the Certificate of Incorporation of the New Holding Company, and each reference herein to the Corporation shall be deemed to be a reference to the New Holding Company and each reference herein to Essex shall be deemed to be a reference to the surviving corporation in such merger. (c) Within 15 days after the end of each fiscal year of the Corporation commencing with the fiscal year of the Corporation in which the Series A Initial Issuance Date occurs, the Corporation shall deliver a certificate to each Holder (or, after the shares of Series A Preferred have been distributed in a public offering, to the transfer agent for the Series A Preferred, if one has been appointed (which transfer agent shall agree to make copies of such certificate available to Holders who request copies thereof)) certifying that during such period the Corporation has not taken any action with respect to which the vote or consent of any portion of the outstanding shares of Series A Preferred is required under this Certificate of Designation without obtaining such vote or consent, and that the Corporation has not taken any other action not permitted to be taken by it hereunder. 6. EXCHANGE. (a) The Series A Preferred shall be exchangeable for Exchange Debt in whole, but not in part, at any time (other than at any time during which the Corporation is obligated to redeem or repurchase shares of Series A Preferred pursuant hereto or pursuant to any other agreement with any of the Holders) on any Series A Dividend Payment Date, out of surplus of the Corporation legally available for such exchange, at -14- the option of the Corporation; provided, however, that the Corporation may not so exchange any Series A Preferred during a Default Period or if all accrued and unpaid dividends thereon (whether or not earned or declared and whether or not there are funds of the Corporation legally available for the payment of dividends) shall not have been paid on such Series A Dividend Payment Date or if on the date of such exchange there exists an event of default, or if such exchange would give rise to an event of default, under any indebtedness of the Corporation or if, immediately after such exchange, there would exist a Default or an Event of Default (as such terms are defined in the Exchange Debt Indenture). At the time of any exchange, Holders of the shares of Series A Preferred being exchanged will be entitled to receive Exchange Debt with a principal amount equal to the aggregate liquidation preference of the shares of Series A Preferred being exchanged. Prior to the Exchange Date, the Corporation shall file at the office of the exchange agent for the Series A Preferred (or with the books of the Corporation if there is no exchange agent) and deliver to each Holder an opinion of counsel addressed to the Corporation and the Holders being exchanged to the effect (A) that the Exchange Debt has been duly authorized and, when executed and authenticated in accordance with the provisions thereof and of this Certificate of Designation and delivered in exchange for the shares of Series A Preferred, will constitute valid and binding obligations of the Corporation (subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general principles of equity and subject to other customary exceptions and assumptions), (B) that the issuance and delivery of the Exchange Debt in exchange for the shares of Series A Preferred will not violate the laws of the state of incorporation of the Corporation, and (C) that (x)qualification of the Exchange Debt Indenture is not required under the Trust Indenture Act of 1939, as amended, or, if required, has been obtained, and (y) the issuance and delivery of the Exchange Debt in exchange for the shares of Series A Preferred is exempt from the registration or qualification requirements of the Securities Act and applicable state securities laws or, if no such exemption is available, that the Exchange Debt of such series has been duly registered or qualified for such exchange under the Securities Act and such applicable state securities laws. Notice of any exchange of the Series A Preferred shall be mailed at least 10 days but not more than 60 days prior to the Exchange Date to each Holder of Series A Preferred to be exchanged, at such Holder's address as it appears on the books of the Corporation. Such notice shall set forth the procedures for exchanging certificates representing Series A Preferred for Exchange Debt. Upon such exchange, the rights of the Holders of Series A Preferred to be exchanged as stockholders of the Corporation shall cease, and the person or persons entitled to receive the Exchange Debt issuable upon such exchange shall be treated for all purposes as the registered holder or holdersof such Exchange Debt. (b) The shares of Series A Preferred which have been exchanged shall no longer be deemed to be outstanding and shall be retired and all rights with respect to such shares, including, without limitation, the rights, if any, to receive dividends (including, without limitation, accrued and unpaid dividends) and to receive notices and to vote or consent, shall forthwith cease, except only the right of the Holders thereof to receive Exchange Debt in exchange therefor. -15- (c) Upon any exchange of shares of Series A Preferred in accordance with this Section 6, the Corporation will pay any stock transfer taxes which may be due with respect to the transfer and exchange of such exchanged shares with the Corporation; provided, however, that if the Exchange Debt into which the Series A Preferred is exchangeable pursuant to this Section 6 is to be issued in the name of any person other than the Holder of the shares of Series A Preferred to be so exchanged, the amount of any transfer taxes (whether imposed on the Corporation, the Holder or such other person) payable on account of the transfer to such person will be payable by the Holder. 7. EVENT OF DEFAULT. (a) If and whenever, at any time or times, (i) dividends payable on shares of Series A Preferred shall have been in arrears and unpaid in an aggregate amount equal to or exceeding the amount payable thereon for six full quarterly dividend periods or (ii) the Corporation fails to honor any of its obligations under Section 3(b) hereof (each such circumstance, an "Event of Default" under this Certificate of Designation), in addition to any other remedies to which the Holders may be entitled at law or otherwise, then the number of directors then constituting the Board of Directors of the Corporation shall be increased by two, and the Holders shall, automatically, and without any further action by the Board of Directors or any stockholder or stockholders of the Corporation, in addition to any other voting rights, have the right, voting separately as a class on a one vote per share basis (pro rated for fractional shares), in person, by proxy or by written consent in lieu of a meeting, to elect such two additional directors. Whenever such right of the Holders shall have vested, such right may be exercised initially either at a special meeting of such Holders as provided in Section 7(b) hereof or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such annual meetings. The right of the Holders to elect such directors shall continue, if arising as a result of the Event of Default specified in clause (i) of the initial sentence of this Section 7(a), until such time as all dividends accrued on outstanding shares of Series A Preferred to the Dividend Payment Date next preceding the date of any such determination shall have been paid in full, and, if arising as a result of the Event of Default specified in clause (ii) of the initial sentence of this Section 7(a), until the Corporation fulfills all its obligations under Section 3(b) hereof, including the payment pursuant to the Change of Control Offer of an amount equal to all accrued dividends through the date of cure, at which time in either such event the right of the Holders so to vote shall terminate, except as herein or by law expressly provided, subject to revesting upon the occurrence of a subsequent default as described above. (b) At any time when the right of the Holders to elect directors as provided in Section 7(a) hereof shall have vested, and if such right shall not already have been initially exercised, but in any event within 30 days of the occurrence of an Event of Default, a proper officer of the Corporation shall call a special meeting of the Holders for the purpose of electing directors. Such meeting shall be held at the earliest practicable date upon the same form of notice as is required for annual meetings of stockholders of the Corporation at such suitable place in the City of New York as is designated by such officer. If such meeting shall not be called by a proper officer of the Corporation within such 30 day period, then the Holders of at least 10% of the aggregate number of shares of Series A Preferred at the time outstanding may designate in writing one of their number to call such a meeting at the expense of the Corporation, -16- and such meeting may be called by such person so designated and shall be held at the place for the holding of annual meetings of stockholders of the Corporation (or such other suitable place as is designated by such person). Any Holder so designated shall have access to the registry books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to this Section 7(b). (c) At any meeting held for the purpose of electing directors at which Holders shall have the right, voting together as a class to elect directors as provided in Section 7(a) hereof, the presence, in person or by proxy, of the Holders of a majority of the aggregate number of shares of Series A Preferred at the time outstanding shall be required and be sufficient to constitute a quorum of such class for the election of either director pursuant to such Section 7(a). At any such meeting or adjournment thereof, (i) the absence of a quorum of the shares of Series A Preferred shall not prevent the election of the directors to be elected otherwise than pursuant to Section 7(a) hereof, and (ii) in the absence of a quorum, a majority of the Holders, present in person or by proxy, shall have the power to adjourn the meeting for the election of directors whom they are entitled to elect, from time to time without notice other than announcement at the meeting or as otherwise required by law, until a quorum shall be present. (d) During any period when the Holders shall have the right to vote together as a class for directors as provided in Section 7(a) hereof, (i) the directors so elected by such Holders shall continue in office until their successors shall have been elected by such Holders or until termination of the rights of such Holders to vote as a class for directors and (ii) any vacancies in the Board of Directors may be filled by a majority (even if that be only a single director) of the remaining directors theretofore elected by the Holders as a class. Immediately upon termination of the right of Holders to vote as a class for directors, (i) the term of office of the directors so elected shall terminate, and (ii) the number of directors shall be such number as may be provided for in the by-laws of the Corporation irrespective of any increase pursuant to the provisions of Section 7(a) hereof. (e) Notwithstanding the foregoing, nothing herein or otherwise in the Corporation's Certificate of Incorporation or bylaws shall limit or prevent the right of the Holders from, to the fullest extent allowed by law, exercising the voting rights provided in this Section by written consent of a majority of the outstanding shares of Series A Preferred. (f) The voting rights and remedies, and the provisions setting forth their terms and conditions, of the Holders set forth in Section 6.1 of the Stock Subscription Agreement (as the same may be from time to time amended), a copy of which is on file with the Secretary of the Corporation and available to each Holder without charge upon request, are hereby incorporated herein by reference and made a part hereof. 8. REPORTS. The Corporation shall, so long as it is subject to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), send by first class mail to each Holder, within 15 days after it files them with the SEC, copies of the annual and quarterly reports and of the information, documents and other reports or copies of such portions of any of the foregoing (as the SEC may by rules and regulations prescribe) which the Corporation is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange -17- Act. If the Corporation is not subject to the requirements of Section 13 or 15(d) of the Exchange Act, the Corporation shall send by first class mail to each Holder who shall (unless an Event of Public Distribution shall previously have occurred) have undertaken to be bound by the confidentiality provisions of Section 8.15 of the Subscription Agreement, within 15 days after it would have been required to file with the SEC, financial statements, including any notes thereto (and with respect to annual reports, an auditors' report by a firm of independent public accountants of established national reputation), and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," both comparable to that which the Corporation would have been required to include in such annual or quarterly reports, information, documents or other reports if the Corporation were subject to the requirements of Section 13 or 15(d) of the Exchange Act. 9. Additional Definitions. As used in this Certificate of Designation, the following terms have the meanings specified below: "Acquisition" shall mean the merger of B E Acquisition Corporation with and into MS/Essex Holdings, Inc. as contemplated by the Merger Agreement (as such term is defined in the Subscription Agreement) and the consummation of all related financing effectuated contemporaneously therewith. "Affiliate" (and, with a correlative meaning, "Affiliated") shall mean, with respect to any Person, any other Person that directly, or through one or more intermediaries, controls or is controlled by or is under common control with such first Person; provided, however, (i) no Person shall be deemed to be an Affiliate of the Corporation solely by reason of its ownership of any Series A Preferred, Exchange Debt, Warrants or shares of Common Stock issued upon exercise of the Warrants, or its ability to elect directors of the Corporation as a result thereof or in connection therewith, (ii) the Corporation and its Subsidiaries shall not be deemed to be Affiliates of each other, (iii) shareholders and Affiliates of Bessemer Securities Corporation ("BSC") that would not be Affiliates of the Corporation other than by reason of being a shareholder or Affiliate of BSC and that neither in fact participate in the management of any of BSC, Bessemer or the Corporation, nor are controlled by BSC, Bessemer, the Corporation, or any of their respective Affiliates who in fact participate in the management of any of BSC, Bessemer or the Corporation, shall not be deemed to be Affiliates of the Corporation, and (iv) except as set forth in clause (iii) above, for so long as Bessemer is an Affiliate of the Corporation, any Affiliate of Bessemer shall be deemed to be an Affiliate of the Corporation. As used in this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Bessemer" shall mean Bessemer Capital Partners, L.P. "Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are authorized to be open for business in New York City. -18- A "Change of Control" shall be deemed to have occurred if a Person or group of Affiliated Persons or other "group" (within the meaning of Section 13(d)(3) of the Exchange Act), other than Bessemer, any of the Investors (as such term is defined in the Stock Subscription Agreement), and any of their respective Affiliates, shall beneficially own, directly or indirectly, or have the power to direct the vote of with respect to the election of directors of the Corporation, shares of capital stock entitled to cast more than the greater of (x) 25% or (y) the Original Group Percentage of the votes entitled to be cast with respect to the election of directors of the Corporation. For the purposes of this definition, the "Original Group Percentage" shall mean, as of any date of determination, the percentage of the votes entitled to be cast with respect to the election of directors of the Corporation by Bessemer, Chemical Venture Partners, L.P., the DLJ/GS Investors, and their respective Affiliates and by Persons who have agreed to vote as directed by Bessemer or any of its Affiliates with respect to the election of directors of the Corporation. For the purposes of the calculation required by the first sentence of this definition, any Warrant Shares issuable upon exercise of the Warrants shall be deemed to be issued and outstanding if the Current Market Price (as such term is defined in the Warrant Agreement) is greater than the Exercise Price (as such term is defined in the Warrant Agreement). "Change of Control Date" shall mean the date on which a Change of Control of the Corporation shall occur. "Consolidated Coverage Ratio" of any Person shall mean the ratio of (i) the aggregate amount of Consolidated EBITDA of such Person for the four fiscal quarters for which financial information in respect thereof is available immediately prior to the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio to (ii) the aggregate Consolidated Fixed Charges of such Person during such four fiscal quarters; provided, that in making any such computation on a pro forma basis, Consolidated Fixed Charges attributable to interest on any indebtedness or dividends on any preferred stock (whether existing or being incurred) and bearing a floating rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period. When required to be calculated on a pro forma basis, the Consolidated Coverage Ratio shall give effect to any indebtedness to be incurred or repaid, equity to be issued or acquisition to be made as if incurred or made on the first day of the four-fiscal-quarter period referred to in clause (i) of the preceding sentence. "Consolidated EBITDA" of any Person shall mean, for any period, the sum of the amounts for such period of (i) Consolidated Net Operating Income, (ii) Consolidated Fixed Charges, to the extent reducing Consolidated Net Operating Income, (iii) provisions for taxes based on income, (iv) depreciation expense, (v) amortization expense and (vi) all other non-cash items, to the extent reducing Consolidated Net Operating Income, minus all non-cash items, to the extent increasing Consolidated Net Operating Income, all as determined on a consolidated basis for such Person and its Subsidiaries in conformity with GAAP. "Consolidated Fixed Charges" of any Person shall mean, for any period, for such Person and its Subsidiaries, the aggregate amount of interest in respect of indebtedness (including, without limitation, amortization of original issue discount on any indebtedness, any pay-in-kind and accreting interest obligation and the interest portion of any deferred payment obligation, calculated in accordance with the -19- effective interest method of accounting), the aggregate amount of dividends with respect to preferred stock (including pay-in-kind and accreting dividends), all commissions, discounts and other fees, costs and charges owed with respect to any indebtedness or preferred stock (including, without limitation, any letters of credit, bankers' acceptance financing, and interest rate swaps, caps, options or similar arrangements), and all but the principal component of rentals in respect of all leases of any property (whether real, personal or mixed) the discounted present value of the rental obligations of such Person as lessee under which, in conformity with GAAP, is required to be capitalized on the balance sheet of such Person, paid, accrued or scheduled to be paid or accrued by such Person (or by any other Person where such obligation is directly or indirectly guaranteed or supported by such Person) during such period, all determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" of any Person shall mean, for any period taken as one accounting period, the net income (or loss) of such Person and its Subsidiaries on a consolidated basis for such period determined in conformity with GAAP, but excluding (i) the income (or loss) of any Person (other than a Subsidiary of such Person) that would otherwise be included in such net income (or loss) in which any other Person (other than such Person or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to such Person or any of its wholly owned Subsidiaries by such other Person during such period, (ii) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or that Person's assets are acquired by such Person or any of its Subsidiaries, and (iii) the income of any Subsidiary of such Person to the extent (and only to the extent) that the declaration or payment of dividends or similar distributions by such Subsidiary of that income to such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary; it being understood that if any such restriction on the payment of such income ceases to be applicable, the full amount of income attributable to the period during which such restriction was in effect that would have been included in Consolidated Net Income but for the existence of such restriction shall be included in Consolidated Net Income to the extent such amount is permitted and available to be paid to such Person at the time of calculation. "Consolidated Net Operating Income" of any Person shall mean, for any period taken as one accounting period, the Consolidated Net Income of such Person, adjusted by excluding (to the extent not otherwise excluded in calculating Consolidated Net Income) any net extraordinary gain or net extraordinary loss, as the case may be, during such period. "Consolidated Net Worth" of any Person shall mean, as at any date of determination, the consolidated stockholders' equity of such Person and its Subsidiaries that would be accounted for as consolidated Subsidiaries in such Person's financial statements in accordance with GAAP, as determined on a consolidated basis in accordance with GAAP, but without inclusion of any amounts attributable to any equity security of such Person that by its terms or otherwise is required to be redeemed prior to the Mandatory Redemption Date or is redeemable at the option of the holder thereof prior to the Mandatory Redemption Date; provided that equity securities held by present or former employees or directors of the Corporation or by their heirs, legatees, personal representatives, -20- successors and permitted assigns and transferees, shall not for purposes of this definition be considered to be redeemable as a result of agreements permitting or requiring the Corporation to repurchase or redeem such securities upon the death, disability or termination of employment of such present or former employee or director at any time prior to the Mandatory Redemption Date; provided, further, that the Consolidated Net Worth of any Person, at any date, shall be calculated so as not to give effect to the adoption and application by such Person of FAS 96 as proposed by the Financial Accounting Standards Board on the date hereof or as modified hereafter. "Default Period" shall mean any time when an Event of Default has occurred and is continuing. "Essex" shall mean Essex Group, Inc., a Michigan corporation and a wholly owned subsidiary of the Corporation. "Event of Public Distribution" shall mean the earliest of (x) any sale to the public in an offering registered under the Securities Act of any equity of the Corporation, (y) such time as the Corporation would be subject to the registration requirements of Section 12 of the Exchange Act by virtue of the number of holders of its equity, or (z) such time as any equity of the Corporation is listed on any securities exchange or on the NASDAQ National Market System or listed, traded or quoted on another similar public trading or reporting system. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exchange Date" shall mean the date fixed for exchange of Exchange Debt for Series A Preferred. "Exchange Debt" shall mean the 15% Junior Subordinated Debentures of the Corporation issued pursuant to the Exchange Debt Indenture, as amended, modified, supplemented, restructured, replaced, extended, or refinanced from time to time in accordance with the terms hereof and thereof. "Holder" shall mean a Holder of shares of Series A Preferred, as reflected in the stock records of the Corporation; and each Holder's address shall be as it appears in the stock records of the Corporation. "GAAP" shall mean United States generally accepted accounting principles as of the date hereof. "Person" shall mean an individual, a partnership, a corporation, a trust, an association, a joint venture, a joint stock corporation, an unincorporated organization and any governmental or regulatory body or political subdivision thereof or other agency or authority. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. "Significant Subsidiary" shall mean any Subsidiary of the Corporation that would be a "significant subsidiary" within the meaning of Rule 1-02 of Regulation S-X under the Securities Act, as in effect on the Series A Initial Issuance Date; provided, however, that for purposes -21- hereof each reference to "10 percent" in such definition shall be deemed to be a reference to "15 percent". "Stock Subscription Agreement" shall mean the Stock and Warrant Subscription Agreement, dated as of the Series A Initial Issuance Date, by and among the Corporation, the DLJ Investors, the GS Investors and Chemical (as such terms are defined therein). "Subsidiary" of any Person shall mean any corporation of which at least a majority of the outstanding capital stock having voting power under ordinary circumstances to elect directors of such corporation shall at the time be held, directly or indirectly, by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person. "Warrants" shall mean the Warrants issued pursuant to the Warrant Agreement (the "Warrant Agreement") between the Corporation and the purchasers listed therein, dated as of the Series A Initial Issuance Date, as the same may be amended, supplemented, or otherwise modified or replaced (including by virtue of any change in the Persons party thereto) from time to time. 10. Availability of Documents. Copies of all documents, agreements and instruments referred to herein are available from the Corporation upon request. -22- IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed by its President and attested by its Secretary this 9th day of October, 1992. /s/ Robert D. Lindsay --------------------------- President ATTEST: /s/ Richard R. Davis --------------------------- Secretary -23- Exhibit A CERTIFICATE OF AMENDMENT OF CERTIFICATE OF DESIGNATION OF SERIES A CUMULATIVE REDEEMABLE EXCHANGEABLE PREFERRED STOCK OF BCP/ESSEX HOLDINGS INC. _________________________ Pursuant to Section 242 of the General Corporation Law of the State of Delaware The undersigned officers of BCP/Essex Holdings Inc., a corporation organized and existing under the laws of the State of Delaware (HOLDINGS), hereby certify as follows: FIRST: That the Certificate of Designation (the Certificate of Designation) of the Series A Cumulative Redeemable Exchangeable Preferred Stock of HOLDINGS is amended as follows: 1. Clause (A) of the proviso to Section 5(b)(iv) of the Certificate of Designation is hereby amended and restated as follows: "(A) the payment of management or advisory fees not exceeding $1,000,000 per annum to Bessemer or any Affiliate of Bessemer;". 2. The definition of "Change of Control" in Section 9 of the Certificate of Designation is hereby amended and restated as follows: "A "Change of Control" shall be deemed to have occurred if a Person or group of Affiliated Persons or other "group" (within the meaning of Section 13(d)(3) of the Exchange Act), other than Bessemer, any of the Investors (as such term is defined in the Stock Subscription Agreement), and any of their respective Affiliates, shall beneficially own, directly or indirectly, or have the power to direct the vote of with respect to the election of directors of the Corporation, shares of capital stock entitled to case more than the greater of (x) 25% or (y) the Original Group percentage of the votes entitled to be cast with respect to the election of directors of the Corporation. For the purpose of this definition, the "Original Group Percentage" shall mean, as of any date of determination, the percentage of the votes entitled to be cast with respect to the election of directors of the Corporation by Bessemer, Chemical Venture Partners, L.P., the DLJ/GS Investors (as defined in the Stock Subscription Agreement), and their respective Affiliates (including for this purpose votes entitled to be cast by any Affiliate of a DLJ Investor (as defined in the Stock Subscription Agreement) in its capacity as Custodian or Collateral Agent under the Custody Agreements (as defined in Amendment Number 1 dated as of April 1, 1993, to the Stock Subscription Agreement)) and by Persons who have agreed to vote as directed by Bessemer or any of its Affiliates with respect to the election of directors of the Corporation. For the purposes of the calculation required by the first sentence of this definition, any Warrant Shares issuable upon exercise of the Warrants shall be deemed to be issued and outstanding if the Current Market Price (as such term is defined in the Warrant Agreement) is greater than the Exercise Price (as such term is defined in the Warrant Agreement)." SECOND: That said amendment of the Certificate of Designation has been duly adopted by the Board of Directors of HOLDINGS and by the stockholders of HOLDINGS (including the holders of the Series A Cumulative Redeemable Exchangeable Preferred Stock of HOLDINGS) in accordance with Sections 242 and 228 of the General Corporation Law of the State of Delaware and that the capital of HOLDINGS will not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, the undersigned have executed this certificate under the seal of the Corporation this 4th day of April, 1993. /s/ Stanley C. Craft __________________________________ Name: Stanley C. Craft Title: President Attested by: /s/ Anthony J. Criso ________________________________ Name: Anthony J. Criso Title: Vice President-Secretary (Corporate Seal) EX-10 6 EXHIBIT A FORM OF INTERCOMPANY NOTE New York, New York October 31, 1996 FOR VALUE RECEIVED, [Name of Payor], a ____________ corporation (the "Borrower"), hereby promises to pay on demand to the order of [Name of Payee] or its assigns (the "Payee"), in lawful money of the United States of America in immediately available funds, at such location in the United States of America as the Payee shall from time to time designate, the unpaid principal amount of all loans and advances made by the Payee to the Borrower. The Borrower promises also to pay interest on the unpaid principal amount hereof in like money at said office from the date hereof until paid at such rate per annum as shall be agreed upon from time to time by the Borrower and Payee. [, which in no event shall exceed the Prime Rate (as defined in the Credit Agreement referred to below). Notwithstanding anything to the contrary herein, no payment or prepayment of principal of or interest on this Note may be made, directly or indirectly, if a Default or Event of Default (each as defined in the Credit Agreement referred to below) shall have occurred and be continuing or would result therefrom.]*/ Upon the commencement of any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar proceeding of any jurisdiction relating to the Borrower, the unpaid principal amount hereof shall become immediately due and payable without presentment, demand, protest or notice of any kind in connection with this Note. This Note is one of the Intercompany Notes referred to in the Credit Agreement, dated as of October 31, 1996, among BCP/Essex Holdings Inc., Essex Group, Inc., the Lenders from time to time parties thereto and The Chase Manhattan Bank, as Administrative Agent (as amended, modified or supplemented from time to time, the "Credit Agreement") and is subject to the terms thereof, and shall be pledged by the Payee pursuant to the [Holdings] [Company] [Subsidiary] Pledge Agreement (as defined in the Credit Agreement). The Borrower hereby acknowledges and agrees that said Administrative Agent pursuant to and as defined in the [Holdings] [Company] [Subsidiary] Pledge Agreement may exercise all rights provided therein with respect to this Note. The Payee is hereby authorized to record all loans and advances made by it to the Borrower (all of which shall be evidenced by this Note), and all repayments or prepayments thereof, in its books and records, such books and records constituting prima facie evidence of the accuracy of the information contained therein. All payments under this Note shall be made without offset, counterclaim or deduction of any kind. */ Insert in Intercompany Notes as to which Essex Group Inc. is the Borrower. The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. [NAME OF PAYOR] By_______________________________ Title: Pay to the order of _______________________ [NAME OF PAYEE] By______________________ Title: EXHIBIT B-1 Form of Borrowing Base Certificate Date: --------- (000's) TO: The Chase Manhattan Bank Asset Based Lending Operations Ten South LaSalle Street Chicago, IL 60603-1097 Telecopy: (312) 807-4077 FROM: Essex Group, Inc. Borrowing Base Certificate#: --------- ----------------------------------------------------------------------- We hereby certify the following information: (1) Accounts Receivable as of the date of last submitted certificate: + SALES - COLLECTIONS - CREDITS - WRITEOFFS - ADJUSTMENTS/OTHER - Change in Reserve for Doubtful Accounts ____ Accounts Receivable as of / / : $_____ -------- - Notes Receivable - Miscellaneous Accounts Receivable - Unbilled + Reserved for Doubtful Accounts + Reserve for Sales Allowances ____ (2) Accounts Receivable Aging as of / / : ____ -------- Division: [CAPTION] 1-30 31-60 61-90 91 or more FUTURE CURRENT Past Due Past Due Past Due Past Due TOTAL ------ ------- ---- ----- ----- ---- ----- Magnet Wire and Insulation Automotive Communications Interstate 2 Industrial Building Wire Other Total $ $ $ $ $ $
(3) Computation of the Borrowing Base: 3 Borrowing Base Certificate Date:________ (000's) ELIGIBLE RECEIVABLES: (+/- Adjustments) (A) Total Accounts Receivable determined in accordance with GAAP $___ Additions: Reserve for Doubtful Accounts $___ Deductions: Miscellaneous A/R for MWI, Automotive, Communications, Interstate, Industrial, Building Wire and Other $___ Competitive Price Accrual Revised Total Accounts Receivable $___ --- Less the following Deductions: ($____) Total Deductions $___ Total Eligible Receivables (before 85%) $___ (B) Eligible Receivables Borrowing Base Value (i.e., 85% of Eligible Receivables) $___ --- ELIGIBLE INVENTORY: (C) Total Inventory - as of / / BY DIVISION -------- (determined in accordance with GAAP; does not consider LIFO reserve) Magnet Wire and Insulation Automotive Communications Interstate Industrial Building Wire Other ____ Total Inventory $____ Plus or Minus Purchase Price Variances: - Current Month - Prior Month ____ Revised Total Inventory $___ Less the following Deductions: ($____) Total Deductions $___ Net Eligible Inventory before Eligible Consigned Inventory and Raw Materials $___ 4 Less: Eligible Consigned Inventory ($____) Raw Materials ($____) Net Eligible Inventory before 65% $_____ ----- (D) 65% of Eligible Inventory --- 5 Borrowing Base Certificate Date:_______ (000's) Eligible Consigned Inventory (E) 50% of Eligible Consigned Inventory ___ Raw Material (F) 30% of Raw Materials ___ --- (G) Total Eligible Inventory $____ ---- Note: Total Eligible Inventory Borrowing Base Value cannot exceed Eligible Receivables Borrowing Base Value (H) Grand Total Borrowing Base $____ (Sum of (B) and (G) above) ---- Effective Date _______, 199__ Aggregate Outstanding Revolving Extension of Credit: (a) (i) Aggregate Principal Amount of Loans ____ (ii) Aggregate L/C ____ (iii) Aggregate Canadian Loan Facility ____ (iv) Aggregate Principal Amount of all Specified Basket Debt Outstanding ____ (b) Sum of (a)(i) through (a)(iv) above $____ Modified Aggregate Outstanding Extensions of Credit: (a) Aggregate Outstanding Extensions of Credit (b) Minus the Lesser of: (i) Letter of Credit Commitment and (ii) Aggregate Amount of all Letter of Credit Obligations outstanding $____ +/- any loans to reimburse L/C drawings $____ (c) Sum of (a) and (b) $____ ---- Loans Available under Borrowing Base (Based on maximum allowable $370 million) $____ The undersigned hereby represents and warrants that this is a correct statement regarding the status of accounts receivable and inventory assigned to The Chase Manhattan Bank, as administrative agent (the "Administrative agent") for the lenders (the "Lenders") parties to the Credit Agreement dated as of October 31, 1996 (the "Credit Agreement"), among BCP/Essex Holdings Inc., the Company, the Administrative Agent and 6 the Lenders, that the figures set forth herein are accurage in all material respects and have been computed in accordance with the Credit Agreement and that no Tolled Inventory (as defined in the Company Security Agreement or the Subsidiary Security Agreement, as the case may be), referred to in the Credit Agreement is included in any of the computations including inventory herein. The undersigned further warrants and represents that the Company is in complete compliance with all the terms and conditions contained in the agreements between us. The undersigned further understands that the Lenders' extensions of credit to the Company will be based upon the reliance on the information contained herein. Terms used herein which are defined in the Credit Agreement shall have such defined meanings when otherwise defined herein. ATTEST: ESSEX GROUP, INC. By:___________________ Name: Title: EXHIBIT B-2 FORM OF SENIOR NOTE INDENTURE REVOLVING CREDIT INCURRENCE LIMIT CERTIFICATE TO: THE CHASE MANHATTAN BANK DATE:____________ c/o Chase Securities Inc. 10 South LaSalle Street Chicago, IL 60603 Telecopy: (312) 807-4077 FROM: Essex Group, Inc. Senior Note Indenture Revolving Credit Incurrence Limit Certificate #:____________________ ______________________________________________________________ We hereby certify the following information: COMPUTATION OF SENIOR NOTE INDENTURE REVOLVING CREDIT INCURRENCE LIMIT: (a) Total Accounts Receivable: $__________ (b) Receivables availability (80% advance): $__________ (c) Total Inventory: $__________ (d) Inventory availability (50% advance): $__________ (e) Total availability on A/R and Inventory (sum of clause (b) and (d) above): $__________ (f) Indebtedness outstanding pursuant to Section 4.04(b)(i) of Senior Note Indenture (other than L/C Obligations and Specified Basket Debt): $__________ $__________ $__________ Total: $__________ (g) Excess of clause (e) over clause (f): $__________ (h) (i) Indebtedness outstanding pursuant to Section 4.04(b)(x) of Senior Note Indenture (other than L/C Obligations and Specified Basket Debt): $__________ $__________ $__________ 2 Total: $__________ (ii) $25,000,000 less aggregate amount described in clause (h)(i): $__________ (i) Sum of clauses (g) and (h)(ii) above: $__________ (j) (i) L/C Obligations presently outstanding: $__________ (ii) Specified Basket Debt presently outstanding: $______ (iii) Sum of clauses (j)(i) and (j)(ii): $______ (k) Amount of clause (j)(iii) cannot exceed amount of clause (i). COMMENTS OR OTHER INFORMATION: The undersigned hereby represents and warrants to The Chase Manhattan Bank, as administrative agent (the "Administrative Agent") for the lenders (the "Lenders") parties to the Credit Agreement, dated as of October 31, 1996 (the "Credit Agreement"), among BCP/Essex Holdings Inc., the Company, the Administrative Agent and the Lenders, that the figures set forth herein are accurate in all material respects and have been computed in accordance with the Credit Agreement and the Senior Note Indenture. The undersigned further warrants and represents that, to the best knowledge of the undersigned, the Company is in complete compliance with all the terms and conditions contained in the agreements between us. The undersigned further understands that the Lenders' extensions of credit to the Company will be based upon the reliance on the information contained herein. Terms used herein which are defined in the Credit Agreement shall have such defined meanings when otherwise defined herein. ESSEX GROUP, INC. By:_____________________________ Name: Title: EXHIBIT C-1 [FORM OF COMPETITIVE ADVANCE ACCEPT/REJECT LETTER] __________, 199__ The Chase Manhattan Bank, as Administrative Agent c/o Chase Agent Bank Services Group Grand Central Tower 140 East 45th Street New York, New York 10017 Attention: Jesus Sang Reference is made to the Credit Agreement, dated as of October 31, 1996, among BCP/Essex Holdings Inc., the undersigned, the Lenders named therein and The Chase Manhattan Bank, as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. In accordance with Section 2.3(f) of the Credit Agreement, the undersigned [rejects] [accepts and confirms] the offers by the Lender(s) to make Competitive Loans to the undersigned on ________, 199__ under Section 2.3 in the (respective) amount(s) set forth on the attached list of Competitive Loans offered. Very truly yours, ESSEX GROUP, INC. By: ---------------------------- Name: Title: [NOTE: The Company must attach the Competitive Loan offer list prepared by the Administrative Agent with the [rejected] [accepted] amount entered by the Company to the right of each Competitive Loan offer]. EXHIBIT C-2 [FORM OF COMPETITIVE ADVANCE INVITATION] --------------, 199___ The Lenders of Essex Group, Inc. (the "Lenders") Reference is made to the Credit Agreement, dated as of October 31, 1996, among BCP/Essex Holdings Inc., the Company, the Lenders named therein and The Chase Manhattan Bank, as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement") and the Competitive Advance Request by the Company, dated as of _______________, 199__. Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. This is an invitation by the Company to each of the Lenders to make a Competitive Advance Offer to the Company which pursuant to Section 2.3 of the Credit Agreement has requested offers for the following Competitive Loans: Loan 1 Loan 2 Loan 3 Aggregate Principal Amount $______ $______ $______ Date of Competitive Borrowing Competitive Loan Maturity Date Very truly yours, THE CHASE MANHATTAN BANK, as Administrative Agent By: -------------------------- Name: Title: ESSEX GROUP, INC. By: -------------------------- Name: Title: EXHIBIT C-3 COMPETITIVE ADVANCE OFFER , 199 The Chase Manhattan Bank, as Administrative Agent c/o Chase Agent Bank Services Group Grand Central Tower 140 East 45th Street New York, New York 10017 Attention: Jesus Sang Reference is made to the Credit Agreement, dated as of October 31, 1996, among BCP/Essex Holdings, Inc., the Company, the Lenders named therein and The Chase Manhattan Bank, as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. In accordance with Section 2.3 of the Credit Agreement, the undersigned Lender offers**/ to make Competitive Loans thereunder in the following amounts with the following maturity dates: Date of Competitive Borrowing: Aggregate Principal Amount: $_______ _________, 199__ Competitive Loan Maturity Date 1: Maximum Amount: $________ _________, 199__ $________ offered at _______* $________ offered at _______* Competitive Loan Maturity Date 2: Maximum Amount: $________ _________, 199__ $________ offered at _______* $________ offered at _______* Competitive Loan Maturity Date 3: Maximum Amount: $________ _________, 199__ $________ offered at _______* $________ offered at _______* [NOTE: Insert the interest rate offered for the specified Competitive Loan where indicated by an asterisk (*). In the case of Eurodollar Competitive Loans, insert a Margin bid. In the case of Fixed Rate Competitive Loans, insert a fixed rate bid.] Very truly yours, The Chase Manhattan Bank, as Administrative Agent By: ____________________________ Name: Title: Telephone No.: Telecopy No.: 6 --------------- **/ Each Lender may make up to five separate offers with respect to each Competitive Loaan requested in the related Competitive Advance Invitation. EXHIBIT C-4 COMPETITIVE ADVANCE REQUEST ----------, 199_ The Chase Manhattan Bank, as Administrative Agent c/o Chase Agent Bank Services Group Grand Central Tower 140 East 45th Street New York, New York 10017 Attention: Jesus Sang Reference is made to the Credit Agreement, dated as of October 31, 1996, among BCP/Essex Holdings, Inc., the Company, the Lenders named therein and The Chase Manhattan Bank, as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. This is a [Fixed Rate] [Eurodollar] Competitive Loan Request pursuant to Section 2.3 of the Credit Agreement requesting offers for the following Competitive Loans: Loan 1 Loan 2 Loan 3 Aggregate Principal Amount $______ $______ $______ Date of Competitive Borrowing Competitive Loan Maturity Date [NOTE: Pursuant to the Credit Agreement, a Competitive Advance Request may be transmitted in writing, by telecopy, or by telephone, immediately confirmed by telecopy. In any case, a Competitive Advance Request shall contain the information specified in the second paragraph of this form.] Very truly yours, [BORROWER] By: ------------------------ Name: Title: EXHIBIT D-1 FORM OF COMPANY PLEDGE AGREEMENT COMPANY PLEDGE AGREEMENT, dated as of October 31, 1996, made by ESSEX GROUP, INC., a Michigan corporation (the "Pledgor"), in favor of THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") parties to the Credit Agreement, dated as of October 31, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Pledgor, BCP/Essex Holdings Inc., the Lenders and the Administrative Agent. W I T N E S S E T H : WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make Loans to the Pledgor upon the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to issue, or to participate in, Letters of Credit for the account of the Pledgor upon the terms and subject to the conditions set forth therein; WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to, and to issue or participate in Letters of Credit for the account of, the Pledgor under the Credit Agreement that the Pledgor shall have executed and delivered this Pledge Agreement to the Administrative Agent for the ratable benefit of the Lenders; and WHEREAS, each Issuer (as defined below) is a wholly owned direct subsidiary of the Pledgor; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and issue or participate in Letters of Credit under the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined, and the following terms shall have the following meanings: "Code" means the Uniform Commercial Code from time to time in effect in the State of New York. "Collateral" means the Pledged Securities and all Proceeds thereof. "Issuers" means each Subsidiary of the Pledgor listed on Schedule I hereto. 2 "Obligations" means the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Pledgor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Pledgor to the Administrative Agent and the Lenders (or, in the case of any Interest Rate Protection Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, any Revolving Credit Notes, any other Loan Document, the Letters of Credit or this Pledge Agreement and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, charges, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Administrative Agent and the Lenders that are required to be paid by the Pledgor pursuant to the terms of the Credit Agreement) or otherwise. "Pledge Agreement" means this Pledge Agreement, as amended, supplemented or otherwise modified from time to time. "Pledged Notes" means all Intercompany Notes at any time issued to the Pledgor and all other promissory notes issued to or held by the Pledgor (other than promissory notes issued in connection with extensions of trade credit by the Pledgor in the ordinary course of business). "Pledged Securities" means all of the Pledged Stock and Pledged Notes. "Pledged Stock" means the shares of capital stock listed on Schedule I hereto, together with all stock certificates, options or rights of any nature whatsoever that may be issued or granted by such Issuer to the Pledgor in respect of the Pledged Stock while this Pledge Agreement is in effect. "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions with respect thereto. 2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to the Administrative Agent, for the ratable benefit of the Lenders, all the Pledged Securities and hereby grants to the Administrative Agent, for the ratable benefit of the Lenders, a first priority security interest in the Collateral, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. 3 3. Stock Powers and Endorsements. Concurrently with the delivery to the Administrative Agent of each certificate representing one or more shares of Pledged Stock to the Administrative Agent, the Pledgor shall deliver an undated stock power covering such certificate, duly executed in blank by the Pledgor with, if the Administrative Agent so requests, signature guaranteed. All Pledged Notes, when delivered, shall be duly endorsed in blank. 4. Representations and Warranties. The Pledgor represents and warrants that: (a) the shares of Pledged Stock of each Issuer listed on Schedule I constitute 100% (or, in the case of any Issuer which is a Foreign Subsidiary, 65%) of the issued and outstanding shares of all classes of the Capital Stock of such Issuer; (b) all the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable; (c) each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws generally affecting creditors' rights and by general principles of equity (regardless of whether enforcement is sought in equity or at law); (d) the Pledgor is the record and beneficial owner of, and has good and marketable title to, the Pledged Securities, free of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Pledge Agreement; and (e) upon delivery to the Administrative Agent of the stock certificates and instruments evidencing the Pledged Securities, the Lien granted pursuant to this Pledge Agreement will constitute a valid, perfected first priority Lien on the Collateral, enforceable as such against all creditors of the Pledgor and any Persons purporting to purchase any Collateral from the Pledgor (subject, in the case of Proceeds, to Section 9-306 of the Code). 5. Covenants. The Pledgor covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Pledge Agreement until the Obligations are paid in full and the Revolving Credit Commitments are terminated: (a) If the Pledgor shall, as a result of its ownership of the Pledged Stock, become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, the Pledgor shall accept the same as the agent of the Administrative Agent and the Lenders, hold the same 4 in trust for the Administrative Agent and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly endorsed by the Pledgor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by the Pledgor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. If an Event of Default shall have occurred and be continuing, any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations. If any sums of money or property so paid or distributed in respect of the Pledged Securities shall be received by the Pledgor while an Event of Default shall have occurred and be continuing, the Pledgor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Lenders, segregated from other funds of the Pledgor, as additional collateral security for the Obligations. (b) Without the prior written consent of the Administrative Agent, the Pledgor will not (i) vote to enable, or take any other action to permit, any Issuer to issue (other than to existing stockholders on a proportionate basis) any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of such Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Collateral other than pursuant to a transaction permitted by the Credit Agreement, or (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Pledge Agreement. The Pledgor will defend the right, title and interest of the Administrative Agent and the Lenders in and to the Collateral against the claims and demands of all Persons whomsoever. (c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purposes of obtaining or preserving the full benefits of this Pledge Agreement and of the rights and powers herein granted. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel paper, such promissory note, other instrument or chattel paper shall be immediately delivered to the Administrative Agent, duly endorsed in 5 a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Pledge Agreement. (d) The Pledgor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Pledge Agreement. 6. Cash Dividends and Other Distributions; Voting Rights. Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the Pledgor of the Administrative Agent's intent to exercise its corresponding rights pursuant to paragraph 7 below, the Pledgor shall be permitted to receive all cash dividends in respect of the Pledged Stock and all payments in respect of the Pledged Notes, in each case paid in the normal course of business of each Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and/or corporate rights with respect to the Pledged Securities, provided, however, that no vote shall be cast or corporate right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, this Pledge Agreement or the other Loan Documents. At the expense of the Pledgor, the Administrative Agent shall execute and deliver to the Pledgor, or cause to be executed and delivered to the Pledgor, all such proxies, powers of attorney and other instruments as the Pledgor may reasonably request for the purpose of enabling it to exercise the voting and/or corporate rights and powers which it is entitled to exercise pursuant to this paragraph 6. 7. Rights of the Lenders and the Administrative Agent. (a) If an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice of its intent to exercise such rights to the Pledgor, (i) the Administrative Agent shall have the right to receive any and all cash dividends and amounts payable in respect of the Pledged Securities and make application thereof to the Obligations in such order as the Administrative Agent may determine, and (ii) all shares of the Pledged Securities shall be registered in or transferred to the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (A) all voting, corporate and other rights pertaining to the Pledged Securities at any meeting of shareholders of each Issuer or otherwise and (B) any and all rights of conversion, exchange, subscription and any other rights, privileges or options pertaining to the Pledged Securities as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by the Pledgor or the Administrative Agent of any right, privilege or option pertaining to such shares of the Pledged Stock, and in connection therewith, the right to deposit and deliver any and all of the Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine), all without liability except to account for property actually 6 received by it, but the Administrative Agent shall have no duty to the Pledgor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. (b) The rights of the Administrative Agent and the Lenders hereunder shall not be conditioned or contingent upon the pursuit by the Administrative Agent or any Lender of any right or remedy against any Issuer or against any other Person which may be or become liable in respect of all or any part of the Obligations or against any collateral security therefor, guarantee therefor or right of offset with respect thereto. Neither the Administrative Agent nor any Lender shall be liable for any failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor shall the Administrative Agent be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Pledgor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. 8. Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted in this Pledge Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Pledgor, any Issuer or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, assign, give option or options to purchase or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, in the over- the-counter market, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Pledgor, which right or equity is hereby waived and released. The Administrative Agent shall apply any Proceeds from time to time held by it and the proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred in respect thereof or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements of counsel to the Administrative Agent, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent account for the surplus, if any, to the Pledgor. 7 To the extent permitted by applicable law, the Pledgor waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. The Pledgor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. 9. Registration Rights; Private Sales. (a) If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to paragraph 8 hereof, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act of 1933, as amended (the "Securities Act"), the Pledgor will cause each Issuer to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) to use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (iii) to make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. The Pledgor agrees to cause each Issuer to use its best efforts to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. (b) The Pledgor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Pledgor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner (even if the Administrative Agent accepts the first offer received or offers the Collateral or any portion thereof to only one offeree). The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit such Issuer to register such securities for public sale under the Securities 8 Act, or under applicable state securities laws, even if such Issuer would agree to do so. (c) The Pledgor further agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this paragraph 9 valid and binding and in compliance with any and all other applicable Requirements of Law. The Pledgor further agrees that a breach of any of the covenants contained in this paragraph 9 will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this paragraph 9 shall be specifically enforceable against the Pledgor, and, to the extent permitted by applicable law, the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 10. Limitation on Duties Regarding Collateral. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar securities and property for its own account. Except for the duty of the Administrative Agent described in this paragraph 10, and the accounting by the Administrative Agent for moneys actually received by it hereunder, neither the Administrative Agent nor any Lender shall have any duties hereunder as to any Collateral (including, without limitation, as to ascertaining any matters or taking any action with respect to any Collateral or as to taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral). Neither the Administrative Agent, any Lender nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Pledgor or otherwise. 11. Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 12. Severability. Any provision of this Pledge Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Paragraph Headings. The paragraph headings used in this Pledge Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written 9 instrument pursuant to paragraph 15 hereof) be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 15. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Pledge Agreement may be amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. All references herein to Schedule I hereto shall be deemed to be references to Schedule I hereto as the same shall be supplemented from time to time as agreed in writing by the Pledgor and the Administrative Agent. This Pledge Agreement shall be binding upon the successors and assigns of the Pledgor and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns. This Pledge Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 16. Notices. All notices, requests and demands hereunder shall be given in accordance with Section 11.2 of the Credit Agreement. 17. Irrevocable Authorization and Instruction to Pledgor. The Pledgor hereby authorizes and instructs each Issuer to comply with any instruction received by it from the Administrative Agent in writing that (a) states that an Event of Default has occurred and (b) is otherwise in accordance with the terms of this Pledge Agreement, without any other or further instructions from the Pledgor, and the Pledgor agrees that such Issuer shall be fully protected in so complying. 18. Authority of Administrative Agent. The Pledgor acknowledges that the rights and responsibilities of the Administrative Agent under this Pledge Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Pledge Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Pledgor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and neither the Pledgor nor any Issuer shall be under any obligation, or entitlement, to make any inquiry respecting such authority. 10 19. Termination. This Agreement and the security interest created hereby shall terminate when all the Obligations shall have been paid in full, the Revolving Credit Commitments shall have been terminated and no Letters of Credit shall be outstanding, at which time the Administrative Agent shall, at the request and expense of the Pledgor, reassign and deliver (without recourse and without any representation or warranty) to the Pledgor, or such person or persons as the Pledgor shall designate, against receipt, such portion of the Collateral as shall not have been sold or otherwise applied by the Administrative Agent pursuant to the terms hereof and shall still be held by it hereunder, together with appropriate instruments of reassignment and release; provided, that any indemnity set forth herein shall survive any such termination. Upon any sale or other disposition of the Collateral by the Pledgor expressly permitted by the Credit Agreement, the Administrative Agent, at the request and expense of the Pledgor, shall release the Collateral being sold and shall reassign and deliver such Collateral to the Pledgor (without recourse and without any representation or warranty), together with appropriate instruments of reassignment and release; provided that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing and (ii) the Pledgor shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Pledgor stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement to be duly executed and delivered as of the date first above written. ESSEX GROUP, INC. By:_______________________________________________ Title: ACKNOWLEDGEMENT AND CONSENT Each Issuer referred to in the foregoing Pledge Agreement hereby acknowledges receipt of a copy thereof, agrees to be bound thereby and to comply with the terms thereof insofar as such terms are applicable to it. Each Issuer agrees to notify the Administrative Agent promptly in writing of the occurrence of any of the events described in paragraph 5(a) of the Pledge Agreement. Each Issuer further agrees that the terms of paragraphs 9(a) and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it under or pursuant to or arising out of paragraph 9 of the Pledge Agreement. DIAMOND WIRE & CABLE CO. By:______________________________ Name: Title: ESSEX GROUP EXPORT INC. By:______________________________ Name: Title: ESSEX INTERNATIONAL, INC. By:_____________________________ Name: Title: ESSEX INTERNATIONAL, INC. By:_____________________________ Name: Title: US SAMICA CORPORATION By:____________________________ Name: Title: Address for Notices for each of the above Issuers: c/o Essex Group, Inc. 1601 Wall Street Fort Wayne, Indiana 46802 Telecopy: 219-461-4762 SCHEDULE 1 To Pledge Agreement DESCRIPTION OF PLEDGED STOCK Stock Class of Certificate No. of State of Issuer Stock No. Shares Incorporation ------ -------- ----------- ------ ------------ Essex Common 1 100 Delaware International, Inc. US Samica Common 3 43,200 Vermont Corporation Diamond Wire & Common 1 25 Illinois Cable Co. Essex Export Common 1 650 U.S. Virgin Company, Inc. Islands (predecessor to Essex Group Export Inc.) Interstate Common B-2 42.656 Delaware Industries Holdings Inc. EXHIBIT D-2 FORM OF HOLDINGS PLEDGE AGREEMENT HOLDINGS PLEDGE AGREEMENT, dated as of October 31, 1996, made by BCP/ESSEX HOLDINGS INC., a Delaware corporation (the "Pledgor"), in favor of THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") parties to the Credit Agreement, dated as of October 31, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Pledgor, Essex Group, Inc., a Michigan corporation (the "Issuer"), the Lenders and the Administrative Agent. W I T N E S S E T H : WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make Loans to the Issuer upon the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to issue, or to participate in, Letters of Credit for the account of the Issuer upon the terms and subject to the conditions set forth therein; WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to, and to issue or participate in Letters of Credit for the account of, the Issuer under the Credit Agreement that the Pledgor shall have executed and delivered this Pledge Agreement to the Administrative Agent for the ratable benefit of the Lenders; and WHEREAS, the Issuer is a wholly owned direct subsidiary of the Pledgor; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and issue or participate in Letters of Credit under the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined, and the following terms shall have the following meanings: "Code" means the Uniform Commercial Code from time to time in effect in the State of New York. "Collateral" means the Pledged Securities and all Proceeds thereof. "Obligations" means obligations, liabilities and indebtedness of the Pledgor under the guarantee contained in Section 10 of the Credit Agreement. 2 "Pledge Agreement" means this Pledge Agreement, as amended, supplemented or otherwise modified from time to time. "Pledged Notes" means all Intercompany Notes at any time issued to the Pledgor and all other promissory notes issued to or held by the Pledgor. "Pledged Securities" means all of the Pledged Stock and Pledged Notes. "Pledged Stock" means the shares of capital stock listed on Schedule I hereto, together with all stock certificates, options or rights of any nature whatsoever that may be issued or granted by the Issuer to the Pledgor in respect of the Pledged Stock while this Pledge Agreement is in effect. "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions with respect thereto. 2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to the Administrative Agent, for the ratable benefit of the Lenders, all the Pledged Securities and hereby grants to the Administrative Agent, for the ratable benefit of the Lenders, a first priority security interest in the Collateral, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. 3. Stock Powers and Endorsements. Concurrently with the delivery to the Administrative Agent of each certificate representing one or more shares of Pledged Stock to the Administrative Agent, the Pledgor shall deliver an undated stock power covering such certificate, duly executed in blank by the Pledgor with, if the Administrative Agent so requests, signature guaranteed. All Pledged Notes, when delivered, shall be duly endorsed in blank. 4. Representations and Warranties. The Pledgor represents and warrants that: (a) the shares of Pledged Stock listed on Schedule I constitute 100% of the issued and outstanding shares of all classes of the Capital Stock of the Issuer; (b) all the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable; (c) each of the Pledged Notes constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws generally affecting creditors' rights and by 3 general principles of equity (regardless of whether enforcement is sought in equity or at law); (d) the Pledgor is the record and beneficial owner of, and has good and marketable title to, the Pledged Securities, free of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Pledge Agreement; and (e) upon delivery to the Administrative Agent of the stock certificates and instruments evidencing the Pledged Securities, the Lien granted pursuant to this Pledge Agreement will constitute a valid, perfected first priority Lien on the Collateral, enforceable as such against all creditors of the Pledgor and any Persons purporting to purchase any Collateral from the Pledgor (subject, in the case of Proceeds, to Section 9-306 of the Code). 5. Covenants. The Pledgor covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Pledge Agreement until the Obligations are paid in full and the Revolving Credit Commitments are terminated: (a) If the Pledgor shall, as a result of its ownership of the Pledged Stock, become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, the Pledgor shall accept the same as the agent of the Administrative Agent and the Lenders, hold the same in trust for the Administrative Agent and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly endorsed by the Pledgor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by the Pledgor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. If an Event of Default shall have occurred and be continuing, any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of the Issuer shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of the Issuer or pursuant to the reorganization thereof, the property so distributed shall be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations. If any sums of money or property so paid or distributed in respect of the Pledged Securities shall be received by the Pledgor while an Event of Default shall have occurred and be continuing, the Pledgor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or 4 property in trust for the Lenders, segregated from other funds of the Pledgor, as additional collateral security for the Obligations. (b) Without the prior written consent of the Administrative Agent, the Pledgor will not (i) vote to enable, or take any other action to permit, the Issuer to issue any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of the Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Collateral, or (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Pledge Agreement. The Pledgor will defend the right, title and interest of the Administrative Agent and the Lenders in and to the Collateral against the claims and demands of all Persons whomsoever. (c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of the Pledgor, the Pledgor will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purposes of obtaining or preserving the full benefits of this Pledge Agreement and of the rights and powers herein granted. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel paper, such promissory note, other instrument or chattel paper shall be immediately delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Pledge Agreement. (d) The Pledgor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Pledge Agreement. 6. Cash Dividends and Other Distributions; Voting Rights. Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the Pledgor of the Administrative Agent's intent to exercise its corresponding rights pursuant to paragraph 7 below, the Pledgor shall be permitted to receive all cash dividends in respect of the Pledged Stock and all payments in respect of the Pledged Notes, in each case paid in the normal course of business of the Issuer or obligor and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and/or corporate rights with respect to the Pledged Securities, provided, however, that no vote shall be cast or corporate right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, this Pledge Agreement or the other Loan Documents. At the expense of the Pledgor, the Administrative Agent shall execute and deliver to the Pledgor, or cause to 5 be executed and delivered to the Pledgor, all such proxies, powers of attorney and other instruments as the Pledgor may reasonably request for the purpose of enabling it to exercise the voting and/or corporate rights and powers which it is entitled to exercise pursuant to this paragraph 6. 7. Rights of the Lenders and the Administrative Agent. (a) If an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice of its intent to exercise such rights to the Pledgor, (i) the Administrative Agent shall have the right to receive any and all cash dividends (other than dividends expressly permitted by Section 7.8(a) of the Credit Agreement and dividends to be used for the purpose referred to in the parenthetical contained in Section 7.8(b) of the Credit Agreement) and amounts payable in respect of the Pledged Securities and make application thereof to the Obligations in such order as the Administrative Agent may determine, and (ii) all shares of the Pledged Securities shall be registered in or transferred to the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (A) all voting, corporate and other rights pertaining to the Pledged Securities at any meeting of shareholders of the Issuer or otherwise and (B) any and all rights of conversion, exchange, subscription and any other rights, privileges or options pertaining to the Pledged Securities as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of the Issuer, or upon the exercise by the Pledgor or the Administrative Agent of any right, privilege or option pertaining to such shares of such Pledged Stock, and in connection therewith, the right to deposit and deliver any and all of such Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to the Pledgor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. (b) The rights of the Administrative Agent and the Lenders hereunder shall not be conditioned or contingent upon the pursuit by the Administrative Agent or any Lender of any right or remedy against the Issuer or against any other Person which may be or become liable in respect of all or any part of the Obligations or against any collateral security therefor, guarantee therefor or right of offset with respect thereto. Neither the Administrative Agent nor any Lender shall be liable for any failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor shall the Administrative Agent be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Pledgor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. 8. Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted in this Pledge Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the 6 foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Pledgor, the Issuer or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, assign, give option or options to purchase or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, in the over- the-counter market, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Pledgor, which right or equity is hereby waived and released. The Administrative Agent shall apply any Proceeds from time to time held by it and the proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred in respect thereof or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements of counsel to the Administrative Agent, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent account for the surplus, if any, to the Pledgor. To the extent permitted by applicable law, the Pledgor waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. The Pledgor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. The Pledgor further waives and agrees not to assert any rights or privileges which it may acquire under Section 9-112 of the Code. 9. Registration Rights; Private Sales. (a) If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to paragraph 8 hereof, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act of 1933, as amended (the "Securities Act"), the Pledgor will cause the Issuer to (i) execute and deliver, and cause the directors and officers of the Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Stock, or that portion thereof to be 7 sold, under the provisions of the Securities Act, (ii) to use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Stock, or that portion thereof to be sold, and (iii) to make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. The Pledgor agrees to cause the Issuer to use its best efforts to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. (b) The Pledgor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Pledgor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner (even if the Administrative Agent accepts the first offer received or offers the Collateral or any portion thereof to only one offeree). The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if the Issuer would agree to do so. (c) The Pledgor further agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this paragraph 9 valid and binding and in compliance with any and all other applicable Requirements of Law. The Pledgor further agrees that a breach of any of the covenants contained in this paragraph 9 will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this paragraph 9 shall be specifically enforceable against the Pledgor, and, to the extent permitted by applicable law, the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 10. Limitation on Duties Regarding Collateral. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar securities and 8 property for its own account. Except for the duty of the Administrative Agent described in this paragraph 10, and the accounting by the Administrative Agent for moneys actually received by it hereunder, neither the Administrative Agent nor any Lender shall have any duties hereunder as to any Collateral (including, without limitation, as to ascertaining any matters or taking any action with respect to any Collateral or as to taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral). Neither the Administrative Agent, any Lender nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Pledgor or otherwise. 11. Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 12. Severability. Any provision of this Pledge Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Paragraph Headings. The paragraph headings used in this Pledge Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to paragraph 15 hereof) be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 15. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Pledge Agreement may be amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. All references herein to Schedule I hereto shall be deemed to be references to Schedule I hereto as the same shall be supplemented from time to time as agreed in writing by the Pledgor and the Administrative Agent. This Pledge Agreement shall be 9 binding upon the successors and assigns of the Pledgor and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns. This Pledge Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 16. Notices. All notices, requests and demands given hereunder shall be given in accordance with Section 11.2 of the Credit Agreement. 17. Irrevocable Authorization and Instruction to Issuer. The Pledgor hereby authorizes and instructs the Issuer to comply with any instruction received by it from the Administrative Agent in writing that (a) states that an Event of Default has occurred and (b) is otherwise in accordance with the terms of this Pledge Agreement, without any other or further instructions from the Pledgor, and the Pledgor agrees that the Issuer shall be fully protected in so complying. 18. Authority of Administrative Agent. The Pledgor acknowledges that the rights and responsibilities of the Administrative Agent under this Pledge Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Pledge Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Pledgor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and neither the Pledgor nor the Issuer shall be under any obligation, or entitlement, to make any inquiry respecting such authority. 19. Termination. This Agreement and the security interest created hereby shall terminate when all the Obligations shall have been paid in full, the Revolving Credit Commitments shall have been terminated and no Letters of Credit shall be outstanding, at which time the Administrative Agent shall, at the request and expense of the Pledgor, reassign and deliver (without recourse and without any representation or warranty) to the Pledgor, or such person or persons as the Pledgor shall designate, against receipt, such portion of the Collateral as shall not have been sold or otherwise applied by the Administrative Agent pursuant to the terms hereof and shall still be held by it hereunder, together with appropriate instruments of reassignment and release; provided, that any indemnity set forth herein shall survive any such termination. IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement to be duly executed and delivered as of the date first above written. BCP/ESSEX HOLDINGS INC. By:__________________________ Name: 10 Title: ACKNOWLEDGEMENT AND CONSENT The Issuer referred to in the foregoing Pledge Agreement hereby acknowledges receipt of a copy thereof, agrees to be bound thereby and to comply with the terms thereof insofar as such terms are applicable to it. The Issuer agrees to notify the Administrative Agent promptly in writing of the occurrence of any of the events described in paragraph 5(a) of the Pledge Agreement. The Issuer further agrees that the terms of paragraphs 9(a) and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it under or pursuant to or arising out of paragraph 9 of the Pledge Agreement. ESSEX GROUP, INC. By_____________________________ Name: Title: Address for Notices: _______________________________ _______________________________ _______________________________ Telex: _______________________ Rapifax: _____________________ SCHEDULE 1 To Pledge Agreement DESCRIPTION OF PLEDGED STOCK Stock Class of Certificate No. of State of Issuer Stock No. Shares Incorporation ------ -------- ----------- ------ ------------- Essex Group, Common 4 100 Michigan Inc. EXHIBIT D-3 FORM OF SUBSIDIARY PLEDGE AGREEMENT SUBSIDIARY PLEDGE AGREEMENT, dated as of October 31, 1996, made by the parties signatories hereto (each, a "Pledgor"; collectively, the "Pledgors"), in favor of THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") parties to the Credit Agreement, dated as of October 31, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among BCP/Essex Holdings Inc., Essex Group, Inc. (the "Company"), a Michigan corporation, the Lenders and the Administrative Agent. W I T N E S S E T H : WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make Loans to the Company upon the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to issue, or to participate in, Letters of Credit for the account of the Company upon the terms and subject to the conditions set forth therein; WHEREAS, the Pledgors are parties to the Subsidiary Guarantee, dated as of April __, 1995 (as the same may be from time to time amended, supplemented or modified, the "Subsidiary Guarantee"); WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to, and to issue or participate in Letters of Credit for the account of, the Company under the Credit Agreement that the Pledgors shall have executed and delivered this Pledge Agreement to the Administrative Agent for the ratable benefit of the Lenders; and WHEREAS, each Issuer (as defined below) is a [wholly owned] direct subsidiary of the Pledgor listed immediately above such Issuer's name on Schedule I hereto; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and issue or participate in Letters of Credit under the Credit Agreement, each Pledgor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined, and the following terms shall have the following meanings: "Code" means the Uniform Commercial Code from time to time in effect in the State of New York. 2 "Collateral" means the Pledged Securities and all Proceeds thereof; with respect to the representations, warranties and covenants made by each Pledgor in Paragraphs 4 and 5 hereof, each reference to "Collateral" shall be deemed to refer to the Collateral in which such Pledgor has granted or hereby grants or purports to grant a security interest under this Pledge Agreement. "Issuers" means the collective reference to each issuer listed on Schedule I hereto, immediately beneath the name of the Pledgor of which it is a Subsidiary. "Obligations" means, with respect to any Pledgor, all obligations, liabilities and indebtedness of such Pledgor under the Subsidiary Guarantee. "Pledge Agreement" means this Pledge Agreement, as amended, supplemented or otherwise modified from time to time. "Pledged Notes" means all Intercompany Notes at any time issued to any Pledgor and all other promissory notes issued to or held by any Pledgor (other than promissory notes issued in connection with extensions of trade credit by any Pledgor in the ordinary course of business). "Pledged Securities" means all of the Pledged Stock and Pledged Notes. "Pledged Stock" means the shares of capital stock of each Issuer listed on Schedule I hereto, together with all stock certificates, options or rights of any nature whatsoever that may be issued or granted by such Issuer to any Pledgor in respect of the Pledged Stock while this Pledge Agreement is in effect. "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions with respect thereto. 2. Pledge; Grant of Security Interest. Each Pledgor hereby delivers to the Administrative Agent, for the ratable benefit of the Lenders, all the Pledged Securities and hereby grants to the Administrative Agent, for the ratable benefit of the Lenders, a first priority security interest in the Collateral owned by such Pledgor, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations. 3. Stock Powers and Endorsements. Concurrently with the delivery to the Administrative Agent of each certificate representing one or more shares of Pledged Stock to the Administrative Agent, the relevant Pledgor shall deliver an undated stock power covering such certificate, duly executed in blank by such Pledgor with, if the Administrative Agent so requests, signature guaranteed. All Pledged Notes, when delivered, shall be duly endorsed in blank. 3 4. Representations and Warranties. Each Pledgor represents and warrants that: (a) the shares of Pledged Stock pledged by such Pledgor hereunder constitute 100% (or, in the case of any Issuer which is a Foreign Subsidiary, 65%) of all the issued and outstanding shares of all classes of the Capital Stock of each of the Issuers; (b) all the shares of the Pledged Stock pledged by such Pledgor hereunder have been duly and validly issued and are fully paid and nonassessable; (c) each of the Pledged Notes pledged by such Pledgor hereunder constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws generally affecting creditors' rights and by general principles of equity (regardless of whether enforcement is sought in equity or at law); (d) such Pledgor is the record and beneficial owner of, and has good and marketable title to, the Pledged Securities pledged by such Pledgor hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Pledge Agreement; and (e) upon delivery to the Administrative Agent of the stock certificates and instruments evidencing the Pledged Securities pledged by such Pledgor hereunder, the Lien granted pursuant to this Pledge Agreement will constitute a valid, perfected first priority Lien on such Pledged Securities and the proceeds thereof, enforceable as such against all creditors of such Pledgor and any Persons purporting to purchase such Collateral from such Pledgor (subject, in the case of Proceeds, to Section 9-306 of the Code). 5. Covenants. Each Pledgor covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Pledge Agreement until the Obligations are paid in full and the Revolving Credit Commitments are terminated: (a) If such Pledgor shall, as a result of its ownership of the Pledged Stock, become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, such Pledgor shall accept the same as the agent of the Administrative Agent and the Lenders, hold the same in trust for the Administrative Agent and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form received, duly endorsed by such Pledgor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Pledgor and with, if the 4 Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. If an Event of Default shall have occurred and be continuing, any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of any Issuer shall be paid over to the Administration Agent to be held by it hereunder as additional collateral security for the Obligations, and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations. If any sums of money or property so paid or distributed in respect of the Pledged Securities shall be received by such Pledgor while an Event of Default shall have occurred and be continuing, such Pledgor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Lenders, segregated from other funds of such Pledgor, as additional collateral security for the Obligations. (b) Without the prior written consent of the Administrative Agent, such Pledgor will not (i) vote to enable, or take any other action to permit, any Issuer to issue (other than existing stockholders on a proportionate basis) any stock or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock or other equity securities of any nature of such Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Collateral other than pursuant to a transaction permitted by the Credit Agreement, or (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Pledge Agreement. Such Pledgor will defend the right, title and interest of the Administrative Agent and the Lenders in and to the Collateral pledged by it hereunder against the claims and demands of all Persons whomsoever. (c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Pledgor, such Pledgor will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purposes of obtaining or preserving the full benefits of this Pledge Agreement and of the rights and powers herein granted. If any amount payable under or in connection with any of the Collateral pledged by such Pledgor hereunder shall be or become evidenced by any promissory note, other instrument or chattel paper, such promissory note, other instrument or chattel paper shall be immediately delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Pledge Agreement. 5 (d) Such Pledgor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral pledged by it hereunder or in connection with any of the transactions contemplated by this Pledge Agreement. 6. Cash Dividends and Other Distributions; Voting Rights. Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to such Pledgor of the Administrative Agent's intent to exercise its corresponding rights pursuant to paragraph 7 below, each Pledgor shall be permitted to receive all cash dividends in respect of the Pledged Stock and all payments in respect of the Pledged Notes, in each case paid in the normal course of business of each Issuer or obligor and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and/or corporate rights with respect to the Pledged Securities, provided, however, that no vote shall be cast or corporate right exercised or other action taken which, in the Administrative Agent's reasonable judgment, would impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, this Pledge Agreement or the other Loan Documents. At the expense of the Pledgor, the Administrative Agent shall execute and deliver to the Pledgor, or cause to be executed and delivered to the Pledgor, all such proxies, powers of attorney and other instruments as the Pledgor may reasonably request for the purpose of enabling it to exercise the voting and/or corporate rights and powers which it is entitled to exercise pursuant to this paragraph 6. 7. Rights of the Lenders and the Administrative Agent. (a) If an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice of its intent to exercise such rights to any Pledgor, (i) the Administrative Agent shall have the right to receive any and all cash dividends and amounts payable in respect of the Pledged Securities pledged by such Pledgor and make application thereof to the Obligations in such order as the Administrative Agent may determine, and (ii) all shares of the Pledged Securities pledged by such Pledgor shall be registered in or transferred to the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (A) all voting, corporate and other rights pertaining to the Pledged Securities at any meeting of shareholders of each Issuer or otherwise and (B) any and all rights of conversion, exchange, subscription and any other rights, privileges or options pertaining to the Pledged Securities as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of any Issuer, or upon the exercise by such Pledgor or the Administrative Agent of any right, privilege or option pertaining to such shares of such Pledged Stock, and in connection therewith, the right to deposit and deliver any and all of such Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Pledgor to exercise 6 any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. (b) The rights of the Administrative Agent and the Lenders hereunder shall not be conditioned or contingent upon the pursuit by the Administrative Agent or any Lender of any right or remedy against any Issuer or against any other Person which may be or become liable in respect of all or any part of the Obligations or against any collateral security therefor, guarantee therefor or right of offset with respect thereto. Neither the Administrative Agent nor any Lender shall be liable for any failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor shall the Administrative Agent be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Pledgor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. 8. Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted in this Pledge Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Pledgor, any Issuer or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, assign, give option or options to purchase or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, in the over- the-counter market, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Pledgor, which right or equity is hereby waived and released. The Administrative Agent shall apply any Proceeds from time to time held by it and the proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred in respect thereof or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements of counsel to the Administrative Agent, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent account for the surplus, if any, to any Pledgor. To the extent permitted by applicable law, each Pledgor waives all claims, 7 damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. Each Pledgor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. Each Pledgor further waives and agrees not to assert any rights or privileges which it may acquire under Section 9-112 of the Code. 9. Registration Rights; Private Sales. (a) If the Administrative Agent shall determine to exercise its right to sell any or all of the Pledged Stock pursuant to paragraph 8 hereof, and if in the opinion of the Administrative Agent it is necessary or advisable to have the Pledged Stock, or that portion thereof to be sold, registered under the provisions of the Securities Act of 1933, as amended (the "Securities Act"), each Pledgor will cause each Issuer of the Pledged Stock owned by such Pledgor to (i) execute and deliver, and cause the directors and officers of each Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register such Pledged Stock, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) to use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of such Pledged Stock, or that portion thereof to be sold, and (iii) to make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Pledgor agrees to cause each Issuer to use its best efforts to comply with the provisions of the securities or "Blue Sky" laws of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act. (b) Each Pledgor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner (even if the Administrative Agent accepts the first offer received or offers the Collateral or any portion thereof to only one offeree). The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit any Issuer to register such securities for public sale under the Securities Act, or 8 under applicable state securities laws, even if such Issuer would agree to do so. (c) Each Pledgor further agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this paragraph 9 valid and binding and in compliance with any and all other applicable Requirements of Law. Each Pledgor further agrees that a breach of any of the covenants contained in this paragraph 9 will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this paragraph 9 shall be specifically enforceable against such Pledgor, and, to the extent permitted by applicable law, each Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement. 10. Limitation on Duties Regarding Collateral. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar securities and property for its own account. Except for the duty of the Administrative Agent described in this paragraph 10, and the accounting by the Administrative Agent for moneys actually received by it hereunder, neither the Administrative Agent nor any Lender shall have any duties hereunder as to any Collateral (including, without limitation, as to ascertaining any matters or taking any action with respect to any Collateral or as to taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral). Neither the Administrative Agent, any Lender nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Pledgor or otherwise. 11. Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 12. Severability. Any provision of this Pledge Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Paragraph Headings. The paragraph headings used in this Pledge Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written 9 instrument pursuant to paragraph 15 hereof) be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 15. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Pledge Agreement may be amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. All references herein to Schedule I hereto shall be deemed to be references to Schedule I hereto as the same shall be supplemented from time to time as agreed in writing by the Pledgor and the Administrative Agent. This Pledge Agreement shall be binding upon the successors and assigns of each Pledgor and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns. This Pledge Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 16. Notices. All notices, requests and demands given hereunder shall be given in accordance with Paragraph 16 of the Subsidiary Guarantee. 17. Irrevocable Authorization and Instruction to Issuers. Each Pledgor hereby authorizes and instructs each Issuer to comply with any instruction received by it from the Administrative Agent in writing that (a) states that an Event of Default has occurred and (b) is otherwise in accordance with the terms of this Pledge Agreement, without any other or further instructions from such Pledgor, and such Pledgor agrees that such Issuer shall be fully protected in so complying. 18. Authority of Administrative Agent. Each Pledgor acknowledges that the rights and responsibilities of the Administrative Agent under this Pledge Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Pledge Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and such Pledgor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and neither such Pledgor nor any Issuer shall be under any obligation, or entitlement, to make any inquiry respecting such authority. 10 19. Termination. This Agreement and the security interest created hereby shall terminate when all the Obligations shall have been paid in full, the Revolving Credit Commitments shall have been terminated and no Letters of Credit shall be outstanding, at which time the Administrative Agent shall, at the request and expense of the Company, reassign and deliver (without recourse and without any representation or warranty) to the relevant Pledgor, or such person or persons as the Company shall designate, against receipt, such portion of the Collateral as shall not have been sold or otherwise applied by the Administrative Agent pursuant to the terms hereof and shall still be held by it hereunder, together with appropriate instruments of reassignment and release; provided, that any indemnity set forth herein shall survive any such termination. Upon any sale or other disposition of the Collateral by any Pledgor expressly permitted by the Credit Agreement, the Administrative Agent, at the request and expense of the Company, shall release the Collateral being sold and shall reassign and deliver such Collateral to the relevant Pledgor (without recourse and without any representation or warranty), together with appropriate instruments of reassignment and release; provided that the Company shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Company stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. At the request and expense of the Company, a Pledgor shall be released from its obligations hereunder in the event that all the capital stock of such Pledgor shall be sold, transferred or otherwise disposed of in accordance with the terms of the Credit Agreement; provided that the Company shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release identifying the relevant Pledgor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Company stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. IN WITNESS WHEREOF, each of the undersigned has caused this Pledge Agreement to be duly executed and delivered as of the date first above written. DIAMOND WIRE & CABLE CO. By:____________________________ Name: Title: ESSEX GROUP EXPORT INC. By:____________________________ Name: Title: 11 ESSEX INTERNATIONAL, INC. By:____________________________ Name: Title: US SAMICA CORPORATION By:____________________________ Name: Title: INTERSTATE INDUSTRIES HOLDINGS INC. By:___________________________ Name: Title: INTERSTATE INDUSTRIES, INC. By:__________________________ Name: Title: ACKNOWLEDGEMENT AND CONSENT Each Issuer referred to in the foregoing Pledge Agreement hereby acknowledges receipt of a copy thereof, agrees to be bound thereby and to comply with the terms thereof insofar as such terms are applicable to it. Each Issuer agrees to notify the Administrative Agent promptly in writing of the occurrence of any of the events described in paragraph 5(a) of the Pledge Agreement. Each Issuer further agrees that the terms of paragraphs 9(a) and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it under or pursuant to or arising out of paragraph 9 of the Pledge Agreement. INTERSTATE INDUSTRIES, INC. By_____________________________ Name: Title: Address for Notices: c/o Essex Group, Inc. 1601 Wall Street Fort Wayne, Indiana 46802 Attention: David A. Owen Facsimile: 219-461-4762 SCHEDULE 1 To Pledge Agreement DESCRIPTION OF PLEDGED STOCK Stock Class of Certificate No. of State of Issuer Stock No. Shares Incorporation ------ -------- ----------- ------ ------------- Interstate Common 37 100 Mississippi Industries, Inc. EXHIBIT E-1 FORM OF COMPANY SECURITY AGREEMENT COMPANY SECURITY AGREEMENT, dated as of October 31, 1996, made by ESSEX GROUP, INC., a Michigan corporation (the "Company"), in favor of THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") parties to the Credit Agreement, dated as of October 31, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among the Company, BCP/Essex Holdings Inc., the Lenders and the Administrative Agent. W I T N E S S E T H : WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make Loans to the Company upon the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to issue, or to participate in, Letters of Credit for the account of the Company upon the terms and subject to the conditions set forth therein; and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to, and to issue or participate in Letters of Credit for the account of, the Company under the Credit Agreement that the Company shall have executed and delivered this Security Agreement to the Administrative Agent for the ratable benefit of the Lenders; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and issue or participate in Letters of Credit under the Credit Agreement, the Company hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined; the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory and Proceeds; and the following terms shall have the following meanings: "Code" means the Uniform Commercial Code as from time to time in effect in the State of New York. "Collateral" shall have the meaning assigned to it in Section 2 of this Security Agreement, provided, that Collateral shall not include any property which is subject to a Lien permitted under Section 7.3 of the Credit Agreement securing Indebtedness permitted under Section 7.2 of the Credit Agreement to the extent that the grant of a security 2 interest hereunder would be prohibited by such Lien or by the terms of such Indebtedness (but only so long as such prohibition is in effect). "Contracts" means all contracts, agreements, instruments and indentures in any form, and portions thereof, to which the Company is a party or under which the Company has any right, title or interest or to which the Company or any property of the Company is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (a) all rights of the Company to receive moneys due and to become due to it thereunder or in connection therewith, (b) all rights of the Company to damages arising out of, or for, breach or default in respect thereof and (c) all rights of the Company to perform and to exercise all remedies thereunder, in each case to the extent the grant by the Company of a security interest pursuant to this Security Agreement in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Company to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by the Company of a security interest pursuant to this Security Agreement in any Account or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. "Intellectual Property" means (a) all intellectual and similar property of the Company of every kind and nature now owned or hereafter acquired by the Company, including, without limitation, inventions, designs, patents, copyrights, licenses and license agreements (whether the Company is the licensor or the licensee under such agreements), trademarks, trade names and other business names, logos, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations, applications and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing and including, without limitation, any thereof referred to in Schedule I hereto and (b) all renewals thereof. Notwithstanding the foregoing, licenses and license agreements as to which the Company is the licensee shall constitute "Intellectual Property" for the purposes of this Agreement only to the extent the grant by the Company of a security interest pursuant to this Security Agreement in its right, title and interest in such license or license agreement is not prohibited by such license or license agreement without the consent of any other party thereto, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate the Company to obtain such consents); provided, that the foregoing 3 limitation shall not affect, limit, restrict or impair the grant by the Company of a security interest pursuant to this Security Agreement in any Account or any money or other amounts due or to become due under any such license or license agreement. "Obligations" means the unpaid principal amount of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Company to the Administrative Agent and the Lenders (or, in the case of any Interest Rate Protection Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, any Revolving Credit Notes, any other Loan Document, the Letters of Credit or this Security Agreement and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Administrative Agent and the Lenders that are required to be paid by the Company pursuant to the terms of the Credit Agreement) or otherwise. "Security Agreement" means this Security Agreement, as amended, supplemented or otherwise modified from time to time. "Vehicles" means all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state and all tires and other appurtenances to any of the foregoing. 2. Grant of Security Interest. As collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, the Company hereby grants to the Administrative Agent for the ratable benefit of the Lenders a security interest in all of the following property now owned or at any time hereafter acquired by the Company or in which the Company now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Contracts; (iv) all Documents; (v) all Equipment; 4 (vi) all General Intangibles; (vii) all Instruments; (viii) all Intellectual Property; (ix) all Inventory; and (x) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing. 3. Rights of Administrative Agent and Lenders; Limitations on Administrative Agent's and Lenders' Obligations; Limitation on Administrative Agent's and Lenders' Interest in Tolled Inventory. (a) Company Remains Liable under Accounts and Contracts. Anything herein to the contrary notwithstanding, the Company shall remain liable under each of the Accounts and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account and in accordance with and pursuant to the terms and provisions of each such Contract. Neither the Administrative Agent nor any Lender shall have any obligation or liability under any Account (or any agreement giving rise thereto) or under any Contract by reason of or arising out of this Security Agreement or the receipt by the Administrative Agent or any such Lender of any payment relating to such Account or Contract pursuant hereto, nor shall the Administrative Agent or any Lender be obligated in any manner to perform any of the obligations of the Company under or pursuant to any Account (or any agreement giving rise thereto) or under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto) or under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) Notice to Account Debtors and Contracting Parties. Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, the Company shall notify account debtors on the Accounts and parties to the Contracts that the Accounts and the Contracts have been assigned to the Administrative Agent for the ratable benefit of the Lenders and that payments in respect thereof shall be made directly to the Administrative Agent. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may in its own name or in the name of others communicate with account debtors on the Accounts and parties to the Contracts to verify with them to its satisfaction the existence, amount and terms of any Accounts or Contracts. (c) Analysis of Accounts. The Administrative Agent shall have the right to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable at any reasonable time and as often as may reasonably be desired, and the Company shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection therewith. If an Event of 5 Default shall have occurred and be continuing, then upon the Administrative Agent's request and at the expense of the Company, the Company shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts. (d) Collections on Accounts. The Administrative Agent hereby authorizes the Company to collect the Accounts, provided, that the Administrative Agent may curtail or terminate said authority at any time upon the occurrence and during the continuance of an Event of Default. If an Event of Default shall have occurred and be continuing, any payments of Accounts, when collected by the Company, shall be forthwith (and, in any event, within two Business Days) deposited by the Company in the exact form received, duly endorsed by the Company to the Administrative Agent if required, in a special collateral account maintained by the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Administrative Agent and the Lenders only, as hereinafter provided, and, until so turned over, shall be held by the Company in trust for the Administrative Agent and the Lenders, segregated from other funds of the Company. Each deposit of any such Proceeds shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit. All Proceeds constituting collections of Accounts while held by the Administrative Agent (or by the Company in trust for the Administrative Agent and the Lenders) shall continue to be collateral security for all of the Obligations and shall not constitute payment thereof until applied as hereinafter provided. At any time at the Administrative Agent's election, the Administrative Agent shall apply all or any part of the funds on deposit in said special collateral account on account of the Obligations in such order as the Administrative Agent may elect, and any part of such funds which the Administrative Agent elects not so to apply and deems not required as collateral security for the Obligations shall be paid over from time to time by the Administrative Agent to the Company or to whomsoever may be lawfully entitled to receive the same. At the Administrative Agent's reasonable request, the Company shall deliver to, or make available for review by, the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Accounts, including, without limitation, all original orders, invoices and shipping receipts. (e) Tolled Inventory. If any third Person (a "Tolling Party") delivers possession of, but not title to, any raw materials, work- in-process or other goods ("Tolled Inventory") pursuant to a bailment arrangement with the Company under which such Tolled Inventory is to be processed, improved or otherwise altered by the Company, the Administrative Agent agrees and acknowledges that any security interest in or lien upon Inventory created hereby does not apply to any Tolled Inventory which is owned by the Tolling Party (rather than owned by the Company subject to a retention of title by the Tolling Party which has the effect of creating a security interest in favor of the Tolling Party which remains unperfected). Notwithstanding anything in this Security Agreement to the contrary, the Company shall be entitled to follow its normal tolling practices and may deliver Tolled Inventory to or for the account of any Tolling Party free of the lien of this Security Agreement. 6 4. Representations and Warranties . The Company hereby represents and warrants that: (a) Title; No Other Liens. Except for the Lien granted to the Administrative Agent for the ratable benefit of the Lenders pursuant to this Security Agreement and the other Liens permitted to exist on the Collateral pursuant to the Credit Agreement, the Company owns each item of the Collateral free and clear of any and all Liens or claims of others. No security agreement, financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office that would serve to grant the Person who filed such security agreement, financing statement or other public notice a perfected security interest in or lien on such Collateral, except such as may have been filed in favor of the Administrative Agent, for the ratable benefit of the Lenders, pursuant to this Security Agreement or as may be permitted pursuant to the Credit Agreement. (b) Perfected First Priority Liens. Upon filing of financing statements in the relevant offices identified in Schedule 4.20(b) to the Credit Agreement, the Liens granted pursuant to this Security Agreement constitute perfected Liens on the Collateral in favor of the Administrative Agent, for the ratable benefit of the Lenders, which are prior to all other Liens on the Collateral created by the Company and in existence on the date hereof (except other Liens expressly permitted by the Credit Agreement) and which are enforceable as such against all creditors of and purchasers from the Company and against any owner or purchaser of the real property where any of the Equipment is located and any present or future creditor obtaining a Lien on such real property, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws generally affecting creditors' rights and by general principles of equity (regardless of whether enforcement is sought in equity or at law). (c) Accounts. The amount represented by the Company to the Lenders from time to time as owing by each account debtor or by all account debtors in respect of the Accounts will at such time be the correct amount actually owing by such account debtor or debtors thereunder. Except as otherwise provided in Section 5(a) hereof, no amount payable to the Company under or in connection with any Account is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent. The place where the Company keeps its records concerning the Accounts is 1510 Wall Street and 1710 Wall Street, Fort Wayne, Indiana 46802. (d) Inventory and Equipment. The Inventory and the Equipment are kept at the locations listed on Schedule II hereto or such other location specified pursuant to Section 5(n). 7 (e) Chief Executive Office. The Company's chief executive office and chief place of business is located at 1601 Wall Street, Fort Wayne, Indiana 46802, or such other location specified pursuant to Section 5(n). (f) Farm Products; Vehicles. None of the Collateral constitutes, or is the Proceeds of, Farm Products. No Vehicle owned by the Company has a book value in excess of $50,000, other than Vehicles as to which the Company has taken steps of the type described in clauses (i) and (ii) of Section 6.10(a) of the Credit Agreement (to the extent, and only to the extent, reasonably requested by the Administrative Agent). (g) Intellectual Property. Set forth on Schedule I is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of the Company on the Effective Date, showing as of the Effective Date the jurisdiction in which registered, the registration number, the date of registration and the expiration date. The Company owns, or is licensed to use, all trademarks, trade names, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to materially impair the value of the Collateral. No claim has been asserted and is pending by any Person challenging or questioning the use of any trademark, trade name, copyright, technology, know-how or process necessary for the conduct of its business as currently conducted, nor does Company know of any valid basis for any such claim, the use of the same by the Company does not infringe on the rights of any Person and, to the knowledge of the Company, no Intellectual Property has been infringed, misappropriated or diluted by any other Person except for such claims, infringements, misappropriations and dilutions that, in the aggregate, could not reasonably be expected to materially impair the value of the Collateral. 5. Covenants. The Company covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Security Agreement until the Obligations are paid in full, the Revolving Credit Commitments are terminated and no Letters of Credit shall be outstanding: (a) Further Documentation; Pledge of Instruments and Chattel Paper. At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of the Company, the Company will promptly and duly execute and deliver such further instruments and documents and take such further action as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Security Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the Liens created hereby. The Company also hereby 8 authorizes the Administrative Agent to file any such financing or continuation statement without the signature of the Company to the extent permitted by applicable law. A carbon, photographic or other reproduction of this Security Agreement shall be sufficient as a financing statement for filing in any jurisdiction. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper having a principal amount in excess of $25,000, such Instrument or Chattel Paper shall be immediately delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Security Agreement; provided that in no event shall the aggregate principal amount of Instruments and Chattel Paper evidencing amounts payable under or in connection with any Collateral (as such terms are defined in the Company Security Agreement or the Subsidiary Security Agreement, as the case may be) which have not been delivered to the Administrative Agent pursuant to such Security Agreements exceed $100,000 at any one time outstanding. (b) Indemnification. The Company agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities, costs and expenses (including, without limitation, reasonable legal fees and expenses) (i) with respect to, or resulting from any delay in paying, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or (ii) with respect to, or resulting from, any delay in complying with any Requirement of Law applicable to any of the Collateral. In any suit, proceeding or action brought by the Administrative Agent in accordance with the terms hereof under any Account or Contract for any sum owing thereunder, or to enforce any provisions of any Account or Contract, the Company will save, indemnify and keep harmless the Administrative Agent and each Lender from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by the Company of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from the Company. (c) Maintenance of Records. The Company will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Accounts. The Company will mark its books and records pertaining to the Collateral to evidence this Security Agreement and the security interests granted hereby. For the Administrative Agent's and the Lenders' further security, the Administrative Agent, for the ratable benefit of the Lenders, shall have a security interest in all of the Company's books and records pertaining to the Collateral. 9 (d) Right of Inspection. The Administrative Agent shall at any reasonable time or times during normal business hours have access to all the books, correspondence and records of the Company, and the Administrative Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and the Company agrees to render to the Administrative Agent, at the Company's cost and expense to the extent expressly provided in Section 11.5 of the Credit Agreement, such clerical and other assistance as may be reasonably requested with regard thereto. The Administrative Agent and its representatives shall at any reasonable time or times during normal business hours also have the right to enter into and upon any premises where any of the Inventory or Equipment is located (or, in the case of any such premises not owned or leased by the Company or any of its Subsidiaries, the Company shall use its best efforts to grant to the Administrative Agent such right) for the purpose of inspecting the same, observing its use or otherwise protecting the Administrative Agent's and the Lenders' interests therein. (e) Compliance with Laws, etc. The Company will comply in all material respects with all Requirements of Law applicable to the Collateral or any part thereof or to the operation of the Company's business, except where failure to satisfy the foregoing requirement could not reasonably be expected to have a material adverse effect on the value of the Collateral taken as a whole or, with respect to any material portion of the Collateral, have a material adverse effect on the perfection or priority of the Liens contemplated hereby relating to such Collateral; provided, however, that the Company may contest any Requirement of Law in any reasonable manner which shall not, in the sole opinion of the Administrative Agent, adversely affect the Administrative Agent's or the Lenders' rights or the priority of their Liens on the Collateral. (f) Limitation on Liens on Collateral. The Company will not create, incur or permit to exist, will defend the Collateral against, and will take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than the Liens created hereby and other than as permitted pursuant to the Credit Agreement, and will defend the right, title and interest of the Administrative Agent and the Lenders in and to any of the Collateral against the claims and demands of all Persons whomsoever. (g) Limitations on Dispositions of Collateral. The Company will not sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so, except as expressly permitted by the Credit Agreement. (h) Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts. The Company will not (i) except in the ordinary course of business consistent with historical practices as of the date hereof, amend, modify, terminate or waive any provision of any agreement giving rise 10 to an Account in any manner which could reasonably be expected to materially adversely affect the value of Collateral taken as a whole, (ii) fail to exercise promptly and diligently each and every material right which it may have under each agreement giving rise to an Account (other than any right of termination), except in a manner consistent with the ordinary and customary conduct of business as generally conducted by the Company over a period of time or (iii) fail to deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any material agreement giving rise to an Account which affects the interests of the Administrative Agent and the Lenders hereunder. (i) Limitations on Discounts, Compromises, Extensions of Accounts. Other than in the ordinary course of business as generally conducted by the Company over a period of time, the Company will not, without the prior written consent of the Administrative Agent, grant any extension of the time of payment of any of the Accounts, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partially, any Person liable for the payment thereof, or allow any credit or discount whatsoever thereon. (j) Maintenance of Equipment. The Company will maintain each item of Equipment in good operating condition, ordinary wear and tear and immaterial impairments of value and damage by the elements excepted, and will provide all maintenance, service and repairs necessary for such purpose. (k) Maintenance of Insurance. The Company will maintain, with financially sound and reputable companies, insurance policies (i) insuring the Inventory and Equipment against loss by fire, explosion, theft and such other casualties as are usually insured against by companies engaged in the same or similar business and (ii) insuring the Company and the Administrative Agent, for the benefit of the Lenders, against liability for personal injury and property damage relating to such Inventory and Equipment, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent, such losses of $1 million or more shall be payable to the Company and the Administrative Agent, for the benefit of the Lenders, as their respective interests may appear. All such insurance shall (i) to the extent requested by the Administrative Agent, provide for a 30-day standard cancellation notice, (ii) name the Administrative Agent, for the benefit of the Lenders, as an insured party and as loss payee and (iii) be reasonably satisfactory in all other respects to the Administrative Agent. If reasonably requested by the Administrative Agent, the Company shall deliver to the Administrative Agent and the Lenders a report of a reputable insurance broker with respect to such insurance, and such supplemental reports with respect thereto as the Administrative Agent may from time to time reasonably request. 11 (l) Further Identification of Collateral. The Company will furnish to the Administrative Agent and the Lenders from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. (m) Notices. The Company will advise the Administrative Agent and the Lenders promptly, in reasonable detail, at their respective addresses set forth in the Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted under the Credit Agreement) on, or claim asserted against, any of the Collateral and (ii) of the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Collateral taken as a whole or, with respect to any material portion of the Collateral, have a material adverse effect on the perfection or priority of the Liens contemplated hereby relating to such Collateral. (n) Changes in Locations, Name, etc. The Company will not (i) change the location of its chief executive office/chief place of business from that specified in Section 4(e) hereof or remove its books and records from the location specified in Section 4(c) hereof, (ii) permit any of the Inventory or Equipment to be kept at a location other than those listed on Schedule II hereto or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Security Agreement would become seriously misleading, unless (x) the Company shall have given the Administrative Agent at least 30 days' prior written notice thereof (in the case of clauses (i) and (iii) above) or at least one Business Day's prior written notice thereof (in the case of clause (ii) above) and (y) the Company shall have taken, and shall continue to take, all steps necessary to ensure that the Administrative Agent, for the benefit of the Lenders, shall have, and shall continue to have, a fully perfected first priority security interest in the Collateral (subject to Liens permitted by the Credit Agreement) notwithstanding such actions. (o) Intellectual Property. The Company will preserve all of its registered trademarks, trade names, service marks and other Intellectual Property, the non-preservation of which would have a reasonable likelihood of materially impairing the value of the Collateral taken as a whole. Whenever the Company, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any patent or trademark with the United States Patent and Trademark Office or any similar office or agency in any other country or any political subdivision thereof, the Company shall report such filing to the Administrative Agent and the Lenders within five Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, the Company shall execute and deliver any and all agreements, instruments, documents, and papers as the 12 Administrative Agent may reasonably request to evidence the Administrative Agent's and the Lenders' security interest in any patent or trademark and the goodwill and General Intangibles of the Company relating thereto or represented thereby, and the Company hereby constitutes the Administrative Agent its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable until the Obligations are paid in full and the Revolving Credit Commitments are terminated. In the event that any material Intellectual Property is infringed, misappropriated or diluted by a third party in any material respect, the Company shall promptly notify the Administrative Agent after it learns thereof. (p) Government Obligors. If at any time the aggregate amount owing on (i) all Accounts and Contracts as to which a Governmental Authority is an obligor and (ii) all "Accounts" and "Contracts" under and as defined in the Subsidiary Security Agreement as to which a Governmental Authority is an obligor (collectively, "Total Government Accounts and Contracts"), exceeds 5% of the aggregate amount owing on (i) all Accounts and Contracts and (ii) all "Accounts" and "Contracts" under and as defined in the Subsidiary Security Agreement ( collectively, "Total Accounts and Contracts"), the Company shall, if requested by the Administrative Agent, at the Company's sole cost and expense, from and after the date on which such aggregate amount first exceeds such percentage (regardless of whether the aggregate amount owing on the Total Government Accounts and Contracts shall equal less than 5% of the aggregate amount owing on the Total Accounts and Contracts at any subsequent time), deliver to the Administrative Agent such assignments, notices of assignment and other documents or information as shall be necessary or otherwise requested by the Administrative Agent to permit the assignment hereunder of all Accounts and Contracts as to which a Governmental Authority is an obligor pursuant to all applicable Requirements of Law (including, without limitation, the Assignment of Claims Act of 1940, as amended). 6. Administrative Agent's Appointment as Attorney-in-Fact. (a) Powers. The Company hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Company and in the name of the Company or in its own name, from time to time in the Administrative Agent's discretion, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement, and, without limiting the generality of the foregoing, the Company hereby gives the Administrative Agent the power and right, on behalf of the Company, without notice to or assent by the Company, to do the following: (i) at any time when any Event of Default shall have occurred and is continuing, in the name of the Company or its own name, or otherwise, to take possession of and endorse and 13 collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account, Instrument, General Intangible or Contract or with respect to any other Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Account, Instrument, General Intangible or Contract or with respect to any other Collateral whenever payable; (ii) in each case to the extent not paid, discharged or effected by the Company as required by this Security Agreement or the Credit Agreement, to pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the costs thereof; and (iii) upon the occurrence and during the continuance of any Event of Default, (A) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against the Company with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as the Administrative Agent may deem appropriate; (G) to assign any Intellectual Property (along with the goodwill of the business to which any such Intellectual Property pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and to do, at the Administrative Agent's option and the Company's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent's and the Lenders' Liens thereon and to effect the intent of this Security Agreement, all as fully and effectively as the Company might do. 14 The Company hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. (b) Other Powers. The Company also authorizes the Administrative Agent, at any time and from time to time, to execute, in connection with any sale provided for in Section 9 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral. (c) No Duty on Administrative Agent or Lenders' Part. The powers conferred on the Administrative Agent and the Lenders hereunder are solely to protect the Administrative Agent's and the Lenders' interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Lender to exercise any such powers. Except for the duty of the Administrative Agent described in Section 10 hereof, and the accounting by the Administrative Agent for moneys actually received by it hereunder, neither the Administrative Agent nor any Lender shall have any duties hereunder as to any Collateral (including, without limitation, as to ascertaining any matters or taking any action with respect to any Collateral or as to taking any necessary steps to preserve rights against prior parties or any other rights pertaining to Collateral). The Administrative Agent and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of the powers conferred on the Administrative Agent and the Lenders hereunder, and neither they nor any of their officers, directors, employees or agents shall be responsible to the Company for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 7. Performance by Administrative Agent of Company's Obligations. If the Company fails to perform or comply with any of its agreements contained herein and the Administrative Agent, as provided for by the terms of this Security Agreement, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the expenses of the Administrative Agent incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%, shall be payable by the Company to the Administrative Agent on demand and shall constitute Obligations secured hereby. The Administrative Agent agrees to notify the Company promptly after incurring any expenses pursuant to this Section 7, provided that the failure of the Administrative Agent to so notify the Company shall in no way impair the rights of the Administrative Agent under this Section 7. 8. Proceeds. In addition to the rights of the Administrative Agent and the Lenders specified in Section 3(d) hereof with respect to payments of Accounts, it is agreed that if an Event of Default shall occur and be continuing (a) the Administrative Agent may require, by notice to the Company, all Proceeds received by the Company consisting of cash, checks and other near-cash items to be held by the Company in trust for the Administrative Agent and the Lenders, segregated from other funds of the Company, and shall, forthwith upon receipt by the Company, be turned over to the Administrative Agent in the exact form received by the Company (duly endorsed by the Company to the Administrative Agent, if required), and (b) any and all such Proceeds received by the Administrative Agent (whether from the Company or otherwise) may, in the sole discretion of the 15 Administrative Agent, be held by the Administrative Agent for the ratable benefit of the Lenders as collateral security for, and/or then or at any time thereafter may be applied by the Administrative Agent against, the Obligations (whether matured or unmatured), such application to be in such order as the Administrative Agent shall elect. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, the Revolving Credit Commitments shall have been terminated and no Letters of Credit shall be outstanding shall be paid over to the Company or to whomsoever may be lawfully entitled to receive the same. 9. Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Company or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Company, which right or equity is hereby waived and released. The Company further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at the Company's premises or elsewhere. The Administrative Agent shall apply the proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent account for the surplus, if any, to the Company. To the extent permitted by applicable law, the Company waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. The Company shall remain liable 16 for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. 10. Limitation on Duties Regarding Preservation of Collateral. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Lender, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Company or otherwise. 11. Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 12. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Paragraph Headings. The paragraph headings used in this Security Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 15 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 15. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. This Security Agreement shall 17 be binding upon the successors and assigns of the Company and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns. This Security Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 16. Notices. All notices, requests and demands hereunder shall be given in accordance with Section 11.2 of the Credit Agreement. 17. Authority of Administrative Agent. The Company acknowledges that the rights and responsibilities of the Administrative Agent under this Security Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Security Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Company, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and the Company shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. 18. Termination. This Agreement and the security interest created hereby shall terminate when all the Obligations have been paid in full and the Revolving Credit Commitments shall have been terminated, at which time the Administrative Agent shall execute and deliver to the Company, or such person or persons as the Company shall reasonably designate, all Uniform Commercial Code termination statements and similar documents prepared by the Company at its expense which the Company shall reasonably request to evidence such termination; provided, that any indemnity set forth herein shall survive any such termination. Upon any sale or other disposition of any item of Collateral by the Company expressly permitted by the Credit Agreement (other than the sales of Inventory in the ordinary course of business), the Administrative Agent, at the request and expense of the Company, shall release the Collateral being sold and shall reassign and deliver such Collateral to the Company (without recourse and without any representation or warranty), together with appropriate instruments of reassignment and release; provided that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing and (ii) the Company shall have delivered to the Administrative Agent at least ten Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Company stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. Any execution and delivery of termination statements or documents pursuant to this Section 18 shall be without recourse to or representation or warranty by the Administrative Agent or any Lender. IN WITNESS WHEREOF, the Company has caused this Security Agreement to be duly executed and delivered as of the date first above written. 18 ESSEX GROUP, INC. By:____________________________ Name: Title: SCHEDULE I to Company Security Agreement PATENTS AND TRADEMARKS Patent Docket [CAPTION] Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4290929 Aqueous Solutions of 9/22/81 Polyesterimides and Methods of Making the Same US 4253570 Reinforced Spool for Storing and 3/3/81 Transporting Strand Material and a Package Assembly Utilizing the Same US 4190319 Fiber Option Ribbon and Cable Made 2/26/80 Tehrefrom CAN 1116903 Fiber Option Ribbon and Cable Made 1/26/82 Therefrom US 4196032 Splice for Optical Ribbon Having 4/1/80 Elongated Strain Relief Elements in the Ribbon and Method of Splicing the Same CAN 1104395 Splice for Optical Ribbon Having 7/7/81 Elongated Strain Relief Elements in the Ribbon and Method of Splicing the Same US 4253569 Reinforced Spol for Storing and 3/3/81 Transporting Strand Material and a Package Assembly Utilizing the Same US 4286010 Insulated Mica Paper and Tapes 8/25/81 Thereof CAN 1157323 Insulated Mica Paper and Tapes 11/22/83 Thereof US 4358202 Apparatus and Method for Monitoring 11/9/82 and Surface Character US 4389510 Water Soluble Polymide Prepared 6/21/83 from 1,2,3,4 Butane Tetracarboxylic Acid and Method of Preparation 2 Patent Country Number Title Issue Date ------- ------- ----- ---------- CAN 1175598 Water Soluble Polymide Prepared 10/2/84 from 1,2,3,4 Butane Tetracarboxylic Acid and Method of Preparation US 4606870 Preparing Magnet Wire Having 8/19/86 Electron Beam Curable Wire Enamels US 4447472 Magnet Wire Coating Method and 5/8/84 Article US 4374221 High Solids Polyamide-Imide Magnet 2/15/83 Wire Enamel CAN 1193044 High Solids Polyamide-Imide Magnet 9/3/85 Wire Enamel US 4396145 Self-Locking Carton 8/2/83 US 4374892 Moisture Resistant Insulating Mica 2/22/83 Tape Comprising a Monoalkoxy Titanate CAN 1171349 Moisture Resistant Insulating Mica 7/24/84 Tape Comprising a Monoalkoxy Titanate US 4350738 Power Insertable Polyamide-Imide 9/21/82 Coated Magnet Wire CAN 1192797 Power Insertable Polyamide-Imide 9/3/85 Coated Magnet Wire US 4348460 Power Insertable Polyamide-Imide 9/7/82 Coated Magnet Wire CAN 1179216 Power Insertable Polyamide-Imide 12/11/84 Coated Magnet Wire US 4385437 Method of Power Inserting 5/31/83 Polyamide-Imide Coated Magnet Wire US 4389587 Unitary Sleeving Insulation 6/21/83 US 4385436 Method of Power Inserting Nylon 5/31/83 Coated Magnet Wire CAN 1209765 Dielectric Films from Water Soluble 8/19/86 Polyimides 3 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4471161 Conductor Strand Formed of Solid 9/11/84 Wires and Method for Making the Conductor Strand US 4471920 Tapered Flange Wire Spool 9/18/84 US 4493462 Spool with Lifting Handles 1/15/85 US 4563095 Method and Apparatus for Monitoring 1/7/86 the Surface of Elongated Objects US 4576207 Texturized Heat Shrinkable Tubing 3/18/86 Having Radial and Longitudinal Shrinkage Memory US 4661314 Method of Making Texturized Heat 4/28/87 Shrinkable Tubing US 4485978 Method and Apparatus for Winding 12/4/84 Strand upon Spools Having Tapered End Flanges US 4521363 Extrusion of a Plastic Coating 6/4/85 about a Strand US 4476279 High Solids Theic Polyester Enamels 10/9/84 US 4571450 Moisture Impervious Power Cable and 2/18/86 Condui-System US 4704335 Highly Flexible Silicone Rubber 11/3/87 Coated Inorganic Yarn US 4693936 Low Coefficient of Friction Magnet 9/15/87 Wire Enamels US 4705657 Ethylene-Propylene Diene Terpolymer 11/10/87 Texturized Heat Shrinkable Tubing US 4551398 Tetraalkyl Titanate Modified Nylon 11/5/85 Magnet Wire Insulation Coating US 4599387 Tetraalkyl Titanate Modified Nylon 7/8/86 Magnet Wire Insulation Coating US 4707209 Method of Making High Density 11/17/87 Moisture Resistant Mica Sheet US 4601952 Method of Making High Density 7/22/86 Moisture Resistant Mica Sheet 4 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4601931 High Density, Moisture Resistant 7/22/86 Mica Cylinders US 4575016 Continuous Ribbon Feed Method and 3/11/86 System US 4588344 Roll Transfer Robot 5/13/86 US 4555070 Method and Apparatus for Unwinding 11/26/85 and Splicing Successive Rolls US 4586415 Assembly for Effecting Vertical and 5/6/86 Rotational Motion US 4575017 Paster Rab and Method of Use 3/11/86 US 4591084 Method and Apparatus for Feeding 5/27/86 and Accumulating Ribbon Material US 4545323 Felt Applicator 10/8/85 US 4622241 Method and Apparatus for Accurately 11/11/86 Dispensing a Solution US 4604300 Method for Applying High Solids 8/5/86 Enamels to Magnet Wire US 4574604 Process and Apparatus for High 3/11/86 Speed Fabrication of Copper US 4615195 Process and Apparatus for High 10/7/86 Speed Fabrication of Copper US 4568607 Aromatic Titanate Modified Nylon 2/4/86 Magnet Wire Insulation US 4588784 Aromatic Titanate Modified Nylon 5/13/86 Magnet Wire Insulation US 4614670 Method for Insulating a Magnet Wire 9/30/86 with an Aromatic Titanate Modified Nylon US 4550055 Titanium Chelate Modified Nylon 10/29/85 Magnet Wire Insulation Coating US 4563369 Titanium Chelate Modified Nylon 1/7/86 Magnet Wire Insulation Coating US 4637852 Neoalkoxy Titanate in High Density 1/20/87 Mica Laminates 5 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4603088 Neoalkoxy Titanate in High Density 7/29/86 Mica Laminates US 4582198 Wire Shipping and Dispensing 4/15/86 Package US 4704322 Resin Rich Mica Tape 11/3/87 US 4839444 High Solids Enamel 6/13/89 US D291172 Container Insert 8/4/87 US 4988980 Low Cost Verbal Annunciator 1/29/91 US 4599905 Method and Apparatus for 7/15/86 Determining the Elongation Property of Copper Wire US 4602751 Wire Spool with End Flange Having a 7/29/86 Wire Protection Groove US 4624718 Polyester-Polyamide Tape Insulated 11/25/86 Magnet Wire and Method of Making the Same US 4601918 Apparatus and Method for Applying 7/22/86 High Solids Enamels to Wire US 4629145 Control of Traversing Guide in 12/16/86 Strand Winding Apparatus US 4926928 Protective Device for Restraining 5/22/90 Rod Produced in a Continuous Casting and Rolling Process US 4775726 Method for Equilibrating Polyamide 10/4/88 Magnet Wire Coatings and Enamel Compositions US 4808436 A Method for Equilibrating 2/28/89 Polyamide Magnet Wire Coatings and Enamel Compositions US 4913963 Magnet Wire with Equilibrating 4/3/90 Polyamide Insulation Coatings and Enamel Compositions US 4635046 Wire Tangle Sensor 1/6/87 US 4695830 Wire Runtogether Sensor 9/22/87 6 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4740756 Continuity Test Method and 4/26/88 Apparatus US 4700171 Ignition Wire 10/13/87 US 4775566 High Temperature Flexible Unitary 10/4/88 Sleeving Insulation US 5032199 Method of Making a High Temperature 7/16/91 Flexible Unitary Sleeving Insulation US 4683162 Mica Product 7/28/87 US 783365 Mica Product 11/8/88 US 4752217 Wire Coating Oven Including Wire 6/21/88 Cooling Apparatus US 4725010 Control Apparatus and Method 2/16/88 US RE33240 Control Apparatus and Method 4/19/88 US 4725458 Urethane Modified Nylon Magnet Wire 2/16/88 Enamel US 4808477 Urethane Modified Nylon Magnet Wire 2/28/89 Enamel US 4689601 Multi-Layer Ignition Wire 8/25/87 US 4704596 Extrusion Coated Ignition Wire 11/03/87 US 4876316 High Temparature Magnet Wire Bond 10/24/89 Coat Polyamide/Aldehyde/ Aromatic Alocohol Reaction Product US 4891243 Die Bar Carrier 1/2/90 US 4826544 Hydrogen Cleaning of Hot Copper Rod 5/2/89 US 4836872 Method of Manufacturing a Fiber 6/6/89 Reinforced Heat Shrinkable Tubing Article US 4915139 Heat Shrinkable Tubing Article 4/10/90 US 4869199 Manifold for Distributing Wire 9/26/89 Coating Enamel 7 Patent Country Number Title Issue Date ------- ------- ----- ---------- US 4839205 Heated Supply Sheaves for Wire 6/13/89 Coating Apparatus US 4844283 Closure Mechanism for Wire Coating 7/4/89 Oven US 4839818 Magnet Wire Over Control Apparatus 6/13/89 US 4821880 Palletized Structure Containing 4/18/89 Spools US 5045136 Heat Shrinkable Article 9/3/91 US 4851060 Multilayer Wrapped Insulated Magnet 7/25/89 Wire US 5106686 Multilayer Wrapped Insulated Magnet 4/21/92 Wire US 4966932 Ultra-High Solids Theic Polyester 10/30/90 Enamels US 4830689 Bonded Metallic Cable Sheathing 5/16/89 with Edge Forming US 5048572 Vibration Damping Heat Shrinkable 9/17/92 Tubing US 4705957 Wire Surface Monitor 11/10/87 US 4611747 Method for Producing Continuous 9/16/86 Length High Solids Enamel Coated Magnet Wire US 5023558 Ignition Wire Core Conductive 6/11/91 Irregularity Detector US 4938428 Wire Winding System with Mobile 7/3/90 Transfer Cart US 4964363 System of Assembly and Filling 10/23/90 Large Cables in a Single Pass at a Single Station US 4923133 Dancer Assembly 5/8/90 US 5304740 Fusible Link Wire 4/19/94 /TABLE 8 Duration US--17 Years (Subject to Maintenance Fees) CAN--17 Years 9 TRADEMARKS AND TRADE NAMES [CAPTION]
Trademark and/or Country Trade Name Registration Expiration ------- ---------------- ------------ ---------- US ACRYFLEX 1,092,803 06/06/98 US ACRYLEX 656,059 12/24/97 US ALLEX 717,483 06/27/01 US ALPIC 861,614 12/10/08 US ASTRA 1,083,505 01/24/98 US ASTRAMELT 1,266,308 02/07/04 US ASTRATITE 1,057,610 02/01/97 US BIPIC 1,218,947 12/07/02 US BONDEX 687,491 11/03/99 US BROWNELL ELECTRO 1,781,418 07/13/03 INC. & Design US CASPIC 1,189,207 02/09/02 US CL & Design 1,197,158 06/08/02 US CUPIC 861,615 12/10/08 Canada DIAMOND 192,723 07/13/03 US DIAMOND 676,255 03/31/99 US DIAMOND FIGURE Des 613,831 10/11/95 Argentina ESSEX 1,176,315 10/07/05 Brazil ESSEX 692,303 04/25/99 Canada ESSEX 193,620 08/31/03 China ESSEX 504,592 11/20/99 France ESSEX 1,331,108 11/15/95 Italy ESSEX 448,366 10/24/05 Italy ESSEX 356,324 03/23/98 Spain ESSEX 1,127,541 04/03/09 US ESSEX 961,503 06/19/03 US ESSEX 959,657 05/29/03 US ESSEX 954,253 03/06/03 US ESSEX 954,283 03/06/03 US ESSEX 1,411,176 09/30/06 US ESSEX 1,644,159 05/14/01 Mexico ESSEX 496,193 03/22/05 US ESSEX 618,128 12/27/95 US ESSEX 965,834 08/14/03 US ESSEX 536,430 01/16/01 US ESSEX 966,421 08/21/03 US ESSEX GROUP 1,313,285 01/08/05 US ESSEX GROUP 1,178,844 11/24/01 India ESSEX Application Mexico ESSEX 496,194 03/22/05 US ESSEX QTY MASTERS 1,205,233 08/17/02 China ESSEX (Chinese) 504,591 11/20/99 US ExCel & xl Des 780,919 12/01/04 US ExCelene 1,032,113 02/03/96 Renewal filed US FEMCO 1,584,450 02/27/00 US FLEXICONE 1,330,873 04/16/05 10 Trademark and/or Country Trade Name Registration Expiration ------- ---------------- ------------ ---------- US GOPIC 969,536 10/02/03 US HANDIWIRE 1,342,096 06/18/05 US IF IT'S P IT'S RIGHT 71,533,826 11/21/00 US IF IT'S P IT'S RIGHT 1,652,273 07/30/01 US ISOMICA 575,202 06/02/03 US IWI 635,106 10/02/96 Renewal filed US IWI Inv W/O Invest 658,007 02/04/98 US LELAND FARADAY 1,827,220 03/22/04 US LF Logo 1,830,155 04/12/04 US MACALLEN & Design 833,230 08/08/07 US MAGNAPAK 628,592 06/12/06 US MAGWIRE 861,613 12/10/08 US MICANITE and Drawing 22,623 03/07/03 US MR-200 1,234,416 04/12/03 US NYTHERM 702,858 08/16/00 US N-900 683,175 08/11/99 US PARAFLEX 586,117 02/23/04 US PARANITE 1,548,127 07/18/09 US PARANITE & Design 537,580 12/13/01 US PARANITE & Design 535,200 12/26/00 US PARASYN 529,926 08/29/00 US PAR-U-FLEX 674,901 03/03/99 US POLYBONDEX 1,172,079 10/06/01 US POLYFOAM 650,440 08/20/97 US REEL PAK 1,144,845 12/30/00 US RELI-A-BAND 1,286,015 07/17/04 US SAMICA 558,013 04/22/02 US SAMICAPOR 1,095,179 07/04/98 US SAMICATHERM 995,614 03/20/03 US SEALPIC 993,738 09/24/04 US SILVERFLEX 1,111,787 01/23/99 US SODERBOND 672,165 01/06/99 US SODEREX 672,138 01/06/99 US SODERON 672,164 01/06/99 US SOLIDEX 1,036,145 03/23/96 US SOLIDON 1,038,144 04/20/96 US SUFLEX 960,771 06/12/03 US SUFLEX Logo 1,308,019 12/04/04 Canada SX N.S. 2026 08/30/08 US SX 612,102 09/13/95 US SX 1,523,072 02/07/09 US SX & Design 1,525,063 02/21/09 US SX (Molder's Mark) 1,065,662 05/17/97 US TF 1,286,937 07/24/04 US THERMALEX 672,137 01/06/99 US THERMALEX 200 1,185,606 01/12/02 US TERHMALEX F 672,750 01/20/99 US THERMETEX GP200 844,472 02/20/08 US UTREX 1,326,775 03/26/05 US VINYLGLAS 965,445 08/07/03 Mexico SX 496,192 03/22/05 11 Trademark and/or Country Trade Name Registration Expiration ------- ---------------- ------------ ---------- Mexico SX 496,195 03/22/05 India SX Application US ULTRASHIELD Application US VANGUARD 1,827,219 03/22/04 /TABLE 12 PENDING APPLICATIONS Country Serial No. Filing Date ------- ---------- ----------- US 08/317506 10/03/94 US 08/261546 06/17/94 US 08/557513 11/14/95 SCHEDULE II to Security Agreement Locations of Inventory and Equipment ESSEX LOCATIONS 1601 Wall Street U.S. Highway 30 W. Fort Wayne, IN Columbia City, IN Allen County Whitley County Location Code: 402 Location Code: 409, 492 West Pearl Street Decker Road Jonesboro, IN Vincennes, IN Grant County Knox County Location Code: 165 Location Code: 401 Youngs Lane Main St./Bay Rd. Newmarket, NH Newmarket, NH Rockingham County Rockingham County Location Code: 014 Location Code: 023 3200 Earlywood Drive Southeast Parkway Dr. Franklin, IN Franklin, TN Johnson County Williamson County Location Code: 447 Location Code: 450 800 W. Mitchell St. 2816 N. Main St. Kendallville, IN Rockford, IL Noble County Winnebago County Location Code: 486 Location Code: 489 1904 Engineers Rd. 1417 Murray Belle Chase, LA 70037 N. Kansas City, MO 64116 Plaquemines Parish Clay County Location Code: 509 Location Code: 519 6808-C Cedar Ave. 3 Commerce Way Lubbock, TX 79404 Tewksbury, MA 01876 Lubbock County Middlesex County Location Code: 536 Location Code: 570 4232 Charter Ave. E. Union & US 52 #100 Lafayette, IN Oklahoma City, OK 73108 Tippecanoe County Location Code: 568 Location Code: 113 24 Spur Drive Old York Road El Paso, TX Chester, SC El Paso County Chester County Location Code: 436 Location Code: 105 108 Elm 1075 N. Patt Street Tiffin, OH Anaheim, CA Seneca County Orange County Location Code: 403, 046, 580 214 E. 24th St. 3959 S. Morgan 2 Marion, IN Chicago, IL Grant County Cook County Location Code: 051 Location Code: 506 Rt. 294 and Bear Creek Rd. 1230 Crestside Drive Pana, IL Coppell, TX Christian County Dallas County Location Code: 099 Location Code: 410, 534 3 190 E. Polk St. 2172 Wharf St. Orleans, IL Memphis, TN Morgan County Shelby County Location Code: 123 Location Code: 413, 556 Rt. 4 East 1900 NE 181st St. Hoisington, KS Portland, OR Barton County Multnomah County Location Code: 128 Location County: 417, 566 University & East St. 1704 Westbelt Dr. Pauline, KS Columbus, OH Shawnee County Franklin County Location Code: 423 Location Code: 414 950 W. 40th St. 2625 S. Wilson Chicago, IL Suite 102 Cook County Tempe, AZ 85282 Location Code: 406 Maricopa County Location Code: 424 6 Lee Blvd. 5405 Valley Belt Frazer, PA Suite D Location Code: 407, 591 Independence, OH (Cleveland) 44131 Cuyahoga County Location Code: 508 4600 Holly St. 23447 Cabot Blvd. Denver, CO Hayward, CA 94545 Colorado County Location Code: 427, 581 Location Code: 411 6715 53rd St. 39065 Webb Drive Tampa, FL Westland, MI 48185 Hillsborough County Location Code: 528 Location Code: 420, 518 6588 Marbut Rd. 3028 - 7th Ave., So. Lithonia, GA Birmingham, AL DeKalb County Jefferson County Location Code: 122, 404, 569 2444 Enterprise Dr. 501 Busse Road Mendota Heights, MN 55120 Elk Grove Village, IL Location Code: 416 Cook County 4667 Somerton Road 5601 Anglum Court Bensalem Twp., PA Hazelwood, MO 63042 (Trevose) St. Louis County Bucks County 140 Southpointe Drive 7001 S. 33rd St. Bridgeville, PA McAllen, TX (Pittsburgh) Hidalgo County Allegheny County 4 5690 Southfield Court 555 Brick Church Park Dr. Forest Park, GA Nashville, TN Clayton County Davidson County 376 Garden Oaks Blvd. 3713 Vineland Road Houston, TX Orlandod, FL Harris County Orange County 5 6850 NW 74th St. 3112 Northington Ct. Miami, FL Florence, AL Cade County Lauderdale County Location Code: 445 933 Lakeside Drive One IGA Way Mobile, AL Cumberland, RI Mobile County Providence County Location Code: 443 4855 Brookside Court 368 Rue Isabey Norfolk, VA St. Laurent, Quebec Norfolk City County Location Code: 446 525 Wall Street 4251 Helton Dr. Tiffin, OH Florence, AL Seneca County Lauderdale County 1620 East Malone Ave. 3201 Woodpark Blvd. Sikeston, MO Charlotte, NC 23207 Scott County Mecklenburg County Location Code: 442 4002 W. Turney Ave. Phoenix, AZ Maricopa County Location Code: 444 95 Grand Ave. Pawtucket, RI Providence County 6050 No. 55th Ave. Glendale, AZ Maricopa County NON - ESSEX LOCATIONS: Phelps Dodge S&S Reel 41 Wawecus St. Box 448 Norwich, CT Hoisington, KS Location Code: N/A Location Code: N/A Sherburne Electric B.N. Yanow & Co., Inc. 40 S. Main Street 45 Johnson Lane Sherburne, NY Braintree, MA Location Code: N/A Location Code: 661 Southwire Company Electrical Insulation 150 Fertilla St. Suppliers Carrollton, GA 1661 Industrial Way Location Code: N/A Belmont, CA Location Code: 942 Precision Steel Miller Sales Industries 3500 N. Wolfe Rd. 1111 N. Old Rand Rd. 6 Franklin Park, IL Wauconda, IL Location Code: N/A Location Code: 930 Vincent - Angel Inc. MSC/Minnesota 2910 Torrence Dr. 2355 Louisiana Ave. N. Greensboro, NC Golden Valley, MN Location Code: 660 Location Code: 931 7 Clark Sales Magnetek/PEI 106 E. Airline Highway 800 Martha St. Kenner, LA Munhall, PA Location Code: 663 Location Code: 937 H.A. Holden, Inc. Magnetek-Century 2825 Comly Rd. 602 Red Rd. Philadelphia, PA McMinville, TN Location Code: 955 Location Code: 938 H.A. Holden, Inc. Electrical Insulation 6675-A Corners Industrial Suppliers Court 412 E. 13th Ave. Norcross, GA N. Kansas City, MO Location Code: 956 Location Code: 940 Electrical Insulation Tecumseh Products Company Suppliers 2700 West Wood Street 1000 Somerset Street, P.O. Box 1208 Bldg. 4-B Paris, TN New Brunswick, NJ Location Code: 980 Location Code: 917 Electrical Insulation S&W Wire Company Suppliers, Inc. 45 A Progress Ave. 4132 Will Rogers Parkway, Zelinenople, PA Suite 200 Location Code: 597 Oklahoma City, OK Location Code: 923 Eaton Corp. Triangle Trading Co. 1910 Bill Mitchell Avenue Ceramica Annex Station Brownsville, TX Carolina, PR Location Code: 925 Location Code: 664 Magnetek - Century Marathon Electric Highway 22 North Highway 63 & Lanton Rd. Lexington, TN West Plains, MO 65775 Location Code: 935 Location Code: 952 Saturn Services Corporation Camden Wire 1231 Naperville Dr. 12 Masonic Ave. Romeoville, IL Camden, NY Location Code: 991 Location Code: N/A Marathon Electric Owl Wire & Cable 401 West Freemont Rd. Rt. 5 Lebanon, MO Canastota, NY Location Code: 953 Location Code: N/A Marathon Electric Harby Associates, Inc. 100 E. Randolph 12 Capital Drive Wausau, WI Wallingford, CT 06492 Location Code: 951 Location Code: 622 Brazil Bros. Mid-States 8 250 - 260 Forrest St. 1115 Aldrich Ave. North Metuchen, NJ Minneapolis, MN 55411 Location Code: N/A Location Code: 825 NASCO, Inc. Electrical Insulation 44 Railroad Hill St. Suppliers Waterbury, CT 1255 Collier Road NW Location Code: N/A Atlanta, GA 30318 Location Code: 857 9 Omega Wire Electrical Insulation Rt 13 - Main St. Suppliers Williamson, NY 155 Nowner Drive Location Code: N/A Cincinnati, OH 45215 Location Code: 861 Albion Wire Electrical Insulation 811 Commerce Drive Suppliers Kendallville, IN 1509 Parkway View Drive Location Code: N/A Pittsburgh, PA 15205 Location Code: 866 Riffle & Associates, Inc. Electrical Insulation 2671 Crescentville Road Suppliers Cincinnati, OH 45231-1578 2000 South Ninth Street Location Code: 627 Louisville, KY 40208 Location Code: 915 Electrical Insulation Electrical Insulation Suppliers Suppliers 3500 Fourth Avenue S 2100 Magnolia Street Birmingham, AL 35222 Richmond, VA 23223 Location Code: 859 Location Code: 919 Electrical Insulation Suppliers Electrical Insulation Route 720 West Suppliers Bluefield, VA 24605 6660 East 47th avenue Location Code: 860 Denver, CO 80216 Location Code: 927 Electrical Insulation Suppliers Electrical Insulation 19769 15 Mile Road Suppliers Clinton Township, MI 1905 Premier Row 480035 (Detroit) Orlando, FL 32809 Location Code: 862 Location Code: 936 Electrical Insulation Suppliers Electrical Insulation 1850 E. Watkins Street Suppliers Suite 3 12740 E. Florence Avenue Phoenix, AZ 85034 Santa Fe, Springs, CA 90670 Location Code: 916 Location Code: 943 Electrical Insulation Suppliers Advanced Electrical Sales 4934 Distribution Drive 1717 West Grant Street 4934 Distribution Drive Phoenix, AZ 85017 Tampa, FL 33605 Location Code: 947 Location Code: 926 108 Elm Electrical Insulation Tiffin, OH Suppliers Seneca County 1347 S. 330 W. Location Code: N/A Salt Lake City, UT 84115 Location Code: 969 Electrical Insulation Suppliers Electrical Insulation 4629 Crossroads Park Drive Suppliers 10 Liverpool, NY 13088 3549 N.W. Yeon Avenue Location Code: 928 Portland, OR 97210 Location Code: 975 Electrical Insulation Suppliers H.A. Holden 2736 Market Street 600 W. 28th Street Garland, TX 75041 Charlotte, NC 28206 Location Code: 941 Location Code: 994 11 Electrical Insulation Suppliers The T.F. Farmer Company 7354 East 38th Street U.S. Highway 90 North Tulsa, OK 74145 Greensboro, NC 27405 Location Code: 945 Location Code: 674 H.A. Holden Michael Frisch Associates 1208 Harman Place 9650 Solar Drive Minneapolis, MN 55403 Tampa, FL 33619-4417 Location Code: 954 Location Code: 676 H.A. Holden Allen Fields & Associates 4327 Delaware Street Building A Denver, CO 80216 2950 Robertson Avenue Location Code: 970 Cincinnati, OH 45209 Location Code: 679 Electrical Insulation Suppliers Electrical Materials, Inc. Road 190 KM, 1.7 W. BO. 44262 Phoenix Drive Sabana Abajo, PR 00630 Sterling Heights, MI 48314 Location Code: 978 Location Code: 681 Thea Enterprises, LLC Bell & McCoy 232 Entin Road 3311 Canal Street Clifton, NJ 07014 Houston, TX 77003 Location Code: 673 Location Code: 648 Florida Electrical Sales Headline Sales, Inc. 1101 North Ward Street 7271 South Paramount Blvd. Tampa, FL 33607 Pico Riviera, CA 90660 Location Code: 675 Location Code: 719 Berry-Elsberry Company Cascade Western 745 Trabert Avenue NW Representatives Atlanta, GA 30325 2729 Southeast Sixth Ave Location Code: 678 Portland, OR 97242 Location Code: 724 Hanke Company Ron Marshall Agencies 1001 Fargo Ave 101-590 Ebury Place Elk Grove Village, IL Delta, British Columbia 60009-1166 V3M 6B7 Location Code: 680 Location Code: 635 Bell & McCoy Film X - Webb Converting 2633 Andjon Street 2272 Park Central Blvd. Dallas, TX 75220 Decatur, GA Location Code: 647 Location Code: N/A Aurich Associates Electric Sales Unlimited 2210 West Alexander St 9023 Norwalk Blvd Salt Lake City, UT 84119 Sante Fe Springs, CA Location Code: 718 H&J Electrical Sales Essex Brownell 30047 Ahern Street 7020 Riverport Drive Union City, CA 94587 Louisville, KY 40268 12 Location Code: 723 Location Code: 484 Intralec Electrical Essex Brownell Products, Ltd. 2625 S. Wilson Unit 1, 1200 Cardiff Suite 102 Mississauga, Ontario Tempe, AZ 85282 L5S 1P6 Location Code: 495 Location Code: 688 Electro-Tech Sales, Ltd. S-B Power Tool Company Unit 10 250 Bolton 2166 Notre Dame Avenue Hwy 110 Winnipeg, Manitoba Heber Springs, AR 72543 R3H OK2 Location Code: 968 Location Code: 637 Electric Sales Unlimited Basler Electric 725 W. Alameda Dr. Route 67 Suite #1 Corning, AR 72422 Tempe, AZ Location Code: 786 Essex Brownell Electrical Insulation 84 Executive Avenue Suppliers Edison, NJ 08817 2947 Interstate street Location Code: 483 Charlotte, NC 28208 Location Code: 855 Essex Brownell Electrical Insulation 647 West 3560 South Suppliers Salt Lake City, UT 84119 546 Penn Street Location Code: 488 Yeadon, PA 19050 Location Code: 858 Essex Brownell Electrical Insulation Route 2 Suppliers Box 1730 815 Elca Lane Bluefield, VA 24805 Suite D Location Code: 497 Brownsville, TX 78521 Location Code: 913 Mallory Controls Electrical Insulation Turntable Road Suppliers Plant #2 300 N. Mannheim Road Sparta, TN 23532 Hillside, IL 60612 Location Code: 996 Location Code: 946 Basler Electric New York Street Caraway, AR 72419 Location Code: 787 Electrical Insulation Suppliers 305 McCarty Road Houston, TX 77029 Location Code: 856 13 In-Sink-Erator Division Emerson Electric Co. 4700 21st Street Racine, WI 53406-5093 Location Code: 869 14 Electrical Insulation Suppliers 1444 30th Street Suite C San Diego, CA 92154 Location Code: 924 Athens Products 2009 Tellico Avenue Athens, TN 37303 Location Code: 979 EXHIBIT E-2 FORM OF HOLDINGS SECURITY AGREEMENT HOLDINGS SECURITY AGREEMENT, dated as of October 31, 1996, made by BCP/ESSEX HOLDINGS INC., a Delaware corporation ("Holdings"), in favor of THE CHASE MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") parties to the Credit Agreement, dated as of October 31, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among Essex Group, Inc. (the "Company"), Holdings, the Lenders and the Administrative Agent. W I T N E S S E T H : WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make Loans to the Company upon the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to issue, or to participate in, Letters of Credit for the account of the Company upon the terms and subject to the conditions set forth therein; WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to, and to issue or participate in Letters of Credit for the account of, the Company under the Credit Agreement that Holdings shall have executed and delivered this Security Agreement to the Administrative Agent for the ratable benefit of the Lenders; and WHEREAS, the Company is a wholly owned direct subsidiary of Holdings; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and issue or participate in Letters of Credit under the Credit Agreement, Holdings hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined; the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory and Proceeds; and the following terms shall have the following meanings: "Code" means the Uniform Commercial Code as from time to time in effect in the State of New York. "Collateral" shall have the meaning assigned to it in Section 2 of this Security Agreement; provided, that Collateral shall not include any property which is subject to a Lien permitted under Section 7.3 of the Credit Agreement securing Indebtedness permitted under Section 7.2 of the 2 Credit Agreement to the extent that the grant of a security interest hereunder would be prohibited by such Lien or by the terms of such Indebtedness (but only so long as such prohibition is in effect). "Contracts" means all contracts, agreements, instruments and indentures in any form, and portions thereof, to which Holdings is a party or under which Holdings has any right, title or interest or to which Holdings or any property of Holdings is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (a) all rights of Holdings to receive moneys due and to become due to it thereunder or in connection therewith, (b) all rights of Holdings to damages arising out of, or for, breach or default in respect thereof and (c) all rights of Holdings to perform and to exercise all remedies thereunder, in each case to the extent the grant by Holdings of a security interest pursuant to this Security Agreement in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate Holdings to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by Holdings of a security interest pursuant to this Security Agreement in any Account or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. "Intellectual Property" means (a) all intellectual and similar property of Holdings of every kind and nature now owned or hereafter acquired by Holdings, including, without limitation, inventions, designs, patents, copyrights, licenses and license agreements (whether Holdings is the licensor or the licensee under such agreements), trademarks, trade names and other business names, logos, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations, applications and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing, including, without limitation, any thereof referred to in Schedule I hereto and (b) all renewals thereof. Notwithstanding the foregoing, licenses and license agreements as to which Holdings is the licensee shall constitute "Intellectual Property" for the purposes of this Agreement only to the extent the grant by Holdings of a security interest pursuant to this Security Agreement in its right, title and interest in such license or license agreement is not prohibited by such license or license agreement without the consent of any other party thereto, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate Holdings to 3 obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by Holdings of a security interest pursuant to this Security Agreement in any Account or any money or other amounts due or to become due under any such license or license agreement. "Obligations" means all obligations, liabilities and indebtedness of Holdings under the guarantee contained in Section 10 of the Credit Agreement. "Security Agreement" means this Security Agreement, as amended, supplemented or otherwise modified from time to time. "Vehicles" means all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state and all tires and other appurtenances to any of the foregoing. 2. Grant of Security Interest. As collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, Holdings hereby grants to the Administrative Agent for the ratable benefit of the Lenders a security interest in all of the following property now owned or at any time hereafter acquired by Holdings or in which Holdings now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Contracts; (iv) all Documents; (v) all Equipment; (vi) all General Intangibles; (vii) all Instruments; (viii) all Intellectual Property; (ix) all Inventory; and (x) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing. 3. Rights of Administrative Agent and Lenders; Limitations on Administrative Agent's and Lenders' Obligations. (a) Holdings Remains Liable Under Accounts and Contracts. Anything herein to the contrary notwithstanding, Holdings shall remain liable under each of the Accounts and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise 4 to each such Account and in accordance with and pursuant to the terms and provisions of each such Contract. Neither the Administrative Agent nor any Lender shall have any obligation or liability under any Account (or any agreement giving rise thereto) or under any Contract by reason of or arising out of this Security Agreement or the receipt by the Administrative Agent or any such Lender of any payment relating to such Account or Contract pursuant hereto, nor shall the Administrative Agent or any Lender be obligated in any manner to perform any of the obligations of Holdings under or pursuant to any Account (or any agreement giving rise thereto) or under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto) or under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) Notice to Account Debtors and Contracting Parties. Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, Holdings shall notify account debtors on the Accounts and parties to the Contracts that the Accounts and the Contracts have been assigned to the Administrative Agent for the ratable benefit of the Lenders and that payments in respect thereof shall be made directly to the Administrative Agent. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may in its own name or in the name of others communicate with account debtors on the Accounts and parties to the Contracts to verify with them to its satisfaction the existence, amount and terms of any Accounts or Contracts. (c) Analysis of Accounts. The Administrative Agent shall have the right to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and Holdings shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection therewith. If an Event of Default shall have occurred and be continuing, then upon the Administrative Agent's request and at the expense of Holdings, Holdings shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts. (d) Collections on Accounts. The Administrative Agent hereby authorizes Holdings to collect the Accounts, provided, that the Administrative Agent may curtail or terminate said authority at any time upon the occurrence and during the continuance of an Event of Default. If an Event of Default shall have occurred and be continuing, any payments of Accounts, when collected by Holdings, shall be forthwith (and, in any event, within two Business Days) deposited by Holdings in the exact form received, duly endorsed by Holdings to the Administrative Agent if required, in a special collateral account maintained by the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Administrative Agent and the Lenders only, as hereinafter provided, and, until so turned over, shall be held by Holdings in trust for the Administrative Agent and the Lenders, segregated from other funds of Holdings. Each deposit of any such Proceeds shall be accompanied by a 5 report identifying in reasonable detail the nature and source of the payments included in the deposit. All Proceeds constituting collections of Accounts while held by the Administrative Agent (or by Holdings in trust for the Administrative Agent and the Lenders) shall continue to be collateral security for all of the Obligations and shall not constitute payment thereof until applied as hereinafter provided. At any time at the Administrative Agent's election, the Administrative Agent shall apply all or any part of the funds on deposit in said special collateral account on account of the Obligations in such order as the Administrative Agent may elect, and any part of such funds which the Administrative Agent elects not so to apply and deems not required as collateral security for the Obligations shall be paid over from time to time by the Administrative Agent to Holdings or to whomsoever may be lawfully entitled to receive the same. At the Administrative Agent's reasonable request, Holdings shall deliver to, or make available for review by, the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Accounts, including, without limitation, all original orders, invoices and shipping receipts. (e) Tolled Inventory. If any third Person (a "Tolling Party") delivers possession of, but not title to, any raw materials, work- in-process or other goods ("Tolled Inventory") pursuant to a bailment arrangement with Holdings under which such Tolled Inventory is to be processed, improved or otherwise altered by Holdings, the Administrative Agent agrees and acknowledges that any security interest in or lien upon Inventory created hereby does not apply to any Tolled Inventory which is owned by the Tolling Party (rather than owned by Holdings subject to a retention of title by the Tolling Party which has the effect of creating a security interest in favor of the Tolling Party which remains unperfected). Notwithstanding anything in this Security Agreement to the contrary, Holdings shall be entitled to follow its normal tolling practices and may deliver Tolled Inventory to or for the account of any Tolling Party free of the lien of this Security Agreement. 4. Representations and Warranties. Holdings hereby represents and warrants that: (a) Title; No Other Liens. Except for the Lien granted to the Administrative Agent for the ratable benefit of the Lenders pursuant to this Security Agreement and the other Liens permitted to exist on the Collateral pursuant to the Credit Agreement, Holdings owns each item of the Collateral free and clear of any and all Liens or claims of others. No security agreement, financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office that would serve to grant the Person who filed such security agreement, financing statement or other public notice a perfected security interest in or lien on such Collateral, except such as may have been filed in favor of the Administrative Agent, for the ratable benefit of the Lenders, pursuant to this Security Agreement or as may be permitted pursuant to the Credit Agreement. (b) Perfected First Priority Liens. Upon filing of financing statements in the relevant offices identified in Schedule 4.20(b) to the Credit Agreement, the Liens granted 6 pursuant to this Security Agreement constitute perfected Liens on the Collateral in favor of the Administrative Agent, for the ratable benefit of the Lenders, which are prior to all other Liens on the Collateral created by Holdings and in existence on the date hereof (except other Liens expressly permitted by the Credit Agreement) and which are enforceable as such against all creditors of and purchasers from Holdings and against any owner or purchaser of the real property where any of the Equipment is located and any present or future creditor obtaining a Lien on such real property, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws generally affecting creditors' rights and by general principles of equity (regardless of whether enforcement is sought in equity or at law). (c) Accounts. The amount represented by Holdings to the Lenders from time to time as owing by each account debtor or by all account debtors in respect of the Accounts will at such time be the correct amount actually owing by such account debtor or debtors thereunder. No amount payable to Holdings under or in connection with any Account is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent. The place where Holdings keeps its records concerning the Accounts is 1510 Wall Street and 1710 Wall Street, Fort Wayne, Indiana 46802. (d) Inventory and Equipment. The Inventory and the Equipment are kept at the locations listed on Schedule II hereto or such other location specified pursuant to Section 5(n). (e) Chief Executive Office. Holdings' chief executive office and chief place of business is located at 1601 Wall Street, Fort Wayne, Indiana 46802 or such other location specified pursuant to Section 5(n). (f) Farm Products; Vehicles. None of the Collateral constitutes, or is the Proceeds of, Farm Products. No Vehicle owned by Holdings has a book value in excess of $50,000 other than Vehicles as to which Holdings has taken steps of the type described in clause (i) and (ii) of Section 6.10(a) of the Credit Agreement (to the extent, and only to the extent, reasonably requested by the Administrative Agent). (g) Intellectual Property. Set forth on Schedule I is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of Holdings, showing as of the Effective Date the jurisdiction in which registered, the registration number, the date of registration and the expiration date. Holdings owns, or is licensed to use, all trademarks, trade names, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or 7 license which could not reasonably be expected to materially impair the value of the Collateral. No claim has been asserted and is pending by any Person challenging or questioning the use of any trademark, trade name, copyright, technology, know-how or process necessary for the conduct of its business as currently conducted, nor does Holdings know of any valid basis for any such claim, the use of the same by Holdings does not infringe on the rights of any Person and, to the knowledge of Holdings, no Intellectual Property has been infringed, misappropriated or diluted by any other Person, except for such claims, infringements, misappropriations and dilutions that, in the aggregate, could not reasonably be expected to materially impair the value of the Collateral. (h) Governmental Obligors. None of the obligors on any Accounts, and none of the parties to any Contracts, is a Governmental Authority. 5. Covenants. Holdings covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Security Agreement until the Obligations are paid in full, the Revolving Credit Commitments are terminated and no Letters of Credit shall be outstanding: (a) Further Documentation; Pledge of Instruments and Chattel Paper. At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of Holdings, Holdings will promptly and duly execute and deliver such further instruments and documents and take such further action as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Security Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the Liens created hereby. Holdings also hereby authorizes the Administrative Agent to file any such financing or continuation statement without the signature of Holdings to the extent permitted by applicable law. A carbon, photographic or other reproduction of this Security Agreement shall be sufficient as a financing statement for filing in any jurisdiction. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be immediately delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Security Agreement. (b) Indemnification. Holdings agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities, costs and expenses (including, without limitation, reasonable legal fees and expenses) (i) with respect to, or resulting from any delay in paying, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the 8 Collateral, (ii) with respect to, or resulting from, any delay in complying with any Requirement of Law applicable to any of the Collateral or (iii) in connection with any of the transactions contemplated by this Security Agreement. In any suit, proceeding or action brought by the Administrative Agent in accordance with the terms hereof under any Account or Contract for any sum owing thereunder, or to enforce any provisions of any Account or Contract, Holdings will save, indemnify and keep harmless the Administrative Agent and each Lender from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by Holdings of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from Holdings. (c) Maintenance of Records. Holdings will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Accounts. Holdings will mark its books and records pertaining to the Collateral to evidence this Security Agreement and the security interests granted hereby. For the Administrative Agent's and the Lenders' further security, the Administrative Agent, for the ratable benefit of the Lenders, shall have a security interest in all of Holdings' books and records pertaining to the Collateral. (d) Right of Inspection. The Administrative Agent shall at any reasonable time or times during normal business hours have access to all the books, correspondence and records of Holdings, and the Administrative Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and Holdings agrees to render to the Administrative Agent, at Holdings' cost and expense to the extent expressly provided in Section 11.5 of the Credit Agreement, such clerical and other assistance as may be reasonably requested with regard thereto. The Administrative Agent and its representatives shall at any reasonable time or times during normal business hours also have the right to enter into and upon any premises where any of the Inventory or Equipment is located (or, in the case of any such premises not owned or leased by Holdings, the Company or any of its Subsidiaries, Holdings shall use its best efforts to grant to the Administrative Agent such right) for the purpose of inspecting the same, observing its use or otherwise protecting the Administrative Agent's and the Lenders' interests therein. (e) Compliance with Laws, etc. Holdings will comply in all material respects with all Requirements of Law applicable to the Collateral or any part thereof or to the operation of Holdings' business, except where failure to satisfy the foregoing requirement could not reasonably be expected to have a material adverse effect on the value of the Collateral taken as a whole or, with respect to any material portion of the Collateral, have a material adverse 9 effect on the perfection or priority of the Liens contemplated hereby relating to such Collateral; provided, however, that Holdings may contest any Requirement of Law in any reasonable manner which shall not, in the sole opinion of the Administrative Agent, adversely affect the Administrative Agent's or the Lenders' rights or the priority of their Liens on the Collateral. (f) Limitation on Liens on Collateral. Holdings will not create, incur or permit to exist, will defend the Collateral against, and will take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than the Liens created hereby and other than as permitted pursuant to the Credit Agreement, and will defend the right, title and interest of the Administrative Agent and the Lenders in and to any of the Collateral against the claims and demands of all Persons whomsoever. (g) Limitations on Dispositions of Collateral. Holdings will not sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so except as expressly permitted by the Credit Agreement. (h) Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts. Holdings will not (i) except in the ordinary course of business amend, modify, terminate or waive any provision of or any agreement giving rise to an Account in any manner which could reasonably be expected to materially adversely affect the value of the Collateral taken as a whole, (ii) fail to exercise promptly and diligently each and every material right which it may have under each agreement giving rise to an Account (other than any right of termination), except in a manner consistent with the ordinary and customary conduct of business as generally conducted by Holdings over a period of time or (iii) fail to deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any material agreement giving rise to an Account which affects the interests of the Administrative Agent and the Lenders hereunder. (i) Limitations on Discounts, Compromises, Extensions of Accounts. Other than in the ordinary course of business as generally conducted by Holdings over a period of time, Holdings will not, without the prior written consent of the Administrative Agent, grant any extension of the time of payment of any of the Accounts, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partially, any Person liable for the payment thereof, or allow any credit or discount whatsoever thereon. (j) Maintenance of Equipment. Holdings will maintain each item of Equipment in good operating condition, ordinary wear and tear and immaterial impairments of value and damage by the elements excepted, and will provide all maintenance, service and repairs necessary for such purpose. (k) Maintenance of Insurance. Holdings will maintain, with financially sound and reputable companies, insurance policies (i) insuring the Inventory and Equipment against loss by fire, 10 explosion, theft and such other casualties as are usually insured against by companies engaged in the same or similar business and (ii) insuring Holdings and the Administrative Agent, for the benefit of the Lenders, against liability for personal injury and property damage relating to such Inventory and Equipment, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent, such losses of $1 million or more shall be payable to Holdings and the Administrative Agent, for the benefit of the Lenders, as their respective interests may appear. All such insurance shall (i) to the extent requested by the Administrative Agent, provide for a 30- day standard cancellation notice, (ii) name the Administrative Agent, for the benefit of the Lenders, as an insured party and (iii) be reasonably satisfactory in all other respects to the Administrative Agent. If reasonably requested by the Administrative Agent, Holdings shall deliver to the Administrative Agent and the Lenders a report of a reputable insurance broker with respect to such insurance, and such supplemental reports with respect thereto as the Administrative Agent may from time to time reasonably request. (l) Further Identification of Collateral. Holdings will furnish to the Administrative Agent and the Lenders from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. (m) Notices. Holdings will advise the Administrative Agent and the Lenders promptly, in reasonable detail, at their respective addresses set forth in the Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted under the Credit Agreement) on, or claim asserted against, any of the Collateral and (ii) of the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Collateral taken as a whole or, with respect to any material portion of the Collateral, have a material adverse effect on the perfection or priority of the Liens contemplated hereby relating to such Collateral. (n) Changes in Locations, Name, etc. Holdings will not (i) change the location of its chief executive office/chief place of business from that specified in Section 4(e) hereof or remove its books and records from the location specified in Section 4(c) hereof, (ii) permit any of the Inventory or Equipment to be kept at a location other than those listed on Schedule II hereto or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Security Agreement would become seriously misleading, unless (x) Holdings shall have given the Administrative Agent at least 30 days' prior written notice thereof, (in the case of clause (i) and (iii) above or at least one Business Day's prior written notice thereof (in the case of clause (ii) above) and (y) Holdings shall have taken, and shall continue to take, all steps necessary to ensure that the Administrative Agent, for the benefit of the Lenders, shall have, and shall continue to have, a fully 11 perfected first priority security interest in the Collateral (subject to the Liens permitted by the Credit Agreement) notwithstanding such actions. (o) Intellectual Property. Holdings will preserve all of its registered trademarks, trade names, service marks and other Intellectual Property, the non-preservation of which would have a reasonable likelihood of materially impairing the value of the Collateral taken as a whole. Whenever Holdings, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any patent or trademark with the United States Patent and Trademark Office or any similar office or agency in any other country or any political subdivision thereof, Holdings shall report such filing to the Administrative Agent and the Lenders within five Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, Holdings shall execute and deliver any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent's and the Lenders' security interest in any patent or trademark and the goodwill and General Intangibles of Holdings relating thereto or represented thereby, and Holdings hereby constitutes the Administrative Agent its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable until the Obligations are paid in full and the Revolving Credit Commitments are terminated. In the event that any material Intellectual Property is infringed, misappropriated or diluted by a third party, in any material respect Holdings shall promptly notify the Administrative Agent after it learns thereof. 6. Administrative Agent's Appointment as Attorney-in-Fact. (a) Powers. Holdings hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Holdings and in the name of Holdings or in its own name, from time to time in the Administrative Agent's discretion, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement, and, without limiting the generality of the foregoing, Holdings hereby gives the Administrative Agent the power and right, on behalf of Holdings, without notice to or assent by Holdings, to do the following: (i) at time when any Event of Default shall have occurred and is continuing, in the name of Holdings or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account, Instrument, General Intangible or Contract or with respect to any other Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for 12 the purpose of collecting any and all such moneys due under any Account, Instrument, General Intangible or Contract or with respect to any other Collateral whenever payable; (ii) in each case to the extent not paid, discharged or effected by Holdings as required by this Security Agreement or the Credit Agreement, to pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the costs thereof; and (iii) upon the occurrence and during the continuance of any Event of Default, (A) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against Holdings with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as the Administrative Agent may deem appropriate; (G) to assign any Intellectual Property (along with the goodwill of the business to which any such Intellectual Property pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and to do, at the Administrative Agent's option and Holdings' expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent's and the Lenders' Liens thereon and to effect the intent of this Security Agreement, all as fully and effectively as Holdings might do. Holdings hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. (b) Other Powers. Holdings also authorizes the Administrative Agent, at any time and from time to time, to execute, in 13 connection with any sale provided for in Section 9 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral. (c) No Duty on Administrative Agent or Lenders' Part. The powers conferred on the Administrative Agent and the Lenders hereunder are solely to protect the Administrative Agent's and the Lenders' interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Lender to exercise any such powers. Except for the duty of the Administrative Agent described in Section 10 hereof, and the accounting by the Administrative Agent for moneys actually received by it hereunder, neither the Administrative Agent nor any Lender shall have any duties hereunder as to the Collateral (including, without limitation, as to ascertaining any matters or taking any action with respect to any Collateral or as to taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral). The Administrative Agent and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of the powers conferred on the Administrative Agent and the Lenders hereunder, and neither they nor any of their officers, directors, employees or agents shall be responsible to Holdings for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 7. Performance by Administrative Agent of Holdings' Obligations. If Holdings fails to perform or comply with any of its agreements contained herein and the Administrative Agent, as provided for by the terms of this Security Agreement, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the expenses of the Administrative Agent incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%, shall be payable by Holdings to the Administrative Agent on demand and shall constitute Obligations secured hereby. The Administrative Agent agrees to notify Holdings promptly after incurring any expenses pursuant to this Section 7, provided that the failure of the Administrative Agent to so notify Holdings shall in no way impair the rights of the Administrative Agent under this Section 7. 8. Proceeds. In addition to the rights of the Administrative Agent and the Lenders specified in Section 3(d) hereof with respect to payments of Accounts, it is agreed that if an Event of Default shall occur and be continuing (a) the Administrative Agent may require, by notice to Holdings, all Proceeds received by Holdings consisting of cash, checks and other near-cash items to be held by Holdings in trust for the Administrative Agent and the Lenders, segregated from other funds of Holdings, and shall, forthwith upon receipt by Holdings, be turned over to the Administrative Agent in the exact form received by Holdings (duly endorsed by Holdings to the Administrative Agent, if required), and (b) any and all such Proceeds received by the Administrative Agent (whether from Holdings or otherwise) may, in the sole discretion of the Administrative Agent, be held by the Administrative Agent for the ratable benefit of the Lenders as collateral security for, and/or then or at any time thereafter may be applied by the Administrative Agent against, the Obligations (whether matured or unmatured), such application to be in such order as the Administrative Agent shall elect. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, the 14 Revolving Credit Commitments shall have been terminated and no Letters of Credit shall be outstanding shall be paid over to Holdings or to whomsoever may be lawfully entitled to receive the same. 9. Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon Holdings or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in Holdings, which right or equity is hereby waived and released. Holdings further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at Holdings' premises or elsewhere. The Administrative Agent shall apply the proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent account for the surplus, if any, to Holdings. To the extent permitted by applicable law, Holdings waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. Holdings shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. Holdings further waives and agrees not to assert any rights or privileges which it may acquire under Section 9- 112 of the Code. 15 10. Limitation on Duties Regarding Preservation of Collateral. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Lender, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Holdings or otherwise. 11. Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 12. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Paragraph Headings. The paragraph headings used in this Security Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 15 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 15. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. This Security Agreement shall be binding upon the successors and assigns of Holdings and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns. This Security Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 16 16. Notices. All notices, requests and demands hereunder shall be given in accordance with Section 11.2 of the Credit Agreement. 17. Authority of Administrative Agent. Holdings acknowledges that the rights and responsibilities of the Administrative Agent under this Security Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Security Agreement shall, as between the Administrative Agent and the Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and Holdings, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and Holdings shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. 18. Termination. This Security Agreement and the security interest created hereby shall terminate when all the Obligations have been paid in full and the Revolving Credit Commitments shall have been terminated at which time the Administrative Agent shall execute and deliver to Holdings, or such person or persons as Holdings shall reasonably designate, all Uniform Commercial Code termination statements and similar documents prepared by Holdings at its expense which Holdings shall reasonably request to evidence such termination; provided, that 17 any indemnity set forth herein shall survive any such termination. Any execution and delivery of termination statements or documents pursuant to this Section 18 shall be without recourse to or representation or warranty by the Administrative Agent or any Lender. IN WITNESS WHEREOF, Holdings has caused this Security Agreement to be duly executed and delivered as of the date first above written. BCP/ESSEX HOLDINGS INC. By_____________________________ Name: Title: SCHEDULE I to Holdings Security Agreement INTELLECTUAL PROPERTY None 19 SCHEDULE II to Holdings Security Agreement LOCATION OF INVENTORY AND EQUIPMENT None EXHIBIT E-3 FORM OF THE SUBSIDIARY SECURITY AGREEMENT SUBSIDIARY SECURITY AGREEMENT, dated as of October 31, 1996, made by each of the parties signatories hereto (each, a "Subsidiary"; collectively, the "Subsidiaries"), in favor of THE CHASE MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") parties to the Credit Agreement, dated as of October 31, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among Essex Group Inc. (the "Company"), BCP/Essex Holdings Inc., the Lenders and the Administrative Agent. W I T N E S S E T H : WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make Loans to the Company upon the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to issue, or to participate in, Letters of Credit for the account of the Company upon the terms and subject to the conditions set forth therein; WHEREAS, the Subsidiaries are parties to the Subsidiary Guarantee, dated as of April __, 1995 (as the same may be from time to time amended, supplemented or modified, the "Subsidiary Guarantee"); and WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Loans to, and to issue or participate in Letters of Credit for the account of, the Company under the Credit Agreement that each Subsidiary shall have executed and delivered this Security Agreement to the Administrative Agent for the ratable benefit of the Lenders; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Loans and issue or participate in Letters of Credit under the Credit Agreement, each Subsidiary hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined; the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory and Proceeds; and the following terms shall have the following meanings: "Code" means the Uniform Commercial Code as from time to time in effect in the State of New York. "Collateral" shall have the meaning assigned to it in Section 2 of this Security Agreement; with respect to the 2 representations, warranties and covenants made by each Subsidiary in Paragraphs 4 and 5 hereof, each reference to "Collateral" shall be deemed to refer to the Collateral in which such Subsidiary has granted or hereby grants or purports to grant a security interest under this Security Agreement, provided, that Collateral shall not include any property which is subject to a Lien permitted under Section 7.3 of the Credit Agreement securing Indebtedness permitted under Section 7.2 of the Credit Agreement to the extent that the grant of a security interest hereunder would be prohibited by such Lien or by the terms of such Indebtedness (but only so long as such prohibition is in effect). "Contracts" means, with respect to any Subsidiary, all contracts, agreements, instruments and indentures in any form, and portions thereof, to which such Subsidiary is a party or under which such Subsidiary has any right, title or interest or to which such Subsidiary or any property of such Subsidiary is subject, as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (a) all rights of such Subsidiary to receive moneys due and to become due to it thereunder or in connection therewith, (b) all rights of such Subsidiary to damages arising out of, or for, breach or default in respect thereof and (c) all rights of such Subsidiary to perform and to exercise all remedies thereunder, in each case to the extent the grant by such Subsidiary of a security interest pursuant to this Security Agreement in its right, title and interest in such contract, agreement, instrument or indenture is not prohibited by such contract, agreement, instrument or indenture without the consent of any other party thereto, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate any Subsidiary to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by such Subsidiary of a security interest pursuant to this Security Agreement in any Account or any money or other amounts due or to become due under any such contract, agreement, instrument or indenture. "Intellectual Property" means, with respect to any Subsidiary, (a) all intellectual and similar property of such Subsidiary of every kind and nature now owned or hereafter acquired by such Subsidiary, including, without limitation, inventions, designs, patents, copyrights, licenses and license agreements (whether such Subsidiary is the licensor or the licensee under such agreements), trademarks, trade names and other business names, logos, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations, applications and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing, including, without limitation, any thereof referred to in Schedule I hereto and (b) all renewals thereof. Notwithstanding the foregoing, 3 licenses and license agreements as to which any Subsidiary is the licensee shall constitute "Intellectual Property" for the purposes of this Agreement only to the extent the grant by any Subsidiary of a security interest pursuant to this Security Agreement in its right, title and interest in such license or license agreement is not prohibited by such license or license agreement without the consent of any other party thereto, or is permitted with consent if all necessary consents to such grant of a security interest have been obtained from the other parties thereto (it being understood that the foregoing shall not be deemed to obligate any Subsidiary to obtain such consents); provided, that the foregoing limitation shall not affect, limit, restrict or impair the grant by any Subsidiary of a security interest pursuant to this Security Agreement in any Account or any money or other amounts due or to become due under any such license or license agreement. "Obligations" means, with respect to any Subsidiary, all obligations, liabilities and indebtedness of such Subsidiary under the Subsidiary Guarantee. "Security Agreement" means this Security Agreement, as amended, supplemented or otherwise modified from time to time. "Vehicles" means all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state and all tires and other appurtenances to any of the foregoing. 2. Grant of Security Interest. As collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, each Subsidiary hereby grants to the Administrative Agent for the ratable benefit of the Lenders a security interest in all of the following property now owned or at any time hereafter acquired by such Subsidiary or in which such Subsidiary now has or at any time in the future may acquire any right, title or interest (collectively, the "Collateral"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Contracts; (iv) all Documents; (v) all Equipment; (vi) all General Intangibles; (vii) all Instruments; (viii) all Intellectual Property; (ix) all Inventory; and 4 (x) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing. 3. Rights of Administrative Agent and Lenders; Limitations on Administrative Agent's and Lenders' Obligations; Limitation on Administrative Agent's and Lenders' Interest in Tolled Inventory. (a) Subsidiary Remains Liable under Accounts and Contracts. Anything herein to the contrary notwithstanding, each Subsidiary shall remain liable under each of the Accounts and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account and in accordance with and pursuant to the terms and provisions of each such Contract. Neither the Administrative Agent nor any Lender shall have any obligation or liability under any Account (or any agreement giving rise thereto) or under any Contract by reason of or arising out of this Security Agreement or the receipt by the Administrative Agent or any such Lender of any payment relating to such Account or Contract pursuant hereto, nor shall the Administrative Agent or any Lender be obligated in any manner to perform any of the obligations of any Subsidiary under or pursuant to any Account (or any agreement giving rise thereto) or under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto) or under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) Notice to Account Debtors and Contracting Parties. Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, the relevant Subsidiary shall notify account debtors on the Accounts and parties to the Contracts that the Accounts and the Contracts have been assigned to the Administrative Agent for the ratable benefit of the Lenders and that payments in respect thereof shall be made directly to the Administrative Agent. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may in its own name or in the name of others communicate with account debtors on the Accounts and parties to the Contracts to verify with them to its satisfaction the existence, amount and terms of any Accounts or Contracts. (c) Analysis of Accounts. The Administrative Agent shall have the right to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and each Subsidiary shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection therewith. If an Event of Default shall have occurred and be continuing, then upon the Administrative Agent's request and at the expense of such Subsidiary, each Subsidiary shall cause independent public accountants or others satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts. (d) Collections on Accounts. The Administrative Agent hereby authorizes each Subsidiary to collect the Accounts, provided, that subject 5 to the Administrative Agent's direction and control, and the Administrative Agent may curtail or terminate said authority at any time upon the occurrence and during the continuance of an Event of Default. If an Event of Default shall have occurred and be continuing, any payments of Accounts, when collected by such Subsidiary, shall be forthwith (and, in any event, within two Business Days) deposited by such Subsidiary in the exact form received, duly endorsed by such Subsidiary to the Administrative Agent if required, in a special collateral account maintained by the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Administrative Agent and the Lenders only, as hereinafter provided, and, until so turned over, shall be held by such Subsidiary in trust for the Administrative Agent and the Lenders, segregated from other funds of such Subsidiary. Each deposit of any such Proceeds shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit. All Proceeds constituting collections of Accounts while held by the Administrative Agent (or by any Subsidiary in trust for the Administrative Agent and the Lenders) shall continue to be collateral security for all of the Obligations and shall not constitute payment thereof until applied as hereinafter provided. At any time at the Administrative Agent's election, the Administrative Agent shall apply all or any part of the funds on deposit in said special collateral account on account of the Obligations in such order as the Administrative Agent may elect, and any part of such funds which the Administrative Agent elects not so to apply and deems not required as collateral security for the Obligations shall be paid over from time to time by the Administrative Agent to such Subsidiary or to whomsoever may be lawfully entitled to receive the same. At the Administrative Agent's reasonable request, each Subsidiary shall deliver to, or make available for review by, the Administrative Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Accounts, including, without limitation, all original orders, invoices and shipping receipts. (e) Tolled Inventory. If any third Person (a "Tolling Party") delivers possession of, but not title to, any raw materials, work- in-process or other goods ("Tolled Inventory") pursuant to a bailment arrangement with any Subsidiary under which such Tolled Inventory is to be processed, improved or otherwise altered by such Subsidiary, the Administrative Agent agrees and acknowledges that any security interest in or lien upon Inventory created hereby does not apply to any Tolled Inventory which is owned by the Tolling Party (rather than owned by such Subsidiary subject to a retention of title by the Tolling Party which has the effect of creating a security interest in favor of the Tolling Party which remains unperfected). Notwithstanding anything in this Security Agreement to the contrary, such Subsidiary shall be entitled to follow its normal tolling practices and may deliver Tolled Inventory to or for the account of any Tolling Party free of the lien of this Security Agreement. 4. Representations and Warranties . Each Subsidiary hereby represents and warrants that: (a) Title; No Other Liens. Except for the Lien granted to the Administrative Agent for the ratable benefit of the Lenders pursuant to this Security Agreement and the other Liens permitted to exist on the Collateral pursuant to the Credit Agreement, such 6 Subsidiary owns each item of the Collateral free and clear of any and all Liens or claims of others. No security agreement, financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office that would serve to grant the Person who filed such security agreement, financing statement or other public notice a perfected security interest in or lien on such Collateral, except such as may have been filed in favor of the Administrative Agent, for the ratable benefit of the Lenders, pursuant to this Security Agreement or as may be permitted pursuant to the Credit Agreement. (b) Perfected First Priority Liens. Upon filing of financing statements in the relevant offices identified in Schedule 4.20(b) to the Credit Agreement, the Liens granted pursuant to this Security Agreement constitute perfected Liens on the Collateral in favor of the Administrative Agent, for the ratable benefit of the Lenders, which are prior to all other Liens on the Collateral created by such Subsidiary and in existence on the date hereof (except other Liens expressly permitted by the Credit Agreement) and which are enforceable as such against all creditors of and purchasers from such Subsidiary and against any owner or purchaser of the real property where any of the Equipment is located and any present or future creditor obtaining a Lien on such real property, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws generally affecting creditors' rights and by general principles of equity (regardless of whether enforcement is sought in equity or at law). (c) Accounts. The amount represented by such Subsidiary or the Company to the Lenders from time to time as owing by each account debtor or by all account debtors in respect of the Accounts will at such time be the correct amount actually owing by such account debtor or debtors thereunder. Except as otherwise provided in Section 5(a) hereof, no amount payable to such Subsidiary under or in connection with any Account is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent. The place where such Subsidiary keeps its records concerning the Accounts is 1510 Wall Street and 1710 Wall Street, Fort Wayne, Indiana 46802. (d) Inventory and Equipment. The Inventory and the Equipment are kept at the locations listed on Schedule II hereto or such other location specified pursuant to Section 5(n). (e) Chief Executive Office. Such Subsidiary's chief executive office and chief place of business is located at 1601 Wall Street, Fort Wayne, Indiana 46802 or such other location specified pursuant to Section 5(n). (f) Farm Products; Vehicles. None of the Collateral constitutes, or is the Proceeds of, Farm Products. No Vehicle owned by such Subsidiary has a book value in excess of $50,000, other than Vehicles as to which such Subsidiary has taken steps of the type described in clauses (i) and (ii) of Section 6.10(a) of the Credit 7 Agreement (to the extent, and only to the extent, reasonably requested by the Administrative Agent). (g) Intellectual Property. Set forth on Schedule I is a complete and accurate list of all patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of such Subsidiary showing as of the Effective Date the jurisdiction in which registered, the registration number, the date of registration and the expiration date. Such Subsidiary owns, or is licensed to use, all trademarks, trade names, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to materially impair the value of the Collateral. No claim has been asserted and is pending by any Person challenging or questioning the use of any trademark, trade name, copyright, technology, know-how or process necessary for the conduct of its business as currently conducted, nor does such Subsidiary know of any valid basis for any such claim, the use of the same by such Subsidiary does not infringe on the rights of any Person and, to the knowledge of such Subsidiary, no Intellectual Property has been infringed, misappropriated or diluted by any other Person, except for such claims, infringements, misappropriations and dilutions that, in the aggregate, could not reasonably be expected to materially impair the value of the Collateral. 5. Covenants. Each Subsidiary covenants and agrees with the Administrative Agent and the Lenders that, from and after the date of this Security Agreement until the Obligations are paid in full, the Revolving Credit Commitments are terminated, and no Letter of Credit shall be outstanding: (a) Further Documentation; Pledge of Instruments and Chattel Paper. At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Subsidiary, such Subsidiary will promptly and duly execute and deliver such further instruments and documents and take such further action as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Security Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the Liens created hereby. Such Subsidiary also hereby authorizes the Administrative Agent to file any such financing or continuation statement without the signature of such Subsidiary to the extent permitted by applicable law. A carbon, photographic or other reproduction of this Security Agreement shall be sufficient as a financing statement for filing in any jurisdiction. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper having a principal amount in excess of $25,000, such Instrument or Chattel Paper shall be immediately delivered to the Administrative Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be held as Collateral pursuant to this 8 Security Agreement; provided, that in no event shall the aggregate principal amount of Instruments and Chattel Paper evidencing amounts payable under or in connection with any Collateral (as such terms are defined in the Company Security Agreement or the Subsidiary Security Agreement, as the case may be) which have not been delivered to the Administrative Agent pursuant to such Security Agreements exceed $100,000 at any one time outstanding. (b) Indemnification. Such Subsidiary agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities, costs and expenses (including, without limitation, reasonable legal fees and expenses) (i) with respect to, or resulting from any delay in paying, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral, (ii) with respect to, or resulting from, any delay in complying with any Requirement of Law applicable to any of the Collateral or (iii) in connection with any of the transactions contemplated by this Security Agreement; provided, that in the case of this clause (iii), such Subsidiary shall not be liable for the payment of any portion of such liabilities, costs or expenses to the extent that such portion of such liabilities, costs or expenses are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from the gross negligence or wilful misconduct of the Administrative Agent. In any suit, proceeding or action brought by the Administrative Agent in accordance with the terms hereof under any Account or Contract for any sum owing thereunder, or to enforce any provisions of any Account or Contract, such Subsidiary will save, indemnify and keep harmless the Administrative Agent and each Lender from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by such Subsidiary of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from such Subsidiary. (c) Maintenance of Records. Such Subsidiary will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Accounts. Such Subsidiary will mark its books and records pertaining to the Collateral to evidence this Security Agreement and the security interests granted hereby. For the Administrative Agent's and the Lenders' further security, the Administrative Agent, for the ratable benefit of the Lenders, shall have a security interest in all of such Subsidiary's books and records pertaining to the Collateral. (d) Right of Inspection. The Administrative Agent shall at any reasonable time or times during normal business hours have access to all the books, correspondence and records of such Subsidiary, and the Administrative Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and such Subsidiary agrees to render to the Administrative Agent, at such Subsidiary's cost and expense to the extent expressly 9 provided in Section 11.5 of the Credit Agreement, such clerical and other assistance as may be reasonably requested with regard thereto. The Administrative Agent and its representatives shall at any reasonable time or times during normal business hours also have the right to enter into and upon any premises where any of the Inventory or Equipment is located (or, in the case of any such premises not owned or leased by such Subsidiary or any of its Subsidiaries, such Subsidiary shall use its best efforts to grant to the Administrative Agent such right) for the purpose of inspecting the same, observing its use or otherwise protecting the Administrative Agent's and the Lenders' interests therein. (e) Compliance with Laws, etc. Such Subsidiary will comply in all material respects with all Requirements of Law applicable to the Collateral or any part thereof or to the operation of such Subsidiary's business, except where failure to satisfy the foregoing requirement could not reasonably be expected to have a material adverse affect on the value of the Collateral taken as a whole or, with respect to any material portion of the Collateral, have a material adverse effect on the perfection or priority of the Liens contemplated hereby relating to such Collateral; provided, however, that such Subsidiary may contest any Requirement of Law in any reasonable manner which shall not, in the sole opinion of the Administrative Agent, adversely affect the Administrative Agent's or the Lenders' rights or the priority of their Liens on the Collateral. (f) Limitation on Liens on Collateral. Such Subsidiary will not create, incur or permit to exist, will defend the Collateral against, and will take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than the Liens created hereby and other than as permitted pursuant to the Credit Agreement, and will defend the right, title and interest of the Administrative Agent and the Lenders in and to any of the Collateral against the claims and demands of all Persons whomsoever. (g) Limitations on Dispositions of Collateral. Such Subsidiary will not sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so except as expressly permitted by the Credit Agreement. (h) Limitations on Modifications, Waivers, Extensions of Agreements Giving Rise to Accounts. Such Subsidiary will not (i) except in the ordinary course of business consistent with historical practices as of the date hereof, amend, modify, terminate or waive any provision of any agreement giving rise to an Account in any manner which could reasonably be expected to materially adversely affect the value of Collateral taken as a whole, (ii) fail to exercise promptly and diligently each and every material right which it may have under each agreement giving rise to an Account (other than any right of termination), except in a manner consistent with the ordinary and customary conduct of business as generally conducted by such Subsidiary over a period of time or (iii) fail to deliver to the Administrative Agent a copy of each material demand, notice or document received by it relating in any way to any 10 material agreement giving rise to an Account which affects the interests of the Administrative Agent and the Lenders hereunder. (i) Limitations on Discounts, Compromises, Extensions of Accounts. Other than in the ordinary course of business as generally conducted by such Subsidiary over a period of time, such Subsidiary will not, without the prior written consent of the Administrative Agent, grant any extension of the time of payment of any of the Accounts, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partially, any Person liable for the payment thereof, or allow any credit or discount whatsoever thereon. (j) Maintenance of Equipment. Such Subsidiary will maintain each item of Equipment in good operating condition, ordinary wear and tear and immaterial impairments of value and damage by the elements excepted, and will provide all maintenance, service and repairs necessary for such purpose. (k) Maintenance of Insurance. Such Subsidiary will maintain, with financially sound and reputable companies, insurance policies (i) insuring the Inventory and Equipment against loss by fire, explosion, theft and such other casualties as are usually insured against by companies engaged in the same or similar business and (ii) insuring such Subsidiary and the Administrative Agent, for the benefit of the Lenders, against liability for personal injury and property damage relating to such Inventory and Equipment, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent, such losses of $1 million or more shall be payable to such Subsidiary and the Administrative Agent, for the benefit of the Lenders, as their respective interests may appear. All such insurance shall (i) to the extent requested by the Administrative Agent, provide for a 30- day standard cancellation notice, (ii) name the Administrative Agent, for the benefit of the Lenders, as an insured party and loss payee and (iii) be reasonably satisfactory in all other respects to the Administrative Agent. If reasonably requested by the Administrative Agent, such Subsidiary shall deliver to the Administrative Agent and the Lenders a report of a reputable insurance broker with respect to such insurance, and such supplemental reports with respect thereto as the Administrative Agent may from time to time reasonably request. (l) Further Identification of Collateral. Such Subsidiary will furnish to the Administrative Agent and the Lenders from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail. (m) Notices. Such Subsidiary will advise the Administrative Agent and the Lenders promptly, in reasonable detail, at their respective addresses set forth in the Credit Agreement, (i) of any Lien (other than Liens created hereby or permitted under the Credit Agreement) on, or claim asserted against, any of the Collateral and (ii) of the occurrence of any other event which could reasonably be 11 expected to have a material adverse effect on the aggregate value of the Collateral taken as a whole or, with respect to any material portion of the Collateral, have a material adverse effect on the perfection or priority of the Liens contemplated hereby relating to such Collateral. (n) Changes in Locations, Name, etc. Such Subsidiary will not (i) change the location of its chief executive office/chief place of business from that specified in Section 4(e) hereof or remove its books and records from the location specified in Section 4(c) hereof, (ii) permit any of the Inventory or Equipment to be kept at a location other than those listed on Schedule II hereto or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Security Agreement would become seriously misleading, unless (x) such Subsidiary shall have given the Administrative Agent at least 30 days' prior written notice thereof (in the case of clause (i) and (iii) above) or at least one Business Day's days prior written notice thereof (in the case of clause (ii) above) and (y) such Subsidiary shall have taken, and shall continue to take, all steps necessary to ensure that the Administrative Agent, for the benefit of the Lenders, shall have, and shall continue to have, a fully perfected first priority security interest in the Collateral (subject to Liens permitted by the Credit Agreement) notwithstanding such actions. (o) Intellectual Property. Such Subsidiary will preserve all of its registered trademarks, trade names, service marks and other Intellectual Property, the non-preservation of which would have a reasonable likelihood of materially impairing the value of the Collateral taken as a whole. Whenever such Subsidiary, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any patent or trademark with the United States Patent and Trademark Office or any similar office or agency in any other country or any political subdivision thereof, such Subsidiary shall report such filing to the Administrative Agent and the Lenders within five Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, such Subsidiary shall execute and deliver any and all agreements, instruments, documents, and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent's and the Lenders' security interest in any patent or trademark and the goodwill and General Intangibles of such Subsidiary relating thereto or represented thereby, and such Subsidiary hereby constitutes the Administrative Agent its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable until the Obligations are paid in full and the Revolving Credit Commitments are terminated. In the event that any material Intellectual Property is infringed, misappropriated or diluted by a third party, in any material respect such Subsidiary shall promptly notify the Administrative Agent after it learns thereof. (p) Government Obligors. If an any time the aggregate amount owing on (i) all Accounts and Contracts as to which a Governmental 12 Authority is an obligor and (ii) all "Accounts" and "Contracts" under and as defined in the Company Security Agreement as to which a Governmental Authority is an obligor (collectively, "Total Government Accounts and Contracts"), exceeds 5% of the aggregate owing on (i) all Accounts and Contracts and (ii) all "Accounts" and "Contracts" under and as defined in the Company Security Agreement (collectively, "Total Accounts and Contracts"), such Subsidiary shall, if requested by the Administrative Agent, at such Subsidiary's sole cost and expense, from and after the date on which such aggregate amount first exceeds such percentage (regardless of whether the aggregate amount owing on the Total Government Accounts and Contracts shall equal less than 5% of the aggregate amount owing on the Total Accounts and Contracts at any subsequent time), deliver to the Administrative Agent such assignments, notices of assignment and other documents or information as shall be necessary or otherwise requested by the Administrative Agent to permit the assignment hereunder of all Accounts and Contracts as to which a Governmental Authority is an obligor pursuant to all applicable Requirements of Law (including, without limitation, the Assignment of Claims Act of 1940, as amended). 6. Administrative Agent's Appointment as Attorney-in-Fact. (a) Powers. Each Subsidiary hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Subsidiary and in the name of such Subsidiary or in its own name, from time to time in the Administrative Agent's discretion, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement, and, without limiting the generality of the foregoing, such Subsidiary hereby gives the Administrative Agent the power and right, on behalf of such Subsidiary, without notice to or assent by such Subsidiary, to do the following: (i) at any time when any Event of Default shall have occurred and is continuing, in the name of such Subsidiary or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account, Instrument, General Intangible or Contract or with respect to any other Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Account, Instrument, General Intangible or Contract or with respect to any other Collateral whenever payable; (ii) in each case to the extent not paid, discharged or effected by such Subsidiary as required by this Security Agreement or the Credit Agreement, to pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the costs thereof; and 13 (iii) upon the occurrence and during the continuance of any Event of Default, (A) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against such Subsidiary with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as the Administrative Agent may deem appropriate; (G) to assign any Intellectual Property (along with the goodwill of the business to which any such Intellectual Property pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (H) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and to do, at the Administrative Agent's option and such Subsidiary's expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent's and the Lenders' Liens thereon and to effect the intent of this Security Agreement, all as fully and effectively as such Subsidiary might do. Each Subsidiary hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. (b) Other Powers. Each Subsidiary also authorizes the Administrative Agent, at any time and from time to time, to execute, in connection with any sale provided for in Section 9 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral. (c) No Duty on Administrative Agent or Lenders' Part. The powers conferred on the Administrative Agent and the Lenders hereunder are solely to protect the Administrative Agent's and the Lenders' interests in the Collateral and shall not impose any duty upon the Administrative Agent or any Lender to exercise any such powers. Except for the duty of the Administrative Agent described in Section 10 hereof, and the accounting by the Administrative Agent for moneys actually received by it hereunder, neither the Administrative Agent nor any Lender shall have any duties hereunder as to any Collateral (including, without limitation, as to ascertaining any matters or taking any action with respect to any Collateral or as to taking any necessary steps to preserve rights against 14 prior parties or any other rights pertaining to any Collateral). The Administrative Agent and the Lenders shall be accountable only for amounts that they actually receive as a result of the exercise of the powers conferred on the Administrative Agent and the Lenders hereunder, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Subsidiary for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 7. Performance by Administrative Agent of Subsidiary's Obligations. If any Subsidiary fails to perform or comply with any of its agreements contained herein and the Administrative Agent, as provided for by the terms of this Security Agreement, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the expenses of the Administrative Agent incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%, shall be payable by such Subsidiary to the Administrative Agent on demand and shall constitute Obligations secured hereby. The Administrative Agent agrees to notify such Subsidiary promptly after incurring any expenses pursuant to this Section 7, provided that the failure of the Administrative Agent to so notify such Subsidiary shall in no way impair the rights of the Administrative Agent under this Section 7. 8. Proceeds. In addition to the rights of the Administrative Agent and the Lenders specified in Section 3(d) hereof with respect to payments of Accounts, it is agreed that if an Event of Default shall occur and be continuing (a) the Administrative Agent may require, by notice to each Subsidiary, all Proceeds received by each Subsidiary consisting of cash, checks and other near-cash items to be held by such Subsidiary in trust for the Administrative Agent and the Lenders, segregated from other funds of such Subsidiary, and shall, forthwith upon receipt by such Subsidiary, be turned over to the Administrative Agent in the exact form received by such Subsidiary (duly endorsed by such Subsidiary to the Administrative Agent, if required), and (b) any and all such Proceeds received by the Administrative Agent (whether from any Subsidiary or otherwise) may, in the sole discretion of the Administrative Agent, be held by the Administrative Agent for the ratable benefit of the Lenders as collateral security for, and/or then or at any time thereafter may be applied by the Administrative Agent against, the Obligations (whether matured or unmatured), such application to be in such order as the Administrative Agent shall elect. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, the Revolving Credit Commitments shall have been terminated and no Letters of Credit shall be outstanding shall be paid over to the Subsidiaries or to whomsoever may be lawfully entitled to receive the same. 9. Remedies. If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights and remedies granted to them in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Subsidiary or any other Person (all and each of which demands, defenses, 15 advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker's board or office of the Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Subsidiary, which right or equity is hereby waived and released. Each Subsidiary further agrees, at the Administrative Agent's request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Subsidiary's premises or elsewhere. The Administrative Agent shall apply the proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent account for the surplus, if any, to any Subsidiary. To the extent permitted by applicable law, each Subsidiary waives all claims, damages and demands it may acquire against the Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. Each Subsidiary shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Lender to collect such deficiency. Each Subsidiary further waives and agrees not to assert any rights or privileges which it may acquire under Section 9-112 of the Code. 10. Limitation on Duties Regarding Preservation of Collateral. The Administrative Agent's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, any Lender, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Subsidiary or otherwise. 16 11. Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 12. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Paragraph Headings. The paragraph headings used in this Security Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 15 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 15. Waivers and Amendments; Successors and Assigns; Governing Law. None of the terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. This Security Agreement shall be binding upon the successors and assigns of each Subsidiary and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns. This Security Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 16. Notices. All notices, requests and demands given hereunder shall be given in accordance with Paragraph 16 of the Subsidiary Guarantee. 17. Authority of Administrative Agent. Each Subsidiary acknowledges that the rights and responsibilities of the Administrative Agent under this Security Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Security Agreement shall, as between the Administrative Agent and the 17 Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and each Subsidiary, the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full and valid authority so to act or refrain from acting, and such Subsidiary shall not be under any obligation, or entitlement, to make any inquiry respecting such authority. 18. Termination. This Security Agreement and the security interest created hereby shall terminate when all the Obligations have been paid in full and the Revolving Credit Commitments shall have been terminated at which time the Administrative Agent shall execute and deliver to each Subsidiary or such person or persons as such Subsidiary shall reasonably designate, all Uniform Commercial Code termination statements and similar documents prepared by such Subsidiary at its expense which such Subsidiary shall reasonably request to evidence such termination; provided, that any indemnity set forth herein shall survive any such termination. At the request and expense of the Company, each Subsidiary shall be released from its obligations hereunder, in the event that all the capital stock of such Subsidiary shall be sold, transferred or otherwise disposed of in accordance with the terms of the Credit Agreement; provided that the Company shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release identifying the relevant Subsidiary and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Company stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. Upon any sale or other disposition of any item of Collateral by any Subsidiary expressly permitted by the Credit Agreement (other than sales of Inventory in the ordinary course of business), the Administrative Agent, at the request and expense of the Company, shall release the Collateral being sold and shall reassign and deliver such Collateral to such Subsidiary (without recourse and without any representation or warranty), together with appropriate instruments of reassignment and release; provided that (i) at the time of such request and such release no Event of Default shall have occurred and be continuing and (ii) the Company shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release describing the item of Collateral and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Company stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. Any execution and delivery of termination statements or documents pursuant to this Section 18 shall be without recourse to or representation or warranty by the Administrative Agent or any Lender. IN WITNESS WHEREOF, each Subsidiary has caused this Security Agreement to be duly executed and delivered as of the date first above written. DIAMOND WIRE & CABLE CO. 18 By____________________________________ Name: Title: ESSEX GROUP EXPORT INC. By___________________________________ Name: Title: ESSEX INTERNATIONAL, INC. By__________________________________ Name: Title: US SAMICA CORPORATION By____________________________________ Name: Title: INTERSTATE INDUSTRIES HOLDINGS INC. By____________________________________ Name: Title: INTERSTATE INDUSTRIES, INC. By____________________________________ Name: Title: SCHEDULE I to Subsidiary Security Agreement TRADEMARKS AND TRADE NAMES Trademark and/or Country Trade Name Registration Expiration ------- ---------------- ------------ ---------- US FEMCO 1,584,450 02/27/00* US ISOMICA 575,202 06/02/03** US MICANITA and Drawing 22,623 03/07/03** US SAMICA 558,013 04/22/02** US SAMICAPOR 1,095,179 07/04/98** US SAMICATHERM 995,614 03/20/03** * Registered to Femco Magnet Wire Corporation. ** These trademarks and/or tradenames are licensed for use by US Samica Corporation. TECHNOLOGY LICENSING AGREEMENTS
Parties Description ------- ----------- ESSEX GROUP, INC. Patent license for technology relating to American Telephone and coaxial cables and land lines Telegraph Co. ESSEX GROUP, INC. Cross license for intellectual property Aismalibar S.A. rights. ESSEX GROUP, INC. Agreement concerning intellectual property Cablec Corporation concerning transmission, distribution, power and control cable. ESSEX GROUP, INC. Agreement concerning intellectual property Chrysler Corporation relating to products used in the manufacture of or in motor vehicles. ESSEX GROUP, INC. Agreement for technology relating to magnet Femco Magnet Wire wire. Corporation ESSEX GROUP, INC. Agreement concerning intellectual property Ford Motor Company relating to products used in the manufacture of or in motor vehicles. ESSEX GROUP, INC. Patent license for technology relating to Groggins Plastic, Inc. spools and lifting handles. ESSEX GROUP, INC. Cross license for intellectual property Insulation Systems and rights. Machines, Ltd. ESSEX GROUP, INC. Cross license for intellectual property Isola Essex A.G. rights. ESSEX GROUP, INC. Agreement for technology concerning Windings, Inc. fabricating of packages and/or Reelex Machines. ESSEX GROUP, INC. Cross licenses for patents relating to Southwire Company shaft furnaces for melting copper and to apparatus for converting copper into copper bar and rod. /TABLE SCHEDULE II to Subsidiary Security Agreement Locations of Inventory and Equipment ---------------------------------- Windcrest Rd. Rutland, VT Rutland County Attala Industrial Park Kosciusko, MS 39090 Attala County Old Mike - Filthy Lucre Lode Black Hills Custer County, SD Location Code: N/A 7 Rimini Mews Unit C Mississauga, Ontario Canada L5N 4K1 EXHIBIT F FORM OF SUBSIDIARY GUARANTEE SUBSIDIARY GUARANTEE, dated as of October 31, 1996, by each of the corporations that are signatories hereto (the "Guarantors") in favor of THE CHASE MANHATTAN BANK, a New York banking corporation, as agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") that are parties to the Credit Agreement described below. W I T N E S S E T H : WHEREAS, Essex Group, Inc., a Michigan corporation (the "Company"), is party to a Credit Agreement, dated as of October 31, 1996, among the Company, BCP/Essex Holdings Inc., the Administrative Agent and the Lenders (as the same may from time to time be amended, supplemented or otherwise modified, the "Credit Agreement"); WHEREAS, pursuant to the terms of the Credit Agreement and the other Loan Documents, the Lenders have agreed to make certain Extensions of Credit (as hereinafter defined) to or for the benefit of the Company; WHEREAS, the Company owns directly or indirectly all of the issued and outstanding stock of each Guarantor; WHEREAS, the Company and the Guarantors are engaged in related businesses, and each Guarantor will derive substantial direct and indirect benefit from the making of the Extensions of Credit; and WHEREAS, the obligation of the Lenders to make the Extensions of Credit is conditioned upon, among other things, the execution and delivery by the Guarantors of this Guarantee; NOW, THEREFORE, in consideration of the premises and to induce the Lenders to enter into the Credit Agreement and to make the Extensions of Credit, each Guarantor hereby agrees with and for the benefit of the Administrative Agent and the Lenders as follows: 1. Defined Terms. As used in this Guarantee, terms defined in the Credit Agreement are used herein as therein defined, and the following terms shall have the following meanings: "Adjusted Net Worth" of any Guarantor shall mean, as of any date of determination thereof, the excess of (i) the amount of the "present fair saleable value" of the assets of such Guarantor as of the date of such determination, over (ii) the amount of all "liabilities of such Guarantor, contingent or otherwise", as of the date of such determination, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors. "Determination Date" shall mean, with respect to any Guarantor, the earlier of (a) the date of commencement of a case under Title 11 of the United States Code in which such Guarantor is 2 a debtor and (b) the date enforcement hereunder is sought with respect to such Guarantor. "Extensions of Credit" shall mean (i) all loans or advances made to the Company under any Loan Document, (ii) all letters of credit issued for the account of the Company under any Loan Document, (iii) all bankers' acceptances created for the account of the Company under any Loan Document and (iv) all other extensions of credit to or for the benefit of the Company under any Loan Document. "Maximum Guaranteed Amount" for any Guarantor shall mean, as of the Determination Date for such Guarantor, the sum of (i) an amount equal to the sum of each Extension of Credit (or portion thereof) the proceeds of which are used to make a Valuable Transfer (as hereinafter defined) to such Guarantor plus interest on such amount at the rate specified in the Credit Agreement plus (ii) the greater of (I) ninety-five percent (95%) of the Adjusted Net Worth of such Guarantor at the date of the execution of this Guarantee before giving effect to any Extensions of Credit made on such date and (II) ninety-five percent (95%) of the Adjusted Net Worth of such Guarantor at the Determination Date for such Guarantor. For purposes hereof, the term "Valuable Transfer" shall mean to (i) make a loan, advance or capital contribution to such Guarantor, (ii) acquire from such Guarantor debt securities or other obligations of such Guarantor, (iii) acquire property, any interest in which is transferred to such Guarantor (but only to the extent of the economic benefit to such Guarantor of the interest so transferred), (iv) purchase equity securities of such Guarantor or (v) otherwise confer, directly or indirectly, an economic benefit on such Guarantor (but only to the extent of such benefit). "Obligations" shall mean the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Company to the Administrative Agent and the Lenders (or, in the case of any Interest Rate Protection Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, the Loans, the other Loan Documents, the Letters of Credit or any other document made, delivered or given in connection therewith, whether on account of principal, interest, reimbursement obligations, fees, charges, indemnities, costs, expenses (including, without limitation, all reasonable fees and disbursements of counsel to the Administrative Agent and the Lenders that are required to be paid by the Company pursuant to the Credit Agreement) or otherwise. 2. Guarantee (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent and the Lenders and their respective successors, endorsees, transferees and assigns, the prompt and complete payment and 3 performance by the Company when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, and each Guarantor further agrees to pay any and all expenses (including, without limitation, all reasonable fees and disbursements of counsel) which may be paid or incurred by the Administrative Agent or any Lender in enforcing, or obtaining advice of counsel in respect of, any rights under this Guarantee; provided, however, that, anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed such Guarantor's Maximum Guaranteed Amount as determined at the Determination Date for such Guarantor; and further provided, that the Maximum Guaranteed Amount for each Guarantor hereunder shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors. (b) Each Guarantor agrees that the Obligations may at any time and from time to time exceed the Maximum Guaranteed Amount of such Guarantor or of all of the Guarantors without impairing this Guarantee or affecting the rights and remedies of the Administrative Agent and the Lenders hereunder. (c) No payment or payments made by the Company, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any Lender from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment or payments other than payments made by such Guarantor in respect of the Obligations or payments received or collected from such Guarantor in respect of the Obligations, remain liable for the Obligations up to its Maximum Guaranteed Amount until the Obligations are paid in full, the Revolving Credit Commitments are terminated and no Letters of Credit are outstanding. (d) Each Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to the Administrative Agent or any Lender on account of its liability hereunder, it will notify the Administrative Agent in writing that such payment is made under this Guarantee for such purpose. 3. Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder who has not paid its proportionate share of such payment. Each Guarantor's right of contribution shall be subject to the terms and conditions of Paragraph 5 hereof. The provisions of this Paragraph 3 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall remain liable to the Administrative Agent and the Lenders for the full amount guaranteed by such Guarantor hereunder. 4. Right of Set-off. Each Guarantor hereby irrevocably authorizes each Lender at any time and from time to time, if an Event of 4 Default shall have occurred and be continuing, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each Guarantor to the extent permitted by applicable law, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender to or for the credit or the account of such Guarantor, or any part thereof in such amounts as such Lender may elect, against and on account of the obligations and liabilities of such Guarantor to such Lender hereunder and claims of every nature and description of such Lender against such Guarantor, in any currency, whether arising hereunder, under the Credit Agreement or any Revolving Credit Notes, as such Lender may elect, whether or not the Administrative Agent or any Lender has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured. Each Lender agrees to notify such Guarantor promptly of any such set-off and the application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this paragraph are in addition to other rights and remedies (including, without limitation, other rights of set- off) which such Lender may have. 5. No Subrogation. Notwithstanding any payment or payments made by any of the Guarantors hereunder or any set-off or application of funds of any of the Guarantors by any Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Company or any other Guarantor or any collateral security or guarantee or right of offset held by any Lender for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent and the Lenders by the Company on account of the Obligations are indefeasibly paid in full, the Revolving Credit Commitments are terminated and no Letters of Credit are outstanding. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent and the Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly endorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Administrative Agent and the Lenders may determine. 6. Amendments, etc. with respect to the Obligations; Waiver of Rights. Each Guarantor shall remain obligated hereunder and under the other Loan Documents notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Obligations made by the Administrative Agent or any Lender may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, 5 modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Lender and this Guarantee, the Credit Agreement, any Revolving Credit Notes, the Loan Documents, any other collateral security document or other guarantee or document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Lender for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against any of the Guarantors, the Administrative Agent or any Lender may, but shall be under no obligation to, make a similar demand on the Company or any other Guarantor or guarantor, and any failure by the Administrative Agent or any Lender to make any such demand or to collect any payments from the Company or any such other Guarantor or guarantor or any release of the Company or such other Guarantor or guarantor shall not relieve any of the Guarantors in respect of which a demand or collection is not made or any of the Guarantors not so released of their several obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Administrative Agent or any Lender against any of the Guarantors. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 7. Guarantee Absolute and Unconditional. To the extent permitted by applicable law, each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon this Guarantee or acceptance of this Guarantee, the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Company or any of the Guarantors and the Administrative Agent or any Lender shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. To the extent permitted by applicable law, each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity, regularity or enforceability of the Credit Agreement, any Revolving Credit Notes, any of the other Loan Documents, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Company against the Administrative Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company for the Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent and any Lender may, but shall be under no obligation to, pursue such rights and remedies as it may have against 6 the Company or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Lender to pursue such other rights or remedies or to collect any payments from the Company or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Company or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve such Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any Lender against such Guarantor. 8. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 9. Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in U.S. Dollars at the office of the Administrative Agent located at c/o Chase Agent Bank Services Group, Grand Central Tower, 140 East 45th Street, New York, New York 10017, Attn: Jesus Sang, Clearing Account No. 144-816-041. 10. Representations and Warranties. Each Guarantor hereby represents and warrants that the representations and warranties set forth in Section 4 of the Credit Agreement as they relate to such Guarantor, each of which is hereby incorporated herein by reference, are true and correct, and the Administrative Agent and each Lender shall be entitled to rely on each of them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Company's knowledge shall, for the purposes of this paragraph, be deemed to be a reference to such Guarantor's knowledge. Each Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by such Guarantor on the date of each borrowing by the Company, and on the date of issuance of each Letter of Credit, under the Credit Agreement on and as of such date of borrowing or issuance as though made hereunder on and as of such date 11. Covenants. Each Guarantor hereby agrees that, from and after the Effective Date and so long as the Revolving Credit Commitments remain in effect, any Revolving Credit Note or Letter of Credit remains outstanding and unpaid or any other amount is owing to any Bank or the Administrative Agent under the Credit Agreement or any other Loan Document, such Guarantor shall take, or shall refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that no violation of any provision, covenant or agreement contained in Section 6 or 7 of the Credit Agreement, and so that no Default or Event of 7 Default, is caused by any act or failure to act of such Guarantor or any of its Subsidiaries. 12. Severability. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Paragraph Headings. The paragraph headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Paragraph 15 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 15. Integration; Waivers and Amendments; Successors and Assigns; Governing Law. This Guarantee represents the entire agreement of each Guarantor with respect to the subject matter hereof and there are no promises or representations by the Administrative Agent or any Lender relative to the subject matter hereof not reflected herein. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except in accordance with Section 11.1 of the Credit Agreement. This Guarantee shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and assigns. This Guarantee shall be governed by and be construed and interpreted in accordance with the law of the State of New York. 16. Notices. All notices, requests and demands given hereunder shall be given in accordance with Section 11.2 of the Credit Agreement, provided that all notices, requests and demands to or upon a Guarantor shall be addressed to such Guarantor at the address provided for such Guarantor in Schedule I hereto or at such other address of which the Administrative Agent shall have been notified pursuant to the Credit Agreement. 8 17. Counterparts. This Guarantee may be executed by one or more of the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 18. Submission To Jurisdiction; Waivers. Each of the Guarantors hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Guarantee and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Guarantor at the address provided for such Guarantor in Schedule I hereto or at such other address of which the Administrative Agent shall have been notified pursuant to the Credit Agreement; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Paragraph any special, exemplary, punitive or consequential damages. 19. Termination. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon each Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Administrative Agent and the Lenders, and their respective successors, endorsees, transferees and assigns, until all the Obligations and the obligations of each Guarantor under this Guarantee shall have been satisfied by payment in full, the Revolving Credit Commitments shall be terminated and no Letters of Credit are outstanding. At the request and expense of the Company, a Guarantor shall be released from its obligations hereunder, in the event that all the capital stock of such Guarantor shall be sold, transferred or otherwise disposed of in accordance with the terms of the Credit Agreement; provided that the Company shall have delivered to the Administrative Agent, at least ten Business Days prior to the date of the proposed release, a written request for release identifying the relevant Guarantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a 9 certification by the Company stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents. 20. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY AND FOR ANY COUNTERCLAIM THEREIN. IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and year first above written. DIAMOND WIRE & CABLE CO. By ____________________________ Name: Title: ESSEX GROUP EXPORT INC. By ____________________________ Name: Title: ESSEX INTERNATIONAL, INC. By ____________________________ Name: Title: US SAMICA CORPORATION By ____________________________ Name: Title: INTERSTATE INDUSTRIES HOLDINGS INC. By____________________________________ Name: Title: INTERSTATE INDUSTRIES, INC. By____________________________________ Name: Title: SCHEDULE I Addresses of Guarantors c/o Essex Group, Inc. 1601 Wall Street Fort Wayne, IN 46802 ATTN: David A. Owen EXHIBIT G-1 [CRAVATH, SWAIN & MOORE LETTERHEAD] October 31, 1996 BCP/Essex Holdings Inc. Credit Agreement dated as of October 31, 1996 Ladies and Gentlemen: We have acted as New York counsel to BCP/Essex Holdings Inc., a Delaware corporation ("Holdings"), in connection with the Credit Agreement dated as of October 31, 1996 (the "Credit Agreement"), among Holdings, Essex Group, Inc., a Michigan corporation ("Essex"), the lending institutions party thereto (the "Lenders") and The Chase Manhattan Bank, as Administrative Agent for the Lenders ("Administrative Agent"). This opinion is being delivered to you pursuant to Section 5.1(g)(i) of the Credit Agreement. Capitalized terms used but not defined herein have the meanings assigned to them in the Credit Agreement. In that connection, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for purposes of this opinion, including (i) the Credit Agreement, (ii) each Note, (iii) the Pledge Agreements, (iv) the Security Agreements, (v) the Mortgages, (vi) the Subsidiary Guarantee, (vii) the Certificates of Incorporation of each of the Loan Parties, as amended, (viii) the By-laws of each of the Loan Parties, (ix) resolutions adopted by the Boards of Directors of each of the Loan Parties on October 28, 1996 and (x) executed copies of the Form UCC-1 financing statements listed on Schedule I hereto (the "Financing Statements"). The documents described in clauses (iii), (iv), (v) and (vi) of the immediately preceding sentence are sometimes referred to herein as the "Security Documents" and, together with the documents described in clauses (i) and (ii), are sometimes referred to herein as the "Loan Documents". We have also relied, with respect to certain factual matters, on the representations and warranties of the Loan Parties contained in the Loan Documents and have assumed compliance by the Loan Parties with the terms of the Loan Documents. In rendering our opinion, we have assumed the due authorization, execution and delivery of the Credit Agreement and the other Loan Documents by all parties thereto other than the Loan Documents as executed by Holdings and Essex International, Inc. ("Essex International"). Based on the foregoing and subject to the qualifications hereinafter set forth, we are of opinion as follows: 1. Holdings is a corporation incorporated under the laws of the State of Delaware, and, based solely on a certificate from the Secretary of State of the State of Delaware, Essex International is a corporation validly existing and in good standing under the laws of the State of Delaware. Each of Holdings and Essex International has all necessary corporate power and authority to execute and deliver the Loan Documents and to perform its obligations thereunder, and the execution and delivery of the Loan Documents by each of them, the performance of their obligations thereunder and the grant by them of security interests 2 pursuant to the Security Documents have been duly authorized by all requisite corporate action on the part of each of Holdings and Essex International. 2. The execution and delivery by the Loan Parties of the Loan Documents, the performance by the Loan Parties of their obligations thereunder and the grant by the Loan Parties of security interests pursuant to the Security Documents (a) will not result in or require the creation or imposition of any Lien on any of the properties or revenues pursuant to any agreement listed on Schedule I hereto; and (b) will not conflict with, result in a breach of or constitute a default under (i) the Certificate of Incorporation or By-laws of Holdings or Essex International, (ii) any law, rule or regulation of the United States of America (including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System) or the State of New York or the General Corporation Law of the State of Delaware, (iii) the provisions of any agreement listed on Schedule I hereto or (iv) to our knowledge, any order or decree of any court or government agency or instrumentality. In connection with the foregoing, we point out that certain of the agreements referred to in clause (b)(iii) above are or may be governed by laws other than the laws of the State of New York. For purposes of the opinion expressed in this paragraph, however, we have assumed that all such agreements are governed by and would be interpreted in accordance with the laws of the State of New York. 3. Each of Holdings and Essex International has duly executed and delivered each of the Loan Documents to which it is a party, and each such document constitutes a legal, valid and binding obligation of each of Holdings and Essex International, enforceable against each of Holdings and Essex International in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws relating to or affecting creditor's rights generally from time to time in effect and to general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law. The foregoing opinion is subject to the following qualifications: (i) certain provisions of the Security Documents (including the Mortgages) are or may be unenforceable in whole or part under the laws of the State of New York, but the inclusion of such provisions does not affect the validity of the Security Documents, and each such Security Document contains adequate provisions for the practical realization of the principal rights and benefits intended to be afforded thereby, except for economic consequences resulting from any delay imposed by, or any procedure required by, applicable New York laws, rules, regulations and court decisions and by constitutional requirements, (ii) insofar as provisions contained in the Loan Documents provide for indemnification, the enforceability thereof may be limited by public policy considerations, (iii) the availability of a decree for specific performance or an injunction is subject to the discretion of the court requested to issue any such decree or injunction, (iv) we express no opinion as to the effect of the laws of any jurisdiction other than the State of New York where any lender may be located or where enforcement of the Security Documents may be sought that limits the rates of interest legally chargeable or collectible and (v) the enforceability of the Security Agreements and the Mortgages may be subject to the rights of lessees or other account debtors, the terms of the leases or other contracts between the relevant Loan Party and such lessees or other 3 account debtors and any claims or defenses of such lessees or account debtors against such Loan Party. 4. No authorization, approval or other action by, and no notice to, consent of, order of or filing with, any United States Federal, New York or, to the extent required under the General Corporation Law of the State of Delaware, Delaware governmental authority is required in connection with the execution, delivery and performance by each of the Loan Parties of any of the Loan Documents or the grant by each of the Loan Parties of the security interests under the Pledge Agreements and the Security Agreements, other than (i) those that have been made or obtained and are in full force and effect or as to which the failure to be made or obtained or to be in full force and effect would not result, individually or in the aggregate, in a material adverse effect on each of Holdings and Essex International and its subsidiaries, taken as a whole, (ii) such registrations, filings and approvals under federal or state securities laws as may be necessary in connection with the sale of the Pledged Stock pursuant to the Pledge Agreements and (iii) filings of Uniform Commercial Code financing statements in appropriate offices in order to perfect certain security interests granted under the Security Agreements. 5. No Loan Party is an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940. No Loan Party is a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. 6. Execution and delivery of the Pledge Agreements, together with delivery to and the continued possession by the Collateral Agent, in each case in the State of New York, of all the Pledged Stock, issued or endorsed in the name of the Collateral Agent or in blank or together with stock powers properly executed in the name of the Collateral Agent or in blank with respect thereto, will create a valid and duly perfected lien on and a security interest in the Pledged Stock pledged on the date hereof under the Pledge Agreements, which security interest in such Pledged Stock will be prior to any security interest, lien, charge or encumbrance that must be perfected by possession or filing under the Uniform Commercial Code of the State of New York as in effect on the date hereof (the "New York UCC"). The opinion expressed in this paragraph 6 is based on the assumption that the Collateral Agent and each of the Lenders have taken delivery of, and acquired their security interest in, the Pledged Stock in good faith and without notice of any adverse claim. For purposes of the foregoing sentence, the terms "good faith", "notice" and "adverse claim" shall have the meanings given to such terms in the New York UCC. 7. The provisions of each of the Security Agreements are effective to create in favor of the Collateral Agent a valid security interest in all right, title and interest of each Loan Party in such of the Collateral (as defined in the relevant Security Agreement) as constitutes "accounts", "documents", "equipment", "general intangibles", "instruments" and "inventory" within the meaning of the New York UCC (such of the Collateral being hereinafter referred to as the "Specified Collateral"), to the extent that the creation of security interests in the Specified Collateral is governed by the New York UCC. The opinion expressed in this paragraph 7 is based on the assumption that all filings and recordings necessary to maintain the effectiveness of the Financing Statements will be made, including without limitation (i) continuation statements, which are required under Article 9 4 of the New York UCC to be filed within the period of six months prior to the expiration of five years from the date of the original filing of the Financing Statements, and (ii) such other statements as may be required by (x) any change in name, identity or corporate structure of either of Holdings or Essex International or the Collateral Agent, (y) any change in the location of the chief executive offices of either of Holdings or Essex International, and (z) any change of location of any of the Collateral (which, in the case of Collateral removed from the State of New York, will require further action to be taken in the jurisdiction to which such Collateral has been removed). Our opinions expressed in paragraphs 6 and 7 are further qualified as follows: (a) in the case of instruments (as such term is defined in Article 9 of the New York UCC), not constituting part of chattel paper (as such term is defined in Article 9 of the New York UCC), the security interests of the Collateral Agent under the Security Agreement cannot be perfected by the filing of financing statements but will be perfected if possession thereof is obtained or maintained by the Collateral Agent in accordance with the provisions of Article 9 of the New York UCC; (b) we express no opinion as to any Loan Party's rights in or title to the Pledged Stock or any Collateral; (c) we express no opinion as to the validity or perfection of any security interests in any item of collateral other than the Pledged Stock existing on the date hereof and Specified Collateral, in any item of Collateral which is expressly excluded from the application of the New York UCC pursuant to Section 9-104 thereof, in any item of Collateral which consists of fixtures (as defined in Section 9-313 of the New York UCC) or in any item of Collateral which is subject to (A) a statute or treaty of the United States which provides for a national or international registration or a national or international certificate of title for the perfection of a security interest therein or which specifies a place of filing different from that specified in the New York UCC for filing to perfect such security interest or (B) a certificate of title statute; (d) we express no opinion as to the perfection of any security interest in any proceeds; (e) except as specifically set forth in paragraph 6, we express no opinion as to the priority of any security interest created under the Security Documents, and we express no opinion in paragraph 6 as to the relative priority of the security interest in the Pledged Stock as against (i) any claim or lien in favor of the United States of America or any agency or instrumentality thereof (including, without limitation, Federal tax liens and liens under Title IV of the Employee Retirement Income Security Act of 1974, as amended) or (ii) the claim of a lien creditor to the extent set forth in Section 9-301 of the New York UCC; (f) in the case of property which becomes Collateral after the date hereof, Section 552 of Title 11 of the United States Code (the "Bankruptcy Code") limits the extent to which property acquired by a 5 debtor after the commencement of a case under the Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of such case; (g) we express no opinion as to the validity or enforceability of any security interest in goods (as defined in the New York UCC) which have been bought by a buyer in the ordinary course of business (as defined in Section 1-201 of the New York UCC); and (h) we express no opinion in paragraph 7 as to what law, pursuant to Section 9-103 of the New York UCC, would govern perfection of the security interests granted in the Collateral. We express no opinion herein as to (i) the enforceability of any provisions contained in the Loan Documents purporting to preserve a debtor's liability for any deficiency after the sale of any collateral to the extent such sales are not conducted in accordance with the applicable provisions of the laws of the State of New York, (ii) Section 11.12(a) of the Credit Agreement and Section 18(a) of the Subsidiary Guarantee insofar as such Sections relate to the subject matter jurisdiction of the United States District Court for the Southern District of New York to adjudicate any controversy related to the Credit Agreements and the Loan Documents, (iii) the waiver of an inconvenient forum set forth in Section 11.12(b) of the Credit Agreement and Section 18(b) of the Subsidiary Guarantee, (iv) Section 11.7(b) of the Credit Agreement insofar as it relates to setoffs in respect of participations purchased in Loans or (v) any provision in any Loan Document insofar as it provides a right of setoff in respect of claims, credits or other obligations that are contingent or a right of setoff in respect of Obligations against deposits, indebtedness or other obligations of any entity other than the entity to which such Obligations are payable. We understand that you are satisfying yourselves as to the status under Section 548 of the Bankruptcy Code and applicable state fraudulent conveyance laws of the obligations of the Loan Parties, and the security interests of the Collateral Agent and the Lenders, under the Loan Documents, and we express no opinion thereon. We understand that you are satisfying yourselves as to the creation, perfection and priority of the security interests created under each of the Mortgages in the Mortgaged Properties and (to the extent that they do not purport to be governed by New York law) the enforceability of such Mortgages and, to the extent that this opinion addresses Loan Documents generally, we express no opinion with respect to the Mortgages with respect to such matters. Our opinion in paragraph 4 as to certain consents, authorizations, filings or any other acts, our opinion in paragraph 2 as to compliance with certain Requirements of Law and our opinion in paragraph 6 as to the priority of the security interests referred to therein are based upon (i) those consents, authorizations, filings and other acts and (ii) a review of the UCC and of those laws, statutes, rules and regulations which, in our experience, are normally applicable to transactions of the type contemplated by the Loan Documents. In connection with this opinion, including our opinion contained in paragraph 2 as to there being no violation of certain 6 Contractual Obligations, we are not expressing any opinion as to whether Holdings or Essex has, as a factual matter, complied with or satisfied any applicable financial tests or ratios and have relied, without any independent verification, on the certificates of David A. Owen, the Chief Financial Officer of Essex, as to such matters. We are admitted to practice only in the State of New York, and we express no opinion as to matters governed by any laws other than the laws of the State of New York, the General Corporation Law of the State of Delaware and the Federal law of the United States of America. Our opinion set forth in paragraph 6 hereof is limited to Article 8 of the New York UCC, and our opinion set forth in paragraph 7 hereof is limited to Article 9 of the New York UCC. This opinion is rendered only to the Administrative Agent and the Lenders and their permitted transferees under the Credit Agreement and is solely for their benefit in connection with the above transactions. This opinion may not be relied upon by any other person or for any other purpose or used, circulated, quoted or otherwise referred to for any other purpose. Very truly yours, /s/ Cravath, Swaine & Moore The Lenders Party to the Credit Agreement referred to above The Chase Manhattan Bank, as Administrative Agent In care of Chase Securities, Inc. 10 South LaSalle Street Chicago, IL 60603 47NS O SCHEDULE I Indenture dated as of May 7, 1993, between Essex Group, Inc., and NBD Bank, National Association, as Trustee. Senior Unsecured Note Agreement dated as of April 12, 1995, among BCP/Essex Holdings Inc., Essex Group, Inc., the lenders party thereto and Chemical Bank, as administrative agent. Officer's Certificate 10% Senior Notes Due 2003 ---------------------- The undersigned is the Chief Financial Officer of Essex Group, Inc. ("Essex"), a Michigan corporation and a wholly owned subsidiary of BCP/Essex Holdings Inc. ("Holdings"). The undersigned is familiar with the terms and provisions of each of (i) the Indenture dated as of May 7, 1993 (the "Indenture"), between Essex and NBD Bank, National Association, in respect of the 10% Senior Notes Due 2003, (ii) the Senior Unsecured Note Agreement dated as of April 12, 1995 (the "Note Agreement"), among Holdings, Essex, the Lenders named therein and Chemical Bank, as administrative agent, (iii) the Agreement and Lease dated as of April 12, 1995 (the "Lease"), between Mellon Financial Services Corporation #3 and Essex, and (iv) the Credit Agreement dated as of October 31, 1996 (the "Credit Agreement"), among Holdings, Essex, the Lenders named therein and The Chase Manhattan Bank, as administrative agent. In connection with the foregoing, the undersigned hereby certifies that: 1. To the best of my knowledge, no violation of the terms and provisions of or obligations under the Indenture has or will occur as a result of the execution of the Note Agreement, the Lease or the Credit agreement, and no violation of such terms and provisions or obligations has or will result from the consummation of the transactions contemplated thereby. 2. Specifically, and in connection with Section 4.04(a) of the Indenture, the Consolidated EBITDA Coverage Ratio (as defined in the Indenture), after giving effect to the incurrence of all Debt to be incurred under the Note Agreement, the Lease and the Credit Agreement, and the receipt and application of the proceeds thereof, would be greater than 2.0 to 1 (the calculation of which is set forth on Exhibit A hereto). 3. Specifically, and in connection with Section 4.04(b)(iv) of the Indenture, the obligations of Essex under the Lease are "Capital Lease Obligations" under, and as defined in, the Indenture and do not exceed in the aggregate, together with any other "Capital Lease Obligations" and guarantees of joint venture obligations thereof, $25,000,000. 4. The calculation attached hereto is true and correct and hs been made on good faith assumptions and has been calculated in accordance with the terms and provisions of the Indenture. ______________________________ David A. Owen Dated: October 31, 1996 Essex Group, Inc. Exhibit A Consolidated EBITDA Coverage Ratio As defined in the Sr. Note re Section 4.04(a). Calculated on a Proforma basis as of June 30, 1996. Events affecting the Proforma calculation include the following: (1) Issuance of Debt by Essex International, Inc., beginning May, 1996 (2) Asset Acquisition of Electro Brownell, October, 1995 (3) Asset Acquisition of BICC Phillips, March, 1996 (4) Asset Acquisition of Triangle Wire & Cable, October, 1996 Impact of the above: (a) Increased interest expense from debt related to each. Included in Proforma interest expense as if incurred at beginning of period. (b) EBITDA is to be increased by earnings of each acquisition for the period. This is assumed to be zero. Consolidated Adjusted Net Income ($million) Actual 40.1 Proforma interest (7.1) ----- Proforma Income 33.0 33.0 + Consolidated Interest Expense Actual 38.7 Proforma interest 7.1 ---- Total Interest 45.8 45.8 + Income Taxes 20.2 + Depreciation (excluding purchase actg.) 17.7 + Amortization 2.3 + Other Non-Cash Charges 2.7 ---- Defined EBITDA 121.7 Proforma Interest Expense 45.8 Consolidated EBITDA Coverage Ratio 2.66 EXHIBIT G-2 ESSEX GROUP, INC. 1601 Wall Street Fort Wayne, Indiana 46801-1601 October 31, 1996 Dear Sirs: I have acted as counsel to Essex Group, Inc., a Michigan corporation ("Essex"), BCP/Essex Holdings Inc., a Delaware corporation ("Holdings"), and the subsidiaries of Essex set forth in Schedule II (the "Subsidiaries") in connection with the preparation, execution and delivery of the Credit Agreement dated as of October 31, 1996 (the "Credit Agreement"), among Holdings, Essex, the lenders party thereto (the "Lenders") and The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent"). This opinion is furnished to you pursuant to Section 5.1(g)(ii) of the Credit Agreement. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined. In connection with this opinion, I have examined (a) executed copies of the Credit Agreement and each other Loan Document and (b) copies of such corporate documents and records of the Essex Entities (as defined below) and certificates of public officials and officers of the Essex Entities and such other documents as I have deemed necessary or appropriate for the purposes of this opinion. In my examination, I have assumed the genuineness of all signatures, the due authorization, execution and delivery of the Credit Agreement and the other Loan Documents by the parties thereto (other than the Essex Entities), the authenticity of all documents submitted to me as originals and the conformity to authentic, original documents of all documents submitted to me as certified, conformed or photostatic copies. As to any facts material to this opinion set forth below which I did not independently establish or verify, I have relied upon representations of officers or representatives of the Essex Entities. Based upon the foregoing, I am of the opinion that: 1. Holdings is a corporation incorporated under the laws of the State of Delaware. Each of Essex and the Subsidiaries that are Loan Parties (Essex, Holdings and such Subsidiaries constituting, collectively, the "Essex Entities") (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) has the corporate power and authority to own and operate its property and to conduct the business in which it is currently engaged and in which it proposes to be engaged after the Effective Date and (c) is duly qualified as a foreign corporation and is in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified and/or in good standing, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 2. Each of the Essex Entities had, at the time they were executed, the corporate power and authority, and the legal right, to make, deliver and perform each of the Loan Documents to which it is a party. 2 Each of the Essex Entities has taken all necessary corporate action to authorize the borrowings on the terms and conditions of the Credit Agreement, to grant the Liens pursuant to the Security Documents to which it is a party and to authorize the execution, delivery and performance of the Loan Documents to which it is a party. Except as previously disclosed to the Lenders and the Agent in the Credit Agreement, no consent or authorization of, filing with or other act by or in respect of any Governmental Authority or, to the best of my knowledge, any other Person is required in connection with the execution, delivery or performance by each of the Essex Entities, or the validity or enforceability, of any of the Loan Documents to which such entity is a party, except for filings in connection with the perfection of Liens created by the Security Documents to which such entity is a party. Each of the Loan Documents to which any of the Essex Entities is a party has been duly executed and delivered by such entity. 3. The execution, delivery and performance of the Loan Documents by each of the Essex Entities and the borrowings under the Credit Agreement and the use of the proceeds thereof will not (a) violate any Requirement of Law (excluding Regulations U, T, G and X of the Board of Governors of the Federal Reserve System and excluding any Requirement of Law other than under the laws of the United States, the State of Indiana or the State of Michigan or the General Corporation Law of the State of Delaware (the "GCL")), (b) to the best of my knowledge after due inquiry, violate any order, writ, judgment, injunction, decree, determination or award of any court or governmental instrumentality presently in effect which affects or binds any of the Essex Entities or any of their respective properties, (c) violate any Contractual Obligation of any of the Essex Entities under any agreement listed on Schedule I hereto or, to the best of my knowledge, any other Contractual Obligation of any of the Essex Entities or (d) to my knowledge, result in, or require, the creation or imposition of any Lien on any of the respective properties or revenues pursuant to any Requirement of Law or Contractual Obligation of any of the Essex Entities, except the Liens created pursuant to the Security Documents. 4. To the best of my knowledge after due inquiry, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or threatened by or against any of the Essex Entities or against any of their respective properties or revenues (a) with respect to any Loan Document, the Loans or the use of the proceeds thereof, any Letter of Credit or any Lien contemplated by the Loan Documents or (b) which has a reasonable possibility of an adverse determination and, if adversely determined, (i) would affect the legality, validity or enforceability or any Loan Document or (ii) would have a Material Adverse Effect. 5. Schedules II and III hereto set forth, as of the Effective Date, with respect to each class of the Capital Stock of each of the Essex Entities (a) the number of authorized, issued and outstanding shares of such class and (b) the number of shares owned of record and beneficially by each of Holdings and Essex. All the shares of such Capital Stock of each of the Essex Entities described on such Schedule are validly issued, fully paid and nonassessable. To the best of my knowledge, there are no outstanding subscriptions, options, warrants, calls, rights (including preemptive rights) or any other agreements or commitments of any nature with respect to the Capital Stock of Holdings, Essex or any of the Subsidiaries, except as set forth on Schedules III and IV hereto. 3 My opinion in paragraph 3 as to compliance with certain Requirements of Law is based upon a review of those laws, statutes, rules and regulations which, in my experience, are normally applicable to transactions of the type contemplated by the Loan Documents. In connection with this opinion, including my opinion contained in paragraph 3 as to there being no violation of certain Contractual Obligations, I am not expressing any opinion as to whether Essex has as a factual matter satisfied or complied with any applicable financial tests or ratios and have relied, without any independent verifications, on the certificate of David A. Owen, the Chief Financial Officer of Essex, as to such matters. I am admitted to practice in the State of Indiana. I express no opinion as to matters governed by any laws other than the laws of the State of Indiana, the laws of the State of Michigan, the Federal laws of the United States of America and the GCL. I have assumed that, insofar as the substantive laws of the State of Michigan and the GCL may be applicable to any matters opined on herein, such laws are identical to the substantive laws of the State of Indiana. This opinion is rendered only to the Administrative Agent and the Lenders and their permitted transferees and is solely for their benefit in connection with the above transactions. This opinion may not be relied upon by the Administrative Agent or the Lenders or their permitted transferees for any other purpose or relied upon by any other person, firm or corporation for any purpose without my prior written consent. Very truly yours, /s/ Debra F. Minnott The Lenders Party to the Credit Agreement referred to above The Chase Manhattan Bank, as Administrative Agent In care of Chase Securities, Inc. 10 South LaSalle Street Chicago, IL 60603 SCHEDULE I Indenture dated as of May 7, 1993, between Essex Group, Inc., and NBD Bank, National Association, as Trustee. Senior Unsecured Note Agreement dated as of April 12, 1995, among BCP/Essex Holdings Inc., Essex Group, Inc., the lenders party thereto and Chemical Bank, as administrative agent. SCHEDULE II [CAPTION] Company Name Shares* Shareholder (Domicile) Auth'd. Issued (# of Shares) ---------- ------- ------ ------------- BCP/Essex Essex Group, Inc. (Michigan) Holdings Inc. (Formerly UAE of Michigan, Inc.) 1,000 100 (100) Essex Group, Inc. Essex International, Inc. (Delaware) 100 100 (100) Essex Group, Inc. US Samica Corporation (Vermont) 66,666 43,200 (43,200) Essex Group, Inc. Diamond Wire & Cable Co. (Illinois) 250 25 (25) Essex Group Export Inc. (U.S. Virgin Essex Group, Inc. Islands) 1,000 1,000 (1,000) Essex Group, Inc. (42.656) Interstate Industries Holdings Inc. CMP Group, Inc. (Delaware) 2,000 53.32 (10.664) Interstate Industries Interstate Industries, Inc. Holdings Inc. (Mississippi) 500 100 (100)
*All shares are Common Stock SCHEDULE III The authorized Capital Stock of Holdings consists of 150,000,000 shares of Common Stock, divided into Class A Common Stock ($.01 par value) and Class B Common Stock ($.01 par value). There are outstanding as of the date of the attached opinion 47,237,698 shares of Class A Common Stock. There are outstanding as of the date of the attached opinion warrants to purchase 5,666,738 shares of Common Stock of Holdings and options to purchase 5,570,950 shares of Common Stock of Holdings. Capitalized terms used herein have the meanings assigned thereto in the attached opinion or the Credit Agreement (as defined in such opinion). SCHEDULE IV Set forth below are agreements (as amended from time to time) known to us on the date of the attached opinion providing for subscriptions, options, warrants, calls, rights (including preemptive rights) or any other agreement or commitments of any nature with respect to the Capital Stock of BCP/Essex Holdings Inc. (Capitalized terms used herein but not defined herein shall have the meanings assigned thereto in the attached opinion or in the Credit Agreement (as defined in such opinion).): Amended and Restated Stock Option Agreement. Amended and Restated Stock Option Plan. BCP Stock Subscription Agreement dated as of October 9, 1992, between Bessemer Capital and BCP/Essex Holdings Inc. (formerly Acquisition Corporation). Investors Shareholders Agreement dated as of October 9, 1992, among BCP/Essex Holdings Inc. (formerly Acquisition Corporation), Bessemer Holdings, L.P., DLJ, Goldman and Chase Equity Associates ("CEA"). Irrevocable Proxies dated as of October 9, 1992, granted to Bessemer Capital by each Management Investor. Management Option Continuation Agreements dated as of October 9, 1992, between BCP/Essex Holdings Inc. (formerly Acquisition Corporation) and the Management Optionholders. Management Stock Subscription Agreements dated as of October 9, 1992, between BCP/Essex Holdings Inc. (formerly Acquisition Corporation) and each individual Management Investor. Management Stockholders and Registration Rights Agreement dated as of October 9, 1992, among BCP/Essex Holdings Inc. (formerly Acquisition Corporation), Bessemer Holdings, L.P. and each of the Management Investors. Registration Rights Agreement dated as of October 9, 1992, among BCP/Essex Holdings Inc. (formerly Acquisition Corporation), DLJ, Goldman and CEA. Stock and Warrant Subscription Agreement dated as of October 9, 1992, among Acquisition Corporation, DLJ, Goldman and CEA. Stock Option Agreements. The Certificate of Incorporation of Holdings, including the Certificates of Designation relating to the Series A Cumulative Redeemable Exchangeable Preferred Stock of Holdings. Warrant Agreement dated as of October 9, 1992, among BCP/Essex Holdings Inc. (formerly Acquisition Corporation), DLJ and Goldman. EXHIBIT G-3 FORM OF OPINION OF LOCAL COUNSEL1/ October 31, 1996 The Lenders Parties to the Credit Agreement referred to below The Chase Manhattan Bank, as Administrative Agent 270 Park Avenue New York, New York 10017 Dear Sirs: We have acted as special local counsel in the state of ________________ (the "State") to Chemical Bank, as Administrative Agent for the Lenders referred to below, in connection with the preparation, execution and delivery of the Credit Agreement, dated as of April __, 1995 (the "Credit Agreement"), among BCP/Essex Holdings Inc., a Delaware corporation ("Holdings"), Essex Group, Inc., a Michigan corporation (the "Company"), the lenders parties thereto (the "Lenders") and Chemical Bank, as agent (in such capacity, the "Administrative Agent"), and the other Loan Documents referred to in the Credit Agreement. This opinion is furnished to you pursuant to Section 5.1(f)(iii) of the Credit Agreement. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined. In connection with this opinion, we have examined execution copies of (i) the Credit Agreement and (ii) each of the Security Documents listed on Annex I hereto (the "State Security Documents;" together with the Credit Agreement, the "Loan Documents"). We have also examined originals, or copies certified or otherwise identified to our satisfaction, of such corporate records, certificates of public officials, certificates of officers of the Loan Parties, and such other documents as we have deemed necessary or appropriate for the purpose of this opinion. For the purposes of this opinion, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of documents submitted to us as certified or photostatic copies. _______________ 1/ This Form of opinion contains only basic provisions and is subject to further comment by each Local Counsel. Certain assumptions and exceptions particular to the laws of each local jurisdiction will be included in the actual opinions delivered. 2 You have advised us that in rendering this opinion, we may assume that (i) the actions of the parties to this transaction are permitted under their respective charter documents; (ii) each of the Loan Documents was duly authorized, executed and delivered by the respective parties thereto in the form of the execution copies reviewed by us and (iii) each of the Loan Documents was negotiated by the various parties thereto principally in the State of New York and such documents were executed and delivered in New York, where the closing and the funding are to take place. Based on the foregoing, we are of the opinion that: 1. Neither the execution and delivery by any Loan Party of the Loan Documents to which it is a party nor the performance by such Loan Party of any of its obligations thereunder does or will violate any applicable Requirement of Law of the State. 2. No license, notice, authorization, consent, exemption, franchise or other approval of, permit or action by, or registration, declaration of filing with any Governmental Authority of the State or any political subdivision thereof is required on the part of any Loan Party in connection with its execution and delivery of, and the performance of its obligations under, any of the Loan Documents or the grant of the liens and security interests created by the State Security Documents, or for the exercise by the Administrative Agent of its rights and remedies thereunder, except for (i) the filing of the financing statements referred to in paragraph 3 below and (ii) the recordation of the Mortgages referred to in paragraph 5 hereof. The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party will not violate any Requirement of Law of the State or any political subdivision thereof. 3. Insofar as the laws of the State are concerned, the provisions of each Security Agreement listed on Annex I hereto are effective to create in favor of the Administrative Agent a legal, valid and enforceable security interest in the Collateral described therein, and when UCC-1 financing statements for each Loan Party to any such Security Agreement in the form attached hereto as Annex II have been filed with the office of the Secretary of State of the State [and with the [Appropriate Local Office]] (the "Filing Offices"), the Administrative Agent shall have a fully perfected security interest in all right, title and interest of the Loan Parties in the State Collateral (as defined below) under the Uniform Commercial Code of the State (the "UCC"), as security for the payment of the Obligations. As used in this paragraph, "State Collateral" means all equipment and inventory (as each such term is defined in the UCC) located in the State, all accounts, chattel paper and general intangibles (as each such term is defined in the UCC) of each Loan Party located in the State (within the meaning of Section 9-103 of the UCC) and all other Collateral as to which filing UCC-1 financing statements in the Filing Offices is an appropriate method of perfection. 4. Section 9-103 of the UCC provides that the laws (including the conflict of laws rules) of the jurisdiction of the chief executive office or place of business of a debtor governs the perfection, and the effect of perfection or non-perfection, of a security interest in the accounts, general intangibles, and mobile goods, and of a non-possessory security interest in chattel paper, of such debtor (each as defined in the UCC). 5. Each Mortgage listed on Annex I hereto (a) is in proper form for execution and recording in the office referred to on Annex I with 3 respect so such Mortgage (the "Recorder's Office"), (b) constitutes a valid mortgage [deed of trust] enforceable in accordance with its terms under all applicable laws in effect in the State, (c) is effective to create a legal, valid and enforceable lien on all right, title and interest of the Loan Party thereto in the Mortgaged Property referred to herein as security for the payment of the Obligations, enforceable as such against such Loan Party and (d) when filed for recording in the Recorder's Office, will constitute a fully perfected lien on such Mortgaged Property. 6. The courts of the State will enforce those provisions in the Loan Documents which stipulate that the validity, construction and enforceability of such agreement will be governed by the laws of the State of New York, except to the extent that the laws of the State shall govern the perfection and effect of perfection of the security interests created thereunder and the enforceability of the security interest in the collateral located in the State. 7. Neither the Administrative Agent nor any of the Lenders will become subject to any income, franchise, or other tax imposed by a Government Authority of the State solely by reason of the transactions contemplated by the Loan Documents. Very truly yours, _______________________________ EXHIBIT H FORM OF CLOSING CERTIFICATE Pursuant to Section 5.1(d) of the Credit Agreement, dated as of October 31, 1996 (the "Credit Agreement"; terms defined therein being used herein as therein defined unless otherwise defined herein) among BCP/ESSEX HOLDINGS INC., ESSEX GROUP, INC., the lenders parties thereto (the "Lenders") and THE CHASE MANHATTAN BANK, as administrative agent for the Lenders, the undersigned [Vice] President of [Name of Loan Party] (the "Certifying Loan Party") hereby certifies as follows: 1. The representations and warranties of the Certifying Loan Party contained in each Loan Document to which it is a party or in any certificate, document or financial or other statement furnished by or on behalf of the Certifying Loan Party pursuant to or in connection with any Loan Document are true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof except for representations and warranties stated to relate to a specific earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date; 2. No Default or Event of Default has occurred and is continuing as of the date hereof or after giving effect to any extensions of credit to be made on the date hereof; [3. Attached hereto as Exhibit A are true and correct copies of all consents, authorizations and filings (other than filings of the type referred to in Section 5.1(m) of the Credit Agreement) required to be obtained from or made with any Governmental Authority or any other Person in connection with the execution, delivery, performance, validity or enforceability of the Credit Agreement, and such consents, authorizations and filings are in full force and effect;1/] 4. ____________________ is and at all times since ______________ 19__, has been the duly elected and qualified [Assistant] Secretary of the Certifying Loan Party and the signature set forth on the signature line for such officer below is such officer's true and genuine signature; and the undersigned [Assistant] Secretary of the Certifying Loan Party hereby certifies as follows: 5. There are no liquidation or dissolution proceedings pending or to my knowledge threatened against the Certifying Loan Party, nor has any other event occurred affecting or to my knowledge threatening the corporate existence of the Certifying Loan Party; _______________ 1/ Insert in Closing Certificate of the Company only. 2 6. The Certifying Loan Party is a corporation duly incorporated, validly existing and in good standing under the laws of the State of _______________; 7. Attached hereto as Exhibit [A] [B] is a complete and correct copy of resolutions duly adopted by the Board of Directors of the Certifying Loan Party on _________, 19__; such resolutions have not in any way been amended, modified, revoked or rescinded and have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect; such resolutions are the only corporate proceedings of the Certifying Loan Party now in force relating to or affecting the matters referred to therein; 8. Attached hereto as Exhibit [B] [C] is a complete and correct copy of the by-laws of the Certifying Loan Party as in effect at all times since _________________, 19__ to and including the date hereof; and attached hereto as Exhibit [C] [D] is a true and complete copy of the certificate of incorporation of the Certifying Loan Party as in effect at all times since ___________________, 19__ to and including the date hereof; 9. The following persons are now duly elected and qualified officers of the Certifying Loan Party holding the offices indicated next to their respective names below, and such officers have held such offices with the Certifying Loan Party at all times since ________________, 19__ to and including the date hereof, and the signatures appearing opposite their respective names below are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Certifying Loan Party any Loan Document to which it is a party and any certificate or other document to be delivered by the Certifying Loan Party pursuant to any Loan Document: Name Office Signature __________________ [Vice] President ________________________ __________________ [AssistantSecretary _____________________ IN WITNESS WHEREOF, the undersigned have hereto set our names. ________________________ _____________________________ Title: [Vice] President Title: [Assistant] Secretary Date: October 31, 1996 EXHIBIT I [FORM OF ASSIGNMENT AND ACCEPTANCE] Reference is made to the Credit Agreement, dated as of October 31, 1996, as amended, supplemented or otherwise modified from time to time (the "Credit Agreement"), among Essex Group, Inc., BCP/Essex Holdings Inc., the Lenders named therein and The Chase Manhattan Bank, as Administrative Agent. Terms defined in the Credit Agreement are used herein with the same meanings. This Assignment and Acceptance, between the Assignor (as set forth on Schedule 1 hereto and made a part hereof) and the Assignee (as set forth on Schedule 1 hereto and made a part hereof) is dated as of the Effective Date (as set forth on Schedule 1 hereto and made a part hereof, the "Effective Date"). 1. The Assignor hereby irrevocably sells and assigns to the Assignee without recourse to the Assignor, and the Assignee hereby irrevocably purchases and assumes from the Assignor without recourse to the Assignor, as of the Effective Date, an interest (the "Assigned Interest") as specified on Schedule 1 hereto, in and to the Assignor's rights and obligations under the Credit Agreement respecting those credit facilities contained in the Credit Agreement as are set forth on Schedule 1 (the "Assigned Facilities"), in a principal amount for each Assigned Facility as set forth on Schedule 1 provided, however, it is expressly understood and agreed that (i) the Assignor is not assigning to the Assignee and the Assignor shall retain (A) all of the Assignor's rights under Section 2.16 of the Credit Agreement with respect to any cost, reduction or payment incurred or made prior to the Effective Date, including, without limitation the rights to indemnification and to reimbursement for taxes, costs and expenses and (B) any and all amounts paid to the Assignor prior to the Effective Date and (ii) both Assignor and Assignee shall be entitled to the benefits of Section 11.5 of the Credit Agreement. 2. The Assignor (i) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto; and (ii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company, any of its Subsidiaries or any other Loan Party or the performance or observance by the Company, any of its Subsidiaries or any other Loan Party of any of their respective obligations under the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant thereto; 3. The Assignee (i) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements delivered pursuant to Section 4.1 thereof and other such documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (iii) agrees that it will, independently and without reliance upon the Assignor, the Administrative Agent or any other Person which has become a Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its 2 own credit decisions in taking or not taking action under the Credit Agreement and each other Loan Document; (iv) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any other Loan Document as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are incidental thereto; and (v) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender including, if it is organized under the laws of a jurisdiction outside the United States, its obligation pursuant to Section 2.16(b) of the Credit Agreement to deliver on or prior to the date of this Assignment and Acceptance and thereafter as specified in said Section 2.16, the forms prescribed by the Internal Revenue Service of the United States certifying the Assignee's complete exemption from United States federal withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement, or where, because of a Tax Law Change, the Assignee is no longer entitled to a complete exemption from United States federal withholding tax on such payments to it but is entitled to a reduced rate of taxation with respect to such payments, the Assignee shall deliver such other documents as are necessary to indicate that all such payments are subject to such reduced rate of taxation. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance by it and recording by the Administrative Agent pursuant to Section 11.6(d) of the Credit Agreement, effective as of the Effective Date (which shall not be earlier than five Business Days after the date of acceptance and recording by the Administrative Agent of the executed Assignment and Acceptance). 5. Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to the Effective Date or accrue subsequent to the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. 6. From and after the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the other Loan Documents and shall be bound by the provisions thereof and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective duly authorized officers on Schedule 1 hereto. 1 Schedule 1 to Assignment and Acceptance Respecting Credit Agreement, dated as of October 31, 1996, among Essex Group, Inc., BCP/Essex Holdings Inc., the Lenders named therein and The Chase Manhattan Bank as Administrative Agent Name of Assignor: Name of Assignee: Effective Date of Assignment: [CAPTION] Revolving Credit Commitment Percentage Assigned (to at least fifteen decimals) (shown as a percentage of aggregate principal Principal Amount Assigned Commitment Percentages of all Lenders ASSIGNEE ASSIGNOR By:____________________ By:_____________________ Name: Name: Title: Title: Accepted for Recordation Consented To: in the Register: THE CHASE MANHATTAN BANK, ESSEX GROUP, INC. as Administrative Agent By:_____________________ Name: Title: By:____________________ THE CHASE MANHATTAN BANK, Name: as Administrative Agent Title: By:______________________ Name: Title: COMERICA BANK, as Issuing Lender By:______________________ Name: Title: /TABLE [Indiana] MORTGAGE THIS MORTGAGE, dated as of October 31, 1996 is made by ESSEX GROUP, INC., a Michigan corporation ("Mortgagor"), whose address is 1601 Wall Street, Fort Wayne, Indiana 46802, to THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for itself and the other Lenders (as defined below) (in such capacity, "Mortgagee"), whose address is 270 Park Avenue, New York, New York 10017. References to this "Mortgage" shall mean this instrument and any and all renewals, modifications, amendments, supplements, extensions, consolidations, substitutions, spreaders and replacements of this instrument. Background A. BCP/Essex Holdings, Inc., Mortgagor, the banks and other financial institutions parties thereto and Chemical Bank (as predecessor- in-interest to Mortgagee), as agent, are parties to the Credit Agreement, dated as of April 12, 1995 (as amended through the date hereof, the "Existing Credit Agreement"). BCP/Essex Holdings, Inc. and Mortgagor have requested that the Existing Credit Agreement be terminated on the Effective Date. B. Mortgagor has requested that (i) the Lenders make revolving credit loans (the "Loans") to Mortgagor in an aggregate principal amount not to exceed $ , the proceeds of which shall be used (a) to refund loans outstanding under the Existing Credit Agreement on the Effective Date, (b) to finance the working capital requirements of Mortgagor and its Subsidiaries, (c) to finance the acquisition and assumption of substantially all of the assets and certain related liabilities of certain businesses of Triangle Wire & Cable, Inc. and related costs and expenses, (d) to pay reasonable fees and expenses in connection with the transactions contemplated hereby and (e) for general corporate purposes, and (ii) the Issuing Lender issue Letters of Credit for the account of Mortgagor in an aggregate amount not to exceed $25,000,000 at any time outstanding. C. BCP/Essex Holdings Inc., Mortgagor, the several banks and financial institutions from time to time parties thereto (the "Lenders") and Mortgagee have entered into that certain Credit Agreement dated as of the date hereof (as the same may be amended, supplemented, modified, extended, restated or replaced from time to time, the "Credit Agreement"). Capitalized terms used herein but not defined herein shall have the respective meanings assigned to such terms in the Credit Agreement. References in this Mortgage to the "Default Rate" shall mean the interest rate provided for in Section 2.11(d) of the Credit Agreement. D. Mortgagor is the owner of the parcel(s) of real property described on Schedule A attached (such real property, together with all of the buildings, improvements, structures and fixtures now or subsequently located thereon (the "Improvements"), being collectively referred to as the "Real Estate"). E. Pursuant to the terms of the Credit Agreement, the Lenders have agreed to make the Loans and the Issuing Lender has agreed to 2 issue Letters of Credit, on the condition, among others, that the Loans, all amounts due in connection with the Letters of Credit and all other obligations of Mortgagor to Mortgagee and the Lenders under the Credit Agreement and the other Loan Documents (as defined below) be secured by a mortgage lien upon, and a security interest in, the Mortgaged Property (as defined below). The Loans mature on or before the Revolving Credit Termination Date. The Credit Agreement is hereby incorporated into and made a part of this Mortgage. F. In order to satisfy the condition referred to in the immediately preceding recital, Mortgagor has agreed to execute and deliver this Mortgage. Granting Clauses For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor agrees that to secure: (a) (i) the repayment of the Loans, (ii) the payment of all interest on, and fees payable in connection with, the Loans, (iii) the payment of any and all reimbursement obligations in respect of, and all other amounts due in connection with, the Letters of Credit and/or the Applications, including, without limitation, all fees and costs related thereto, (iv) payment of all commitment fees and other amounts payable by Mortgagor pursuant to the terms of the Credit Agreement and (v) all amounts payable by Mortgagor to the Lenders or any affiliate thereof pursuant to the terms of any interest rate swap agreements or other interest rate protection products entered into by Mortgagor and the Lenders (the items set forth in clauses (i) through and including (v) being referred to collectively as the "Indebtedness"); (b) the performance of all covenants, agreements, obligations and liabilities of Mortgagor (the "Obligations") under or pursuant to the provisions of the Credit Agreement, the Letters of Credit, the Applications, this Mortgage, any other document securing payment of the Indebtedness (such other documents securing payment of the Indebtedness together with this Mortgage, collectively, the "Security Documents") and any amendments, supplements, extensions, renewals, restatements, replacements or modifications of any of the foregoing (the Credit Agreement, the Letters of Credit, the Applications, the Security Documents and all other documents and instruments from time to time evidencing, securing or guaranteeing the payment of the Indebtedness or the performance of the Obligations, as any of the same may be amended, supplemented, extended, renewed, restated, replaced or modified from time to time, are collectively referred to as the "Loan Documents"); and (c) this Mortgage shall secure: (i) the maximum principal amount, exclusive of any items described in (ii) below, of Six Hundred Million Dollars ($600,000,000), including any additional advances made from time to time after the date hereof pursuant to this Mortgage or the Credit Agreement whether made as an obligation, made at the option of the Mortgagee and/or the Lenders, made after a reduction to a zero (0) or other balance, or made otherwise, (ii) 3 all other amounts payable by Mortgagor, or advanced by Mortgagee and/or the Lenders for the account, or on behalf, of Mortgagor, pursuant to the Security Documents or the other Loan Documents, including, without limitation, amounts advanced with respect to the Mortgaged Property (as defined below) for the payment of taxes, assessments and insurance premiums and costs incurred for the protection of the Mortgaged Property to the same extent as if the future obligations and advances were made on the date of execution of this Mortgage; and (iii) future modifications, extensions, and renewals of any Indebtedness or Obligations secured by this Mortgage; pursuant to Indiana Code 32-8-11-9, the lien of this Mortgage with respect to future advances, modifications, extensions, and renewals referred to herein shall have the same priority to which this Mortgage otherwise would be entitled as of the date this Mortgage is executed and recorded without regard to the fact that the future advance, modification, extension, or renewal may occur after the Mortgage is executed and/or recorded; MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND HEREBY MORTGAGES, WARRANTS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER TO MORTGAGEE: (A) the Real Estate; (B) all the estate, right, title, claim or demand whatsoever of Mortgagor, in possession or expectancy, in and to the Real Estate or any part thereof; (C) all right, title and interest of Mortgagor in, to and under all easements, rights of way, gores of land, streets, ways, alleys, passages, sewer rights, waters, water courses, water and riparian rights, development rights, air rights, mineral rights and all estates, rights, titles, interests, privileges, licenses, tenements, hereditaments and appurtenances belonging, relating or appertaining to the Real Estate, and any reversions, remainders, rents, issues, profits and revenue thereof and all land lying in the bed of any street, road or avenue, in front of or adjoining the Real Estate to the center line thereof; (D) all of the fixtures, chattels, business machines, machinery, apparatus, equipment, furnishings, fittings and articles of personal property of every kind and nature whatsoever, and all appurtenances and additions thereto and substitutions or replacements thereof (together with, in each case, attachments, components, parts and accessories) currently owned or subsequently acquired by Mortgagor and now or subsequently attached to, or contained in or used or usable in any way in connection with any operation or letting of the Real Estate, including but without limiting the generality of the foregoing, all screens, awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs, storm doors and windows, furniture and furnishings, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus, refrigerating, and incinerating equipment, escalators, elevators, loading and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus), telephones, communication systems (including satellite dishes and 4 antennae), televisions, computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and fixtures of every kind and description (all of the foregoing in this paragraph (D) being referred to as the "Equipment"); (E) all right, title and interest of Mortgagor in and to all substitutes and replacements of, and all additions and improvements to, the Real Estate and the Equipment, subsequently acquired by or released to Mortgagor or constructed, assembled or placed by Mortgagor on the Real Estate, immediately upon such acquisition, release, construction, assembling or placement, including, without limitation, any and all building materials whether stored at the Real Estate or offsite, and, in each such case, without any further mortgage, conveyance, assignment or other act by Mortgagor; (F) all right, title and interest of Mortgagor, as lessor, in, to and under all leases, subleases, underlettings, concession agreements, management agreements, licenses and other agreements relating to the use or occupancy of the Real Estate or the Equipment or any part thereof, now existing or subsequently entered into by Mortgagor and whether written or oral and all guarantees of any of the foregoing (collectively, as any of the foregoing may be amended, restated, extended, renewed or modified from time to time, the "Leases"), and all rights of Mortgagor in respect of cash and securities deposited thereunder and the right to receive and collect the revenues, income, rents, issues and profits thereof, together with all other rents, royalties, issues, profits, revenue, income and other benefits arising from the use and enjoyment of the Mortgaged Property (as defined below) (collectively, the "Rents"); (G) all right, title and interest of Mortgagor in and to all trade names, trade marks, logos, copyrights, good will and books and records relating to or used in connection with the operation of the Real Estate or the Equipment or any part thereof; all general intangibles related to the operation of the Improvements now existing or hereafter arising; (H) all unearned premiums under insurance policies now or subsequently obtained by Mortgagor relating to the Real Estate or Equipment and Mortgagor's interest in and to all proceeds of any such insurance policies (including title insurance policies) including the right to collect and receive such proceeds, subject to the provisions relating to insurance generally set forth below; and all awards and other compensation, including the interest payable thereon and the right to collect and receive the same, made to the present or any subsequent owner of the Real Estate or Equipment for the taking by eminent domain, condemnation or otherwise, of all or any part of the Real Estate or any easement or other right therein; (I) all right, title and interest of Mortgagor in and to (i) all contracts from time to time executed by Mortgagor or any manager or agent on its behalf relating to the ownership, construction, maintenance, repair, operation, occupancy, sale or financing of the Real Estate or Equipment or any part thereof and all agreements relating to the purchase or lease of any portion of the Real Estate 5 or any property which is adjacent or peripheral to the Real Estate, together with the right to exercise such options and all leases of Equipment (collectively, the "Contracts"), (ii) all consents, licenses, building permits, certificates of occupancy and other governmental approvals relating to construction, completion, occupancy, use or operation of the Real Estate or any part thereof (collectively, the "Permits") and (iii) all drawings, plans, specifications and similar or related items relating to the Real Estate (collectively, the "Plans"); (J) any and all monies now or subsequently on deposit for the payment of real estate taxes or special assessments against the Real Estate or for the payment of premiums on insurance policies covering the foregoing property or otherwise on deposit with or held by Mortgagee as provided in this Mortgage; and (K) all proceeds, both cash and noncash, of the foregoing (except to the extent otherwise provided in the Credit Agreement); (All of the foregoing property and rights and interests now owned or held or subsequently acquired by Mortgagor and described in the foregoing clauses (A) through (E) are collectively referred to as the "Premises", and those described in the foregoing clauses (A) through (K) are collectively referred to as the "Mortgaged Property"). TO HAVE AND TO HOLD the Mortgaged Property and the rights and privileges hereby mortgaged unto Mortgagee, its successors and assigns for the uses and purposes set forth, until the Indebtedness is fully paid and the Obligations fully performed. Terms and Conditions Mortgagor further represents, warrants, covenants and agrees with Mortgagee as follows: 1. Warranty of Title. Mortgagor warrants that Mortgagor has good title to the Real Estate in fee simple and good title to the rest of the Mortgaged Property, subject only to the matters that are set forth in Schedule B of the title insurance policy or policies being issued to Mortgagee to insure the lien of this Mortgage and the matters referred to in Section 7.3 of the Credit Agreement (the "Permitted Exceptions") and Mortgagor shall warrant, defend and preserve such title and the lien of the Mortgage thereon against all claims of all persons and entities. Mortgagor further warrants that it has the right to mortgage the Mortgaged Property. 2. Payment of Indebtedness. Mortgagor shall pay the Indebtedness at the times and places and in the manner specified in the Credit Agreement and shall perform all the Obligations, without relief from applicable valuation and appraisement laws. 3. Requirements. (a) Mortgagor shall promptly comply with, or cause to be complied with, and conform to all present and future laws, statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and requirements, and irrespective of the nature of the work to be done, of 6 each of the United States of America, any State and any municipality, local government or other political subdivision thereof and any agency, department, bureau, board, commission or other instrumentality of any of them, now existing or subsequently created (collectively, "Governmental Authority") which has jurisdiction over the Mortgaged Property and all covenants, restrictions and conditions now or later of record which may be applicable to any of the Mortgaged Property, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or reconstruction of any of the Mortgaged Property. All present and future laws, statutes, codes, ordinances, orders, judgments, decrees, rules, regulations and requirements of every Governmental Authority applicable to Mortgagor or to any of the Mortgaged Property and all covenants, restrictions, and conditions which now or later may be applicable to any of the Mortgaged Property are collectively referred to as the "Legal Requirements". (b) From and after the date of this Mortgage, Mortgagor shall not by act or omission permit any building or other improvement on any premises not subject to the lien of this Mortgage to encroach upon or be served by the Premises or any part thereof or any interest therein to fulfill any Legal Requirement (except to the extent such encroachment or service is pursuant to a Permitted Exception), and Mortgagor hereby assigns to Mortgagee any and all rights to give consent for all or any portion of the Premises or any interest therein to be so used. Mortgagor shall not by act or omission impair the integrity of any of the Real Estate as a single zoning lot separate and apart from all other premises. Mortgagor represents that each parcel of the Real Estate constitutes a legally subdivided lot, in compliance with all subdivision laws and similar Legal Requirements. Any act or omission by Mortgagor which would result in a violation of any of the provisions of this Section shall be void. 4. Payment of Taxes and Other Impositions. 1. Mortgagor shall pay and discharge, no later than the last day when same may be paid without interest or penalty, all taxes of every kind and nature (including, without limitation, all real and personal property, income, franchise, withholding, transfer, gains, profits and gross receipts taxes), all charges for any easement or agreement maintained for the benefit of any of the Mortgaged Property, all general and special assessments, levies, permits, inspection and license fees, all water and sewer rents and charges and all other public charges even if unforeseen or extraordinary, imposed upon or assessed against or which may become a lien on any of the Mortgaged Property, or arising in respect of the occupancy, use or possession thereof, together with any penalties or interest on any of the foregoing (all of the foregoing are collectively referred to as the "Impositions"). Mortgagor shall, within 30 days of specific request of Mortgagee (which shall not be made prior to the earlier of the last day when the Imposition in question may be paid without interest or penalty or the date such Imposition is actually paid), deliver to Mortgagee (i) original or copies of receipted bills and canceled checks evidencing payment of such Imposition if it is a real estate tax or other public charge or (ii) evidence reasonably acceptable to Mortgagee showing the payment of any other such Imposition. If by law any Imposition, at Mortgagor's option, may be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Mortgagor may elect to pay such Imposition in such installments and shall be responsible for the payment of such installments with interest, if any. 7 (b) Nothing herein shall affect any right or remedy of Mortgagee under this Mortgage or otherwise, without notice or demand to Mortgagor, to pay, if an Event of Default shall have occurred and be continuing, any Imposition after the date such Imposition shall have become due, and to add to the Indebtedness the amount so paid, together with interest from the time of payment at the Default Rate. Any sums paid by Mortgagee in discharge of any Impositions shall be (i) a lien on the Premises secured hereby prior to any right or title to, interest in, or claim upon the Premises subordinate to the lien of this Mortgage, and (ii) payable on demand by Mortgagor to Mortgagee together with interest at the Default Rate as set forth above. (c) Mortgagor shall not claim, demand or be entitled to receive any credit or credits toward the satisfaction of this Mortgage or on any interest payable thereon for any taxes assessed against the Mortgaged Property or any part thereof. Mortgagor shall not claim any deduction from the taxable value of the Mortgaged Property by reason of this Mortgage to the extent the same may or will result in any expense, cost or loss to Mortgagee. 5. Insurance. (a) Mortgagor shall maintain or cause to be maintained on all of the Premises insurance as required under Section 6.5 (Maintenance of Property; Insurance) of the Credit Agreement. Each insurance policy (other than flood insurance written under the National Flood Insurance Act of 1968, as amended, in which case to the extent available) shall (i) provide (to the extent that such provisions are generally commercially available from insurance companies having an A.M. Best Company, Inc. rating of A or higher and a financial size category of not less than XI) that it shall not be canceled, non-renewed or materially amended without 30-days' prior written notice to Mortgagee, and (ii) with respect to all property insurance, may provide for deductibles in commercially reasonable amounts, and contain a "Replacement Cost Endorsement" without any deduction made for depreciation and with no co- insurance penalty (or attaching an agreed amount endorsement satisfactory to Mortgagee), with loss payable solely to Mortgagee (except as otherwise provided in Section 5(e) below) as Mortgagee's interest may appear, under a "standard" or "New York" mortgagee clause acceptable to Mortgagee and be written by insurance companies having an A.M. Best Company, Inc. rating of A or higher and a financial size category of not less than XI, or otherwise as approved by Mortgagee. Liability insurance policies shall name Mortgagee as an additional insured. The amounts of each insurance policy and the form of each such policy shall at all times be reasonably satisfactory to Mortgagee. Each policy shall expressly provide that any proceeds which are payable to Mortgagee (pursuant to the terms of Section 5(e) below) shall be paid by check payable to the order of Mortgagee only and require the endorsement of Mortgagee only. If any required insurance shall expire, be withdrawn, become void by breach of any condition thereof by Mortgagor or by any lessee of any part of the Mortgaged Property or become void or unsafe by reason of the failure or impairment of the capital of any insurer, or if for any other reason whatsoever (sufficient in Mortgagee's reasonable judgment) such insurance shall become unsatisfactory to Mortgagee, Mortgagor shall promptly obtain new or additional insurance satisfactory to Mortgagee (after notice from Mortgagee in the case that Mortgagor's obligation so to obtain new or additional insurance results solely from the fact that such insurance in Mortgagee's reasonable judgment has become unsatisfactory to Mortgagee). Mortgagor shall not take out any separate or additional insurance which is 8 contributing in the event of loss unless it is properly endorsed and otherwise reasonably satisfactory to Mortgagee in all respects. (b) Mortgagor shall deliver to Mortgagee a certificate or certificates of the insurance required to be maintained hereunder reasonably acceptable to Mortgagee. Mortgagor shall (i) pay all premiums for insurance not later than the earlier of (A) 30 days after the effective date or renewal date, as the case may be, of each insurance policy or (B) 30 days after the date (not earlier than such effective or renewal date, as the case may be) on which the bill for the premium for such insurance is rendered by the insurer with respect thereto (but in any event, not later than the last day before which the policy would be terminated for failure to pay such premium) and (ii) not later than the date of renewal of each policy to be furnished pursuant to the provisions of this Section, deliver a renewed certificate of insurance with standard non-contributory mortgage clauses in favor of and acceptable to Mortgagee. Within 30 days of specific request of Mortgagee (which shall not be made prior to the earlier of the date the payment is required to be made hereunder or the date payment is actually made), Mortgagor shall deliver to Mortgagee evidence of payment of the premium for such insurance reasonably satisfactory to Mortgagee. In no event shall Mortgagor permit the cancellation of the insurance coverage herein required due to non- payment of premiums. (c) If Mortgagor is in default beyond the applicable grace period provided in the Credit Agreement of its obligations to insure or deliver any such prepaid policy or policies, then Mortgagee, at its option and without notice, may effect such insurance from year to year, and pay the premium or premiums therefor, and Mortgagor shall pay to Mortgagee on demand such premium or premiums so paid by Mortgagee with interest from the time of payment at the Default Rate and the same shall be deemed to be secured by this Mortgage and shall be collectible in the same manner as the Indebtedness secured by this Mortgage. (d) Mortgagor promptly shall comply with and conform to (i) all provisions of each such insurance policy, and (ii) all requirements of the insurers applicable to Mortgagor or to any of the Mortgaged Property or to the use, manner of use, occupancy, possession, operation, maintenance, alteration or repair of any of the Mortgaged Property. Mortgagor shall not use or permit the use of the Mortgaged Property in any manner which would permit any insurer to cancel any fire or "all-risks" insurance policy or void the coverage provided thereunder. Mortgagor shall not use or permit the use of the Mortgaged Property in any manner which would permit any insurer to cancel any other insurance policy or void coverage provided thereunder unless Mortgagor promptly replaces such policy or coverage, as the case may be, with a policy or coverage, as the case may be, in conformity with the provisions hereof and in the Credit Agreement pertaining to insurance. (e) If the Mortgaged Property, or any part thereof, shall be destroyed or damaged by fire or any other casualty, whether insured or uninsured, or in the event any material claim is made against Mortgagor for any personal injury, bodily injury or property damage incurred on or about the Premises, Mortgagor shall give prompt notice thereof to Mortgagee. If the Mortgaged Property is damaged by fire or other casualty and the reasonably estimated cost to repair such damage is less than the lesser of (i) 50% of the replacement cost of the Improvements at the 9 affected Real Estate site and (ii) $1,000,000, then provided that no Event of Default shall have occurred and be continuing, Mortgagor shall have the right to adjust such loss, and the insurance proceeds relating to such loss shall be paid over to Mortgagor; provided that Mortgagor shall, promptly after any such damage and adjustment of the insurance loss, if any, repair all such damage regardless of whether any insurance proceeds have been received or whether such proceeds, if received, are sufficient to pay for the costs of repair. If the Mortgaged Property is damaged by fire or other casualty and an Event of Default shall have occurred and be continuing, then Mortgagor authorizes and empowers Mortgagee, at Mortgagee's option and in Mortgagee's sole discretion, as attorney-in-fact for Mortgagor, to make proof of loss, to adjust and compromise any claim under any insurance policy, to appear in and prosecute any action arising from any policy, to collect and receive insurance proceeds and to deduct therefrom Mortgagee's expenses incurred in the collection process. Each insurance company concerned is hereby authorized and directed to make payment for loss directly to Mortgagee if the Mortgaged Property is damaged by fire or other casualty and the cost to repair such damage exceeds the above limit or if an Event of Default shall have occurred and is continuing. Unless such Mortgaged Property is described in Section 7.6(a) of the Credit Agreement, and except as otherwise provided in the Credit Agreement, Mortgagee shall have the right to require Mortgagor to repair or restore the Mortgaged Property, and, if an Event of Default shall have occurred and be continuing, Mortgagor hereby designates Mortgagee as its attorney-in-fact for the purpose of making any election required or permitted under any insurance policy relating to repair or restoration. The insurance proceeds or any part thereof received by Mortgagee shall be applied by Mortgagee toward reimbursement of all costs and expenses of Mortgagee in collecting such proceeds, and the balance, (i) if an Event of Default shall have occurred and is continuing, at Mortgagee's option in its sole and absolute discretion, to the principal and interest due or to become due in respect of the Loans (in the manner set forth for mandatory prepayments in Section 2.8(c) of the Credit Agreement), to fulfill any other Obligation of Mortgagor, to the restoration or repair of the property damaged, or released to Mortgagor or (ii) if an Event of Default shall not have occurred and be continuing, released to Mortgagor. In the event Mortgagee elects (or in accordance with clause (ii) of the immediately preceding sentence, is obligated) to release such proceeds to Mortgagor, Mortgagor shall be obligated to use such proceeds to restore or repair the Mortgaged Property (except to the extent otherwise provided in the Credit Agreement). Application by Mortgagee of any insurance proceeds toward the last maturing installments of principal and interest due or to become due under the Loans shall not excuse Mortgagor from making any regularly scheduled payments due thereunder, nor shall such application extend or reduce the amount of such payments. (f) In the event of foreclosure of this Mortgage or other transfer of title to the Mortgaged Property in extinguishment of the Indebtedness, all right, title and interest of Mortgagor in and to any insurance policies then in force shall pass to the purchaser or grantee and Mortgagor hereby appoints Mortgagee its attorney-in-fact, in Mortgagor's name, to assign and transfer all such policies and proceeds to such purchaser or grantee. (g) Mortgagor may maintain insurance required under this Mortgage by means of one or more blanket insurance policies maintained by 10 Mortgagor; provided, however, that (A) any such policy (to the extent generally commercially available from insurance companies having an A.M. Best Company, Inc. rating of A or higher and a financial size category of not less than XI) shall specify, or Mortgagor shall furnish to Mortgagee a written statement from the insurer so specifying, the maximum amount of the total insurance afforded by such blanket policy that is allocated to the Premises and the other Mortgaged Property and any sublimits in such blanket policy applicable to the Premises and the other Mortgaged Property, (B) each such blanket policy shall include an endorsement providing that, in the event of a loss resulting from an insured peril, property insurance coverage shall be allocated to the Mortgaged Property in an amount equal to the replacement value of the Mortgaged Property and liability insurance shall be allocated to the Mortgaged Property in an amount equal to coverage required as provided above, and (C) the protection afforded under any such blanket policy shall be no less than that which would have been afforded under a separate policy or policies relating only to the Mortgaged Property. 6. Restrictions on Liens and Encumbrances. Except as permitted under Section 7.3 (Limitation on Liens) of the Credit Agreement, except for the Liens of the Security Agreements and except for the lien of this Mortgage and the Permitted Exceptions, Mortgagor shall not further mortgage, nor otherwise encumber the Mortgaged Property nor create or suffer to exist any lien, charge or encumbrance on the Mortgaged Property, or any part thereof, whether superior or subordinate to the lien of this Mortgage and whether recourse or non-recourse. 7. Due on Sale and Other Transfer Restrictions. Except as permitted under Section 7.6 (Limitation on Sale of Assets) of the Credit Agreement, Mortgagor shall not sell, transfer, convey or assign all or any portion of, or any interest in, the Mortgaged Property. 8. Maintenance; No Alteration; Inspection; Utilities. (a) Mortgagor shall maintain or cause to be maintained all the Improvements in good condition and repair and shall not commit or suffer any waste of the Improvements. Mortgagor shall repair, restore, replace or rebuild promptly after adjustment of any applicable insurance claim of a loss any part of the Premises which may be damaged or destroyed by any casualty whatsoever except to the extent the same is no longer required for the conduct of Mortgagor's business and Mortgagor has not received insurance proceeds with respect thereto. The Improvements shall not be demolished or materially altered without the prior written consent of Mortgagee; provided, that Mortgagee shall not unreasonably withhold its consent to any such alteration. (b) Mortgagee and any persons authorized by Mortgagee shall have the right to enter and inspect the Premises and the right to inspect all work done, labor performed and materials furnished in and about the Improvements and the right to inspect and make copies of all books, contracts and records of Mortgagor relating to the Mortgaged Property. (c) Mortgagor shall pay or cause to be paid when due all utility charges which are incurred for gas, electricity, water or sewer services furnished to the Premises and all other assessments or charges of a similar nature, whether public or private, affecting the Premises or any portion thereof, whether or not such assessments or charges are liens thereon; provided, however, that such payment shall not be required with 11 respect to any such charge or assessment so long as (i) the validity or amount of such charge or assessment shall be contested by Mortgagor in good faith by proceedings that are, in Mortgagee's reasonable discretion, appropriate, (ii) Mortgagor shall have given to Mortgagee prior notice of such contest, (iii) Mortgagor shall have set aside on its books adequate reserves as required by GAAP with respect thereto and (iv) Mortgagee shall have determined, in its reasonable discretion, that (A) payment of the Indebtedness and performance of the Obligations, (B) the liens and security interests created hereby and (C) Mortgagee's rights and remedies hereunder will not be impaired or endangered thereby in any material respect. 9. Condemnation/Eminent Domain. Promptly after obtaining knowledge of the institution of any proceedings for the condemnation of the Mortgaged Property, or any portion thereof, Mortgagor will notify Mortgagee of the pendency of such proceedings. After an Event of Default shall have occurred and while such Event of Default is continuing, Mortgagor authorizes Mortgagee, at Mortgagee's option and in Mortgagee's sole discretion, as attorney-in-fact for Mortgagor, to commence, appear in and prosecute, in Mortgagee's or Mortgagor's name, any action or proceeding relating to any condemnation of the Mortgaged Property, or any portion thereof, and to settle or compromise any claim in connection with such condemnation. If Mortgagee does not participate in such condemnation proceeding, then Mortgagor shall, at its expense, diligently prosecute any such proceeding and shall consult with Mortgagee, its attorneys and experts and cooperate with them in any defense of any such proceedings. All awards and proceeds of condemnation shall be assigned to Mortgagee to be applied in the same manner as insurance proceeds, as provided above, and Mortgagor agrees to execute any such assignments of all such awards as Mortgagee may request. 10. Restoration. If Mortgagee elects (or, in accordance with Section 5(e) above, is obligated) to release funds to Mortgagor for restoration of any of the Real Estate, then such restoration shall be performed only in accordance with the following conditions: (i) prior to the commencement of any restoration, the plans and specifications for such restoration, and the budgeted costs, shall be submitted to and approved by Mortgagee in its reasonable discretion; (ii) prior to making any advance of restoration funds, Mortgagee shall be satisfied that the remaining restoration funds are sufficient to complete the restoration; (iii) at the time of any disbursement of the restoration funds, (A) no Event of Default shall then exist and (B) if the amount of such disbursement is $1,000,000 or more, a satisfactory bring-down or continuation of title insurance on the Premises shall be delivered to Mortgagee; (iv) disbursements shall be made from time to time in an amount not exceeding the cost of the work completed since the last disbursement (which costs shall include the cost of materials installed or delivered to the site and architectural, engineering and other similar professional fees incurred in connection with the restoration), upon receipt of a satisfactory architect's certificate 12 certifying as to the stage of completion and of performance of the work in a good and workmanlike manner and in accordance with the contracts, plans and specifications acceptable to Mortgagee; (v) the restoration funds shall bear no interest and may be commingled with Mortgagee's other funds; (vi) except to the extent otherwise provided in the Credit Agreement, any restoration funds remaining after Mortgagor has been reimbursed for the restoration costs it incurred which are reimbursable hereunder shall be retained by Mortgagee and may be applied by Mortgagee, in its sole discretion, to the Indebtedness in the inverse order of maturity. 11. Leases. Except as permitted under Sections 7.3(n), 7.6 (Limitation of Sale of Assets) and 7.7 (Limitation on Leases) of the Credit Agreement, Mortgagor shall not (i) execute an assignment or pledge of any Lease relating to all or any portion of the Mortgaged Property other than in favor of Mortgagee, or (ii) without the prior written consent of Mortgagee, execute or permit to exist any Lease of any of the Mortgaged Property. 12. Further Assurances. To further assure Mortgagee's rights under this Mortgage, Mortgagor agrees upon demand of Mortgagee to do any act or execute any additional documents (including, but not limited to, security agreements on any personalty included or to be included in the Mortgaged Property and a separate assignment of each Lease in recordable form) as may be reasonably required by Mortgagee to confirm the lien of this Mortgage and all other rights or benefits conferred on Mortgagee. 13. Mortgagee's Right to Perform. If Mortgagor fails to perform any of the covenants or agreements of Mortgagor after an Event of Default shall have occurred and be continuing, Mortgagee, without waiving or releasing Mortgagor from any obligation or default under this Mortgage, may, at any time (but shall be under no obligation to) pay or perform the same, and the amount or cost thereof, with interest at the Default Rate, shall immediately be due from Mortgagor to Mortgagee and the same shall be secured by this Mortgage and shall be a lien on the Mortgaged Property prior to any right, title to, interest in or claim upon the Mortgaged Property attaching subsequent to the lien of this Mortgage. No payment or advance of money by Mortgagee under this Section shall be deemed or construed to cure Mortgagor's default or waive any right or remedy of Mortgagee. 14. Events of Default. The occurrence of any one or more of the following events shall constitute an event of default (an "Event of Default") hereunder: (a) if any of the Mortgaged Property (other than any Mortgaged Property which is described in Section 7.6(a) of the Credit Agreement) is materially damaged or destroyed by an uninsured casualty and Mortgagor does not promptly provide funds for the restoration of the damage caused by such casualty; or (b) if, except as permitted under Section 7.3 (Limitation on Liens) of the Credit Agreement, except for the Liens of the Security Agreements and except for the lien of this Mortgage and the Permitted 13 Exceptions, Mortgagor shall further mortgage, pledge or otherwise encumber the Mortgaged Property or any part thereof or any interest therein or create or suffer to exist any lien, charge or other encumbrance on the Mortgaged Property or any part thereof, whether superior or subordinate to the lien of this Mortgage, whether recourse or non-recourse; or (c) if, except as permitted under Section 7.6 (Limitation on Sale of Assets) of the Credit Agreement, Mortgagor shall sell, transfer, convey or assign the Mortgaged Property or any part thereof or any interest therein (by operation of law or otherwise); or (d) an "Event of Default", as defined in the Credit Agreement, shall occur under the Credit Agreement. 15. Remedies. (a) Upon the occurrence of any Event of Default, in addition to any other rights and remedies Mortgagee may have pursuant to the Loan Documents, or as provided by law, and without limitation, (a) if such event is an "Event of Default" specified in clause (i) or (ii) of Section 8(f) of the Credit Agreement with respect to Mortgagor, automatically the Indebtedness and all other amounts payable with respect to the Loans, and payable under the Credit Agreement, this Mortgage and the other Security Documents immediately shall become due and payable, and (b) if such event is any other Event of Default, by notice to Mortgagor, Mortgagee may declare the Indebtedness (together with accrued interest thereon) and all other amounts payable with respect to the Loans, and payable under the Credit Agreement, this Mortgage and the other Security Documents to be immediately due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. In addition, upon the occurrence of any Event of Default, Mortgagee may immediately take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Mortgaged Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such manner as Mortgagee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Mortgagee: (i) Mortgagee may, to the extent permitted by applicable law, (A) institute and maintain an action of mortgage foreclosure against all or any part of the Mortgaged Property, (B) institute and maintain an action with respect to the Loans under the Credit Agreement, (C) sell all or part of the Mortgaged Property (Mortgagor expressly granting to Mortgagee the power of sale), or (D) take such other action at law or in equity for the enforcement of this Mortgage or any of the Loan Documents as the law may allow. Mortgagee may proceed in any such action to final judgment and execution thereon for all sums due hereunder, together with interest thereon at the Default Rate and all costs of suit, including, without limitation, reasonable attorneys' fees and disbursements. Interest at the Default Rate shall be due on any judgment obtained by Mortgagee from the date of judgment until actual payment is made of the full amount of the judgment. (ii) Mortgagee may, to the extent permitted by applicable law, personally, or by its agents, attorneys and employees and without regard to the adequacy or inadequacy of the Mortgaged Property or any other collateral as security for the Indebtedness and Obligations enter into 14 and upon the Mortgaged Property and each and every part thereof and exclude Mortgagor and its agents and employees therefrom without liability for trespass, damage or otherwise (Mortgagor hereby agreeing to surrender possession of the Mortgaged Property to Mortgagee upon demand at any such time) and use, operate, manage, maintain and control the Mortgaged Property and every part thereof. Following such entry and taking of possession, Mortgagee shall be entitled, without limitation, (x) to lease all or any part or parts of the Mortgaged Property for such periods of time and upon such conditions as Mortgagee may, in its discretion, deem proper, (y) to enforce, cancel or modify any Lease and (z) generally to execute, do and perform any other act, deed, matter or thing concerning the Mortgaged Property as Mortgagee shall deem appropriate as fully as Mortgagor might do. (b) The holder of this Mortgage, in any action to foreclose it, shall be entitled, to the extent permitted by applicable law, to the appointment of a receiver. In case of a foreclosure sale, the Real Estate may be sold, at Mortgagee's election, in one parcel or in more than one parcel and Mortgagee is specifically empowered, (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Mortgaged Property to be held. (c) In the event of any breach of any of the covenants, agreements, terms or conditions contained in this Mortgage, and notwithstanding to the contrary any exculpatory or non-recourse language which may be contained herein, Mortgagee shall be entitled to enjoin such breach and obtain specific performance of any covenant, agreement, term or condition and Mortgagee shall have the right to invoke any equitable right or remedy as though other remedies were not provided for in this Mortgage. (d) To the extent applicable laws limit (i) the availability of the exercise of any of the remedies set forth herein, including without limitation the remedies involving a power of sale on the part of Mortgagee and the right of Mortgagee to exercise self-help in connection with the enforcement of the terms of this Mortgage, or (ii) the enforcement of waivers and indemnities made by Mortgagor, such remedies, waivers, or indemnities shall be exercisable or enforceable, any provisions in this Mortgage to the contrary notwithstanding, if, and to the extent, permitted by the laws in force at the time of the exercise of such remedies or the enforcement of such waivers or indemnities without regard to the enforceability of such remedies, waivers or indemnities at the time of the execution and delivery of this Mortgage. 16. Right of Mortgagee to Credit Sale. Upon the occurrence of any sale made under this Mortgage, whether made under the power of sale or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged Property or any part thereof. In lieu of paying cash therefor, Mortgagee may make settlement for the purchase price by crediting upon the Indebtedness or other sums secured by this Mortgage the net sales price after deducting therefrom the expenses of sale and the cost of the action and any other sums which Mortgagee is authorized to deduct under this Mortgage. In such event, this Mortgage and any documents evidencing the Loans or any expenditures secured hereby may be presented to the person or persons conducting the sale in order that the amount so used or applied may be credited upon the Indebtedness as having been paid. 15 17. Appointment of Receiver. If an Event of Default shall have occurred and be continuing, Mortgagee as a matter of right and without notice to Mortgagor, unless otherwise required by applicable law, and without regard to the adequacy or inadequacy of the Mortgaged Property or any other collateral as security for the Indebtedness and Obligations or the interest of Mortgagor therein, shall have the right, to the extent permitted by applicable law, to apply to any court having jurisdiction to appoint a receiver or receivers or other manager of the Mortgaged Property, and Mortgagor hereby irrevocably consents to such appointment and waives notice of any application therefor (except as may be required by law). Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Mortgagee in case of entry as provided in this Mortgage, including, without limitation and to the extent permitted by law, the right to enter into leases of all or any part of the Mortgaged Property, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Mortgaged Property unless such receivership is sooner terminated. 18. Extension, Release, etc. (a) Without affecting the lien or charge of this Mortgage upon any portion of the Mortgaged Property not then or theretofore released as security for the full amount of the Indebtedness, Mortgagee may, from time to time and without notice, agree to (i) release any person liable for the Indebtedness, (ii) extend the maturity or alter any of the terms of the Indebtedness or any guaranty thereof, (iii) grant other indulgences, (iv) release or reconvey, or cause to be released or reconveyed at any time at Mortgagee's option any parcel, portion or all of the Mortgaged Property, (v) take or release any other or additional security for any obligation herein mentioned, or (vi) make compositions or other arrangements with debtors in relation thereto. If at any time this Mortgage shall secure less than all of the principal amount of the Indebtedness, it is expressly agreed that any repayments of the principal amount of the Indebtedness shall not reduce the amount of the lien of this Mortgage until the lien amount shall equal the principal amount of the Indebtedness outstanding. (b) No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property or upon any other property of Mortgagor shall affect the lien of this Mortgage or any liens, rights, powers or remedies of Mortgagee hereunder, and such liens, rights, powers and remedies shall continue unimpaired. (c) If Mortgagee shall have the right to foreclose this Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose the lien of this Mortgage subject to the rights of any tenants of the Mortgaged Property. The failure to make any such tenants parties defendant to any such foreclosure proceeding and to foreclose their rights will not be asserted by Mortgagor as a defense to any proceeding instituted by Mortgagee to collect the Indebtedness or to foreclose the lien of this Mortgage. (d) Unless expressly provided otherwise, in the event that ownership of this Mortgage and title to the Mortgaged Property or any estate therein shall become vested in the same person or entity, this Mortgage shall not merge in such title but shall continue as a valid lien on the Mortgaged Property for the amount secured hereby. 16 19. Security Agreement under Uniform Commercial Code. (a) It is the intention of the parties hereto that this Mortgage shall constitute a Security Agreement within the meaning of the Uniform Commercial Code (the "Code") of the State in which the Mortgaged Property is located. If an Event of Default shall occur and be continuing under this Mortgage, then in addition to having any other right or remedy available at law or in equity, Mortgagee shall have the option of either (i) proceeding under the Code and exercising such rights and remedies as may be provided to a secured party by the Code with respect to all or any portion of the Mortgaged Property which is personal property (including, without limitation, taking possession of and selling such property) or (ii) treating such property as real property and proceeding with respect to both the real and personal property constituting the Mortgaged Property in accordance with Mortgagee's rights, powers and remedies with respect to the real property (in which event the default provisions of the Code shall not apply). If Mortgagee shall elect to proceed under the Code, then ten days' notice of sale of the personal property shall be deemed reasonable notice and the reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by Mortgagee shall include, but not be limited to, attorneys' fees and legal expenses. At Mortgagee's request, Mortgagor shall assemble the personal property and make it available to Mortgagee at a place designated by Mortgagee which is reasonably convenient to both parties. (b) Mortgagor and Mortgagee agree, to the extent permitted by law, that: (i) all of the goods described within the definition of the word "Equipment" are or are to become fixtures on the Real Estate; (ii) this Mortgage upon recording or registration in the real estate records of the proper office shall constitute a financing statement filed as a "fixture filing" within the meaning of Sections 9-313 and 9-402 of the Code; (iii) Mortgagor is the record owner of the Real Estate; and (iv) the addresses of Mortgagor and Mortgagee are as set forth on the first page of this Mortgage. (c) Mortgagor, upon request by Mortgagee from time to time, shall execute, acknowledge and deliver to Mortgagee one or more separate security agreements, in form satisfactory to Mortgagee, covering all or any part of the Mortgaged Property and will further execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as Mortgagee may request in order to perfect, preserve, maintain, continue or extend the security interest under and the priority of this Mortgage and such security instrument. Mortgagor further agrees to pay to Mortgagee on demand all costs and expenses incurred by Mortgagee in connection with the preparation, execution, recording, filing and re- filing of any such document and all reasonable costs and expenses of any record searches for financing statements Mortgagee shall reasonably require. Mortgagor shall from time to time, on request of Mortgagee, deliver to Mortgagee an inventory in reasonable detail of any of the Mortgaged Property which constitutes personal property. If Mortgagor shall fail to furnish any financing or continuation statement within 10 days after request by Mortgagee, then pursuant to the provisions of the Code, Mortgagor hereby authorizes Mortgagee, without the signature of Mortgagor, to execute and file any such financing and continuation statements. The filing of any financing or continuation statements in the records relating to personal property or chattels shall not be construed as in any way impairing the right of Mortgagee to proceed against any 17 personal property encumbered by this Mortgage as real property, as set forth above. (d) With respect to the items of Mortgaged Property which are also encumbered by the Company Security Agreement (other than those items which are exclusively real property interests), to the extent that the provisions under this Section conflict with the provisions of the Company Security Agreement, the provisions of the Company Security Agreement shall prevail. 20. Assignment of Rents. Mortgagor hereby assigns to Mortgagee the Rents as further security for the payment of the Indebtedness and performance of the Obligations, and Mortgagor grants to Mortgagee the right to enter the Mortgaged Property for the purpose of collecting the same and to let the Mortgaged Property or any part thereof, and to apply the Rents on account of the Indebtedness. The foregoing assignment and grant is present and absolute, to the extent permitted by applicable law, and shall continue in effect until the Indebtedness is paid in full, but Mortgagee hereby waives the right to enter the Mortgaged Property for the purpose of collecting the Rents and Mortgagor shall be entitled to collect, receive, use and retain the Rents until the occurrence of an Event of Default under this Mortgage; such right of Mortgagor to collect, receive, use and retain the Rents may be revoked by Mortgagee upon the occurrence of any Event of Default under this Mortgage by giving not less than five days' written notice of such revocation to Mortgagor; in the event such notice is given, Mortgagor shall pay over to Mortgagee, or to any receiver appointed to collect the Rents, any lease security deposits, and shall pay monthly in advance to Mortgagee, or to any such receiver, the fair and reasonable rental value as determined by Mortgagee for the use and occupancy of the Mortgaged Property or of such part thereof as may be in the possession of Mortgagor or any affiliate of Mortgagor, and upon default in any such payment Mortgagor and any such affiliate will vacate and surrender the possession of the Mortgaged Property to Mortgagee or to such receiver, and in default thereof may be evicted by summary proceedings or otherwise. Mortgagor shall not accept prepayments of installments of Rent to become due for a period of more than one month in advance (except for security deposits and estimated payments of percentage rent, if any). 21. Trust Funds. All lease security deposits of the Real Estate shall be treated as trust funds not to be commingled with any other funds of Mortgagor. Within 30 days after request by Mortgagee, Mortgagor shall furnish Mortgagee reasonably satisfactory evidence of compliance with this Section, together with a statement of all lease security deposits by lessees and copies of all Leases not previously delivered to Mortgagee, which statement shall be certified by Mortgagor. 22. Additional Rights. The holder of any subordinate lien on the Mortgaged Property shall have no right to terminate any Lease whether or not such Lease is subordinate to this Mortgage nor shall any holder of any subordinate lien join any tenant under any Lease in any action to foreclose the lien or modify, interfere with, disturb or terminate the rights of any tenant under any Lease. By recordation of this Mortgage all subordinate lienholders are subject to and notified of this provision, and any action taken by any such lienholder contrary to this provision shall be null and void. Upon the occurrence of any Event of Default, Mortgagee may, in its sole discretion and without regard to the adequacy of its 18 security under this Mortgage, apply all or any part of any amounts on deposit with Mortgagee under this Mortgage against all or any part of the Indebtedness. Any such application shall not be construed to cure or waive any Default or Event of Default or invalidate any act taken by Mortgagee on account of such Default or Event of Default. 23. Changes in Method of Taxation. In the event of the passage after the date hereof of any law of any Governmental Authority deducting from the value of the Premises for the purposes of taxation any lien thereon, or changing in any way the laws for the taxation of mortgages or debts secured thereby for federal, state or local purposes, or the manner of collection of any such taxes, and imposing a tax, either directly or indirectly, on mortgages or debts secured thereby, the holder of this Mortgage shall have the right to declare the Indebtedness due on a date to be specified by not less than 30 days' written notice to be given to Mortgagor unless within such 30-day period Mortgagor shall assume as an Obligation hereunder the payment of any tax so imposed until full payment of the Indebtedness and such assumption shall be permitted by law. 24. Notices. All notices, requests, demands and other communications hereunder shall be given in accordance with the terms of the Credit Agreement. 25. No Oral Modification. This Mortgage may not be changed or terminated orally. Any agreement made by Mortgagor and Mortgagee after the date of this Mortgage relating to this Mortgage shall be superior to the rights of the holder of any intervening or subordinate lien or encumbrance. 26. Partial Invalidity. In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but each shall be construed as if such invalid, illegal or unenforceable provision had never been included. Notwithstanding anything contained in this Mortgage or in any provisions of the Indebtedness or Loan Documents to the contrary, the obligations of Mortgagor and of any other obligor under the Indebtedness or Loan Documents shall be subject to the limitation that Mortgagee shall not charge, take or receive, nor shall Mortgagor or any other obligor be obligated to pay to Mortgagee, any amounts constituting interest in excess of the maximum rate permitted by law to be charged by Mortgagee. 27. Mortgagor's Waiver of Rights. To the fullest extent permitted by law, Mortgagor waives the benefit of all laws now existing or that may subsequently be enacted providing for (i) any appraisement before sale of any portion of the Mortgaged Property, (ii) any extension of the time for the enforcement of the collection of the Indebtedness or the creation or extension of a period of redemption from any sale made in collecting such debt and (iii) exemption of the Mortgaged Property from attachment, levy or sale under execution or exemption from civil process. To the full extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, exemption, extension or redemption, or requiring foreclosure of this Mortgage before exercising any other remedy granted hereunder and Mortgagor, for Mortgagor and its successors and 19 assigns, and for any and all persons ever claiming any interest in the Mortgaged Property, to the extent permitted by law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of foreclosure of the liens hereby created. Notwithstanding anything contained herein or in Indiana Code 32-8-16-1.5 to the contrary, no waiver made by Mortgagor in this Section 28 or anywhere else in this Mortgage or in any of the other terms and provisions of the Loan Documents or Security Documents shall constitute the consideration for or be deemed to be a waiver or release by Mortgagee or any judgment holder of the Indebtedness or Obligations hereby secured of the right to seek a deficiency judgment against the Mortgagor or any other person or entity who may be personally liable for the Indebtedness or Obligations hereby secured, which right to seek a deficiency judgment is hereby reserved, preserved and retained by Mortgagee and its successors and assigns. 28. Remedies Not Exclusive. Mortgagee shall be entitled to enforce payment of the Indebtedness and performance of the Obligations and to exercise all rights and powers under this Mortgage or under any of the other Loan Documents or other agreement or any laws now or hereafter in force, notwithstanding some or all of the Indebtedness and Obligations may now or hereafter be otherwise secured, whether by mortgage, security agreement, pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement, shall prejudice or in any manner affect Mortgagee's right to realize upon or enforce any other security now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be entitled to enforce this Mortgage and any other security now or hereafter held by Mortgagee in such order and manner as Mortgagee may determine in its absolute discretion. No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents to Mortgagee or to which it may otherwise be entitled, may be exercised, concurrently or independently, to the extent permitted by applicable law, from time to time and as often as may be deemed expedient by Mortgagee. In no event shall Mortgagee, in the exercise of the remedies provided in this Mortgage (including, without limitation, in connection with the assignment of Rents to Mortgagee, or the appointment of a receiver and the entry of such receiver on to all or any part of the Mortgaged Property), be deemed a "mortgagee in possession," and Mortgagee shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies. 29. Multiple Security. If (a) the Premises shall consist of one or more parcels, whether or not contiguous and whether or not located in the same county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter hold one or more additional mortgages, liens, deeds of trust or other security (directly or indirectly) for the Indebtedness upon other property in the State in which the Premises are located (whether or not such property is owned by Mortgagor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by law, Mortgagee may, at its election, commence or consolidate in a single foreclosure action all foreclosure proceedings against all such collateral securing the Indebtedness (including the 20 Mortgaged Property), which action may be brought or consolidated in the courts of any county in which any of such collateral is located. Mortgagor acknowledges that the right to maintain a consolidated foreclosure action is a specific inducement to Mortgagee to extend the Indebtedness, and Mortgagor expressly and irrevocably waives any objections to the commencement or consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have. Mortgagor further agrees that if Mortgagee shall be prosecuting one or more foreclosure or other proceedings against a portion of the Mortgaged Property or against any collateral other than the Mortgaged Property, which collateral directly or indirectly secures the Indebtedness, or if Mortgagee shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral, then, whether or not such proceedings are being maintained or judgments were obtained in or outside the State in which the Premises are located, Mortgagee may commence or continue foreclosure proceedings and exercise its other remedies granted in this Mortgage against all or any part of the Mortgaged Property and Mortgagor waives any objections to the commencement or continuation of a foreclosure of this Mortgage or exercise of any other remedies hereunder based on such other proceedings or judgments, and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this Mortgage or such other proceedings on such basis. Neither the commencement nor continuation of proceedings to foreclose this Mortgage nor the exercise of any other rights hereunder nor the recovery of any judgment by Mortgagee in any such proceedings shall prejudice, limit or preclude Mortgagee's right to commence or continue one or more foreclosure or other proceedings or obtain a judgment against any other collateral (either in or outside the State in which the Premises are located) which directly or indirectly secures the Indebtedness, and Mortgagor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other proceedings or exercise of any remedies in such proceedings based upon any action or judgment connected to this Mortgage, and Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this Mortgage on such basis. It is expressly understood and agreed that to the fullest extent permitted by law, Mortgagee may, at its election, cause the sale of all collateral which is the subject of a single foreclosure action at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the Indebtedness (directly or indirectly) in the most economical and least time-consuming manner. 30. Expenses; Indemnification. (a) Mortgagor shall pay or reimburse Mortgagee for all expenses incurred by Mortgagee after the date of this Mortgage with respect to any and all transactions contemplated by this Mortgage including without limitation, the preparation of any document reasonably required hereunder or any amendment, modification, restatement or supplement to this Mortgage, the delivery of any consent, non-disturbance agreement or similar document in connection with this Mortgage or the enforcement of any of Mortgagee's rights. Such expenses shall include, without limitation, all title and conveyancing charges, recording and filing fees and taxes, mortgage taxes, intangible personal property taxes, escrow fees, revenue and tax stamp expenses, insurance premiums (including title insurance premiums), title search and title 21 rundown charges, brokerage commissions, finders' fees, placement fees, court costs, reasonable fees and disbursements of surveyors, photographers, appraisers, architects, engineers, consulting professionals, accountants and attorneys. Mortgagor acknowledges that from time to time Mortgagor may receive statements for such expenses, including without limitation attorneys' fees and disbursements. Mortgagor shall pay such statements promptly upon receipt. (b) If (i) any action or proceeding shall be commenced by Mortgagee (including but not limited to any action to foreclose this Mortgage or to collect the Indebtedness), or any action or proceeding is commenced to which Mortgagee is made a party, or in which it becomes necessary to defend or uphold the lien of this Mortgage (including, without limitation, any proceeding or other action relating to the bankruptcy, insolvency or reorganization of Mortgagor or any other Loan Party), or in which Mortgagee is served with any legal process, discovery notice or subpoena and (ii) in each of the foregoing instances such action or proceeding in any manner relates to or arises out of this Mortgage or Mortgagee's lending to Mortgagor or acceptance of a guaranty from a guarantor of the Indebtedness or of any of the Obligations or any of the transactions contemplated by this Mortgage, then Mortgagor will immediately reimburse or pay to Mortgagee all of the expenses which have been or may be incurred by Mortgagee with respect to the foregoing (including reasonable counsel fees and disbursements), together with interest thereon at the Default Rate, and any such sum and the interest thereon shall be a lien on the Mortgaged Property, prior to any right, or title to, interest in or claim upon the Mortgaged Property attaching or accruing subsequent to the lien of this Mortgage, and shall be deemed to be secured by this Mortgage. In any action or proceeding to foreclose this Mortgage, or to recover or collect the Indebtedness, the provisions of law respecting the recovering of costs, disbursements and allowances shall prevail unaffected by this covenant. (c) Mortgagor shall indemnify and hold harmless Mortgagee and Mortgagee's affiliates, and the respective directors, officers, agents and employees of Mortgagee and its affiliates from and against all claims, damages, losses and liabilities (including, without limitation, reasonable attorneys' fees and expenses) arising out of or based upon any matter related to this Mortgage, the Mortgaged Property or the occupancy, ownership, maintenance or management of the Mortgaged Property by Mortgagor, including, without limitation, any claims based on the alleged acts or omissions of any employee or agent of Mortgagor, provided that Mortgagor shall have no obligation hereunder to Mortgagee or Mortgagee's affiliates or any of their respective directors, officers, agents and employees with respect to indemnified liabilities to the extent such indemnified liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct of Mortgagee or Mortgagee's affiliates or any of their respective directors, officers, agents and employees. This indemnification shall be in addition to any other liability which Mortgagor may otherwise have to Mortgagee. 31. Successors and Assigns. All covenants of Mortgagor contained in this Mortgage are imposed solely and exclusively for the benefit of Mortgagee and its successors and assigns, and no other person or entity shall have standing to require compliance with such covenants or be deemed, under any circumstances, to be a beneficiary of such covenants, 22 any or all of which may be freely waived in whole or in part by Mortgagee at any time if in its sole discretion it deems such waiver advisable. All such covenants of Mortgagor shall run with the land and bind Mortgagor, the successors and assigns of Mortgagor (and each of them) and all subsequent owners, encumbrancers and tenants of the Mortgaged Property, and shall inure to the benefit of Mortgagee, its successors and assigns. The word "Mortgagor" shall be construed as if it read "Mortgagors" whenever the sense of this Mortgage so requires and if there shall be more than one Mortgagor, the obligations of the Mortgagors shall be joint and several. 32. No Waivers, etc. Any failure by Mortgagee to insist upon the strict performance by Mortgagor of any of the terms and provisions of this Mortgage shall not be deemed to be a waiver of any of the terms and provisions hereof, and Mortgagee, notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by Mortgagor of any and all of the terms and provisions of this Mortgage to be performed by Mortgagor. Mortgagee may release, regardless of consideration and without the necessity for any notice to or consent by the holder of any subordinate lien on the Mortgaged Property, any part of the security held for the obligations secured by this Mortgage without, as to the remainder of the security, in any way impairing or affecting the lien of this Mortgage or the priority of such lien over any subordinate lien. 33. Governing Law, etc. This Mortgage shall be governed by and construed in accordance with the laws of the State of Indiana, except that Mortgagor expressly acknowledges that by its terms the Credit Agreement shall be governed and construed in accordance with the laws of the State of New York, without regard to principles of conflict of law, and for purposes of consistency, Mortgagor agrees that in any in personam proceeding related to this Mortgage the rights of the parties to this Mortgage shall also be governed by and construed in accordance with the laws of the State of New York governing contracts made and to be performed in that State, without regard to principles of conflict of law. 34. Waiver of Trial by Jury. Mortgagor and Mortgagee each hereby irrevocably and unconditionally waive trial by jury in any action, claim, suit or proceeding relating to this Mortgage and for any counterclaim brought therein. Mortgagor hereby waives all rights to interpose any counterclaim in any suit brought by Mortgagee hereunder (unless the nonassertion thereof, as an affirmative defense, shall operate as a waiver thereof) and all rights to have any such suit consolidated with any separate suit, action or proceeding. 35. Certain Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Mortgage shall be used interchangeably in singular or plural form and the word "Mortgagor" shall mean "each Mortgagor or any subsequent owner or owners of the Mortgaged Property or any part thereof or interest therein," the word "Mortgagee" shall mean "Mortgagee or any subsequent agent for the Lenders," the word "person" shall include any individual, corporation, partnership, trust, unincorporated association, government, governmental authority, or other entity, and the words "Mortgaged Property" shall include any portion of the Mortgaged Property or interest therein. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the 23 singular form of nouns and pronouns shall include the plural and vice versa. The captions in this Mortgage are for convenience or reference only and in no way limit or amplify the provisions hereof. 36. Receipt of Copy. Mortgagor acknowledges that it has received a true copy of this Mortgage. 37. Release Upon Payment. Notwithstanding anything to the contrary contained herein, if the Indebtedness and all other amounts secured hereby, and any extensions, modifications or renewals thereof, shall be well and truly paid according to its and their tenor, the Revolving Credit Commitments shall have terminated and there shall be no Letters of Credit outstanding, then this Mortgage shall become null and void and shall be released in recordable form at the cost of the Mortgagor or the then owner of the Mortgaged Property; otherwise this Mortgage shall remain in full force and effect. 38. Release. Upon a sale or transfer of any Mortgaged Property which, pursuant to the terms of the Credit Agreement, Mortgagor is permitted to sell or otherwise transfer free of the lien of the Security Documents, Mortgagee shall release such Mortgaged Property from the lien of this Mortgage. In connection with any such sale or transfer, the Mortgagee shall execute and deliver to Mortgagor, or to such person or persons as Mortgagor shall reasonably designate, at the expense of Mortgagor, a partial or total release, as applicable, and such other documents as Mortgagor may reasonably request to evidence the release of this Mortgage with respect to such Mortgaged Property. 24 This Mortgage has been duly executed by Mortgagor on the date first above written. ESSEX GROUP, INC. By:________________________ Name: David A. Owen Title: Executive Vice President This Instrument was prepared by Emily R. Steinman. STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) Before me, a Notary Public in and for said County and State, personally appeared ________________, the ________ President of ESSEX GROUP, INC., a corporation organized and existing under the laws of the State of Michigan, and acknowledged the execution of the foregoing instrument as such officer acting for and on behalf of said corporation, and who, having been duly sworn, stated that any representations therein contained are true and correct. Witness my hand and Notarial seal this __ day of April, 1995. _________________________________ (signature) [Notarial Seal] Schedule A Description of the Premises [Attach Legal Description of all parcels] Exhibit J [Indiana] [FORM OF] MORTGAGE from ESSEX GROUP, INC., Mortgagor to THE CHASE MANHATTAN BANK, as Administrative Agent, Mortgagee DATED AS OF OCTOBER 31, 1996 This Instrument was prepared by and after recording, please return to: Simpson Thacher & Bartlett a partnership which includes professional corporations 425 Lexington Avenue New York, New York 10017 ATTN: Emily R. Steinman, Esq. EXHIBIT K FORM OF COMPLIANCE CERTIFICATE [For the Fiscal Quarter ending _____] [For the Fiscal Year ending _____] Pursuant to Section 6.2(b) of the Credit Agreement, dated as of October 31, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; terms defined therein being used herein as therein defined unless otherwise defined), among Essex Group, Inc., a Michigan corporation (the "Company"), BCP/Essex Holdings Inc. ("Holdings"), the financial institutions from time to time parties thereto (the "Lenders"), and The Chase Manhattan Bank, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), the undersigned, duly elected, qualified and acting Responsible Officers of the Company and Holdings, respectively, hereby certify that: (a) To the best of such Responsible Officer's knowledge, the Company and each other Loan Party has, during the period or periods referred to above, observed or performed in all material respects all of its covenants and other agreements, and satisfied every condition, contained in the Credit Agreement and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, and as of the date hereof such Responsible Officer has obtained no knowledge of any Default or Event of Default except as follows: ____________________. (b) The financial statements referred to in Section 6.1(a) of the Credit Agreement which are delivered concurrently with the delivery of this Compliance Certificate are complete and correct in all material respects and have been prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by the accountants or such Responsible Officer, as the case may be, and disclosed therein).] The financial statements referred to in Section 6.1(b) of the Credit Agreement which are delivered concurrently with the delivery of this Compliance Certificate are complete and correct in all material respects and fairly present the financial condition and results of operations of Holdings or the Company, as the case may be (subject to normal year-end audit adjustments) and have been prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by the accountants or such Responsible Officer, as the case may be, and disclosed therein).] (c) The covenants as listed and calculated below are based on the Company's [unaudited] [audited] balance sheets and statements of operations, shareholders' equity and cash flows for the fiscal [quarter] [year] ended ________ __, 199_, a copy of which is attached hereto. 1. Current Ratio (Section 7.1(a)) The ratio of (i) Consolidated Current Assets $ __________ of Holdings and its consolidated 3 Subsidiaries to (ii) Consolidated Current Liabilities $ __________ of Holdings and its consolidated Subsidiaries Ratio: (must be greater 2.0 to 1.0) ____________ 2. Consolidated Net Worth (Section 7.1(b)) without duplication: (i) 50% of Consolidated $ __________ Net Income of Holdings and its consolidated Subsidiaries for each fiscal quarter of Holdings (beginning with the fiscal quarter ending Mar. 31, 1995) for which Consolidated Net Income is positive (ii) 100% of Net Cash Proceeds of Holdings $________ Common Equity Offering consummated after the Effective Date (iii) 100% of any capital contribution made $_______ to Holdings or the Company after the Effective Date by any holder of its Capital Stock (iv) Sum of (i), (ii) and (iii) and $ _________ $80,000,000 (v) Consolidated Net Worth of Holdings $ _________ and its consolidated subsidiaries (must be equal to or greater than (iv) above) (vi) Clauses (ii) and (iii) shall be $ __________ reduced to the extent (a) such proceeds or contributions are applied to repurchase of equity in accordance with the Credit Agreement and (b) Consolidated Net Worth would be reduced as a result of repurchase 3. Interest Coverage (Section 7.1(c)) The ratio of (i) Consolidated EBITDA of Holdings $ __________ and its consolidated Subsidiaries for the relevant Interest Coverage Test Period to 3 (ii) Consolidated Net Cash Interest Expense $______ of Holdings and its consolidated Subsidiaries for such Interest Coverage Test Period Ratio: (must be greater 2.0 to 1.0) ____________ 4. Leverage Ratio (Section 7.1(d)) The ratio of (i) Total Debt of Holdings and its $ __________ consolidated Subsidiaries (as of last day of any period of four consecutive fiscal quarters of Holdings) to (ii) Consolidated EBITDA of Holdings and its $______ consolidated Subsidiaries for such period Ratio: (after the Effective Date and prior to $_______ March 31, 1995 and prior to March 31, 1998, must be less 5.00 to 1.0; on or after March 31, 1998 and prior to March 31, 1999, must be less than 4.50 to 1.0; March 31, 1999 and prior to March 31, 2000, must be less than 4.25 to 1.00; and March 31, 2000 and thereafter, must be less than 4.0 to 1.0) 5. Senior Secured Leverage Ratio (Section 7.1(e)) The ratio of (i) Total Senior Secured Debt of Company $ _______ and its Subsidiaries (as of the last day of any period of four consecutive fiscal quarters of Holdings) to (ii) Consolidated EBITDA for such period $ ________ Ratio: (after the Effective Date and prior $_______ to March 31, 1998, must be less 3.00 to 1.0; On or after March 31, 1998 and prior to March 31, 1999, must be less than 2.75 to 1.0; On or after March 31, 1999 and prior to March 31, 2000, must be less 2.50 to 1.0; March 31, 2000 and thereafter, must be less than 2.25 to 1.0) 6. Limitation on Indebtedness (Section 7.2) (i) (A) Aggregate amount of Non-Facility L/C obligations $ __________ 4 (B) Aggregate amount of L/C Obligations (the sum of $ __________ (A) and (B) may not exceed $25,000,000, at any time) (ii) Indebtedness of the Company resulting $ _______ from the delivery of a promissory note to support Indebtedness of the Company, in connection with the requirements of the Company's insurance carriers to recognize casualty insurance premiums (may not exceed $10,000,000 at any time) (iii) Senior Unsecured Term Loans of the $ __________ Company (may not exceed $60,000,000 at any time) (iv) Interest Rate Protection Agreements $ ________ in respect of the Senior Notes (may not exceed $200,000,000 at any time) (v) Additional unsecured indebtedness not $ _______ otherwise permitted by Section 7.2 which is (a) unsecured, (b) incurred in connection with the acquisition of assets and secured only by such assets or (c) secured by assets acceptable to the Required Lenders (may not exceed $20,000,000 at any time) (vi) Additional unsecured indebtedness not $________ otherwise permitted by Section 7.2 (may not exceed $25,000,000 at any time) (vii) Additional indebtedness of Essex $_______ International not otherwise permitted by Section 7.2 (may not exceed $15,000,000 at any time) 7. Limitation on Liens (Section 7.3(g)) (i) Aggregate amount of Indebtedness secured $ ____ by Liens incurred as described in Section 7.3(g) (may not exceed $25,000,000 at any time and 10% of Consolidated Net Worth of Holdings and its consolidated Subsidiaries) 8. Limitation on Guarantee Obligations (Section 7.4) (i) Aggregate amount of guarantees by the $ _______ Company or any of its Subsidiaries of the obligations of joint ventures in which the Company or any of its Subsidiaries is a party, as described in Section 7.4(c) (may not, when added to Joint Venture Loans, exceed $25,000,000) (ii) Aggregate amount of surety, indemnity, $ ______ 5 performance, release and appeal bonds and guarantees thereof issued by the Company or any of its Subsidiaries, as described in Section 7.4(d) (may not exceed $10,000,000 at any time) 9. Limitation on Sale of Assets (7.6) (i) Aggregate amount of the sale or other $ _______ disposition of obsolete, outdated or surplus assets as described in Section 7.6(a) (may not exceed $3,000,000 in fiscal year) (ii) Aggregate amount of fair market value of $ ____ all assets sold by the Company and its Subsidiaries as described in Section 7.6(f) during the fiscal [quarter] [year] of the Company ending _______, 19__ (may not exceed $20,000,000 in fiscal year or $30,000,000 during the term of the Credit Agreement) 10. Limitation on Leases (Section 7.7) (i) Aggregate amount of lease payments $ _________ pursuant to leases listed on Schedule 7.7(a) (including replacements) and operating leases entered into in the ordinary course of business (may not exceed $20,000,000 in fiscal year) (ii) Aggregate outstanding amount of $ __________ Capital Lease Obligations as described in Section 7.7(c) during the fiscal [quarter] [year] ending _______, 19__ (may not exceed the sum of $25,000,000 and an amount equal to 10% of Consolidated Net Worth of Holdings and its consolidated Subsidiaries at any time) 11. Limitation on Dividends (Section 7.8) $ __________ (i) Aggregate amount of dividends to $ __________ Holdings as described in Section 7.8(b) since the beginning of the 19__ fiscal year (ii) Aggregate amount of Net Cash $ __________ Proceeds of sale of Holdings common stock to any officer or employee as described in Section 7.8(b) since the Effective Date (iii) Aggregate amount distributed to $ __________ Holdings for repurchasing Holdings common stock as described in Section 7.8(b) during preceding fiscal year (ending _____________, 19__) (iv) Sum of (a) $5,000,000 and (b) (ii) $ __________ minus (iii) (amount of (iv) may not exceed (i) in any fiscal year) (v) Aggregate amount of cash dividends $ __________ 6 paid on the Preferred Stock since the beginning of the 19__ fiscal year (may not exceed $5,000,000 in any fiscal year ending on or prior to December 31, 1998 and $10,000,000 in any fiscal year thereafter, provided that in no event shall such dividends, when added to Capital Expenditures made pursuant to Section 7.10(g), exceed the EBITDA Basket Amount for such fiscal year) 12. Limitation on Capital Expenditures, Investments, Loans and Advances (Section 7.10) (i) Aggregate amount of loans and advances $______ of the Company and its Subsidiaries as described in Section 7.10(c) (may not exceed $1,000,000) (ii) Aggregate amount outstanding of Loans $ _____ by the Company to any Joint Venture as described in Section 7.10(e) (may not exceed $18,000,000 at any time) (iii) Aggregate amount the sum of (i) $ __________ outstanding of Loans by the Company to any Joint Venture as described in Section 7.10(e)(i) and (ii) the aggregate amount of guarantees described in Section 7.10(e)(ii) (may not exceed $25,000,000 at any time) (iii) (A) (1) Aggregate amount of Capital $ _______ Expenditures of the Company and its Subsidiaries since the beginning of the 19__ fiscal year (2) Basket Expenditure Amount for $ _____ 19__ fiscal year (as set forth in Section 7.10(g) (3) Unused Basket Expenditure $ _________ Amounts carried over from each preceding fiscal year (including $19,800,000 for fiscal year 1995) (4) Amount of A(1) may not exceed $ _____ the sum of A(2) and A(3) (provided that, unless A(1) is less than $30,000,000, the sum of A(1) and the amount of cash dividends on the Preferred Stock made during the current fiscal year shall not exceed the EBITDA Basket Amount) (B) Investment Expenditures since the $ ______ Effective Date (may not exceed Maximum Investment Amount then 7 in effect) (C) (1) Capital Expenditures and $ __________ Investment Expenditures (excluding up to $5,000,000 of Investment Expenditures constituting capital contributions to any Joint Venture which (a) constitute capital contributions or other investments in any Person that is not a Subsidiary Guarantor or (b) are made to acquire assets which do not constitute Collateral since the beginning of the 19__ fiscal year (may not exceed $20,000,000 in any fiscal year and $30,000,000 during the term of the Credit Agreement) (2) Investment Expenditures $ __________ constituting capital contributions to any Joint Venture made since the Effective Date and excluded pursuant to (C)(1) (iv) (A) Capital Expenditures and $ __________ Investment Expenditures of Company and Subsidiaries as described in 7.10(h)(x) made with proceeds from Holdings Common Equity Offering since the Effective Date (may not exceed $100,000,000) (B) Capital Expenditures and $ __________ Investment Expenditures of Company and Subsidiaries as described in 7.10(h)(y) made with proceeds from Holdings Common Equity Offering since the Effective Date which (a) constitute capital contributions or other investments in any Person that is not a Subsidiary Guarantor or (b) are made to acquire assets which do not constitute Collateral since Effective Date (may not exceed $50,000,000) IN WITNESS WHEREOF, we have hereto set our names. Dated: By:___________________________ Name: Title: [Responsible Officer of the Company] By:___________________________ Name: Title: [Responsible Officer of the Holdings] EXHIBIT L [FORM OF CONFIDENTIALITY LETTER] [BANK LETTERHEAD] [Date] Essex Group, Inc. 1601 Wall Street Fort Wayne, IN 46801 The Chase Manhattan Bank, as Administrative Agent 270 Park Avenue New York, New York 10017 [Name and address of Lender selling a participation or making an assignment under the Credit Agreement referred to below] Dear Sirs: We understand that The Chase Manhattan Bank ("Chase") is acting as Administrative Agent under the Credit Agreement dated as of October 31, 1996 (the "Credit Agreement"; terms used herein and not otherwise defined herein are used as defined therein) among Essex Group, Inc. (the "Company"), the lenders named therein (the "Lenders") and Chase, as Administrative Agent. In connection with our evaluation of a proposed purchase of a participation in or acceptance of an assignment of, a portion of the Loans, the Letters of Credit and the Revolving Credit Commitments, Chase and/or a Lender have furnished, and will furnish, us with a copy of the Credit Agreement and Confidential Information. We understand that prior to receiving a copy of the Credit Agreement and Confidential Information, we are required under Section 11.6(g) of the Credit Agreement to execute and deliver this letter. We agree to keep confidential (and to cause our officers, directors, employees, agents, attorneys, accountants and professional advisors to keep confidential) to the extent provided in Section 11.16 of the Credit Agreement all Confidential Information. In the event we do not participate or accept an assignment under the Credit Agreement, at Chase's, such Lender's or the Company's request, we agree to return (and to cause such other person to return) to Chase, such Lender or the Company, as the case may be, all written Confidential Information and all copies thereof, extracts therefrom and analyses and other materials based thereon, except that we shall be permitted to disclose details of the Confidential Information (i) to the extent contemplated in Section 11.16 and (ii) to the extent Chase and the Company shall have consented to such disclosure in writing. We further agree that we will use the Confidential Information only in connection with our evaluation of becoming a possible participant or assignee under the Credit Agreement. The undertakings contained herein are for the benefit of each of you. 2 THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. [Name of Institution] By: _______________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----