-----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, Tltk5ECQg6C/wYretOCw9O/cCeikcq878UaukdTPin5mDj//C+6j6NjPNQSoEwq3 vyAhCillRjQQXO5sP0u5Yg== 0000935799-97-000018.txt : 19970815 0000935799-97-000018.hdr.sgml : 19970815 ACCESSION NUMBER: 0000935799-97-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMPSON INDUSTRIES INC CENTRAL INDEX KEY: 0000090588 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 381225111 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06611 FILM NUMBER: 97663746 BUSINESS ADDRESS: STREET 1: 47603 HALYARD DR CITY: PLYMOUTH STATE: MI ZIP: 48170 BUSINESS PHONE: 3135406200 MAIL ADDRESS: STREET 1: 47603 HALYARD DR CITY: PLYMOUTH STATE: MI ZIP: 48170 10-Q 1 QUARTERLY REPORT ON FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended June 30, 1997 Commission File Number 0-6611 SIMPSON INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Michigan 38-1225111 (State or other jurisdiction of IRS Employer Identification No.) incorporation or organization) 47603 Halyard Drive, Plymouth, Michigan 48170-2429 (Address of principal executive offices) (Zip Code) (313)207-6200 (Registrant's telephone number, including area code) (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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No At July 31, 1997 there were 18,128,212 outstanding shares of the registrant's common stock, $1.00 par value each. PAGE Consolidated Balance Sheets (Unaudited) (In thousands) June 30, 1997 and December 31, 1996 June 30 Dec. 31 ASSETS Current Assets Cash and cash equivalents $ 920 $ 28,902 Accounts receivable 63,589 41,032 Inventories 18,206 14,034 Customer tooling in process 6,455 4,002 Prepaid expenses and other current assets 5,440 6,256 Total Current Assets 94,610 94,226 Property, Plant and Equipment Cost 309,327 278,229 Less Allowance 135,460 126,152 Total Property, Plant and Equipment 173,867 152,077 Unallocated Purchase Cost 38,843 - Other Assets 15,625 2,653 $322,945 $248,956 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable $ 490 - Current installment of long-term debt 3,579 $ 3,579 Accounts payable 33,307 28,455 Compensation and amounts withheld 7,573 10,203 Taxes, other than income taxes 2,326 2,597 Other accrued expenses 9,825 4,354 Total Current Liabilities 57,100 49,188 Long-term debt, excluding current installment 116,854 58,643 Accrued Retirement Benefits 14,750 14,015 Deferred Income Taxes 12,261 11,118 Shareholders' Equity 121,980 115,992 $322,945 $248,956 PAGE Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Periods Ended June 30, 1997 and 1996 Six Months Three Months 1997 1996 1997 1996 Net sales $216,148 $211,470 $110,274 $110,049 Costs and expenses: Cost of products sold 192,292 186,821 97,234 95,783 Administrative and selling 6,223 6,199 3,191 3,364 198,515 193,020 100,425 99,147 Operating Earnings 17,633 18,450 9,849 10,902 Investment and other income, net 526 159 107 35 Interest expense (2,717) (2,724) (1,424) (1,384) Earnings Before Income Taxes 15,442 15,885 8,532 9,553 Income taxes 5,637 5,957 3,114 3,582 Net Earnings $ 9,805 $ 9,928 $ 5,418 $ 5,971 Net Earnings Per Share $0.54 $0.55 $0.30 $0.33 Cash dividends per share $0.20 $0.20 $0.10 $0.10 Average number of common equivalent shares 18,163,432 18,096,326 18,177,427 18,118,936 PAGE Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, 1997 and 1996 1997 1996 OPERATING ACTIVITIES Net earnings $ 9,805 $ 9,928 Depreciation 10,556 10,192 Provision for deferred income taxes 598 552 Amortization of restricted stock 163 159 (Gain) loss on disposition of assets (85) 237 Changes in operating assets and liabilities, net of effects of acquisition of business (11,370) (3,053) Cash Provided By Operating Activities 9,667 18,015 INVESTING ACTIVITIES Acquisition of business, net of cash acquired (74,388) - Capital expenditures (17,699) (9,671) Proceeds from disposal of property and equipment 206 43 Cash Used In Investing Activities (91,881) (9,628) FINANCING ACTIVITIES Cash dividends paid (3,626) (3,616) Proceeds (repayments) of long-term debt, net 58,211 (1,788) Cash provided by stock transactions, net - 242 Cash Provided From (Used In) Financing Activities 54,585 (5,162) Effect of foreign currency exchange rate changes (353) 64 Increase (Decrease)In Cash and Cash Equivalents (27,982) 3,289 Cash and cash equivalents at beginning of period 28,902 13,490 Cash and Cash Equivalents at End of Period $ 920 $16,779 Supplemental Disclosures Cash paid during the year for: Interest $ 2,590 $ 2,677 Income Taxes 4,207 3,673 PAGE Note 1. Significant Accounting Principles The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the period ended June 30, 1997 are not necessarily indicative of the results to be expected for the year ending December 31, 1997. Goodwill is amortized on a straight-line basis over 40 years. Specific intangibles are amortized on a straight-line basis over the estimated periods benefited with periods ranging from 5 to 20 years. For further information regarding the Company's accounting policies, refer to the Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Note 2. Holset VA Acquisition On June 27, the Company through a wholly owned subsidiary purchased the Vibration Attenuation division of Holset Engineering Company Limited ("Holset VA") from Cummins Engine Company. The aggregate purchase cost for the acquisition of the Holset VA Business was $76.6 million. Funds for the Holset VA Business acquisition, net of cash received, were provided by cash and borrowings of $60 million under the Credit Agreements as described in Note 4. The Holset VA Business has operations in the United Kingdom, France, Spain, Mexico, Korea, Brazil, the United States and India. Holset VA manufactures rubber and viscous dampers and supplies three main markets including heavy truck, light truck and automotive and industrial. The acquisition was accounted for as a purchase transaction. The purchase cost of $76.6 million has been allocated to assets and liabilities acquired based upon their preliminary estimated fair values at the acquisition date. The excess of purchase price over estimated values for assets and liabilities has been reflected as unallocated purchase cost which is being amortized over forty years. The final allocation of the purchase cost to assets and liabilities will depend on the final results of appraisals that are not yet available and investigations into liabilities assumed that are not yet complete. Therefore, the final allocation will probably differ from the estimated allocation, possibly by substantial amounts. The preliminary allocation at June 27, 1997 of the $76.6 million purchase cost is summarized as follows: (In thousands) Current assets $17,748 Property, plant and equipment 15,806 Unallocated purchase cost, principally goodwill 38,843 Intangible assets 12,728 Other noncurrent assets 841 Current liabilities (9,346) Total purchase cost $76,620 The operations of the Holset VA Business from the acquisition date to June 30, 1997 were not material to the consolidated Statement of Income of the Company. See Note 3 for pro forma information. NOTE 3. Pro Forma Information The following pro forma unaudited financial data is presented to illustrate the estimated effects of (i) the Holset VA acquisition and (ii) the completion of the new credit agreements (Note 4) as if the transactions had occurred as of January 1 of each year presented (in thousands, except per share data). _____________________________________________________________ Six Months Ended June 30 June 30 1997 1996 Net sales 251,911 246,800 Net income 10,228 10,665 Net income per share $0.56 $0.59 _____________________________________________________________ The pro forma information above does not purport to be indicative of the results that actually would have been achieved if the transactions had occurred prior to the years presented, and is not intended to be a projection of future results or trends. Note 4. Debt In June, 1997, the Company entered into revolving credit agreements to allow for borrowings of up to $50 million under a five-year agreement and up to $50 million under a 364-day agreement. Borrowings outstanding under these agreements at June 30, 1997 were $50 million at an interest rate of 6.3% and $10 million at an interest rate of 8.25%, respectively. The 364-day agreement is classified as long-term based on management's intent to renew it each year. Borrowings under the credit agreements bear interest, at the election of the Company, at a floating rate of interest equal to (a) the higher of ABN AMRO's prime lending rate and the federal funds rate plus .5% or (b) the Eurodollar rate plus the applicable borrowing margin. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales reached a record high in the second quarter of 1997, increasing $225,000 from the second quarter of 1996. Year-to-date sales increased 2.2% or $4,678,000 from the first half of 1996. The increased sales for the quarter and the first half of the year reflect strong sales to diesel engine customers and a new wheel-end suspension program that went on line in late 1996 offset by the effects of a decline in auto production and strikes at two key customers. Cost of products sold as a percent of sales for the first six months of 1997 compared to the first half of 1996 increased to 89.0% from 88.3%. Cost of products sold as a percent of sales for the second quarter of 1997 compared to the second quarter of 1996 increased to 88.2% from 87.0%. The increase in cost of products sold in both the three- and six-month periods ended June 30, 1997 reflects the recovery of some out-of-period start-up costs recorded in the second quarter of 1996. Administrative and selling costs remained at approximately 3% of sales for the six- and three-month periods ending June, 30 1996 and 1997. Interest expense for the six- and three-month periods ending June 30, 1997 and 1996 remained approximately the same. In July the company announced the closing of its Jackson, Michigan manufacturing plant. A pre-tax charge of approximately $4 million will be recorded in the third quarter ending September 30, 1997. This closure is anticipated to provide annualized savings of approximately $2.5 million a year beginning in 1998. In June, 1997, the Company entered into revolving credit agreements to allow for borrowings of up to $50 million under a five-year agreement and up to $50 million under a 364-day agreement. Borrowings outstanding under these agreements at June 30, 1997 were $50 million at an interest rate of 6.3% and $10 million at an interest rate of 8.25%, respectively. The 364-day agreement is classified as long-term based on management's intent to renew it each year. Borrowings under the credit agreements bear interest, at the election of the Company, at a floating rate of interest equal to (a) the higher of ABN AMRO's prime lending rate and the federal funds rate plus .5% or (b) the Eurodollar rate plus the applicable borrowing margin. On June 27, 1997, the Company purchased the Vibration Attenuation division of Holset Engineering Company Limited ("Holset VA") from Cummins Engine Company for an aggregate purchase price of $76.6 million. Net funds used for the acquisition totaled $74.4 million. Cash flow from operations was $9.7 million for the first half of 1997. Net cash used in investing activities was $91.9 million and $9.6 million for the six months ending June 30, 1997 and 1996, respectively. The primary reason for the increase in investing activities was the Holset VA acquisition, as described above. The Company's investment in production capacity for new automotive, light truck and diesel engine programs also increased from $9.7 million in 1996 to $17.7 million in 1997. The increase was primarily due to the new program launches occurring in 1997. Net cash used in investing activities and dividends paid during the six months ended June 30, 1997, exceeded cash flows from operations and net proceeds from borrowings, discussed above, resulting in a reduction of $28 million in cash and cash equivalents. The Company believes that cash flows from operations and available credit facilities will be sufficient to meet its debt service requirements, projected capital expenditures and working capital requirements. Certain statements in this report may be "forward-looking statements" under the Securities Exchange Act of 1934. Statements regarding future operating performance, new programs expected to be launched and other future prospects and developments are based on current expectations and involve certain risks and uncertainties that could cause the actual results and developments to differ materially from the forward-looking statements. Potential risks and uncertainties include such factors as demand for the Company's products, pricing and other actions taken by competitors, and general economic conditions affecting the markets served by the Company. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this report. Exhibit No. Description 3.1 Restated Articles of Incorporation, as amended 10.3 Amendment to Note Agreement with Travelers Life Insurance Company, dated as of May 30, 1997 (Amendment No. 2 to original Note Agreement Dated as of June 12, 1986 with Aetna Life Insurance Company) 10.11 Amendment to Note Agreement with Massachusetts Mutual Life Insurance Company, dated as of May 30, 1997 (Amendment No. 1 to original Note Agreement Dated as of August 15, 1991 with Massachusetts Mutual Life Insurance Company) 10.15 $20,000,000 Renewal Term Note Due December 31, 2008, with Comerica Bank, dated as of June 17, 1997 10.20 $3,230,357.07 Renewal Term Note Due January 25, 2003, with Comerica Bank, dated as of June 17, 1997 10.21 $20,000,000 Renewal Term Note Due February 7, 2005, with Comerica Bank, dated as of June 17, 1997 10.22 Letter Agreement with Comerica Bank, dated June 17, 1997 10.24 Credit Agreement (Five Year), dated June 17, 1997, among Simpson Industries and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 10.25 Credit Agreement (364 Day), dated June 17, 1997, among Simpson Industries and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 11 Computation of Earnings Per Share 27 Financial Data Schedule (b) The following reports on Form 8-K were filed during the quarter ended June 30, 1997. (i) April 1, 1997 - Form 8-K relating to the Holset VA acquisition. (ii) June 20, 1997 - Form 8-K relating to the Holset VA acquisition. PAGE SIGNATURES 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. SIMPSON INDUSTRIES, INC. Registrant August 11, 1997 /S/ROY E. PARROTT Roy E. Parrott President and Chief Executive Officer INDEX TO EXHIBITS Exhibit No. Description 3.1 Restated Articles of Incorporation, as amended 10.3 Amendment to Note Agreement with Travelers Life Insurance Company, dated as of May 30, 1997 (Amendment No. 2 to original Note Agreement Dated as of June 12, 1986 with Aetna Life Insurance Company) 10.11 Amendment to Note Agreement with Massachusetts Mutual Life Insurance Company, dated as of May 30, 1997 (Amendment No. 1 to original Note Agreement Dated as of August 15, 1991 with Massachusetts Mutual Life Insurance Company) 10.15 $20,000,000 Renewal Term Note Due December 31, 2008, with Comerica Bank, dated as of June 17, 1997 10.20 $3,230,357.07 Renewal Term Note Due January 25, 2003, with Comerica Bank, dated as of June 17, 1997 10.21 $20,000,000 Renewal Term Note Due February 7, 2005, with Comerica Bank, dated as of June 17, 1997 10.22 Letter Agreement with Comerica Bank, dated June 17, 1997 10.24 Credit Agreement (Five Year), dated June 17, 1997, among Simpson Industries and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 10.25 Credit Agreement (364 Day), dated June 17, 1997, among Simpson Industries and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 11 Computation of Earnings Per Share 27 Financial Data Schedule EX-3.1 2 RESTATED ARTICLES OF INCORPORATION, AS AMENDED CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION For Use By Domestic Profit and Nonprofit Corporations Pursuant to the provisions of Act 284, Public Acts of 1972 (profit corporations), the undersigned corporation executes the following Certificate: 1. The present name of the corporation is: Simpson Industries, Inc. 2. The identification number assigned by the Bureau is: 034-302 3. The location of the registered office is: 30600 Telegraph Road, Bingham Farms, Michigan 48025 4. Article III of the Articles of Incorporation is hereby amended to read as follows: The total authorized capital stock is 55,000,000 shares of common stock, par value $1.00 per share. Holders of common stock shall have equal voting rights and other rights and shall be entitled to one vote per share. No holder of capital stock of the corporation shall be entitled as such as a matter of right to subscribe for, or to purchase, any part of a new or additional issue of stock or any other reacquired shares of stock of any class whatsoever or of any securities convertible into stock of any class whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration. 5. Not applicable. 6. (For profit corporations, and for nonprofit corporations whose articles state the corporation is organized on stock or on a membership basis.) The foregoing amendment to the Articles of Incorporation was duly adopted on the 22nd day of April, 1997, by the shareholders if a profit corporation, or by the shareholders or members if a nonprofit corporation (check one of the following) X at a meeting. The necessary votes were cast in favor of the amendment. Signed this 5th day of May, 1997 /S/ ROY E. PARROTT Roy E. Parrott President and Chief Executive Officer 7. Not applicable. EX-10.11 3 AMENDMENT TO NOTE AGREEMENT WITH MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY SIMPSON INDUSTRIES, INC. Amendment to Note Agreement Dated as of May 30, 1997 Re: Note Agreement Dated as of June 12, 1986 and $15,000,000 8.80% Senior Notes Due June 15, 2001 of Simpson Industries, Inc. PAGE SIMPSON INDUSTRIES, INC. AMENDMENT TO NOTE AGREEMENT Re: Note Agreement Dated as of June 12, 1986 and $15,000,000 8.80% Senior Notes Due June 15, 2001 of Simpson Industries, Inc. Dated as of May 30, l997 The Travelers Insurance Company One Tower Square Hartford, Connecticut 06183 Ladies and Gentlemen: Reference is made to the Note Agreement dated as of June 12, 1986, (the "Note Agreement"), between Simpson Industries, Inc., a Michigan corporation (the "Company"), and you, pursuant to which $15,000,000 aggregate principal amount of 8.80% Senior Notes due June 15, 2001 (the "Notes") of the Company were originally issued. The Company desires to amend certain covenants contained in the Note Agreement and hereby requests that you accept the amendments as set forth below in the manner herein provided. Section 1. Amendments to Note Agreement. Section 1.1. Amendment to Section 2.1 of Note Agreement. Section 2.1 of the Note Agreement shall be amended by the addition thereto of a new paragraph which shall read as follows: In the event of any prepayment made pursuant to Section 2.3 in which less than all of the Notes shall have been prepaid by the Company, the amount of each payment required to be made pursuant to this Section 2.1 shall be reduced by a percentage equal to the aggregate principal amount of the Notes so prepaid pursuant to Section 2.3 divided by the aggregate principal amount of the Notes outstanding immediately prior to such prepayment. Section 1.2. Amendment to Section 2.3 of Note Agreement. Section 2.3 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: Section 2.3. Prepayment upon Change in Control. (a) Notice of Change in Control or Control Event. The Company will, within two business days after any Responsible Officer has knowledge of the occurrence of any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes unless notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this Section 2.3. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay the Notes as described in subparagraph (c) of this Section 2.3 and shall be accompanied by the certificate described in subparagraph (g) of this Section 2.3. (b) Condition to Company Action. The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 15 days prior to such action the Company shall have given to each holder of Notes written notice containing and constituting an offer to prepay the Notes as described in subparagraph (c) of this Section 2.3, accompanied by the certificate described in subparagraph (g) of this Section 2.3, and (ii) contemporaneously with such action, the Company prepays all Notes required to be prepaid in accordance with this Section 2.3. (c) Offer to Prepay Notes. The offer to prepay the Notes contemplated by subparagraphs (a) and (b) of this Section 2.3 shall be an offer to prepay, in accordance with and subject to this Section 2.3, all, but not less than all, of the Notes held by each holder on a date specified in such offer (the "Proposed Prepayment Date"). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this Section 2.3, such date shall be not less than 20 days and not more than 30 days after the date of such offer. (d) Acceptance; Rejection. A holder of Notes may accept or reject the offer to prepay made pursuant to this Section 2.3 by causing a notice of such acceptance or rejection to be delivered to the Company at least five days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 2.3 shall be deemed to constitute acceptance of such offer by such holder. (e) Prepayment. Prepayment of the Notes pursuant to this Section 2.3 shall be at 100% of the principal amount of all Notes held by the holder or holders accepting the Company' offer to prepay such Notes, plus a premium equal to the premium which would have been payable if the Notes had been prepaid in accordance with Section 2.2(b), determined for such prepayment date with respect to such principal amount, together with interest on such Notes accrued to the date of prepayment. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this Section 2.3. (f) Deferral Pending Change in Control. The obligation of the Company to prepay the Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with subparagraph (d) of this Section 2.3 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 2.3 in respect of such Change in Control shall be deemed rescinded). (g) Officer's Certificate. Each offer to prepay the Notes pursuant to this Section 2.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this Section 2.3; (iii) the principal amount of each Note offered to be prepaid; (iv) the premium due in connection with such prepayment (calculated as if the date of such Proposed Prepayment Date were the date of the prepayment); (v) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of this Section 2.3 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. (h) Effect on Required Payments. The amount of each payment of the principal of the Notes made pursuant to this Section 2.3 shall be applied against and reduce each of the then remaining principal payments due pursuant to Section 2.1 by a percentage equal to the aggregate principal amount of the Notes so paid divided by the aggregate principal amount of the Notes outstanding immediately prior to such payment. (i) Terms Defined. The terms set forth below shall have the respective meanings assigned thereto: The term "Change in Control" means each and every issue, sale or other disposition of shares of stock of the Company which results in any Person or group of Persons acting in concert, other than any Designated Shareholders, beneficially owning or controlling, directly or indirectly, more than 50% (by number of votes) of the Voting Stock of the Company. The term "control" means the possession of power to direct or cause the direction of management and policies of such entity, whether through the ownership of an equity interest, by contract or otherwise. The term "Control Event" means: (i) the execution by the Company or any of its Restricted Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, (ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or (iii) the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act, or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) to the holders of the Voting Stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control. The term "Current Management Team" shall mean Roy E. Parrott, Kathryn L. Williams, James A. Hug, James B. Painter and James E. Garpow. The term "Designated Shareholders" shall mean (i) the members of the Current Management Team; (ii) the Principal Shareholders; (iii) the spouses, lineal descendants and spouses of the lineal descendants of the Persons named in clause (i); (iv) the estates or legal representatives of the Persons named in clause (i); and (v) any trust, custodianship or other fiduciary arrangement in respect of which one or more of the Persons described in clauses (i) and (iii) are the principal beneficiaries and such Person or Persons shall have control of such trust, custodianship or other fiduciary arrangement. The term "Principal Shareholders" shall mean Pioneering Management Group, J.P. Morgan & Co., Incorporated and Farmers Group Inc. Section 1.3. Amendment to Section 2 of Note Agreement. Section 2 of the Note Agreement shall be amended by the addition thereto of a new Section 2.4 which shall read as follows: Section 2.4. Partial Payment Pro Rata. If there is more than one Note outstanding, the principal amount of each required or optional partial payment of the Notes, other than an offer to prepay the Notes pursuant to Section 2.3 which has been declined by one or more holders of Notes, will be allocated among the Notes at the time outstanding in proportion, as nearly as practicable, to the respective outstanding principal amount of the Notes. Section 1.4. Amendment to Section 3 of Note Agreement. Section 3 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: Section 3.1. Financial and Business Information. The Company shall deliver to each holder of Notes: (a) Quarterly Statements within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of: (i) a consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Restricted Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from normal, recurring year-end adjustments; (b) Annual Statements within 90 days after the end of each fiscal year of the Company, duplicate copies of, (i) a consolidated balance sheet of the Company and its Restricted Subsidiaries, as at the end of such year, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Restricted Subsidiaries, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied (A) by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and (B) a certificate of such accountants stating that they have reviewed this Agreement and stating further whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit); (c) SEC and Other Reports promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to public securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the Securities and Exchange Commission and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material; (d) Notice of Default or Event of Default promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 5.1(f), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (e) ERISA Matters promptly, and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Plan, any Reportable Event for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; (f) Notices from Governmental Authority promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; (g) Unrestricted Subsidiaries within the respective periods provided in Section 3.1(a) and (b) above, financial statements of the character and for the dates and periods as provided in said Section 3.1(a) and (b) covering each Unrestricted Subsidiary (or group of Unrestricted Subsidiaries on a consolidated basis); (h) Material Information with reasonable promptness, the Company will use its best efforts to provide written notice of any Material change to the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries; and (i) Requested Information with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. Section 3.2. Officer's Certificate. Each set of financial statements delivered to a holder of Notes pursuant to Section 3.1(a) or Section 3.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer setting forth: (a) Covenant Compliance the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Section 4.1 through Section 4.7 hereof, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and (b) Event of Default a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Restricted Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. Section 3.3. Inspection. The Company shall permit the representatives of each holder of Notes: (a) No Default if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and (b) Default if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested. Section 1.5. Amendment to Section 4 of Note Agreement. Section 4 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: The Company covenants that so long as any of the Notes are outstanding: Section 4.1. Consolidated Net Worth. The Company will not, at any time, permit Consolidated Net Worth to be less than the sum of (a) $95,000,000, plus (b) 25% of its aggregate Consolidated Net Income (but only if a positive number) for the period beginning on July 1, 1997 and ending at the end of the then most recently completed fiscal year of the Company (or if such date of determination is the last day of any fiscal year, then ending on such date), computed on a cumulative basis for such entire period. Section 4.2. Limitations on Debt. The Company will not, and will not permit any Restricted Subsidiary to, create, assume or incur or in any manner be or become liable in respect of any Consolidated Debt, except: (a) Debt evidenced by the Notes; (b) Consolidated Debt of the Company and its Restricted Subsidiaries outstanding as of the date of the First Amendment and reflected on Exhibit A to the First Amendment; and (c) additional Consolidated Debt of the Company and its Restricted Subsidiaries, provided that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof: (i) no Default or Event of Default exists; (ii) Consolidated Debt does not exceed 3.5 times EBITDA for the then most recently ended period of four consecutive fiscal quarters of the Company; and (iii) in the case any such Debt is Priority Debt, such Debt is permitted by Section 4.3. Any corporation which becomes a Restricted Subsidiary after the date of this Agreement shall, for all purposes of this Section 4.2, be deemed to have created, assumed or incurred, at the time it becomes a Restricted Subsidiary, all Debt of such corporation existing immediately after it becomes a Restricted Subsidiary. Section 4.3. Limitations on Priority Debt. The Company will not at any time permit Priority Debt to exceed 15% of Total Capitalization as of the last day of the then most recently ended fiscal quarter of the Company. Section 4.4. Limitation on Liens. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any Property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Restricted Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits, except: (a) Liens for taxes, assessments or other governmental charges which are not yet due and payable or the payment of which is not at the time required by Section 4.13; (b) any attachment or judgment Lien, unless the judgment it secures shall not, within 30 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 30 days after the expiration of any such stay (or such lesser period of time as applicable law allows a judgment creditor to levy on such judgment); (c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the payment of which is not at the time required by Section 4.13; (d) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capitalized Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property; (e) Liens existing on the date of the First Amendment and securing the Debt of the Company and its Restricted Subsidiaries referred to in Exhibit B to the First Amendment; (f) any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of Property (other than accounts receivable or inventory), or any improvement thereon, acquired or constructed by the Company or a Restricted Subsidiary after the date of the First Amendment, provided that (i) any such Lien shall extend solely to the item or items of such Property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other Property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed Property (or improvement thereon) or which is real Property being improved by such acquired or constructed Property (or improvement thereon), (ii) the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (A) the cost to the Company or such Restricted Subsidiary of the Property (or improvement thereon) so acquired or constructed and (B) the fair market value (as determined in good faith by the board of directors of the Company) of such Property (or improvement thereon) at the time of such acquisition or construction, and (iii) any such Lien shall be created contemporaneously with the acquisition or construction of such Property; and (g) in addition to the Liens permitted by the preceding clauses (a) through (f), inclusive, of this Section 4.4, Liens on Property (other than accounts receivable or inventory of any Company) securing Priority Debt of the Company or any Restricted Subsidiary, provided that such Priority Debt shall be permitted by the applicable limitations set forth in Section 4.2 and 4.3. Section 4.5. Merger, Consolidation, etc. The Company will not, and will not permit any of its Restricted Subsidiaries to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that a Restricted Subsidiary of the Company may (x) consolidate with or merge with, or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to, the Company or a Wholly-Owned Restricted Subsidiary of the Company and (y) convey, transfer or lease all of its assets in compliance with the provisions of Section 4.6), provided that the foregoing restriction does not apply to the consolidation or merger of the Company with, or the conveyance, transfer or lease of substantially all of the assets of the Company in a single transaction or series of transactions to, any Person so long as: (a) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety, as the case may be (the "Successor Corporation"), shall be a solvent corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (b) if the Company is not the Successor Corporation, such corporation shall have executed and delivered to each holder of Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Required Holders), and the Company shall have caused to be delivered to each holder of Notes an opinion of nationally recognized independent counsel, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (c) immediately after giving effect to such transaction: (i) no Default or Event of Default would exist, and (ii) the Successor Corporation would be permitted by the provisions of Section 4.2 hereof to incur at least $1.00 of additional Debt owing to a Person other than a Restricted Subsidiary of the Successor Corporation. No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any Successor Corporation from its liability under this Agreement or the Notes. Section 4.6. Sales of Assets. Except as permitted under Section 4.5, the Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless: (a) in the good faith opinion of the Company, the Asset Disposition is in exchange for consideration having a Fair Market Value at least equal to that of the Property exchanged and is in the best interest of the Company or such Restricted Subsidiary; and (b) immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and (c) immediately after giving effect to the Asset Disposition: (i) the Disposition Value of all Property that was the subject of any Asset Disposition occurring in any period of four consecutive fiscal quarters of the Company then next ending would not exceed 10% of Consolidated Total Assets as of the last day of the then most recently ended fiscal quarter of the Company, and (ii) the Disposition Value of all Property that was the subject of any Asset Disposition occurring on or after the date of the First Amendment would not exceed 25% of Consolidated Total Assets as of the last day of the then most recently ended fiscal quarter of the Company. If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application contemporaneously with such Transfer or a Property Reinvestment Application within one year of such Transfer, then such Transfer, only for the purpose of determining compliance with subsection (c) of this Section 4.6 as of any date on or after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition. Section 4.7. Long Term Lease Rentals. The Company will not, at any time, permit Long Term Lease Rentals for any current or future period of 12 consecutive calendar months to exceed 10% of Total Capitalization as of the last day of the then most recently ended fiscal quarter of the Company. Section 4.8. Nature of Business. Neither the Company nor any Restricted Subsidiary will engage in any business if, as a result, the general nature of the business, taken on a consolidated basis, which would then be engaged in by the Company and its Restricted Subsidiaries would be substantially changed from the general nature of the business engaged in by the Company and its Restricted Subsidiaries on the date of this Agreement. Section 4.9. Transactions with Affiliates. The Company will not, and will not permit any Restricted Subsidiary to, enter into, directly or indirectly, any transaction or group of related transactions with any Affiliate which, individually or in the aggregate, are Material (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service), except in the ordinary course and pursuant to the reasonable requirements of the Company's or such Restricted Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. Section 4.10. Compliance with Law. The Company will and will cause each of its Restricted Subsidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 4.11. Insurance. The Company will and will cause each of its Restricted Subsidiaries to maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated. Section 4.12. Maintenance of Properties. The Company will and will cause each of its Restricted Subsidiaries to maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Restricted Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 4.13. Payment of Taxes and Claims. The Company will and will cause each of its Subsidiaries to file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the Company nor any Subsidiary need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect. Section 4.14. Corporate Existence, etc. Subject to Sections 4.5 and 4.6, the Company will at all times preserve and keep in full force and effect its corporate existence and will at all times preserve and keep in full force and effect the corporate existence of each of its Restricted Subsidiaries and all rights and franchises of the Company and its Restricted Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect. Section 4.15. Designation of Unrestricted Subsidiaries. The Company may from time to time cause any Subsidiary to be designated as an Unrestricted Subsidiary or any Unrestricted Subsidiary to be designated a Restricted Subsidiary, provided, however, that immediately following such action and after giving effect thereto, (a) no Default or Event of Default would exist under the terms of this Agreement, and (b) the Company and its Restricted Subsidiaries would be in compliance with all of the covenants set forth in this Section 4 if tested on the date of such action and provided, further, that once a Restricted Subsidiary has been designated an Unrestricted Subsidiary, it shall not thereafter be redesignated as a Restricted Subsidiary. Within ten (10) days following any designation described above, the Company will deliver to you a notice of such designation accompanied by a certificate signed by a Senior Financial Officer of the Company certifying compliance with all requirements of this Section 4.15 and setting forth all information required in order to establish such compliance. Section 4.16. Financial Records. The Company will, and will cause its Subsidiaries to, keep true and correct books of records and accounts in which full and correct entries will be made of all of its business transactions, and will reflect in its financial statements adequate accruals and appropriations to reserves, all in accordance with GAAP. Section 4.17. Additional Guaranties. If any Restricted Subsidiary becomes a party to any Guaranty of, or is otherwise liable for, any Debt of the Company or any Restricted Subsidiary, the Company will cause such Restricted Subsidiary to execute and deliver to all holders of Notes a written Guaranty, satisfactory in scope and form to the Required Holders, to which such Restricted Subsidiary shall unconditionally guaranty the payment of all amounts payable hereunder by the Company and the performance by the Company of all obligations hereunder. Section 1.6. Amendment to Section 5 of Note Agreement. Section 5 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: Section 5.1 Nature of Default. An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Company defaults in the payment of any principal or premium, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) the Company defaults in the payment of any interest on any Note for more than five business days after the same becomes due and payable; or (c) the Company defaults in the performance of or compliance with any term contained in Sections 4.1 through 4.7, inclusive; or (d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 5.1) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (d) of Section 5.1); or (e) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or (f) (i) the Company or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is outstanding in an aggregate principal amount of at least $5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding principal amount of at least $5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), the Company or Restricted any Subsidiary has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $5,000,000; or (g) the Company or any Material Restricted Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or (h) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Restricted Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Material Restricted Subsidiaries, or any such petition shall be filed against the Company or any of its Material Restricted Subsidiaries and such petition shall not be dismissed within 60 days; or (i) a final judgment or judgments for the payment of money aggregating in excess of $5,000,000 are rendered against one or more of the Company and its Restricted Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal (or such lesser period of time as applicable law or rules of court allow a judgment creditor to levy on such judgments), or are not discharged within 60 days after the expiration of such stay (or such lesser period of time as applicable law or rules of court allow a judgment creditor to levy on such judgments); or (j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed $7,500,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in Section 5.1(j), the terms "employee benefit plan" and "employee welfare benefit plan" shall have the respective meanings ssigned to such terms in Section 3 of ERISA. Section 5.2. Notice to Holders. When any Event of Default described in the foregoing Section 5.1 has occurred, or if the holder of any Note or of any other evidence of Debt of the Company gives any notice or takes any other action with respect to a claimed default, the Company agrees to give notice within three business days of such event to all holders of the Notes then outstanding. Section 5.3. Default Remedies. (a) Acceleration If an Event of Default described in paragraph (a) or (b) of Section 5.1 exists, any holder of Notes may, at its option, exercise any right, power or remedy permitted by law, including the right, by notice to the Company, to declare the Notes held by such holder to be immediately due and payable. If any Event of Default described in paragraphs (c) through (f), inclusive, or paragraphs (i) or (j) of Section 5.1 exists, the holder or holders of at least 51% in outstanding principal amount of the Notes (exclusive of Notes owned by the Company, Restricted Subsidiaries and Affiliates) may, at its or their option, exercise any right, power or remedy permitted by law, including the right, by notice to the Company, to declare all the outstanding Notes to be immediately due and payable. When any Event of Default described in paragraph (g) or (h) of Section 5.1 has occurred, then all outstanding Notes shall immediately become due and payable without presentment, demand or notice of any kind. Upon the Notes becoming due and payable as a result of any Event of Default as aforesaid, the Company will forthwith pay to the holders of the Notes the entire principal and interest accrued on the Notes, determined as of the date on which the Notes shall so become due and payable. No course of dealing or delay or failure to exercise any right on the part of any holder of the Notes shall operate as a waiver of such right or otherwise prejudice such holder's rights, powers or remedies. The Company will pay or reimburse the holders of the Notes for all costs and expenses (including reasonable attorneys' fees) incurred by them in collecting any sums due on the Notes or in otherwise enforcing any of their rights. (b) Annulment of Acceleration In the event of any declaration pursuant to Section 5.3(a) by reason of any Event of Default described in paragraphs (a) through (f), inclusive, or paragraphs (i) or (j) of Section 5.1, the holder or holders of at least 75% of the outstanding principal amount of the Notes (exclusive of Notes owned by the Company and Affiliates) may annul such declaration and its consequences if (i) no judgment or decree has been entered for the payment of any amount due pursuant to such declaration, (ii) all sums payable under the Notes and under this Agreement (except any principal or interest on the Notes which has become payable solely by reason of such declaration) shall have been duly paid and (iii) each and every other Default and Event of Default shall have been made good, cured or waived pursuant to Section 8.5. Section 1.7. Amendment to Section 6.1 of Note Agreement. Section 6.1 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: "Acceptable Bank" means any bank or trust company (i) which is organized under the laws of the United States of America or any State thereof or a jurisdiction of any nation whose government is an Acceptable Foreign Government (or any jurisdiction therein), (ii) which has capital, surplus and undivided profits aggregating at least $250,000,000, and (iii) whose long-term unsecured debt obligations (or the long-term unsecured debt obligations of the bank holding company owning all of the capital stock of such bank or trust company) shall have been given a rating of "A-" or better by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or "A3" or better by Moody's Investors Service, Inc. "Acceptable Broker-Dealer" means any Person other than a natural person (i) which is registered as a broker or dealer pursuant to the Exchange Act, and (ii) whose long-term unsecured debt obligations shall have been given a rating of "A" or better by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., "A2" or better by Moody's Investors Service, Inc. "Acceptable Foreign Government" means the government of any foreign nation whose debt obligations are rated at least "A-" by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors Service, Inc. "Acquired Business Entity" means for any period of determination hereunder (i) any business entity the assets and related liabilities of which have been acquired substantially as an entirety by the Company or any Restricted Subsidiary by purchase, merger or consolidation, and (ii) any other assets which were operated as an identifiable business unit, i.e. a branch or division of a business entity and which have been acquired substantially as an entirety by the Company or any Restricted Subsidiary. "Affiliate" means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Company. "Agreement" shall mean this Note Agreement dated as of June 12, 1986 between the Company and the original holder of Notes (including Attachments), as amended or modified from time to time. "Asset Disposition" means any Transfer except: (a) any (i) Transfer from a Restricted Subsidiary to the Company or a Wholly-Owned Restricted Subsidiary; (ii) Transfer from the Company to a Wholly-Owned Restricted Subsidiary; and (iii) Transfer from the Company to a Restricted Subsidiary (other than a Wholly-Owned Restricted Subsidiary) or from a Restricted Subsidiary to another Restricted Subsidiary (other than a Wholly-Owned Restricted Subsidiary), which in either case is for Fair Market Value, so long as immediately before and immediately after the consummation of any such Transfer and after giving effect thereto, no Default or Event of Default exists; and (b) any Transfer made in the ordinary course of business and involving only Property that is either (i) inventory held for sale or (ii) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Company or any of its Restricted Subsidiaries or that is obsolete. "Capitalized Lease" shall mean any lease the obligation for Rentals with respect to which is required to be capitalized on a consolidated balance sheet of the lessee and its subsidiaries in accordance with GAAP. "Closing Date" is defined in Section 1.2. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "Consolidated Debt" means the total amount of all Debt of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" means for any period the net income of the Company and its Restricted Subsidiaries, determined in accordance with GAAP on a consolidated basis. "Consolidated Net Worth" means, as of the date of any determination thereof, (a) the total amount of Shareholders' Equity, minus (b) the book value of all Restricted Investments. "Consolidated Total Assets" means, as of the date of any determination thereof, the total amount of assets of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Debt" means, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of Property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such Property); (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capitalized Leases; (d) all liabilities for borrowed money secured by any Lien with respect to any Property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all of its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (d) hereof. Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "Debt Prepayment Application" means, with respect to any Transfer of Property, the application by the Company or its Restricted Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect to such Transfer to pay Senior Debt of the Company (other than Senior Debt owing to the Company, any of its Restricted Subsidiaries or any Affiliate and Senior Debt in respect of any revolving credit or similar credit facility providing the Company or any of its Restricted Subsidiaries with the right to obtain loans or other extensions of credit from time to time, except to the extent that in connection with such payment of Senior Debt the availability of credit under such credit facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Debt), provided that in the course of making such application the Company shall offer to prepay each outstanding Note in accordance with Section 2.2(b) in a principal amount which equals the Ratable Portion for such Note. If any holder of a Note fails to accept such offer of prepayment, then, for purposes of the preceding sentence only, the Company nevertheless will be deemed to have paid Senior Debt in an amount equal to the Ratable Portion for such Note. "Ratable Portion" for any Note means an amount equal to the product of (x) the Net Proceeds Amount being so applied to the payment of Senior Debt multiplied by (y) a fraction the numerator of which is the outstanding principal amount of such Note and the denominator of which is the aggregate principal amount of all Senior Debt of the Company. "Default" shall mean any event or condition the occurrence of which would, with the lapse of time or the giving of notice, or both, constitute an Event of Default. "Disposition Value" means, at any time, with respect to any Property (a) in the case of Property that does not constitute Subsidiary Stock, the book value thereof, valued at the time of such disposition in good faith by the Company, and (b) in the case of Property that constitutes Subsidiary Stock, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such stock as is equal to the percentage that the book value of such Subsidiary Stock represents of the book value of all of the outstanding capital stock of such Subsidiary (assuming, in making such calculations, that all Securities convertible into such capital stock are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by the Company. "Divested Business Entity" means for any period of determination hereunder (i) any business entity the assets and related liabilities of which have been sold, disposed of or otherwise divested substantially as an entirety by the Company or any Restricted Subsidiary, and (ii) any other assets which were operated as an identifiable business unit, i.e. a branch or division of a business entity and which have been sold, disposed of or otherwise divested substantially as an entirety by the Company or any Restricted Subsidiary. "EBITDA" means for any period the difference between (a) sum of (i) Consolidated Net Income during such period plus (to the extent deducted in determining Consolidated Net Income), (ii) all provisions for any Federal, state or other income taxes made by the Company and its Restricted Subsidiaries during such period, (iii) all Interest Charges on Consolidated Debt (including the interest component on Rentals on Capitalized Leases), and (iv) all depreciation and amortization expense and all other non-cash charges or expenses of the Company and its Restricted Subsidiaries during such period, and (b) the sum of (to the extent included in determining Consolidated Net Income) (i) all interest income on any particular Investment for which calculations are being made, and (ii) all non-cash credits or income of the Company and its Restricted Subsidiaries during such period. For purposes of determining EBITDA in connection with the incurrence of any Debt in which the proceeds shall be used to fund the acquisition of any Acquired Business Entity, EBITDA shall be computed on a pro forma basis for such Acquired Business Entity during such period. EBITDA shall exclude all amounts attributable to any Divested Business Entity which has been divested by the Company or any Restricted Subsidiary during such period. "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed to also refer to any successor sections. "ERISA Affiliate" shall mean any corporation, trade or business that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Sections 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA. "Event of Default" is defined in Section 5.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Market Value" means, at any time and with respect to any Property, the sale value of such Property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell). "First Amendment" means the Amendment to Note Agreement dated as of May 30, 1997, pursuant to which certain provisions of the Agreement were amended. "GAAP" shall mean generally accepted accounting principles at the time. "Governmental Authority" means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Restricted Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Restricted Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "Governmental Security" means any direct obligations of, or obligation guaranteed by, the United States of America or any Acceptable Foreign Government or any agency or instrumentality thereof, so long as such obligation or guarantee shall have the benefit of the full faith and credit of the United States of America or such Acceptable Foreign Government, as the case may be. "Guaranty" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such indebtedness or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof. In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. "Interest Charges" for any period means all interest and all amortization of debt discount and expense on any particular Debt for which such calculations are being made, including, without limitation, all commissions, fees and other charges owed with respect to letters of credit and bankers' acceptances. "Investment" means any investment, made in cash or by delivery of property, by the Company or any of its Subsidiaries (i) in any Person, whether by acquisition of stock, indebtedness or other obligation or Security, or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any property. "Lien" means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether the interest is based on common law, statute or contract (including the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes). The term "Lien" shall not include minor reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions and other minor title exceptions affecting Property, provided that they do not constitute security for a monetary obligation. For the purposes of this Agreement, the Company or a Restricted Subsidiary shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention or vesting shall be deemed to be a Lien. "Long Term Lease Rentals" means, with respect to any period, the sum of the rental and other obligations required to be paid during such period by the Company or any Restricted Subsidiary as lessee under all leases of real or personal Property (other than Capitalized Leases) having a term (including terms of renewal or extension at the option of the lessor or the lessee, whether or not such option has been exercised) expiring more than one year after the commencement of the initial term, excluding any amount required to be paid by the lessee (whether or not therein designated as rental or additional rental) on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges, provided that, if at the date of determination, any such rental or other obligations are contingent or not otherwise definitely determinable by the terms of the related lease, the amount of such obligations (i) shall be assumed to be equal to the amount of such obligations for the period of 12 consecutive calendar months immediately preceding the date of determination or (ii) if the related lease was not in effect during such preceding 12-month period, shall be the amount estimated by a Senior Financial Officer of the Company on a reasonable basis and in good faith. "Material" means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Restricted Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes. "Material Restricted Subsidiary" means any Restricted Subsidiary which, either individually or together with one or more Restricted Subsidiaries, (i) accounts for 5% or more of Consolidated Total Assets, determined as of the end of either of the two most recently ended fiscal years, or (ii) accounts for 5% or more of Consolidated Net Income during one of the two immediately preceding fiscal years. "Minority Interests" means any shares of stock of any class of a Restricted Subsidiary (other than directors' qualifying shares as required by law) that are not owned by the Company and/or one or more of its Restricted Subsidiaries. Minority Interests shall be valued by valuing Minority Interests constituting preferred stock at the voluntary or involuntary liquidating value of such preferred stock, whichever is greater, and by valuing Minority Interests constituting common stock at the book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any changes from the book value of such common stock required by the foregoing method of valuing Minority Interests in preferred stock. "Multiemployer Plan" shall have the same meaning as in ERISA. "Net Proceeds Amount" means, with respect to any Transfer of any Property by any Person, an amount equal to the difference of (a) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer. "Notes" is defined in Section 1.1. "PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "Plan" shall mean a "pension plan," as such term is defined in ERISA, established or maintained by the Company or any ERISA Affiliate or as to which the Company or any ERISA Affiliate contributed or is a member or otherwise may have any liability. "Priority Debt" means the sum of (a) all Debt of the Company secured by Liens permitted by Section 4.4(g), and (b) all Consolidated Debt of Restricted Subsidiaries. "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Property Reinvestment Application" means, with respect to any Transfer of Property, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the acquisition by the Company of Property of a similar nature and having a value at least equal to the value of such Property subject to such Transfer. "Registered Notes" is defined in Section 1.1. "Rentals" shall mean and include as of the date of any determination thereof all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Restricted Subsidiary, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company or a Restricted Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. "Reportable Event" shall have the same meaning as in ERISA. "Repurchase Agreement" means any written agreement (a) that provides for (i) the transfer of one or more Governmental Securities in an aggregate principal amount at least equal to the amount of the Transfer Price (defined below) to the Company or any of its Restricted Subsidiaries from an Acceptable Bank or an Acceptable Broker-Dealer against a transfer of funds (the "Transfer Price") by the Company or such Restricted Subsidiary to such Acceptable Bank or Acceptable Broker-Dealer, and (ii) a simultaneous agreement by the Company or such Restricted Subsidiary, in connection with such transfer of funds, to transfer to such Acceptable Bank or Acceptable Broker-Dealer the same or substantially similar Governmental Securities for a price not less than the Transfer Price plus a reasonable return thereon at a date certain not later than 365 days after such transfer of funds, (b) in respect of which the Company or such Restricted Subsidiary shall have the right, whether by contract or pursuant to applicable law, to liquidate such agreement upon the occurrence of any default thereunder, and (c) in connection with which the Company or such Restricted Subsidiary, or an agent thereof, shall have taken all action required by applicable law or regulations to perfect a Lien in such Governmental Securities. "Required Holders" means, at any time, the holders of at least 51% in aggregate principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates). "Responsible Officer" means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this agreement. "Restricted Investments" means all Investments except the following: (a) Property to be used in the ordinary course of business of the Company and its Restricted Subsidiaries; (b) Investments in one or more Restricted Subsidiaries or any Person that concurrently with such Investment becomes a Restricted Subsidiary; (c) Investments existing as of the date of the First Amendment and disclosed in Exhibit C to such First Amendment; (d) Investments in direct obligations of the United States of America or any Acceptable Foreign Government or any agency or instrumentality thereof, the payment or guarantee of which constitutes a full faith and credit obligation of the United States of America or such Acceptable Foreign Government, in either case, maturing within three years for the date of acquisition thereof; (e) Investments in certificates of deposit or time deposits issued by an Acceptable Bank, provided that such obligations mature within 365 days from the date of acquisition thereof; (f) Investments in commercial paper maturing in 270 days or less from the date of issuance which, at the time of acquisition by the Company or any Restricted Subsidiary, are rated at least "A-1" by Standard & Poor's Rating Group, a division of McGraw-Hill, Inc., or at least "P-2" by Moody's Investors Service, Inc. (g) Investments in Repurchase Agreements; and (h) Investments other than described in the foregoing clauses (a) through (g), above, provided that such Investments do not exceed 5% of Consolidated Net Worth. For purposes of this Agreement, any Investment which involves an Acceptable Bank which is organized under the laws of a jurisdiction of a nation whose government is an Acceptable Foreign Government, shall become a Restricted Investment at such time as the debt obligations of such government are not rated at least "A-" by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors Service, Inc. As of any date of determination, each Restricted Investment shall be valued at the greater of: (x) the amount at which such Restricted Investment is shown on the books of the Company or any of its Restricted Subsidiaries (or zero if such Restricted Investment is not shown on any such books); and (y) either (i) in the case of any Guaranty of the obligation of any Person, the amount which the Company or any of its Restricted Subsidiaries has paid on account of such obligation less any recoupment by the Company or such Subsidiary of any such payments, or (ii) in the case of any other Restricted Investment, the excess of (x) the greater of (A) the amount originally entered on the books of the Company or any of its Restricted Subsidiaries with respect thereto and (B) the cost thereof to the Company or its Restricted Subsidiary over (y) any return of capital (after income taxes applicable thereto) upon such Restricted Investment through the sale or other liquidation thereof or part thereof or otherwise. "Restricted Subsidiary" shall mean any Subsidiary listed as a Restricted Subsidiary on Attachment G hereto and any other subsidiary, (1) organized under the laws of the United States or a jurisdiction of any nation whose government is an Acceptable Foreign Government (or any jurisdiction thereof); (2) which conducts substantially all of its business and has substantially all of its Property within the United States or the jurisdiction of any national whose government is an Acceptable Foreign Government; (3) a majority of each class of common stock of which is legally and beneficially owned by the Company and its Restricted Subsidiaries; and (4) which is not an Unrestricted Subsidiary. For purposes of this Agreement, any Restricted Subsidiary which is organized under, and conducts substantially all of its business and has substantially all of its Property within, the jurisdiction of any nation whose government is an Acceptable Foreign Government, shall be designated as an Unrestricted Subsidiary at such time as the debt obligations of such government are not rated at least "A-" by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors Service, Inc. "Security" shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended. "Senior Debt" means all Consolidated Debt of the Company other than Subordinated Debt. "Senior Financial Officer" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. "Shareholders' Equity" means the total amount of shareholders' equity of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Swaps" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. "Subordinated Debt" means all unsecured Debt of the Company which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Debt of the Company (including, without limitation, the Notes). "Subsidiary" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the Company. "Subsidiary Stock" means, with respect to any Person, the stock (or any options or warrants to purchase stock or other Securities exchangeable for or convertible into stock) of any Subsidiary of such Person. "Total Capitalization" means, as of the date of any determination thereof, the sum of Consolidated Net Worth and Consolidated Debt. "Transfer" means, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its Property, including, without limitation, Subsidiary Stock. For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Company may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any Property subject to each such separate Transfer and (b) the amount of Consolidated Total Assets attributable to any Property subject to each such separate Transfer shall be determined by ratably allocating the aggregate Disposition Value of, and the aggregate Consolidated Total Assets attributable to, all Property subject to all such separate Transfers to each such separate Transfer on a proportionate basis. "Unrestricted Subsidiary" shall mean any Subsidiary of the Company which has been so designated by the Company, in accordance with Section 4.15 hereof. "Voting Stock" shall mean Securities, the holders of which are ordinarily, in the absence of contingencies, entitled to elect the corporate directors (or Persons performing similar functions). "Weighted Average Life to Maturity" is defined in Section 2.2(d). "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Restricted Subsidiaries at such time. Section 1.8. Amendment to Section 6.2 of the Note Agreement. Section 6.2 of the Note Agreement shall be amended by changing the reference to "generally accepted accounting principles" to "GAAP." Section 2. Miscellaneous. Section 2.1. Representation and Warranty. The Company represents and warrants that it does not own any Subsidiary which is organized under the laws of the United States or any jurisdiction therein. Section 2.2. Requisite Approval. If the foregoing is acceptable to you, please note your acceptance in the space provided below. Upon the execution by the Company and the holders of 100% in aggregate principal amount of the outstanding Notes, the Note Agreement shall be deemed to be amended as set forth above. Except as amended herein, the terms and provisions of the Note Agreement are hereby ratified, confirmed and approved in all respects. Section 2.3. Successors and Assigns. This Amendment to Note Agreement shall be binding upon the Company and its successors and assigns and shall inure to your benefit and to the benefit of your successors and assigns, including each successive holder or holders of any Notes. Section 2.4. Counterparts. This Amendment to Note Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together one and the same instrument. Section 2.5. Fees and Expenses. The Company agrees to pay all reasonable fees and expenses of you and your special counsel in connection with the preparation of this Amendment to Note Agreement. Section 2.6. No Legend Required. Any and all notices, requests, certificates and other instruments including, without limitation, the Notes, may refer to the Note Agreement dated as of June 12, 1986 without making specific reference to this Amendment to Note Agreement, but nevertheless all such references shall be deemed to include this Amendment to Note Agreement unless the context shall otherwise require. IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Note Agreement as of the day and year first above written. Simpson Industries, Inc. By Its Accepted and agreed to as of the first date written above. THE TRAVELERS INSURANCE COMPANY By Its PAGE CONSOLIDATED DEBT as of May 30, 1997 Lender Annual Interest Rate Principal Balance Comerica Bank 6.75% 20,000,000 Comerica Bank 8.445% 20,000,000 Comerica Bank 8.82% 3,230,463 Massachusetts Mutual Life Insurance Co. 9.98% 15,000,000 Travelers Insurance Co. 8.80% 3,750,000 61,980,463 EXISTING LIENS as of May 30, 1997 NONE PAGE EXISTING INVESTMENTS as of May 30, 1997 COMERICA INSTITUTIONAL CASH INVESTMENT TRUST #74094 = $11,929,886.51 (U.S. Dollars) COMERICA INSTITUTIONAL CASH INVESTMENT TRUST #78791 = $1,786,629.50 (U.S. Dollars) EX-10.11 4 AMENDMENT TO NOTE AGREEMENT WITH MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, DATED AS OF MAY 30, 1997 SIMPSON INDUSTRIES, INC. AMENDMENT TO NOTE AGREEMENT Dated as of May 30, 1997 Re: Note Agreement Dated as of August 15, 1991 and $15,000,000 9.98% Senior Notes Due August 15, 2006 of Simpson Industries, Inc. PAGE SIMPSON INDUSTRIES, INC. AMENDMENT TO NOTE AGREEMENT Re: Note Agreement Dated as of August 15, 1991 and $15,000,000 9.98% Senior Notes Due August 15, 2006 of Simpson Industries, Inc. Dated as of May 30, l997 Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, Massachusetts 01111 Ladies and Gentlemen: Reference is made to the Note Agreement dated as of August 15, l991, (the "Note Agreement"), between Simpson Industries, Inc., a Michigan corporation (the "Company"), and you, pursuant to which $15,000,000 aggregate principal amount of 9.98% Senior Notes due August 15, 2006 (the "Notes") of the Company were originally issued. The Company desires to amend certain covenants contained in the Note Agreement and hereby requests that you accept the amendments as set forth below in the manner herein provided. Section 1. Amendments to Note Agreement. Section 1.1. Amendment to Section 2.1 of Note Agreement. Section 2.1 of the Note Agreement shall be amended by the addition thereto of a new paragraph which shall read as follows: In the event of any prepayment made pursuant to Section 2.3 in which less than all of the Notes shall have been prepaid by the Company, the amount of each payment required to be made pursuant to this Section 2.1 shall be reduced by a percentage equal to the aggregate principal amount of the Notes so prepaid pursuant to Section 2.3 divided by the aggregate principal amount of the Notes outstanding immediately prior to such prepayment. Section 1.2. Amendment to Section 2.3 of Note Agreement. Section 2.3 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: Section 2.3. Prepayment upon Change in Control. (a) Notice of Change in Control or Control Event. The Company will, within two business days after any Responsible Officer has knowledge of the occurrence of any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes unless notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this Section 2.3. If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay the Notes as described in subparagraph (c) of this Section 2.3 and shall be accompanied by the certificate described in subparagraph (g) of this Section 2.3. (b) Condition to Company Action. The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 15 days prior to such action the Company shall have given to each holder of Notes written notice containing and constituting an offer to prepay the Notes as described in subparagraph (c) of this Section 2.3, accompanied by the certificate described in subparagraph (g) of this Section 2.3, and (ii) contemporaneously with such action, the Company prepays all Notes required to be prepaid in accordance with this Section 2.3. (c) Offer to Prepay Notes. The offer to prepay the Notes contemplated by subparagraphs (a) and (b) of this Section 2.3 shall be an offer to prepay, in accordance with and subject to this Section 2.3, all, but not less than all, of the Notes held by each holder on a date specified in such offer (the "Proposed Prepayment Date"). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this Section 2.3, such date shall be not less than 20 days and not more than 30 days after the date of such offer. (d) Acceptance; Rejection. A holder of Notes may accept or reject the offer to prepay made pursuant to this Section 2.3 by causing a notice of such acceptance or rejection to be delivered to the Company at least five days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 2.3 shall be deemed to constitute acceptance of such offer by such holder. (e) Prepayment. Prepayment of the Notes pursuant to this Section 2.3 shall be at 100% of the principal amount of all Notes held by the holder or holders accepting the Company' offer to prepay such Notes, plus the Make-Whole Amount determined for such prepayment date with respect to such principal amount, together with interest on such Notes accrued to the date of prepayment. Two business days prior to such date of prepayment, the Company shall deliver to each holder of Notes being prepaid a statement showing the Make-Whole Amount due in connection with such prepayment and setting forth the details of the computation of such amount. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this Section 2.3. (f) Deferral Pending Change in Control. The obligation of the Company to prepay the Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with subparagraph (d) of this Section 2.3 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 2.3 in respect of such Change in Control shall be deemed rescinded). (g) Officer's Certificate. Each offer to prepay the Notes pursuant to this Section 2.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this Section 2.3; (iii) the principal amount of each Note offered to be prepaid; (iv) the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation; (v) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of this Section 2.3 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. (h) Effect on Required Payments. The amount of each payment of the principal of the Notes made pursuant to this Section 2.3 shall be applied against and reduce each of the then remaining principal payments due pursuant to Section 2.1 by a percentage equal to the aggregate principal amount of the Notes so paid divided by the aggregate principal amount of the Notes outstanding immediately prior to such payment. (i) Terms Defined. The terms set forth below shall have the respective meanings assigned thereto: The term "Change in Control" means each and every issue, sale or other disposition of shares of stock of the Company which results in any Person or group of Persons acting in concert, other than any Designated Shareholders, beneficially owning or controlling, directly or indirectly, more than 50% (by number of votes) of the Voting Stock of the Company. The term "control" means the possession of power to direct or cause the direction of management and policies of such entity, whether through the ownership of an equity interest, by contract or otherwise. The term "Control Event" means: (i) the execution by the Company or any of its Restricted Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control, (ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or (iii) the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act, or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act) to the holders of the Voting Stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control. The term "Current Management Team" shall mean Roy E. Parrott, Kathryn L. Williams, James A. Hug, James B. Painter and James E. Garpow. The term "Designated Shareholders" shall mean (i) the members of the Current Management Team; (ii) the Principal Shareholders; (iii) the spouses, lineal descendants and spouses of the lineal descendants of the Persons named in clause (i); (iv) the estates or legal representatives of the Persons named in clause (i); and (v) any trust, custodianship or other fiduciary arrangement in respect of which one or more of the Persons described in clauses (i) and (iii) are the principal beneficiaries and such Person or Persons shall have control of such trust, custodianship or other fiduciary arrangement. The term "Principal Shareholders" shall mean Pioneering Management Group, J.P. Morgan & Co., Incorporated and Farmers Group Inc. Section 1.3. Amendment to Section 2 of Note Agreement. Section 2 of the Note Agreement shall be amended by the addition thereto of a new Section 2.4 which shall read as follows: Section 2.4. Partial Payment Pro Rata. If there is more than one Note outstanding, the principal amount of each required or optional partial payment of the Notes, other than an offer to prepay the Notes pursuant to Section 2.3 which has been declined by one or more holders of Notes, will be allocated among the Notes at the time outstanding in proportion, as nearly as practicable, to the respective outstanding principal amount of the Notes. Section 1.4. Amendment to Section 3 of Note Agreement. Section 3 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: Section 3.1. Financial and Business Information. The Company shall deliver to each holder of Notes: (a) Quarterly Statements within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of: (i) a consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Restricted Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from normal, recurring year-end adjustments; (b) Annual Statements within 90 days after the end of each fiscal year of the Company, duplicate copies of, (i) a consolidated balance sheet of the Company and its Restricted Subsidiaries, as at the end of such year, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Restricted Subsidiaries, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied (A) by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and (B) a certificate of such accountants stating that they have reviewed this Agreement and stating further whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit); (c) SEC and Other Reports promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to public securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the Securities and Exchange Commission and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material; (d) Notice of Default or Event of Default promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 5.1(f), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (e) ERISA Matters promptly, and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Plan, any Reportable Event for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; (f) Notices from Governmental Authority promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; (g) Unrestricted Subsidiaries within the respective periods provided in Section 3.1(a) and (b) above, financial statements of the character and for the dates and periods as provided in said Section 3.1(a) and (b) covering each Unrestricted Subsidiary (or group of Unrestricted Subsidiaries on a consolidated basis); (h) Material Information with reasonable promptness, the Company will use its best efforts to provide written notice of any Material change to the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries; and (i) Requested Information with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes. Section 3.2. Officer's Certificate. Each set of financial statements delivered to a holder of Notes pursuant to Section 3.1(a) or Section 3.1(b) hereof shall be accompanied by a certificate of a Senior Financial Officer setting forth: (a) Covenant Compliance the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Section 4.1 through Section 4.7 hereof, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and (b) Event of Default a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Restricted Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. Section 3.3. Inspection. The Company shall permit the representatives of each holder of Notes: (a) No Default if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and (b) Default if a Default or Event of Default then exists, at the expense of the Company to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested. Section 1.5. Amendment to Section 4 of Note Agreement. Section 4 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: The Company covenants that so long as any of the Notes are outstanding: Section 4.1. Consolidated Net Worth. The Company will not, at any time, permit Consolidated Net Worth to be less than the sum of (a) $95,000,000, plus (b) 25% of its aggregate Consolidated Net Income (but only if a positive number) for the period beginning on July 1, 1997 and ending at the end of the then most recently completed fiscal year of the Company (or if such date of determination is the last day of any fiscal year, then ending on such date), computed on a cumulative basis for such entire period. Section 4.2. Limitations on Debt. The Company will not, and will not permit any Restricted Subsidiary to, create, assume or incur or in any manner be or become liable in respect of any Consolidated Debt, except: (a) Debt evidenced by the Notes; (b) Consolidated Debt of the Company and its Restricted Subsidiaries outstanding as of the date of the First Amendment and reflected on Exhibit A to the First Amendment; and (c) additional Consolidated Debt of the Company and its Restricted Subsidiaries, provided that at the time of issuance thereof and after giving effect thereto and to the application of the proceeds thereof: (i) no Default or Event of Default exists; (ii) Consolidated Debt does not exceed 3.5 times EBITDA for the then most recently ended period of four consecutive fiscal quarters of the Company; and (iii) in the case any such Debt is Priority Debt, such Debt is permitted by Section 4.3. Any corporation which becomes a Restricted Subsidiary after the date of this Agreement shall, for all purposes of this Section 4.2, be deemed to have created, assumed or incurred, at the time it becomes a Restricted Subsidiary, all Debt of such corporation existing immediately after it becomes a Restricted Subsidiary. Section 4.3. Limitations on Priority Debt. The Company will not at any time permit Priority Debt to exceed 15% of Total Capitalization as of the last day of the then most recently ended fiscal quarter of the Company. Section 4.4. Limitation on Liens. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any Property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Restricted Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits, except: (a) Liens for taxes, assessments or other governmental charges which are not yet due and payable or the payment of which is not at the time required by Section 4.13; (b) any attachment or judgment Lien, unless the judgment it secures shall not, within 30 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 30 days after the expiration of any such stay (or such lesser period of time as applicable law allows a judgment creditor to levy on such judgment); (c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the payment of which is not at the time required by Section 4.13; (d) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capitalized Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property; (e) Liens existing on the date of the First Amendment and securing the Debt of the Company and its Restricted Subsidiaries referred to in Exhibit B to the First Amendment; (f) any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of Property (other than accounts receivable or inventory), or any improvement thereon, acquired or constructed by the Company or a Restricted Subsidiary after the date of the First Amendment, provided that (i) any such Lien shall extend solely to the item or items of such Property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other Property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed Property (or improvement thereon) or which is real Property being improved by such acquired or constructed Property (or improvement thereon), (ii) the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (A) the cost to the Company or such Restricted Subsidiary of the Property (or improvement thereon) so acquired or constructed and (B) the fair market value (as determined in good faith by the board of directors of the Company) of such Property (or improvement thereon) at the time of such acquisition or construction, and (iii) any such Lien shall be created contemporaneously with the acquisition or construction of such Property; and (g) in addition to the Liens permitted by the preceding clauses (a) through (f), inclusive, of this Section 4.4, Liens on Property (other than accounts receivable or inventory of any Company) securing Priority Debt of the Company or any Restricted Subsidiary, provided that such Priority Debt shall be permitted by the applicable limitations set forth in Section 4.2 and 4.3. Section 4.5. Merger, Consolidation, etc. The Company will not, and will not permit any of its Restricted Subsidiaries to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that a Restricted Subsidiary of the Company may (x) consolidate with or merge with, or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to, the Company or a Wholly-Owned Restricted Subsidiary of the Company and (y) convey, transfer or lease all of its assets in compliance with the provisions of Section 4.6), provided that the foregoing restriction does not apply to the consolidation or merger of the Company with, or the conveyance, transfer or lease of substantially all of the assets of the Company in a single transaction or series of transactions to, any Person so long as: (a) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety, as the case may be (the "Successor Corporation"), shall be a solvent corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (b) if the Company is not the Successor Corporation, such corporation shall have executed and delivered to each holder of Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Required Holders), and the Company shall have caused to be delivered to each holder of Notes an opinion of nationally recognized independent counsel, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and (c) immediately after giving effect to such transaction: (i) no Default or Event of Default would exist, and (ii) the Successor Corporation would be permitted by the provisions of Section 4.2 hereof to incur at least $1.00 of additional Debt owing to a Person other than a Restricted Subsidiary of the Successor Corporation. No such conveyance, transfer or lease of substantially all of the assets of the Company shall have the effect of releasing the Company or any Successor Corporation from its liability under this Agreement or the Notes. Section 4.6. Sales of Assets. Except as permitted under Section 4.5, the Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless: (a) in the good faith opinion of the Company, the Asset Disposition is in exchange for consideration having a Fair Market Value at least equal to that of the Property exchanged and is in the best interest of the Company or such Restricted Subsidiary; and (b) immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and (c) immediately after giving effect to the Asset Disposition: (i) the Disposition Value of all Property that was the subject of any Asset Disposition occurring in any period of four consecutive fiscal quarters of the Company then next ending would not exceed 10% of Consolidated Total Assets as of the last day of the then most recently ended fiscal quarter of the Company, and (ii) the Disposition Value of all Property that was the subject of any Asset Disposition occurring on or after the date of the First Amendment would not exceed 25% of Consolidated Total Assets as of the last day of the then most recently ended fiscal quarter of the Company. If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application contemporaneously with such Transfer or a Property Reinvestment Application within one year of such Transfer, then such Transfer, only for the purpose of determining compliance with subsection (c) of this Section 4.6 as of any date on or after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition. Section 4.7. Long Term Lease Rentals. The Company will not, at any time, permit Long Term Lease Rentals for any current or future period of 12 consecutive calendar months to exceed 10% of Total Capitalization as of the last day of the then most recently ended fiscal quarter of the Company. Section 4.8. Nature of Business. Neither the Company nor any Restricted Subsidiary will engage in any business if, as a result, the general nature of the business, taken on a consolidated basis, which would then be engaged in by the Company and its Restricted Subsidiaries would be substantially changed from the general nature of the business engaged in by the Company and its Restricted Subsidiaries on the date of this Agreement. Section 4.9. Transactions with Affiliates. The Company will not, and will not permit any Restricted Subsidiary to, enter into, directly or indirectly, any transaction or group of related transactions with any Affiliate which, individually or in the aggregate, are Material (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service), except in the ordinary course and pursuant to the reasonable requirements of the Company's or such Restricted Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. Section 4.10. Compliance with Law. The Company will and will cause each of its Restricted Subsidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 4.11. Insurance. The Company will and will cause each of its Restricted Subsidiaries to maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated. Section 4.12. Maintenance of Properties. The Company will and will cause each of its Restricted Subsidiaries to maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Restricted Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 4.13. Payment of Taxes and Claims. The Company will and will cause each of its Subsidiaries to file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the Company nor any Subsidiary need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect. Section 4.14. Corporate Existence, etc. Subject to Sections 4.5 and 4.6, the Company will at all times preserve and keep in full force and effect its corporate existence and will at all times preserve and keep in full force and effect the corporate existence of each of its Restricted Subsidiaries and all rights and franchises of the Company and its Restricted Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect. Section 4.15. Designation of Unrestricted Subsidiaries. The Company may from time to time cause any Subsidiary to be designated as an Unrestricted Subsidiary or any Unrestricted Subsidiary to be designated a Restricted Subsidiary, provided, however, that immediately following such action and after giving effect thereto, (a) no Default or Event of Default would exist under the terms of this Agreement, and (b) the Company and its Restricted Subsidiaries would be in compliance with all of the covenants set forth in this Section 4 if tested on the date of such action and provided, further, that once a Restricted Subsidiary has been designated an Unrestricted Subsidiary, it shall not thereafter be redesignated as a Restricted Subsidiary. Within ten (10) days following any designation described above, the Company will deliver to you a notice of such designation accompanied by a certificate signed by a Senior Financial Officer of the Company certifying compliance with all requirements of this Section 4.15 and setting forth all information required in order to establish such compliance. Section 4.16. Financial Records. The Company will, and will cause its Subsidiaries to, keep true and correct books of records and accounts in which full and correct entries will be made of all of its business transactions, and will reflect in its financial statements adequate accruals and appropriations to reserves, all in accordance with GAAP. Section 4.17. Additional Guaranties. If any Restricted Subsidiary becomes a party to any Guaranty of, or is otherwise liable for, any Debt of the Company or any Restricted Subsidiary, the Company will cause such Restricted Subsidiary to execute and deliver to all holders of Notes a written Guaranty, satisfactory in scope and form to the Required Holders, to which such Restricted Subsidiary shall unconditionally guaranty the payment of all amounts payable hereunder by the Company and the performance by the Company of all obligations hereunder. Section 1.6. Amendment to Section 5 of Note Agreement. Section 5 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: Section 5.1. Nature of Default. An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) the Company defaults in the payment of any interest on any Note for more than five business days after the same becomes due and payable; or (c) the Company defaults in the performance of or compliance with any term contained in Sections 4.1 through 4.7, inclusive;or (d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 5.1) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a "notice of default" and to refer specifically to this paragraph (d) of Section 5.1); or (e) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or (f) (i) the Company or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is outstanding in an aggregate principal amount of at least $5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding principal amount of at least $5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), the Company or Restricted any Subsidiary has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $5,000,000; or (g) the Company or any Material Restricted Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or (h) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Restricted Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Material Restricted Subsidiaries, or any such petition shall be filed against the Company or any of its Material Restricted Subsidiaries and such petition shall not be dismissed within 60 days; or (i) a final judgment or judgments for the payment of money aggregating in excess of $5,000,000 are rendered against one or more of the Company and its Restricted Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal (or such lesser period of time as applicable law or rules of court allow a judgment creditor to levy on such judgments), or are not discharged within 60 days after the expiration of such stay (or such lesser period of time as applicable law or rules of court allow a judgment creditor to levy on such judgments); or (j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed $7,500,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect. As used in Section 5.1(j), the terms "employee benefit plan" and "employee welfare benefit plan" shall have the respective meanings assigned to such terms in Section 3 of ERISA. Section 5.2. Notice to Holders. When any Event of Default described in the foregoing Section 5.1 has occurred, or if the holder of any Note or of any other evidence of Debt of the Company gives any notice or takes any other action with respect to a claimed default, the Company agrees to give notice within three business days of such event to all holders of the Notes then outstanding. Section 5.3. Default Remedies. (a) Acceleration If an Event of Default described in paragraph (a) or (b) of Section 5.1 exists, any holder of Notes may, at its option, exercise any right, power or remedy permitted by law, including the right, by notice to the Company, to declare the Notes held by such holder to be immediately due and payable. If any Event of Default described in paragraphs (c) through (f), inclusive, or paragraphs (i) or (j) of Section 5.1 exists, the holder or holders of at least 51% in outstanding principal amount of the Notes (exclusive of Notes owned by the Company, Restricted Subsidiaries and Affiliates) may, at its or their option, exercise any right, power or remedy permitted by law, including the right, by notice to the Company, to declare all the outstanding Notes to be immediately due and payable. When any Event of Default described in paragraph (g) or (h) of Section 5.1 has occurred, then all outstanding Notes shall immediately become due and payable without presentment, demand or notice of any kind. Upon the Notes becoming due and payable as a result of any Event of Default as aforesaid, the Company will forthwith pay to the holders of the Notes the entire principal and interest accrued on the Notes and, to the extent not prohibited by applicable law, an amount as liquidated damages for the loss of the bargain evidenced hereby (and not as a penalty) equal to the Make-Whole Amount, determined as of the date on which the Notes shall so become due and payable. No course of dealing or delay or failure to exercise any right on the part of any holder of the Notes shall operate as a waiver of such right or otherwise prejudice such holder's rights, powers or remedies. The Company will pay or reimburse the holders of the Notes for all costs and expenses (including reasonable attorneys' fees) incurred by them in collecting any sums due on the Notes or in otherwise enforcing any of their rights. (b) Annulment of Acceleration In the event of any declaration pursuant to Section 5.3(a) by reason of any Event of Default described in paragraphs (a) through (f), inclusive, or paragraphs (i) or (j) of Section 5.1, the holder or holders of at least 51% of the outstanding principal amount of the Notes (exclusive of Notes owned by the Company and Affiliates) may annul such declaration and its consequences if (i) no judgment or decree has been entered for the payment of any amount due pursuant to such declaration, (ii) all sums payable under the Notes and under this Agreement (except any principal or interest on the Notes which has become payable solely by reason of such declaration) shall have been duly paid and (iii) each and every other Default and Event of Default shall have been made good, cured or waived pursuant to Section 8.5. Section 1.7. Amendment to Section 6.1 of Note Agreement. Section 6.1 of the Note Agreement shall be amended in its entirety so that the same shall read as follows: "Acceptable Bank" means any bank or trust company (i) which is organized under the laws of the United States of America or any State thereof or a jurisdiction of any nation whose government is an Acceptable Foreign Government (or any jurisdiction therein), (ii) which has capital, surplus and undivided profits aggregating at least $250,000,000, and (iii) whose long-term unsecured debt obligations (or the long-term unsecured debt obligations of the bank holding company owning all of the capital stock of such bank or trust company) shall have been given a rating of "A-" or better by Standard & Poor's Rating Group, a division of The McGraw-Hill Company, Inc., or "A3" or better by Moody's Investors Service, Inc. "Acceptable Broker-Dealer" means any Person other than a natural person (i) which is registered as a broker or dealer pursuant to the Exchange Act and (ii) whose long-term unsecured debt obligations shall have been given a rating of "A" or better by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., "A2" or better by Moody's Investors Service, Inc. "Acceptable Foreign Government" means the government of any foreign nation whose debt obligations are rated at least "A-" by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors Service, Inc. "Acquired Business Entity" means for any period of determination hereunder (i) any business entity the assets and related liabilities of which have been acquired substantially as an entirety by the Company or any Restricted Subsidiary by purchase, merger or consolidation, and (ii) any other assets which were operated as an identifiable business unit, i.e. a branch or division of a business entity and which have been acquired substantially as an entirety by the Company or any Restricted Subsidiary. "Affiliate" means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in this definition, "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Company. "Agreement" shall mean this Note Agreement dated as of August 15, 1991 between the Company and you (including Attachments), as amended or modified from time to time. "Asset Disposition" means any Transfer except: (a) any (i) Transfer from a Restricted Subsidiary to the Company or a Wholly-Owned Restricted Subsidiary; (ii) Transfer from the Company to a Wholly-Owned Restricted Subsidiary; and (iii) Transfer from the Company to a Restricted Subsidiary (other than a Wholly-Owned Restricted Subsidiary) or from a Restricted Subsidiary to another Restricted Subsidiary (other than a Wholly-Owned Restricted Subsidiary), which in either case is for Fair Market Value, so long as immediately before and immediately after the consummation of any such Transfer and after giving effect thereto, no Default or Event of Default exists; and (b) any Transfer made in the ordinary course of business and involving only Property that is either (i) inventory held for sale or (ii) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Company or any of its Restricted Subsidiaries or that is obsolete. "Capitalized Lease" shall mean any lease the obligation for Rentals with respect to which is required to be capitalized on a consolidated balance sheet of the lessee and its subsidiaries in accordance with GAAP. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "Closing Date" is defined in Section 1.2. "Consolidated Debt" means the total amount of all Debt of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" means for any period the net income of the Company and its Restricted Subsidiaries, determined in accordance with GAAP on a consolidated basis. "Consolidated Net Worth" means, as of the date of any determination thereof, (a) the total amount of Shareholders' Equity, minus (b) the book value of all Restricted Investments. "Consolidated Total Assets" means, as of the date of any determination thereof, the total amount of assets of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Debt" means, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of Property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such Property); (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capitalized Leases; (d) all liabilities for borrowed money secured by any Lien with respect to any Property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all of its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money); (f) Swaps of such Person; and (g) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (d) hereof. Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "Debt Prepayment Application" means, with respect to any Transfer of Property, the application by the Company or its Restricted Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect to such Transfer to pay Senior Debt of the Company (other than Senior Debt owing to the Company, any of its Restricted Subsidiaries or any Affiliate and Senior Debt in respect of any revolving credit or similar credit facility providing the Company or any of its Restricted Subsidiaries with the right to obtain loans or other extensions of credit from time to time, except to the extent that in connection with such payment of Senior Debt the availability of credit under such credit facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Debt), provided that in the course of making such application the Company shall offer to prepay each outstanding Note in accordance with Section 2.2(b) in a principal amount which equals the Ratable Portion for such Note. If any holder of a Note fails to accept such offer of prepayment, then, for purposes of the preceding sentence only, the Company nevertheless will be deemed to have paid Senior Debt in an amount equal to the Ratable Portion for such Note. "Ratable Portion" for any Note means an amount equal to the product of (x) the Net Proceeds Amount being so applied to the payment of Senior Debt multiplied by (y) a fraction the numerator of which is the outstanding principal amount of such Note and the denominator of which is the aggregate principal amount of all Senior Debt of the Company. "Default" shall mean any event or condition the occurrence of which would, with the lapse of time or the giving of notice, or both, constitute an Event of Default. "Disposition Value" means, at any time, with respect to any Property (a) in the case of Property that does not constitute Subsidiary Stock, the book value thereof, valued at the time of such disposition in good faith by the Company, and (b) in the case of Property that constitutes Subsidiary Stock, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such stock as is equal to the percentage that the book value of such Subsidiary Stock represents of the book value of all of the outstanding capital stock of such Subsidiary (assuming, in making such calculations, that all Securities convertible into such capital stock are so converted and giving full effect to all transactions that would occur or be required in connection with such conversion) determined at the time of the disposition thereof, in good faith by the Company. "Divested Business Entity" means for any period of determination hereunder (i) any business entity the assets and related liabilities of which have been sold, disposed of or otherwise divested substantially as an entirety by the Company or any Restricted Subsidiary, and (ii) any other assets which were operated as an identifiable business unit, i.e. a branch or division of a business entity and which have been sold, disposed of or otherwise divested substantially as an entirety by the Company or any Restricted Subsidiary. "EBITDA" means for any period the difference between (a) sum of (i) Consolidated Net Income during such period plus (to the extent deducted in determining Consolidated Net Income), (ii) all provisions for any Federal, state or other income taxes made by the Company and its Restricted Subsidiaries during such period, (iii) all Interest Charges on Consolidated Debt (including the interest component on Rentals on Capitalized Leases), and (iv) all depreciation and amortization expense and all other non-cash charges or expenses of the Company and its Restricted Subsidiaries during such period, and (b) the sum of (to the extent included in determining Consolidated Net Income) (i) all interest income on any particular Investment for which calculations are being made, and (ii) all non-cash credits or income of the Company and its Restricted Subsidiaries during such period. For purposes of determining EBITDA in connection with the incurrence of any Debt in which the proceeds shall be used to fund the acquisition of any Acquired Business Entity, EBITDA shall be computed on a pro forma basis for such Acquired Business Entity during such period. EBITDA shall exclude all amounts attributable to any Divested Business Entity which has been divested by the Company or any Restricted Subsidiary during such period. "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed to also refer to any successor sections. "ERISA Affiliate" shall mean any corporation, trade or business that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Sections 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA. "Event of Default" is defined in Section 5.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Market Value" means, at any time and with respect to any Property, the sale value of such Property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell). "First Amendment" means the Amendment to Note Agreement dated as of May 30, 1997, pursuant to which certain provisions of the Agreement were amended. "GAAP" shall mean generally accepted accounting principles at the time. "Governmental Authority" means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Restricted Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Restricted Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "Governmental Security" means any direct obligations of, or obligation guaranteed by, the United States of America or any Acceptable Foreign Government or any agency or instrumentality thereof, so long as such obligation or guarantee shall have the benefit of the full faith and credit of the United States of America or such Acceptable Foreign Government, as the case may be. "Guaranty" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such indebtedness or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof. In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. "Interest Charges" for any period means all interest and all amortization of debt discount and expense on any particular Debt for which such calculations are being made, including, without limitation, all commissions, fees and other charges owed with respect to letters of credit and bankers' acceptances. "Investment" means any investment, made in cash or by delivery of property, by the Company or any of its Subsidiaries (i) in any Person, whether by acquisition of stock, indebtedness or other obligation or Security, or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any property. "Lien" means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether the interest is based on common law, statute or contract (including the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes). The term "Lien" shall not include minor reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions and other minor title exceptions affecting Property, provided that they do not constitute security for a monetary obligation. For the purposes of this Agreement, the Company or a Restricted Subsidiary shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention or vesting shall be deemed to be a Lien. "Long Term Lease Rentals" means, with respect to any period, the sum of the rental and other obligations required to be paid during such period by the Company or any Restricted Subsidiary as lessee under all leases of real or personal Property (other than Capitalized Leases) having a term (including terms of renewal or extension at the option of the lessor or the lessee, whether or not such option has been exercised) expiring more than one year after the commencement of the initial term, excluding any amount required to be paid by the lessee (whether or not therein designated as rental or additional rental) on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges, provided that, if at the date of determination, any such rental or other obligations are contingent or not otherwise definitely determinable by the terms of the related lease, the amount of such obligations (i) shall be assumed to be equal to the amount of such obligations for the period of 12 consecutive calendar months immediately preceding the date of determination or (ii) if the related lease was not in effect during such preceding 12-month period, shall be the amount estimated by a Senior Financial Officer of the Company on a reasonable basis and in good faith. "Make-Whole Amount" shall have the meaning assigned thereto in Section 2.2(c). "Material" means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Restricted Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes. "Material Restricted Subsidiary" means any Restricted Subsidiary which, either individually or together with one or more Restricted Subsidiaries, (i) accounts for 5% or more of Consolidated Total Assets, determined as of the end of either of the two most recently ended fiscal years, or (ii) accounts for 5% or more of Consolidated Net Income during one of the two immediately preceding fiscal years. "Minority Interests" means any shares of stock of any class of a Restricted Subsidiary (other than directors' qualifying shares as required by law) that are not owned by the Company and/or one or more of its Restricted Subsidiaries. Minority Interests shall be valued by valuing Minority Interests constituting preferred stock at the voluntary or involuntary liquidating value of such preferred stock, whichever is greater, and by valuing Minority Interests constituting common stock at the book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any changes from the book value of such common stock required by the foregoing method of valuing Minority Interests in preferred stock. "Multiemployer Plan" shall have the same meaning as in ERISA. "Net Proceeds Amount" means, with respect to any Transfer of any Property by any Person, an amount equal to the difference of (a) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer. "Notes" is defined in Section 1.1. "PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "Plan" shall mean a "pension plan," as such term is defined in ERISA, established or maintained by the Company or any ERISA Affiliate or as to which the Company or any ERISA Affiliate contributed or is a member or otherwise may have any liability. "Priority Debt" means the sum of (a) all Debt of the Company secured by Liens permitted by Section 4.4(g), and (b) all Consolidated Debt of Restricted Subsidiaries. "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Property Reinvestment Application" means, with respect to any Transfer of Property, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to the acquisition by the Company of Property of a similar nature and having a value at least equal to the value of such Property subject to such Transfer. "Registered Notes" is defined in Section 1.1. "Rentals" shall mean and include as of the date of any determination thereof all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Restricted Subsidiary, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company or a Restricted Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. "Reportable Event" shall have the same meaning as in ERISA. "Repurchase Agreement" means any written agreement (a) that provides for (i) the transfer of one or more Governmental Securities in an aggregate principal amount at least equal to the amount of the Transfer Price (defined below) to the Company or any of its Restricted Subsidiaries from an Acceptable Bank or an Acceptable Broker-Dealer against a transfer of funds (the "Transfer Price") by the Company or such Restricted Subsidiary to such Acceptable Bank or Acceptable Broker-Dealer, and (ii) a simultaneous agreement by the Company or such Restricted Subsidiary, in connection with such transfer of funds, to transfer to such Acceptable Bank or Acceptable Broker-Dealer the same or substantially similar Governmental Securities for a price not less than the Transfer Price plus a reasonable return thereon at a date certain not later than 365 days after such transfer of funds, (b) in respect of which the Company or such Restricted Subsidiary shall have the right, whether by contract or pursuant to applicable law, to liquidate such agreement upon the occurrence of any default thereunder, and (c) in connection with which the Company or such Restricted Subsidiary, or an agent thereof, shall have taken all action required by applicable law or regulations to perfect a Lien in such Governmental Securities. "Required Holders" means, at any time, the holders of at least 51% in aggregate principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates). "Responsible Officer" means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this agreement. "Restricted Investments" means all Investments except the following: (a) Property to be used in the ordinary course of business of the Company and its Restricted Subsidiaries; (b) Investments in one or more Restricted Subsidiaries or any Person that concurrently with such Investment becomes a Restricted Subsidiary; (c) Investments existing as of the date of the First Amendment and disclosed in Exhibit C to such First Amendment; (d) Investments in direct obligations of the United States of America or any Acceptable Foreign Government or any agency or instrumentality thereof, the payment or guarantee of which constitutes a full faith and credit obligation of the United States of America or such Acceptable Foreign Government, in either case, maturing within three years for the date of acquisition thereof; (e) Investments in certificates of deposit or time deposits issued by an Acceptable Bank, provided that such obligations mature within 365 days from the date of acquisition thereof; (f) Investments in commercial paper maturing in 270 days or less from the date of issuance which, at the time of acquisition by the Company or any Restricted Subsidiary, are rated at least "A-1" by Standard & Poor's Rating Group, a division of McGraw-Hill, Inc., or at least "P-2" by Moody's Investors Service, Inc. (g) Investments in Repurchase Agreements; and (h) Investments other than described in the foregoing clauses (a) through (g), above, provided that such Investments do not exceed 5% of Consolidated Net Worth. For purposes of this Agreement, any Investment which involves an Acceptable Bank which is organized under the laws of a jurisdiction of a nation whose government is an Acceptable Foreign Government, shall become a Restricted Investment at such time as the debt obligations of such government are not rated at least "A-" by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors Service, Inc. As of any date of determination, each Restricted Investment shall be valued at the greater of: (x) the amount at which such Restricted Investment is shown on the books of the Company or any of its Restricted Subsidiaries (or zero if such Restricted Investment is not shown on any such books); and (y) either (i) in the case of any Guaranty of the obligation of any Person, the amount which the Company or any of its Restricted Subsidiaries has paid on account of such obligation less any recoupment by the Company or such Subsidiary of any such payments, or (ii) in the case of any other Restricted Investment, the excess of (x) the greater of (A) the amount originally entered on the books of the Company or any of its Restricted Subsidiaries with respect thereto and (B) the cost thereof to the Company or its Restricted Subsidiary over (y) any return of capital (after income taxes applicable thereto) upon such Restricted Investment through the sale or other liquidation thereof or part thereof or otherwise. "Restricted Subsidiary" shall mean any Subsidiary listed as a Restricted Subsidiary on Attachment G hereto and any other subsidiary, (1) organized under the laws of the United States or a jurisdiction of any nation whose government is an Acceptable Foreign Government (or any jurisdiction thereof); (2) which conducts substantially all of its business and has substantially all of its Property within the United States or the jurisdiction of any nation whose government is an Acceptable Foreign Government; (3) a majority of each class of common stock of which is legally and beneficially owned by the Company and its Restricted Subsidiaries; and (4) which is not an Unrestricted Subsidiary. For purposes of this Agreement, any Restricted Subsidiary which is organized under, and conducts substantially all of its business and has substantially all of its Property within, the jurisdiction of any nation whose government is an Acceptable Foreign Government, shall be designated as an Unrestricted Subsidiary at such time as the debt obligations of such government are not rated at least "A-" by Standard & Poor's Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors Service, Inc. "Security" shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended. "Senior Debt" means all Consolidated Debt of the Company other than Subordinated Debt. "Senior Financial Officer" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. "Shareholders' Equity" means the total amount of shareholders' equity of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Swaps" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. "Subordinated Debt" means all unsecured Debt of the Company which shall contain or have applicable thereto subordination provisions providing for the subordination thereof to other Debt of the Company (including, without limitation, the Notes). "Subsidiary" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the Company. "Subsidiary Stock" means, with respect to any Person, the stock (or any options or warrants to purchase stock or other Securities exchangable for or convertible into stock) of any Subsidiary of such Person. "Total Capitalization" means, as of the date of any determination thereof, the sum of Consolidated Net Worth and Consolidated Debt. "Transfer" means, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its Property, including, without limitation, Subsidiary Stock. For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Company may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any Property subject to each such separate Transfer and (b) the amount of Consolidated Total Assets attributable to any Property subject to each such separate Transfer shall be determined by ratably allocating the aggregate Disposition Value of, and the aggregate Consolidated Total Assets attributable to, all Property subject to all such separate Transfers to each such separate Transfer on a proportionate basis. "Unrestricted Subsidiary" shall mean any Subsidiary of the Company which has been so designated by the Company, in accordance with Section 4.15 hereof. "Voting Stock" shall mean Securities, the holders of which are ordinarily, in the absence of contingencies, entitled to elect the corporate directors (or Persons performing similar functions). "Weighted Average Life to Maturity" is defined in Section 2.2(c). "Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Restricted Subsidiaries at such time. Section 2. Miscellaneous. Section 2.1. Representation and Warranty. The Company represents and warrants that it does not own any Subsidiary which is organized under the laws of the United States or any jurisdiction therein. Section 2.2. Requisite Approval. If the foregoing is acceptable to you, please note your acceptance in the space provided below. Upon the execution by the Company and the holders of 100% in aggregate principal amount of the outstanding Notes, the Note Agreement shall be deemed to be amended as set forth above. Except as amended herein, the terms and provisions of the Note Agreement are hereby ratified, confirmed and approved in all respects. Section 2.3. Successors and Assigns. This Amendment to Note Agreement shall be binding upon the Company and its successors and assigns and shall inure to your benefit and to the benefit of your successors and assigns, including each successive holder or holders of any Notes. Section 2.4. Counterparts. This Amendment to Note Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together one and the same instrument. Section 2.5. Fees and Expenses. The Company agrees to pay all reasonable fees and expenses of you and your special counsel in connection with the preparation of this Amendment to Note Agreement. Section 2.6. No Legend Required. Any and all notices, requests, certificates and other instruments including, without limitation, the Notes, may refer to the Note Agreement dated as of August 15, l991 without making specific reference to this Amendment to Note Agreement, but nevertheless all such references shall be deemed to include this Amendment to Note Agreement unless the context shall otherwise require. IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Note Agreement as of the day and year first above written. SIMPSON INDUSTRIES, INC. By Its Accepted and agreed to as of the first date written above. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By Its PAGE CONSOLIDATED DEBT as of May 30, 1997 Lender Annual Interest Rate Principal Balance Comerica Bank 6.75% 20,000,000 Comerica Bank 8.445% 20,000,000 Comerica Bank 8.82% 3,230,463 Massachusetts Mutual Life Insurance Co. 9.98% 15,000,000 Travelers Insurance Co. 8.80% 3,750,000 61,980,463 EXISTING LIENS as of May 30, 1997 NONE PAGE EXISTING INVESTMENTS as of May 30, 1997 COMERICA INSTITUTIONAL CASH INVESTMENT TRUST #74094 = $11,929,886.51 (U.S. Dollars) COMERICA INSTITUTIONAL CASH INVESTMENT TRUST #78791 = $1,786,629.50 (U.S. Dollars) EX-10.15 5 $20,000,000 RENEWAL NOTE DUE 12/31/08 $20,000,000 Detroit, Michigan June 17, 1997 RENEWAL TERM NOTE On December 31, 2008 (the "Maturity Date"), for value received, the undersigned promises to pay to the order of Comerica Bank ("Bank") at any office of the Bank in the State of Michigan, Twenty Million Dollars ($20,000,000) (U.S.) with interest from the date of this Note at the rate of six and seventy-five hundredths percent (6.75%) per annum until maturity, whether by acceleration or otherwise, or until Default, as later defined, and after that at a default rate equal to the rate of interest otherwise prevailing under this Note, plus three percent (3%) per annum (but in no event in excess of the maximum rate permitted by law). Interest shall be calculated for the actual number of days the principal is outstanding on the basis of a 360-day year. Principal and interest under this Note shall be due and payable as follows: (i) commencing on September 1, 1997 and on the first day of each calendar quarter thereafter through January 1, 1999, payments of interest only shall be due and payable; (ii) commencing on January 1, 2000 and on January 1 of each year thereafter until the Maturity Date, when all amounts outstanding under this Note shall be due and payable in full, payments of principal shall be due and payable each in the amount of Two Million Dollars ($2,000,000), plus accrued interest. If any payment of principal or interest under this Note shall be payable on a day other than a day on which the Bank is open for business, this payment shall be extended to the next succeeding business day and interest shall be payable at the rate specified in this Note during this extension. A late payment charge equal to five percent (5%) of each late payment may be charged on any payment not received by the Bank within ten (10) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default under this Note. The Bank does not have to accept any prepayment of principal under this Note except as described below or as required under applicable law. The undersigned may prepay principal of this Note in increments of $500,000 at any time as long as the Bank is provided written notice of the prepayment at least five business days prior to the date of prepayment. The notice of prepayment shall contain the following information: (a) the date of prepayment (the "Prepayment Date") and (b) the amount of principal to be prepaid. On the Prepayment Date, the undersigned will pay to the Bank, in addition to the other amounts then due on this Note, the Prepayment Amount described below. The Bank, in its sole discretion, may accept any prepayment of principal even if not required to do so under this Note and may deduct from the amount to be applied against principal the other amounts required as part of the Prepayment Amount. The Prepaid Principal Amount (as defined below) will be applied to this Note in the reverse order of which the principal payments would have been due under this Note's principal amortization schedule. If the Bank exercises its right to accelerate the payment of this Note prior to its stated maturity, the undersigned will pay to the Bank, in addition to the other amounts then due on this Note, on the date specified by the Bank as the Prepayment Date, the Prepayment Amount. The Bank's determination of the Prepayment Amount will be conclusive in the absence of obvious error or fraud. If requested in writing by the undersigned, the Bank will provide the undersigned a written statement specifying the Prepayment Amount. For purposes of this Note, the Prepayment Amount shall be equal to the sum of: (i) the amount of principal which the undersigned has elected to prepay or the amount of principal which the Bank has required the undersigned to prepay because of acceleration, as the case may be (the "Prepaid Principal Amount"), (ii) interest accruing on the Prepaid Principal Amount up to, but not including, the Prepayment Date, (iii) Five Hundred Dollars ($500) plus (iv) the present value, discounted at the Reinvestment Rates (as defined below), of the positive amount by which (A) the interest the Bank would have earned had the Prepaid Principal Amount been paid according to the Note's amortization schedule at the Note's interest rate exceeds (B) the interest the Bank would earn by reinvesting the Prepaid Principal Amount at the Reinvestment Rates (defined below). As used herein, "Reinvestment Rates" shall mean the per annum rates of interest equal to one half percent (1/2%) above the rates of interest reasonably determined by the Bank to be in effect not more than seven days prior to the Prepayment Date in the secondary market for United States Treasury Obligations in amount(s) and with maturity(ies) which correspond (as closely as possible) to the principal installment amount(s) and the payment date(s) against which the Prepaid Principal Amount will be applied. If the undersigned (a) fails to pay this Note or any of the Indebtedness when due, by maturity, acceleration or otherwise, or fails to pay any Indebtedness owing on a demand basis upon demand; or (b) fails to comply with any of the terms or provisions of any agreement between the undersigned and the Bank as in effect from time to time; or (c) becomes insolvent or the subject of a voluntary or involuntary proceeding in bankruptcy, or a reorganization, arrangement or creditor composition proceeding, ceases doing business as a going concern, is the subject of a dissolution, merger or consolidation (other than a merger or consolidation in which the undersigned is the survivor); or (d) if any warranty or representation made by the undersigned or any guarantor in connection with this Note or any of the Indebtedness shall be discovered to be untrue or incomplete; or (e) if there is any termination, notice of termination, or breach of any guaranty, pledge, collateral assignment or subordination agreement relating to all or any part of the Indebtedness; or (f) if there is any failure by the undersigned to pay when due, taking into account any applicable period of grace or cure, any of its indebtedness for borrowed money (other than to the Bank) or in the observance or performance of any term, covenant or condition in any document evidencing, securing or relating to such indebtedness; or (g) if there occurs an event of default under that certain $50,000,000 long term Credit Agreement dated as of June 17, 1997 among the undersigned and certain subsidiaries of the undersigned as borrowers, certain commercial lending institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as agent for such lenders and the Bank as documentation agent for such lenders, that certain $50,000,000 short term Credit Agreement dated as of June 17, 1997 among the undersigned and certain subsidiaries of the undersigned as borrowers, certain commercial lending institutions as lenders, ABN AMRO Bank N.V. as agent for such lenders and the Bank as documentation agent for such lenders, that certain $3,230,357.07 (8.82%) Renewal Term Note dated June 17, 1997 issued by the undersigned in favor of Bank or that certain $20,000,000 (8.445%) Renewal Term Note dated June 17, 1997 issued by the undersigned in favor of Bank, each such agreement in the form existing as of the date hereof, and notwithstanding (x) the repayment of any indebtedness covered thereby or (y) any amendment, supplement or termination of any such credit agreement after the date hereof; then the Bank, upon the occurrence of any of these events (each a "Default"), may at its option and without prior notice to the undersigned, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned, charge interest at the default rate hereunder or as provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any agreement with the undersigned or given to it under applicable law. All payments under this Note shall be in immediately available United States funds, without setoff or counterclaim. This Note shall bind the undersigned, and its successors and assigns. The undersigned waives presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agrees that no extension or indulgence to the undersigned or release, substitution or nonenforcement of any security, or release or substitution of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of the undersigned. The undersigned waives all defenses or right to discharge available under Section 3-606 of the Uniform Commercial Code and waives all other suretyship defenses or right to discharge. The undersigned agrees that the Bank has the right to sell, assign, or grant participations, or any interest, in any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness, other than any documents or information reasonably determined by the undersigned to be competitive or proprietary in nature and specifically identified as such, in writing, to Bank. All agreements between the undersigned and Bank pertaining to the indebtedness described herein are expressly limited so that in no event whatsoever shall the amount of interest paid or agreed to be paid to Bank exceed the highest rate of interest permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of any of the Agreements, this Note or any other instrument securing this Note or all or any part of the indebtedness secured thereby, at the time performance of such provision shall be due, shall involve exceeding the interest limitation validly prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, the obligation to be fulfilled shall be reduced to an amount computed at the highest rate of interest permissible under such applicable law, and if, for any reason whatsoever, Bank shall ever receive as interest an amount which would be deemed unlawful under such applicable law, such interest shall be automatically applied to the payment of the principal amount described herein or otherwise owed by the undersigned to Bank (in the inverse order of any applicable maturities and whether or not then due and payable) and not to the payment of interest. The undersigned acknowledges and agrees that there are no contrary agreements, oral or written, establishing the terms of this Note and agrees that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word "undersigned" means, individually and collectively, each maker, accommodation party, indorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN. THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS. This Renewal Term Note is given in replacement and renewal of that certain Advance/Term Note dated as of December 17, 1993 previously issued by the undersigned to Bank pursuant to that certain Term Loan Agreement dated as of December 17, 1993 (as amended through the date hereof, the "Term Loan Agreement"), which Term Loan Agreement shall be replaced by this Renewal Term Note. SIMPSON INDUSTRIES, INC. By: Its: EX-10.20 6 $3,230,357.07 RENEWAL NOTE DUE 1/25/03 $3,230,357.07 Detroit, Michigan June 17, 1997 RENEWAL TERM NOTE On January 25, 2003 (the "Maturity Date"), for value received, the undersigned promises to pay to the order of Comerica Bank ("Bank") at any office of the Bank in the State of Michigan, Three Million, Two Hundred Thirty Thousand, Three Hundred Fifty-Seven Dollars and Seven Cents ($3,230,357.07) (U.S.) with interest from the date of this Note at the rate of eight and eighty-two hundredths percent (8.82%) per annum until maturity, whether by acceleration or otherwise, or until Default, as later defined, and after that at a default rate equal to the rate of interest otherwise prevailing under this Note, plus three percent (3%) per annum (but in no event in excess of the maximum rate permitted by law). Interest shall be calculated for the actual number of days the principal is outstanding on the basis of a 360-day year. Principal and interest under this Note shall be due and payable as follows: commencing on July 1, 1997 and on the first day of each month thereafter until the Maturity Date, when all amounts outstanding under this Note shall be due and payable in full, payments of principal shall be due and payable each in the amount of Forty Eight Thousand Two Hundred Fourteen and 29/100 Dollars ($48,214.29), plus accrued interest. If any payment of principal or interest under this Note shall be payable on a day other than a day on which the Bank is open for business, this payment shall be extended to the next succeeding business day and interest shall be payable at the rate specified in this Note during this extension. A late payment charge equal to five percent (5%) of each late payment may be charged on any payment not received by the Bank within ten (10) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default under this Note. The Bank does not have to accept any prepayment of principal under this Note except as described below or as required under applicable law. The undersigned may prepay principal of this Note in increments of $500,000 at any time as long as the Bank is provided written notice of the prepayment at least five business days prior to the date of prepayment. The notice of prepayment shall contain the following information: (a) the date of prepayment (the "Prepayment Date") and (b) the amount of principal to be prepaid. On the Prepayment Date, the undersigned will pay to the Bank, in addition to the other amounts then due on this Note, the Prepayment Amount described below. The Bank, in its sole discretion, may accept any prepayment of principal even if not required to do so under this Note and may deduct from the amount to be applied against principal the other amounts required as part of the Prepayment Amount. The Prepaid Principal Amount (as defined below) will be applied to this Note in the reverse order of which the principal payments would have been due under this Note's principal amortization schedule. If the Bank exercises its right to accelerate the payment of this Note prior to its stated maturity, the undersigned will pay to the Bank, in addition to the other amounts then due on this Note, on the date specified by the Bank as the Prepayment Date, the Prepayment Amount. The Bank's determination of the Prepayment Amount will be conclusive in the absence of obvious error or fraud. If requested in writing by the undersigned, the Bank will provide the undersigned a written statement specifying the Prepayment Amount. For purposes of this Note, the Prepayment Amount shall be equal to the sum of: (i) the amount of principal which the undersigned has elected to prepay or the amount of principal which the Bank has required the undersigned to prepay because of acceleration, as the case may be (the "Prepaid Principal Amount"), (ii) interest accruing on the Prepaid Principal Amount up to, but not including, the Prepayment Date, (iii) Five Hundred Dollars ($500) plus (iv) the present value, discounted at the Reinvestment Rates (as defined below), of the positive amount by which (A) the interest the Bank would have earned had the Prepaid Principal Amount been paid according to the Note's amortization schedule at the Note's interest rate exceeds (B) the interest the Bank would earn by reinvesting the Prepaid Principal Amount at the Reinvestment Rates (defined below). As used herein, "Reinvestment Rates" shall mean the per annum rates of interest equal to one half percent (1/2%) above the rates of interest reasonably determined by the Bank to be in effect not more than seven days prior to the Prepayment Date in the secondary market for United States Treasury Obligations in amount(s) and with maturity(ies) which correspond (as closely as possible) to the principal installment amount(s) and the payment date(s) against which the Prepaid Principal Amount will be applied. If the undersigned (a) fails to pay this Note or any of the Indebtedness when due, by maturity, acceleration or otherwise, or fails to pay any Indebtedness owing on a demand basis upon demand; or (b) fails to comply with any of the terms or provisions of any agreement between the undersigned and the Bank as in effect from time to time; or (c) becomes insolvent or the subject of a voluntary or involuntary proceeding in bankruptcy, or a reorganization, arrangement or creditor composition proceeding, ceases doing business as a going concern, is the subject of a dissolution, merger or consolidation (other than a merger or consolidation in which the undersigned is the survivor); or (d) if any warranty or representation made by the undersigned or any guarantor in connection with this Note or any of the Indebtedness shall be discovered to be untrue or incomplete; or (e) if there is any termination, notice of termination, or breach of any guaranty, pledge, collateral assignment or subordination agreement relating to all or any part of the Indebtedness; or (f) if there is any failure by the undersigned to pay when due, taking into account any applicable period of grace or cure, any of its indebtedness for borrowed money (other than to the Bank) or in the observance or performance of any term, covenant or condition in any document evidencing, securing or relating to such indebtedness; or (g) if there occurs an event of default under that certain $50,000,000 long term Credit Agreement dated as of June 17, 1997 among the undersigned and certain subsidiaries of the undersigned as borrowers, certain commercial lending institutions as lenders, ABN AMRO Bank N.V. as agent for the lenders and the Bank as documentation agent for the lenders, that certain $50,000,000 short Term Credit Agreement dated as of June 17, 1997 among the undersigned and certain subsidiaries of the undersigned as borrowers, certain commercial lending institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as agent for the lenders and the Bank as documentation agent for the lenders, that certain $20,000,000 (8.445%) Renewal Term Note dated June 17, 1997 issued by the undersigned in favor of the Bank or that certain $20,000,000 (6.75%) Renewal Term Note dated June 17, 1997 issued by the undersigned in favor of the Bank, each such agreement in the form existing as of the date hereof, and notwithstanding (x) the repayment of any indebtedness covered thereby or (y) any amendment, supplement or termination of any such credit agreement after the date hereof; then the Bank, upon the occurrence of any of these events (each a "Default"), may at its option and without prior notice to the undersigned, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned, charge interest at the default rate hereunder or as provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any agreement with the undersigned or given to it under applicable law. All payments under this Note shall be in immediately available United States funds, without setoff or counterclaim. This Note shall bind the undersigned, and its successors and assigns. The undersigned waives presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agrees that no extension or indulgence to the undersigned or release, substitution or nonenforcement of any security, or release or substitution of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of the undersigned. The undersigned waives all defenses or right to discharge available under Section 3-606 of the Uniform Commercial Code and waives all other suretyship defenses or right to discharge. The undersigned agrees that the Bank has the right to sell, assign, or grant participations, or any interest, in any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness, other than any documents or information reasonably determined by the undersigned to be competitive or proprietary in nature and specifically identified as such, in writing, to Bank. All agreements between the undersigned and Bank pertaining to the indebtedness described herein are expressly limited so that in no event whatsoever shall the amount of interest paid or agreed to be paid to Bank exceed the highest rate of interest permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of any of the Agreements, this Note or any other instrument securing this Note or all or any part of the indebtedness secured thereby, at the time performance of such provision shall be due, shall involve exceeding the interest limitation validly prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, the obligation to be fulfilled shall be reduced to an amount computed at the highest rate of interest permissible under such applicable law, and if, for any reason whatsoever, Bank shall ever receive as interest an amount which would be deemed unlawful under such applicable law, such interest shall be automatically applied to the payment of the principal amount described herein or otherwise owed by the undersigned to Bank (in the inverse order of any applicable maturities and whether or not then due and payable) and not to the payment of interest. The undersigned acknowledges and agrees that there are no contrary agreements, oral or written, establishing the terms of this Note and agrees that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word "undersigned" means, individually and collectively, each maker, accommodation party, indorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN. THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS. This Renewal Term Note is given in replacement and renewal of that certain Renewal Term Note previously issued by the undersigned to Bank dated October 3, 1995. SIMPSON INDUSTRIES, INC. By: Its: EX-10.21 7 $20,000,000 RENEWAL TERM NOTE DUE 2/7/05 $20,000,000 Detroit, Michigan June 17, 1997 RENEWAL TERM NOTE On February 7, 2005 (the "Maturity Date"), for value received, the undersigned promises to pay to the order of Comerica Bank ("Bank") at any office of the Bank in the State of Michigan, Twenty Million Dollars ($20,000,000) (U.S.) with interest from the date of this Note at the rate of eight and four hundred forty-five thousandths percent (8.445%) per annum until maturity, whether by acceleration or otherwise, or until Default, as later defined, and after that at a default rate equal to the rate of interest otherwise prevailing under this Note, plus three percent (3%) per annum (but in no event in excess of the maximum rate permitted by law). Interest shall be calculated for the actual number of days the principal is outstanding on the basis of a 360-day year. Principal and interest under this Note shall be due and payable as follows: (i) commencing on September 1, 1997 and on the first day of each calendar quarter thereafter through April 1, 2000, payments of interest only shall be due and payable; (ii) thereafter, commencing on July 1, 2000 and on the first day of each calendar quarter thereafter until the Maturity Date, when all amounts outstanding under this Note shall be due and payable in full, payments of principal shall be due and payable each in the amount of One Million Dollars ($1,000,000), plus accrued interest. If any payment of principal or interest under this Note shall be payable on a day other than a day on which the Bank is open for business, this payment shall be extended to the next succeeding business day and interest shall be payable at the rate specified in this Note during this extension. A late payment charge equal to five percent (5%) of each late payment may be charged on any payment not received by the Bank within ten (10) calendar days after the payment due date, but acceptance of payment of this charge shall not waive any Default under this Note. The Bank does not have to accept any prepayment of principal under this Note except as described below or as required under applicable law. The undersigned may prepay principal of this Note in increments of $500,000 at any time as long as the Bank is provided written notice of the prepayment at least five business days prior to the date of prepayment. The notice of prepayment shall contain the following information: (a) the date of prepayment (the "Prepayment Date") and (b) the amount of principal to be prepaid. On the Prepayment Date, the undersigned will pay to the Bank, in addition to the other amounts then due on this Note, the Prepayment Amount described below. The Bank, in its sole discretion, may accept any prepayment of principal even if not required to do so under this Note and may deduct from the amount to be applied against principal the other amounts required as part of the Prepayment Amount. The Prepaid Principal Amount (as defined below) will be applied to this Note in the reverse order of which the principal payments would have been due under this Note's principal amortization schedule. If the Bank exercises its right to accelerate the payment of this Note prior to its stated maturity, the undersigned will pay to the Bank, in addition to the other amounts then due on this Note, on the date specified by the Bank as the Prepayment Date, the Prepayment Amount. The Bank's determination of the Prepayment Amount will be conclusive in the absence of obvious error or fraud. If requested in writing by the undersigned, the Bank will provide the undersigned a written statement specifying the Prepayment Amount. For purposes of this Note, the Prepayment Amount shall be equal to the sum of: (i) the amount of principal which the undersigned has elected to prepay or the amount of principal which the Bank has required the undersigned to prepay because of acceleration, as the case may be (the "Prepaid Principal Amount"), (ii) interest accruing on the Prepaid Principal Amount up to, but not including, the Prepayment Date, (iii) Five Hundred Dollars ($500) plus (iv) the present value, discounted at the Reinvestment Rates (as defined below), of the positive amount by which (A) the interest the Bank would have earned had the Prepaid Principal Amount been paid according to the Note's amortization schedule at the Note's interest rate exceeds (B) the interest the Bank would earn by reinvesting the Prepaid Principal Amount at the Reinvestment Rates (defined below). As used herein, "Reinvestment Rates" shall mean the per annum rates of interest equal to one half percent (1/2%) above the rates of interest reasonably determined by the Bank to be in effect not more than seven days prior to the Prepayment Date in the secondary market for United States Treasury Obligations in amount(s) and with maturity(ies) which correspond (as closely as possible) to the principal installment amount(s) and the payment date(s) against which the Prepaid Principal Amount will be applied. If the undersigned (a) fails to pay this Note or any of the Indebtedness when due, by maturity, acceleration or otherwise, or fails to pay any Indebtedness owing on a demand basis upon demand; or (b) fails to comply with any of the terms or provisions of any agreement between the undersigned and the Bank as in effect from time to time; or (c) becomes insolvent or the subject of a voluntary or involuntary proceeding in bankruptcy, or a reorganization, arrangement or creditor composition proceeding, ceases doing business as a going concern, is the subject of a dissolution, merger or consolidation (other than a merger or consolidation in which the undersigned is the survivor); or (d) if any warranty or representation made by the undersigned or any guarantor in connection with this Note or any of the Indebtedness shall be discovered to be untrue or incomplete; or (e) if there is any termination, notice of termination, or breach of any guaranty, pledge, collateral assignment or subordination agreement relating to all or any part of the Indebtedness; or (f) if there is any failure by the undersigned to pay when due, taking into account any applicable period of grace or cure, any of its indebtedness for borrowed money (other than to the Bank) or in the observance or performance of any term, covenant or condition in any document evidencing, securing or relating to such indebtedness; or (g) if there occurs an event of default under that certain $50,000,000 long term Credit Agreement dated as of June 17, 1997 among the undersigned and certain subsidiaries of the undersigned as borrowers, certain commercial lending institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as agent for such lenders and the Bank as documentation agent for such lenders, that certain $50,000,000 short term Credit Agreement dated as of June 17, 1997 among the undersigned and certain subsidiaries of the undersigned as borrowers, certain commercial lending institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as agent for the lenders and the Bank as documentation agent for such lenders, that certain $3,230,357.07(8.82%) Renewal Term Note dated as of June 17, 1997 issued by the undersigned in favor of the Bank or that certain $20,000,000 (6.75%) Renewal Term Note dated as of June 17, 1997 issued by the undersigned in favor of the Bank, each such agreement in the form existing as of the date hereof, and notwithstanding (x) the repayment of any indebtedness covered thereby or (y) any amendment, supplement or termination of any such credit agreement after the date hereof; then the Bank, upon the occurrence of any of these events (each a "Default"), may at its option and without prior notice to the undersigned, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned, charge interest at the default rate hereunder or as provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any agreement with the undersigned or given to it under applicable law. All payments under this Note shall be in immediately available United States funds, without setoff or counterclaim. This Note shall bind the undersigned, and its successors and assigns. The undersigned waives presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agrees that no extension or indulgence to the undersigned or release, substitution or nonenforcement of any security, or release or substitution of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of the undersigned. The undersigned waives all defenses or right to discharge available under Section 3-606 of the Uniform Commercial Code and waives all other suretyship defenses or right to discharge. The undersigned agrees that the Bank has the right to sell, assign, or grant participations, or any interest, in any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness, other than any documents or information reasonably determined by the undersigned to be competitive or proprietary in nature and specifically identified as such, in writing, to Bank. All agreements between the undersigned and Bank pertaining to the indebtedness described herein are expressly limited so that in no event whatsoever shall the amount of interest paid or agreed to be paid to Bank exceed the highest rate of interest permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of any of the Agreements, this Note or any other instrument securing this Note or all or any part of the indebtedness secured thereby, at the time performance of such provision shall be due, shall involve exceeding the interest limitation validly prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, the obligation to be fulfilled shall be reduced to an amount computed at the highest rate of interest permissible under such applicable law, and if, for any reason whatsoever, Bank shall ever receive as interest an amount which would be deemed unlawful under such applicable law, such interest shall be automatically applied to the payment of the principal amount described herein or otherwise owed by the undersigned to Bank (in the inverse order of any applicable maturities and whether or not then due and payable) and not to the payment of interest. The undersigned acknowledges and agrees that there are no contrary agreements, oral or written, establishing the terms of this Note and agrees that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word "undersigned" means, individually and collectively, each maker, accommodation party, indorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN. THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS. This Renewal Term Note is given in replacement and renewal of that certain Term Note previously issued by the undersigned to Bank dated February 7, 1995. SIMPSON INDUSTRIES, INC. By: Its: EX-10.22 8 LETTER AGREEMENT WITH COMERICA BANK DATED JUNE 17, 1997 June 17, 1997 Mr. James Garpow Simpson Industries, Inc. 47603 Halyard Drive Plymouth, Michigan 48170-2429 Dear Jim: Reference is made to (a) the Renewal Term Note dated June 17, 1997 and due January 25, 2003, issued by Simpson Industries, Inc. (the "Company") in favor of Comerica Bank ("Bank"), evidencing indebtedness in the principal amount of $3,230,357.07 and bearing interest at the fixed rate of 8.82% per annum (the "8.82% Term Note"); (b) the Renewal Term Note dated June 17, 1997 and due February 7, 2005, issued by the Company in favor of Bank, evidencing indebtedness in the principal amount of $20,000,000 and bearing interest at the fixed rate of 8.445% per annum (the "8.445% Term Note"); and (c) the Renewal Term Note dated June 17, 1997 and due December 31, 2008, issued by the Company in favor of Bank, evidencing indebtedness in the principal amount of $20,000,000 and bearing interest at the fixed rate of 6.75% per annum (the "6.75% Term Note," and collectively with the 8.82% Term Note and the 8.445% Term Note, the "Term Notes"). Reference is also made to the long term Credit Agreement (the "Credit Agreement") dated as of June 17, 1997 among the Company, certain commercial lending institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as agent for such lenders and the Bank as documentation agent for such lenders, in the form existing as of the date hereof, and notwithstanding (x) the repayment of any indebtedness covered thereby or (y) any amendment, supplement or termination of such Credit Agreement after the date hereof. In consideration of the Bank entering into the Term Notes, the Company hereby agrees that whenever, as of the last day of any fiscal quarter (determined on the basis of financial statements prepared and delivered to the Bank in accordance with Section 8.1.2(a) and (b) of the Credit Agreement, and beginning with the Company's fiscal quarter ending on June 30, 1998) the Company's Funded Debt to EBITDA Ratio (as defined in the Credit Agreement) equals or exceeds the levels set forth below, the principal balance outstanding under each of the Term Notes shall bear additional interest ("Additional Interest") for the next succeeding fiscal quarter following the reporting period covered by the applicable financial statements at the per annum rates set forth below: If Funded Debt to EBITDA Ratio is greater than 2.5 to 1, but less than 3 to 1 - Additional Interest Rate is .05% If Funded Debt to EBITDA Ratio is equal to or greater than 3 to 1 - Additional Interest Rate is .10% The Additional Interest for the four preceding fiscal quarters, if applicable, shall be paid to Bank within five (5) business days following June 30th of each fiscal year, beginning in 1999. In addition, this letter will confirm the Bank's receipt from the Company of a term loan amendment fee of $12,500 and of the Company's agreement to pay the reasonable fees and expenses incurred by the Bank in connection with the review and execution of the Credit Agreement (and the companion short term credit agreement) and the structuring, documentation and closing of the Term Notes. Except as set forth in this letter, each of the Term Notes shall remain in full force and effect according to its terms. COMERICA BANK By: Its: Acknowledged and agreed to as of the date first set forth above: SIMPSON INDUSTRIES, INC. By: Its: EX-10.24 9 CREDIT AGREEMENT (FIVE YEAR), DATED JUNE 17, 1997 U.S. $50,000,000 CREDIT AGREEMENT, (Five Year) dated as of June 17, 1997 among SIMPSON INDUSTRIES, INC. certain other Borrowers as the Borrowers, CERTAIN COMMERCIAL LENDING INSTITUTIONS as the Lenders, ABN AMRO BANK N.V. as the Agent for the Lenders and COMERICA BANK as Documentation Agent for the Lenders PAGE TABLE OF CONTENTS SECTION PAGE I DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . .1 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . .1 1.2. Use of Defined Terms. . . . . . . . . . . . . . . . 18 1.3. Cross-References. . . . . . . . . . . . . . . . . . 18 1.4. Accounting and Financial Determinations . . . . . . 18 II COMMITMENTS, BORROWING PROCEDURES AND NOTES. . . . . . . 19 2.1. Commitments . . . . . . . . . . . . . . . . . . . . 19 2.1.1. Revolving Loan Commitment. . . . . . . . 19 2.1.2. Commitment to Issue Letters of Credit. . 19 2.1.3. Lenders Not Permitted or Required To Make Loans or Issue or Participate in Letters of Credit Under Certain Circumstances. . . . . . . . . . . . . . 19 2.2. Reduction of Commitment Amounts . . . . . . . . . . 20 2.3. Borrowing Procedure . . . . . . . . . . . . . . . . 20 2.4. Continuation and Conversion Elections . . . . . . . 21 2.5. Funding . . . . . . . . . . . . . . . . . . . . . . 22 2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . 22 2.7. Swing Line Commitment . . . . . . . . . . . . . . . 22 2.8. Borrowing Procedure Swing Loans . . . . . . . . . 22 2.9. Refunding of Swing Loans. . . . . . . . . . . . . . 23 2.10. Participations in Swing Loans. . . . . . . . . . . 23 2.11. Swing Loan Participation Obligations Unconditional 24 2.12. Conditions to Swing Loans. . . . . . . . . . . . . 25 2.13. Swing Note . . . . . . . . . . . . . . . . . . . . 25 III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES. . . . . . . . 25 3.1. Repayments and Prepayments. . . . . . . . . . . . . 25 3.2. Interest Provisions . . . . . . . . . . . . . . . . 26 3.2.1. Rates. . . . . . . . . . . . . . . . . . 26 3.2.2. Post-Maturity Rates. . . . . . . . . . . 27 3.2.3. Payment Dates. . . . . . . . . . . . . . 27 3.3. Fees. . . . . . . . . . . . . . . . . . . . . . . . 28 3.3.1. Commitment Fee . . . . . . . . . . . . . 28 3.3.2. Arrangement Fee; Agent's Fee . . . . . . 28 3.3.3. Letter of Credit Face Amount Fee . . . . 28 3.3.4. Letter of Credit Fronting Fee. . . . . . 28 3.3.5. Letter of Credit Administrative Fee. . . 29 IV LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . .. 29 4.1. Issuance Requests . . . . . . . . . . . . . . . . . 29 4.2. Issuances and Extensions. . . . . . . . . . . . . . 30 4.3. Expenses. . . . . . . . . . . . . . . . . . . . . . 30 4.4. Other Lenders' Participation. . . . . . . . . . . . 30 4.5. Disbursements . . . . . . . . . . . . . . . . . . . 31 4.6. Reimbursement . . . . . . . . . . . . . . . . . . . 32 4.7. Deemed Disbursements. . . . . . . . . . . . . . . . 32 4.8. Nature of Reimbursement Obligations . . . . . . . . 33 4.9. Increased Costs; Indemnity. . . . . . . . . . . . . 34 V CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS. . . . . . 36 5.1. Eurocurrency Rate Lending Unlawful. . . . . . . . . 36 5.2. Deposits Unavailable. . . . . . . . . . . . . . . . 36 5.3. Increased Eurocurrency Rate Loan Costs, etc . . . . 36 5.4. Funding Losses. . . . . . . . . . . . . . . . . . . 37 5.5. Increased Capital Costs . . . . . . . . . . . . . . 38 5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . 38 5.7. Payments, Computations, etc . . . . . . . . . . . . 40 5.8. Sharing of Payments . . . . . . . . . . . . . . . . 41 5.9. Setoff. . . . . . . . . . . . . . . . . . . . . . . 42 5.10. Use of Proceeds. . . . . . . . . . . . . . . . . . 42 VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . .. 42 6.1. Initial Credit Extension . . . . . . . . . . . . .. 42 6.1.1. Resolutions, etc. . . . . . . . . . . . . . 43 6.1.2. Delivery of Notes . . . . . . . . . . . . . 43 6.1.3. Outstanding Indebtedness, etc . . . . . . . 43 6.1.4 Delivery of Simpson Guaranty . . . . . . . . 44 6.1.5. Opinions of Counsel . . . . . . . . . . . . 44 6.1.6. Regulatory Restriction . . . . . .. . . . . 44 6.1.7. Closing Fees, Expenses, etc. . . .. . . . . 44 6.2. All Credit Extensions . . . . . . . . . . . . . . . 44 6.2.1. Compliance with Warranties, No Default, etc.. . . . . . . . . . . . 44 6.2.2. Credit Request . . . . . . . . . . . . . 45 6.2.3. Satisfactory Legal Form. . . . . . . . . 45 VII REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 45 7.1. Organization, etc . . . . . . . . . . . . . . . . . 45 7.2. Due Authorization, Non-Contravention, etc . . . . . 46 7.3. Government Approval, Regulation, etc. . . . . . . . 46 7.4. Validity, etc . . . . . . . . . . . . . . . . . . . 46 7.5. Financial Information . . . . . . . . . . . . . . . 46 7.6. No Material Adverse Change. . . . . . . . . . . . . 47 7.7. Environmental Warranties. . . . . . . . . . . . . . 47 7.8. Litigation, Labor Controversies, etc. . . . . . . . 48 7.9. Subsidiaries. . . . . . . . . . . . . . . . . . . . 48 7.10. Ownership of Properties. . . . . . . . . . . . . . 49 7.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . 49 7.12. Pension and Welfare Plans. . . . . . . . . . . . . 49 7.13. Regulations G, U and X . . . . . . . . . . . . . . 49 7.14. Accuracy of Information. . . . . . . . . . . . . . 50 7.15. Solvency . . . . . . . . . . . . . . . . . . . . . 50 VIII COVENANTS. . . . . . . . . . . . . . . . . . . . . . . .. 50 8.1. Affirmative Covenants . . . . . . . . . . . . . . . 50 8.1.1. Legal Existence. . . . . . . . . . . . .. . 50 8.1.2. Financial Information, Reports, Notices, etc50 8.1.3. Compliance with Laws, etc. . . . . . . . .. 53 8.1.4. Maintenance of Properties. . . . . . . .. . 53 8.1.5. Insurance. . . . . . . . . . . . . . .. . . 53 8.1.6. Books, Records and Access. . . . . . . .. . 53 8.1.7. Environmental Covenant . . . . . . . . .. . 54 8.1.8. Guaranty . . . . . . . . . . . . . . . .. . 54 8.2. Negative Covenants. . . . . . . . . . . . . . . . . 54 8.2.1. Business Activities. . . . . . . . .. . . . 54 8.2.2. Liens. . . . . . . . . . . . . . . . . .. . 54 8.2.3. Financial Condition. . . . . . . . . . .. . 55 8.2.4. Acquisitions . . . . . .. . . . . . . . . . 56 8.2.5. Investments. . . . . . . . . .. . . . . . . 56 8.2.6. Indebtedness . . . . . . . . .. . . . . . . 57 8.2.7. Subordinated Debt. . . . . . . . . .. . . . 58 8.2.8. Capital Expenditures, etc. . . . . .. . . . 58 8.2.9. Rental Obligations . . . . . . . . . . . .. 59 8.2.10. Sale/Leaseback. . . . . . . . .. . . . . . 59 8.2.11. Consolidation, Merger, Etc. . . . . .. . . 59 8.2.12. Asset Dispositions, etc.. . . . . . . .. . 59 8.2.13. Transactions with Affiliates. . . .. . . . 60 IX EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . .. 60 9.1. Listing of Events of Default. . . . . . . . . . . . 60 9.1.1. NonPayment of Obligations. . . . . . . . .. 60 9.1.2. Breach of Warranty . . . . . . . . . .. . . 60 9.1.3. Non-Performance of Certain Covenants and Obligations. . . . . . . . . .60 9.1.4. Non-Performance of Other Covenants and Obligations. . . . . . . . . . . . . . .61 9.1.5. Default on Other Indebtedness. . .. . . . . 61 9.1.6. Judgments. . . . . . . . . . . . .. . . . . 61 9.1.7. Pension Plans. . . . . . . . . . .. . . . . 61 9.1.8. Change in Control. . . . . . . . . . . .. . 61 9.1.9. Bankruptcy, Insolvency, etc. . . .. . . . . 62 9.2. Action if Bankruptcy. . . . . . . . . . . . . . . . 63 9.3. Action if Other Event of Default. . . . . . . . . . 63 X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 63 10.1. Actions. . . . . . . . . . . . . . . . . . . . . . 63 10.2. Funding Reliance, etc. . . . . . . . . . . . . . . 64 10.3. Exculpation. . . . . . . . . . . . . . . . . . . . 64 10.4. Successor. . . . . . . . . . . . . . . . . . . . . 65 10.5. Loans or Letters of Credit Issued by ABN . . . . . 65 10.6. Credit Decisions . . . . . . . . . . . . . . . . . 66 10.7. Copies, etc. . . . . . . . . . . . . . . . . . . . 66 10.8. Documentation Agent. . . . . . . . . . . . . . . . 66 XI MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . 66 11.1. Waivers, Amendments, etc . . . . . . . . . . . . . 66 11.2. Notices. . . . . . . . . . . . . . . . . . . . . . 67 11.3. Payment of Costs and Expenses. . . . . . . . . . . 68 11.4. Indemnification. . . . . . . . . . . . . . . . . . 68 11.5. Survival . . . . . . . . . . . . . . . . . . . . . 69 11.6. Severability . . . . . . . . . . . . . . . . . . . 70 11.7. Headings . . . . . . . . . . . . . . . . . . . . . 70 11.8. Execution in Counterparts, Effectiveness, etc. . . 70 11.9. Governing Law; Entire Agreement. . . . . . . . . . 70 11.10. Successors and Assigns. . . . . . . . . . . . . 70 11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes. . . . . . . . . . . . . . . . . . . . 70 11.11.1. Assignments. . . . . . . . . . . . . . 71 11.11.2. Participations . . . . . . . . . . . . 72 11.11.3. Information. . . . . . . . . . . . . . 73 11.11.4. Confidentiality. . . . . . . . . . . . 73 11.12. Additional Borrowers. . . . . . . . . . . . . . . 74 11.13. Joint and Several Liability . . . . . . . . . . . 74 11.14. Judgment Currency . . . . . . . . . . . . . . . . 76 11.15. Other Transactions. . . . . . . . . . . . . . . . 76 11.16. Consent to Jurisdiction . . . . . . . . . . . . . 76 11.17. Waiver of Jury Trial. . . . . . . . . . . . . . . 77 PAGE SCHEDULE I - Disclosure Schedule EXHIBIT A - Form of Additional Borrower Certificate EXHIBIT B - Form of Revolving Note EXHIBIT C - Form of Swing Note EXHIBIT D - Form of Irrevocable Standby Letter of Credit EXHIBIT E - Form of Borrowing Request EXHIBIT F - Form of Continuation/Conversion Notice EXHIBIT G - Form of Issuance Request EXHIBIT H - Form of Lender Assignment Agreement EXHIBIT I - Form of Opinion of Counsel to Simpson EXHIBIT J - Form of Compliance Certificate EXHIBIT K - Form of Guaranty EXHIBIT L - Form of Simpson Guaranty PAGE CREDIT AGREEMENT (Five Year) THIS CREDIT AGREEMENT, dated as of June 17, 1997 among SIMPSON INDUSTRIES, INC. ("Simpson"), a Michigan corporation, certain subsidiaries that from time to time become a party hereto pursuant to Section 11.13 (such subsidiaries, together with Simpson, the "Borrowers"), the commercial lending institutions as are or may become parties hereto (the "Lenders"), ABN AMRO BANK N.V. ("ABN"), as agent (the "Agent") for the Lenders, and COMERICA BANK, as documentation agent (the "Documentation Agent") for the Lenders. W I T N E S S E T H: WHEREAS, the Borrowers desire to obtain Commitments from the Lenders pursuant to which (a) Loans will be made to the Borrowers from time to time prior to the Commitment Termination Date; and (b) Letters of Credit will be issued by the Issuer for the accounts of the Borrowers from time to time prior to the Commitment Termination Date; in aggregate principal amount for Loans plus Letter of Credit Outstandings at any one time not to exceed $50,000,000 in the aggregate; and WHEREAS, the Lenders are willing, on the terms and subject to the conditions hereinafter set forth (including Article VI), to extend such Commitments, make such Loans to the Borrowers and issue and participate in such Letters of Credit; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1. Defined Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "ABN" is defined in the preamble. "Additional Borrower Certificate" means a certificate in the form of Exhibit A hereto. "Affiliate" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Agent" is defined in the preamble and includes each other Person as shall have subsequently been appointed as the successor Agent pursuant to Section 10.4. "Agreement" means, on any date, this Credit Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date. "Assignee Lender" is defined in Section 11.12.1. "Assignment Effective Date" is defined in Section 11.12.1. "Authorized Officer" means, as to any Borrower, those of its officers whose signatures and incumbency shall have been certified to the Agent and the Lenders pursuant to Section 6.1.1. "Available Currency" means Dollars, Pounds Sterling, French Francs, Spanish Peseta and such other currencies as the Lenders agree to make available from time to time and which the Agent determines in its sole discretion are freely transferable. "Borrower" means any of Simpson and any Subsidiary that from time to time becomes a party hereto pursuant to Section 11.13. "Borrowing" means a borrowing made hereunder consisting of the aggregate amount of the several Loans made by the Lenders to the applicable Borrower on the same Borrowing Date, in the same currency, for the same Rate Option and for the same Interest Period. "Borrowing Date" means any Business Day on which a Borrowing is made. "Borrowing Request" means a loan request and certificate duly executed by an Authorized Officer of the applicable Borrower, substantially in the form of Exhibit E hereto. "Business Day" means any day (a) other than (i) a Saturday or Sunday; or (ii) a legal holiday on which banks are authorized or required to be closed in Chicago, Illinois or New York, New York; and (b) with respect to Eurocurrency Rate Loans on which dealings in the applicable Available Currency are being carried on in the interbank eurocurrency market. "Capital Expenditures" means, for any period, the sum of (a) the aggregate amount of all expenditures of Simpson and its Subsidiaries for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures; and (b) the aggregate amount of all Capitalized Lease Liabilities incurred during such period; less any expenditures pursuant to an acquisition transaction of the type described in Section 8.2.4. "Capitalized Lease Liabilities" means all monetary obligations of a Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Cash Equivalent Investment" means, at any time: (a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government; (b) commercial paper, maturing not more than nine months from the date of issue, which is issued by (i) a corporation (other than an Affiliate of a Borrower) organized under the laws of any state of the United States or of the District of Columbia and rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., or (ii) any Lender (or its holding company); (c) any certificate of deposit or bankers acceptance, maturing not more than one year after such time, which is issued by either (i) a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, or (ii) any Lender; or (d) any repurchase agreement entered into with any Lender (or other commercial banking institution of the stature referred to in clause (c)(i)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c); and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response Compensation Liability Information System List. "Change in Control" means (a) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock of Simpson; or (b) any Borrower (other than Simpson) shall not be 100% owned, directly or indirectly by Simpson. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Commitment" means, relative to any Lender, such Lender's obligation to make Loans pursuant to Section 2.1.2 and to issue (in the case of the Issuer) or participate in (in the case of all Lenders) Letters of Credit pursuant to Section 2.1.3. "Commitment Amount" means, on any date, $50,000,000, as such amount may be reduced from time to time pursuant to Section 2.2. "Commitment Termination Date" means the earliest of (a) June 17, 2002; (b) the date on which the Commitment Amount is terminated in full or reduced to zero pursuant to Section 2.2; and (c) the date on which any Commitment Termination Event occurs. Upon the occurrence of any event described in clause (b) or (c), the Commitments shall terminate automatically and without any further action. "Commitment Termination Event" means (a) the occurrence of any Default described in clauses (a) through (d) of Section 9.1.9; or (b) the occurrence and continuance of any other Event of Default and either (i) the declaration of the Loans to be due and payable pursuant to Section 9.3, or (ii) in the absence of such declaration, the giving of notice by the Agent, acting at the direction of the Required Lenders, to the Borrower that the Commitments have been terminated. "Companion Agreement" means the Credit Agreement of even date herewith among Simpson, certain Subsidiaries, the Lenders, ABN, as agent, and Comerica Bank, as documentation agent, providing for a $50,000,000 364-day credit facility. "Compliance Certificate" means a certificate duly executed by the chief financial officer, treasurer or assistant treasurer of Simpson, substantially in the form of Exhibit J hereto, as the same may be amended, modified or supplemented from time to time by the Required Lenders and Simpson, for the purposes of monitoring Simpson's compliance herewith. "Contingent Liability" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the debt, obligation or other liability guaranteed thereby. "Continuation/Conversion Notice" means a notice of continuation or conversion and certificate duly executed by an Authorized Officer of Simpson, substantially in the form of Exhibit F hereto. "Controlled Group" means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with Simpson, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA. "Credit Extension" means and includes (a) the advancing of any Loans by the Lenders in connection with a Borrowing, and (b) any issuance or extension by the Issuer of a Letter of Credit. "Default" means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default. "Determination Date" means with respect to any Loan in an Available Currency other than Dollars: (a) the date a Loan is made; (b) if such Loan is a Eurocurrency Rate Loan, the last Business Day of each month, and the date such Eurocurrency Rate Loan is continued from the current Interest Period of such Loan into a subsequent Interest Period; or (c) the date such outstanding Loan is converted from one type of Loan into another or from a Eurocurrency Rate Loan in one currency into a Eurocurrency Rate Loan in another currency. "Disbursement" means a payment by the Issuer to a beneficiary (or its designee) under a Letter of Credit. "Disbursement Date" is defined in Section 4.5. "Disclosure Schedule" means the Disclosure Schedule attached hereto as Schedule I, as it may be amended, supplemented or otherwise modified from time to time by Simpson with the written consent of the Agent and the Required Lenders. "Documentation Agent" is defined in the preamble. "Dollar" and the sign "$" mean the lawful currency of the United States. "Dollar Amount" means (a) with respect to Dollars or an amount denominated in Dollars, such amount and (b) with respect to an amount of any other Available Currency or an amount denominated in such Available Currency, the amount of Dollars into which the Agent could, in accordance with its practice from time to time in the interbank foreign exchange market, convert such amount of Available Currency at its spot rate of exchange (inclusive of all related costs of conversion) applicable to the relevant transaction at or about 10:00 A.M., New York time, on the date of calculation. "Domestic Office" means, relative to any Lender, the office of such Lender designated as such below its signature hereto or designated in the Lender Assignment Agreement or such other office of a Lender (or any successor or assign of such Lender) within the United States as may be designated from time to time by notice from such Lender, as the case may be, to each other Person party hereto. "EBITDA" means, at the end of any Fiscal Quarter for the four Fiscal Quarter period then ending, net earnings plus interest expense (net of interest income), depreciation, amortization and all other non-cash charges, and income tax expenses, excluding any non-cash gains or losses used in determining net income, all calculated on a consolidated basis for Simpson and its Subsidiaries. "Effective Date" means the date this Agreement becomes effective pursuant to Section 11.8. "Environmental Laws" means all applicable foreign, federal, state or local statutes, laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders) relating to public health and safety and protection of the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections. "Eurocurrency Office" means with respect to any Lender the office or offices of such Lender which shall be making or maintaining the Eurocurrency Loans of such Lender hereunder or such other office or offices through which such Lender determines its Eurocurrency Rate. A Eurocurrency Office of any Lender may be, at the option of such Lender, either a domestic or foreign office. "Eurocurrency Rate" means, with respect to any Eurocurrency Rate Loan for any Interest Period, the rate per annum at which deposits in the relevant Available Currency in immediately available funds are offered to the Eurocurrency Office of ABN two Business Days prior to the beginning of such Interest Period by major banks in the London interbank eurocurrency market as at or about 11:00 A.M. London time for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount equal or comparable to the amount of the Eurocurrency Rate Loan of ABN for such Interest Period. "Eurocurrency Rate Loan" means a Loan bearing interest at a fixed rate of interest determined by reference to the Eurocurrency Rate. "Eurocurrency Rate (Reserve Adjusted)" means, with respect to any Eurocurrency Rate Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurocurrency Rate EQUALS Eurocurrency Rate _______________________________ (Reserve Adjusted) 1-Eurocurrency Reserve Percentage "Eurocurrency Reserve Percentage" means, with respect to any Eurocurrency Rate Loan for any Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the percentage in effect on each day of such Interest Period, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the aggregate maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable regulation of such Board of Governors which prescribes reserve requirements applicable to "Eurocurrency Liabilities" as presently defined in Regulation D. "Event of Default" is defined in Section 9.1. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to (a) 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 for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. "Fiscal Quarter" means any quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31, references to a Fiscal Year with a number corresponding to any calendar year (e.g. the "1997 Fiscal Year") refer to the Fiscal Year ending on December 31 occurring during such calendar year. "French Francs" means lawful currency of France. "F.R.S. Board" means the Board of Governors of the Federal Reserve System or any successor thereto. "Funded Debt" means any Indebtedness as described within clauses (a), (b), (c), (e), and (f) of the definition of "Indebtedness" and any Contingent Liabilities with respect to any such Indebtedness. "Funded Debt to EBITDA Ratio" means at any Fiscal Quarter end the ratio on a consolidated basis for Simpson and its Subsidiaries of Funded Debt at such Fiscal Quarter end to EBITDA for the four Fiscal Quarters then ending. "GAAP" is defined in Section 1.4. "Guaranty" means the guaranty of the U.S. Subsidiaries of Simpson executed and delivered pursuant to Section 8.1.8, substantially in the form of Exhibit K hereto, as amended, supplemented, restated or otherwise modified from time to time. "Hazardous Materials" means (a) any "hazardous substance", as defined by CERCLA; (b) any "hazardous waste", as defined by the Resource Conservation and Recovery Act, as amended; (c) any petroleum product; or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other applicable foreign, federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as amended or hereafter amended. "Hedging Obligations" means, with respect to any Person, all liabilities of such Person under interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "herein", "hereof", "hereto", "hereunder" and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document. "Impermissible Qualification" means, relative to the opinion or certification of any independent public accountant as to any financial statement of any Borrower, any qualification or exception to such opinion or certification (a) which is of a "going concern" nature; (b) which relates to the limited scope of examination of matters relevant to such financial statement; or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause such Borrower to be in default of any of its obligations under Section 8.2.3. "including" means including without limiting the generality of any description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned. "Indebtedness" of any Person means, without duplication: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person; (c) all obligations of such Person as lessee under leases which have been or should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities; (d) all other items which, in accordance with GAAP, would be included as liabilities on the liability side of the balance sheet of such Person as of the date at which Indebtedness is to be determined; (e) net liabilities of such Person under all Hedging Obligations; (f) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; and (g) all Contingent Liabilities of such Person in respect of any of the foregoing. "Indemnified Liabilities" is defined in Section 11.4. "Indemnified Parties" is defined in Section 11.4. "Interest Period" means, relative to any Eurocurrency Rate Loans, the period beginning on (and including) the date on which such Eurocurrency Rate Loan is made or continued as, or converted into, a Eurocurrency Rate Loan pursuant to Section 2.3, 2.4 or 2.9 and ending on (but excluding) the day which, numerically corresponds to such date one, two, three or six months thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month), in each case as the Borrowers may select in their relevant notice pursuant to Section 2.3, 2.4 or 2.9; provided, however, that (a) no more than 10 Interest Periods shall be outstanding at any one time in the aggregate; (b) if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day (unless, such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding such numerically corresponding day); and (c) no Interest Period may end later than the date set forth in clause (a) of the definition of "Commitment Termination Date". "Investment" means, relative to any Person, (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business); (b) any Contingent Liability of such Person; and (c) any ownership or similar interest held by such Person in any other Person. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property. "Issuance Request" means a properly completed application for a Letter of Credit on the Issuer's standard form, attached hereto as Exhibit G, executed by an Authorized Officer of the Borrower. "Issuer" means any affiliate, unit or agency of ABN which has agreed to issue one or more Letters of Credit at the request of the Agent. "Lender Assignment Agreement" means a Lender Assignment Agreement substantially in the form of Exhibit H hereto. "Lenders" is defined in the preamble. "Letter of Credit" is defined in Section 4.1. "Letter of Credit Availability" means, at any time, the lesser of (a) the Dollar Amount of $5,000,000 minus the Dollar Amount of the Letter of Credit Outstandings on such date and (b) the excess of (i) the then Commitment Amount over (ii) the sum of (A) the Dollar Amount of the outstanding principal amount of all Loans on such date plus (B) the Dollar Amount of the Letter of Credit Outstandings on such date. "Letter of Credit Outstandings" means, at any time, an amount equal to the sum of (a) the Dollar Amount of the aggregate Stated Amount at such time of all Letters of Credit then outstanding and undrawn (as such aggregate Stated Amount shall be adjusted, from time to time, as a result of drawings, the issuance of Letters of Credit, or otherwise), plus (b) the then aggregate amount of all unpaid and outstanding Reimbursement Obligations. "Lien" means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever. "Loan" means, as the context may require, either a Revolving Loan or a Swing Loan. "Loan Commitment Availability" means, on any date, the excess of (a) the then Commitment Amount, over (b) the sum of (i) the Dollar Amount of the outstanding principal amount of all Revolving Loans on such date, plus (ii) the Dollar Amount of the Letter of Credit Outstandings on such date. "Loan Document" means this Agreement, the Notes, the Issuance Requests, the Guaranty and the Simpson Guaranty. "Margin" means, for any period beginning on (and including) a Margin Determination Date until (but excluding) the next Margin Determination Date, a percentage equal to the Margin set forth in the following table corresponding to the Funded Debt to EBITDA Ratio as at the end of the Fiscal Quarter immediately preceding such Margin Determination Date, provided that for the period from the Effective Date through the first Margin Determination Date after June 30, 1997, the applicable Margin set forth opposite Level II shall be used: STANDBY LETTER MARGIN OF FOR CREDIT COMMERCIAL MARGIN FOR EURO- COMMIT- FACE LETTER OF FUNDED DEBT TO PRIME CURRENCY MENT AMOUNT CREDIT FACE LEVEL EBITDA RATIO RATE LOANS LOANS FEE FEE AMOUNT FEE I Greater than 3.0:1.0 0.00% 0.75% 0.25% 0.73% 0.325% II Less than or equal to 3.0:1.0, but greater than 2.50:1.0 0.00% 0.60% 0.20% 0.58% 0.20% III Less than or equal to 2.50:1.0, but greater than 2.00:1.0 0.00% 0.475% 0.15% 0.455% 0.1175% IV Less than or equal to 2.00:1.0, but greater than 1.50:1.0 0.00% 0.325% 0.125% 0.305% 0.075% V Less than or equal to 1.5:1.0 0.00% 0.225% 0.10% 0.205% 0.0625%
Notwithstanding the foregoing, in the event Simpson fails to report the Funded Debt to EBITDA Ratio at the end of any Fiscal Quarter by the Margin Determination Date following such Fiscal Quarter, "Margin" shall mean the Margin set forth in Level I. Nothing in this definition shall constitute a waiver of the financial covenant set forth in Section 8.2.3(b) or limit the right of the Lenders to receive interest at the rates set forth in Section 3.2.2 hereof. "Margin Determination Date" means each date on which a quarterly Compliance Certificate is delivered. The first Margin Determination Date shall be the first such date after June 30, 1997. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, or condition (financial or otherwise) of Simpson and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Borrower to perform under any Loan Document and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Borrower of any Loan Document. "Net Worth" means, as to Simpson, the consolidated net worth of Simpson and its Subsidiaries. "Note" means, as the context may require, either a Revolving Note or a Swing Note. "Obligations" means all obligations (monetary or otherwise) of the Borrowers arising under or in connection with this Agreement, the Notes and each other Loan Document. "Organic Document" means, relative to any Borrower, its certificate of incorporation or other organizational documents comparable thereto, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock. "Outstandings" means at any time the sum of: (a) the aggregate Dollar Amount of the principal amount of all Loans outstanding at such time; (b) the aggregate Dollar Amount of the face amount of all Letters of Credit outstanding and undrawn at such time; and (c) the aggregate Dollar Amount at such time of Obligations to reimburse drawings under any Letters of Credit which have been paid by the Issuer. "Participant" is defined in Section 11.12. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Pension Plan" means a "pension plan", as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which Simpson or any corporation, trade or business that is, along with Simpson, a member of a Controlled Group, may have liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "Percentage" means, relative to any Lender, the percentage set forth opposite its signature hereto or set forth in the Lender Assignment Agreement, as such percentage may be adjusted from time to time pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 11.12. "Person" means any natural person, corporation, partnership, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "Plan" means any Pension Plan or Welfare Plan. "Pounds Sterling" means lawful currency of the United Kingdom. "Prime Rate" means a floating rate of interest equal to the higher (redetermined daily) of (a) the per annum rate of interest announced by ABN at its office in Chicago, Illinois as its prime rate for Dollar loans; and (b) the Federal Funds Rate plus 1/2%. (The "prime rate" is set by ABN based upon various factors and is used as a reference for pricing some loans. It is not the best rate available to the customers of ABN at any point in time.) Changes in the rate of interest on that portion of any Loans maintained as Prime Rate Loans will take effect simultaneously with each change in the Prime Rate. The Agent will give notice promptly to the Borrowers and the Lenders of changes in the Prime Rate. "Prime Rate Loan" means a Loan in Dollars bearing interest at a fluctuating rate determined by reference to the Prime Rate. "Quarterly Payment Date" means the last day of each March, June, September, and December or, if any such day is not a Business Day, the next succeeding Business Day. "Rate Option" means, with respect to any Loan, a Eurocurrency Rate Loan or Prime Rate Loan. "Reimbursement Obligation" is defined in Section 4.6. "Release" means a "release", as such term is defined in CERCLA. "Required Lenders" means, at any time, any Lenders having Percentages aggregating at least 66 2/3%. "Revolving Loan" is defined in Section 2.1.2. "Revolving Note" means a promissory note of any Borrower payable to the order of any Lender, in the form of Exhibit B hereto (as such promissory notes may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of such Borrower to such Lender resulting from outstanding Revolving Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Significant Subsidiary" means a Subsidiary which accounted for in excess of either 5% of the consolidated assets of Simpson and its Subsidiaries as of the end of the last Fiscal Quarter or 5% of the consolidated revenue of Simpson and its Subsidiaries for the four Fiscal Quarter period ending as of the end of the last Fiscal Quarter. "Simpson Guaranty" means the guaranty of Simpson substantially in the form of Exhibit L hereto, as amended, supplemented, restated or otherwise modified from time to time. "Solvent" means, as to any Person at any time, that (a) the fair value of the property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts of liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital. "Spanish Pesetas" means lawful currency of Spain. "Stated Amount" of each Letter of Credit means the "Stated Amount" as defined therein. "Stated Expiry Date" is defined in Section 4.1. "Stated Maturity Date" means June 17, 2002. "Subordinated Debt" means Indebtedness of any Borrower subordinated in form and substance satisfactory to the Agent. "Subsidiary" means, with respect to any Person, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person and (ii) any other entity of which more than 50% of the outstanding capital interest, profit interest or beneficial interest is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person or by one or more other Subsidiaries of such Person. "Subsidiary Borrower" means each Borrower other than Simpson. "Swing Lender" means ABN in its capacity as swing lender hereunder. "Swing Loan" is defined in Section 2.7. "Swing Note" means a promissory note of Simpson payable to the order of the Swing Lender, in the form of Exhibit C hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of Simpson to the Swing Lender resulting from outstanding Swing Loans, and also means any other promissory note accepted from time to time in substitution therefor or renewal thereof. "Tangible Net Worth" means, as to Simpson, the consolidated net worth of Simpson and its Subsidiaries after subtracting therefrom the aggregate amount of any intangible assets of Simpson and its Subsidiaries, including goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service marks and brand names. "Taxes" is defined in Section 5.6. "United States" or "U.S." means the United States of America, its fifty States and the District of Columbia. "U.S. Subsidiary" means a Subsidiary of Simpson organized under the laws of a state of the United States or the District of Columbia. "Welfare Plan" means a "welfare plan", as such term is defined in section 3(1) of ERISA, of Simpson or any member of its Controlled Group. SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and in each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document. SECTION 1.3. Cross-References. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition. SECTION 1.4. Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 8.2.3) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with, those generally accepted accounting principles ("GAAP") in the United States at the time in effect. ARTICLE II COMMITMENTS, BORROWING PROCEDURES AND NOTES SECTION 2.1. Commitments. On the terms and subject to the conditions of this Agreement (including Article V), each Lender severally agrees as follows: SECTION 2.1.1. Revolving Loan Commitment. From time to time on any Business Day occurring prior to the Commitment Termination Date, each Lender will make Revolving Loans in Dollars and/or other Available Currencies (relative to such Lender, its "Revolving Loans") to any Borrower equal to such Lender's Percentage of the aggregate amount of the Borrowing of Revolving Loans requested by such Borrower to be made on such day; provided, however that the aggregate Dollar Amount of the principal amount of Loans by all the Lenders in currencies other than Dollars shall not at any time exceed $20,000,000 at any time outstanding. On the terms and subject to the conditions hereof, each Borrower may from time to time borrow, prepay and reborrow Revolving Loans. SECTION 2.1.2. Commitment to Issue Letters of Credit. From time to time on any Business Day, the Issuer will issue, and each Lender will participate in, the Letters of Credit, in accordance with Article IV. SECTION 2.1.3. Lenders Not Permitted or Required To Make Loans or Issue or Participate in Letters of Credit Under Certain Circumstances. No Lender shall be permitted or required to (a) make any Loan if, after giving effect thereto, an amount equal to the Dollar Amount of the aggregate outstanding principal amount of all Revolving Loans (i) of all Lenders, together with the Dollar Amount of all outstanding Swing Loans and the Dollar Amount of all Letter of Credit Outstandings, would exceed the Commitment Amount, or (ii) of such Lender, together with the Dollar Amount of its Percentage of the Dollar Amount of the principal amount of all Swing Loans and the Dollar Amount of its Percentage of all Letter of Credit Outstandings, would exceed such Lender's Percentage of the Commitment Amount; or (b) issue (in the case of the Issuer), extend or participate in (in the case of each Lender) any Letter of Credit if, after giving effect thereto (i) the Dollar Amount of all Letter of Credit Outstandings together with an aggregate amount equal to the Dollar Amount of the aggregate outstanding principal amount of all Loans would exceed the Commitment Amount, or (ii) the Dollar Amount of such Lender's Percentage of all Letter of Credit Outstandings together with an aggregate amount equal to the Dollar Amount of the aggregate outstanding principal amount of all Revolving Loans of such Lender and such Lender's Percentage of the Dollar Amount of the aggregate principal amount of all Swing Loans would exceed such Lender's Percentage of the Commitment Amount. For the purposes of this Section 2.1.3, the Dollar Amount of any Loans not denominated in Dollars shall be determined as of the most recent Determination Date for each such Loan. SECTION 2.2. Reduction of Commitment Amounts. Simpson may, from time to time on any Business Day, voluntarily reduce the amount of the Commitment Amount; provided, however, that Simpson shall simultaneously reduce the amount of Commitment Amount (as such term is defined in the Companion Agreement) under the Companion Agreement by an equal amount; provided, further, that the Commitment Amount shall not be reduced to an amount less than the Outstandings (after giving effect to any concurrent repayment of Loans); and provided further, that all such reductions shall require at least 5 Business Days' prior notice to the Agent and be permanent, and any partial reduction of such Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral multiple of $250,000. SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to the Agent on or before 11:00 A.M., New York time, on a Business Day, Simpson may from time to time irrevocably request (on not less than three nor more than five Business Days' notice with respect to a Eurocurrency Rate Loan, and not less than one nor more than five Business Days' notice with respect to Prime Rate Loan) that a Borrowing of Revolving Loans be made to the Borrower specified by Simpson in an Available Currency, if in Dollars, in a minimum amount of $2,000,000 and an integral multiple of $100,000 or if in another Available Currency, in a minimum amount of the Dollar Amount of $2,000,000 and an integral multiple of 100,000 units of such Available Currency, or in the unused amount of the applicable Commitment. On the terms and subject to the conditions of this Agreement, each Borrowing shall be comprised of the same Rate Option of Loans (and, in the case of Eurocurrency Rate Loans, the same Available Currency), and shall be made on the Business Day, specified in such Borrowing Request. The proceeds of each Borrowing shall be advanced to the Borrower specified in the applicable Borrowing Request. On or before 10:00 A.M., New York time, on such Business Day each Lender shall deposit with the Agent same day funds in the applicable Available Currency in an amount equal to such Lender's Percentage of the requested Borrowing. Such deposit will be made to such accounts which the Agent shall specify from time to time by notice to the Lenders. To the extent funds are received from the Lenders, the Agent shall make such funds available to the Borrower specified by Simpson by wire transfer to such accounts as Simpson shall have specified in its Borrowing Request. No Lender's obligation to make any Loan shall be affected by any other Lender's failure to make any Loan. SECTION 2.4. Continuation and Conversion Elections. By delivering a Continuation/Conversion Notice to the Agent on or before 11:00 A.M., New York time, on a Business Day, Simpson may from time to time irrevocably elect (on not less than three nor more than five Business Days' notice with respect to a conversion into or a continuation of a Eurocurrency Loan to a Borrower specified by Simpson and not less than one nor more than five Business Days' notice with respect to a conversion into Prime Rate Loan) that all, or any portion in an aggregate minimum amount, if in Dollars of $2,000,000 and an integral multiple of $100,000 or in the case of an Available Currency other than Dollars, in an aggregate minimum amount of the Dollar Amount of $2,000,000 and an integral multiple of 100,000 units of such currency, of any Revolving Loans be, in the case of Prime Rate Loans, converted into Eurocurrency Rate Loans or, in the case of Eurocurrency Rate Loans be converted into Prime Rate Loans or Eurocurrency Rate Loans in another Available Currency or continued as Eurocurrency Rate Loans in the same currency. In the absence of delivery of a Continuation/ Conversion Notice with respect to any Revolving Loan constituting a Eurocurrency Rate Loan by 11:00 A.M. New York time at least three Business Days before the last day of the then current Interest Period with respect thereto, such Eurocurrency Rate Loan shall, on such last day, automatically convert to a Eurocurrency Rate Loan in the same currency having an Interest Period equal to the shorter of (i) one month and (ii) the number of days in the period from and including such last day to but excluding the Commitment Termination Date; provided that such period determined under this clause (ii) is acceptable to the Agent, otherwise the Loan shall become due and payable. Each such conversion or continuation shall be prorated among the applicable outstanding Loans of such Borrower to all Lenders, and when any Default has occurred and is continuing, no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, Eurocurrency Rate Loans. SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its obligation to make, continue or convert Eurocurrency Rate Loans hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to make or maintain such Eurocurrency Rate Loan; provided, however, that such Eurocurrency Rate Loan shall nonetheless be deemed to have been made and to be held by such Lender, and the obligation of the Borrowers to repay such Eurocurrency Rate Loan shall nevertheless be to such Lender for the account of such foreign branch, Affiliate or international banking facility. In addition, the Borrowers hereby consent and agree that, for purposes of any determination to be made for purposes of Section 5.1, 5.2, 5.3 or 5.4, it shall be conclusively assumed that each Lender elected to fund all Eurocurrency Rate Loans by purchasing deposits, in the interbank eurocurrency market having a maturity corresponding to the Interest Period for such Loan and bearing an interest rate equal to the Eurocurrency Rate for such Loan. SECTION 2.6. Notes. The Revolving Loans of each Lender to each Borrower shall be evidenced by a Note of such Borrower, payable to the order of such Lender in an amount equal to the Lender's Revolving Loans. Each Lender shall record in its records, or at its option on the schedule attached to its applicable Note, the date, amount and Available Currency of each Loan made by such Lender thereunder, each repayment or prepayment thereof, and the dates on which the Interest Period for such Loan shall begin and end. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Note. The failure to so record or any error in so recording any such amount shall not, however, limit or otherwise affect the obligations of any Borrower hereunder or under any Note to repay the principal amount of each Revolving Loan, together with all interest accruing thereon. SECTION 2.7. Swing Line Commitment. From time to time on any Business Day occurring prior to the Commitment Termination Date, the Swing Lender agrees to make loans to Simpson (each such loan, a "Swing Loan") in an aggregate principal amount not to exceed $10,000,000. All Swing Loans shall be in Dollars. On the terms and subject to the conditions hereof, Simpson may from time to time borrow, prepay and reborrow Swing Loans. SECTION 2.8. Borrowing Procedure Swing Loans. By delivering a Borrowing Request to the Swing Lender and the Agent on or before 1:00 p.m., New York time, on a proposed Borrowing Date, Simpson may from time to time irrevocably request that a Borrowing be made in a minimum amount of $2,000,000 and an integral multiple of $100,000. On or before 4:00 P.M., Chicago time, on such Borrowing Date the Swing Lender shall deposit with the Agent same day funds in an amount equal to the requested Borrowing. Such deposit will be made to such accounts which the Agent shall specify from time to time by notice to the Swing Lender. To the extent funds are received from the Swing Lender, the Agent shall make such funds available to Simpson by wire transfer to such accounts as Simpson shall have specified in its Borrowing Request. SECTION 2.9. Refunding of Swing Loans. The Swing Lender may, at any time later than five Business Days after the Borrowing Date of a Swing Loan, in its sole and absolute discretion, on behalf of Simpson (which hereby irrevocably directs the Swing Lender to act on its behalf), request each Lender to make a Revolving Loan in Dollars in an amount equal to such Lender's Percentage of the Dollar Amount of the principal amount of the Swing Loans outstanding on the date such notice is given. Unless any of the events described in Section 9.1.9 shall have occurred (in which event the procedures of Section 2.10 shall apply), and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Loan are then satisfied or the aggregate amount of such Revolving Loans is not in the minimum or integral amount otherwise required hereunder, each Lender shall make the proceeds of its Revolving Loan available to the Agent for the account of the Swing Lender at 10:00 A.M. Chicago time in immediately available funds on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Loans shall be in Dollars and shall be immediately applied to repay the outstanding Swing Loans. All Revolving Loans made pursuant to this Section 2.9 shall be in Dollars and shall be Prime Rate Loans (but, subject to the other provisions of this Agreement, may be converted to Eurocurrency Rate Loans). SECTION 2.10. Participations in Swing Loans. (a) If an event described in Section 9.1.9 occurs (or for any reason the Lenders may not make Revolving Loans pursuant to Section 2.9), each Lender will, upon notice from the Agent, purchase from the Swing Lender (and the Swing Lender will sell to each such Lender) an undivided participation interest in all outstanding Swing Loans in an amount equal to its Percentage of the outstanding principal amount of the Swing Loans (and each Lender will immediately transfer to the Agent, for the account of the Swing Lender, in immediately available funds, the amount of its participation). (b) Whenever, at any time after the Swing Lender has received payment for any Lender's participation interest in the Swing Loans pursuant to Section 2.10(a), the Swing Lender receives any payment on account thereof, the Swing Lender will distribute to the Agent for the account of such Lender its participation interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participation interest was outstanding and funded) in like funds as received; provided, however, that in the event that such payment received by the Swing Lender is required to be returned, such Lender will return to the Agent for the account of the Swing Lender any portion thereof previously distributed by the Swing Lender to it in like funds as such payment is required to be returned by the Swing Lender. SECTION 2.11. Swing Loan Participation Obligations Unconditional. (a) Each Lender's obligation to make Revolving Loans pursuant to Section 2.9 and/or to purchase participation interests in Swing Loans pursuant to Section 2.10 shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Lender, Simpson or any other Person for any reason whatsoever; (b) the occurrence or continuance of an Event of Default; (c) any adverse change in the condition (financial or otherwise) of Simpson or any other Person; (d) any breach of this Agreement by Simpson or any other Lender; (e) any inability of Simpson to satisfy the conditions precedent to borrowing set forth in this Agreement on the date upon which any Swing Loan is to be refunded or any participation interest therein is to be purchased; or (f) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (b) Notwithstanding the provisions of subsection 2.11(a), no Lender shall be required to make any Revolving Loan to Simpson to refund a Swing Loan pursuant to Section 2.9 or to purchase a participation interest in a Swing Loan pursuant to Section 2.10 if, prior to the making by the Swing Lender of such Swing Loan, the Swing Lender received written notice (i) from a Lender specifying that such Lender believes in good faith that one or more of the conditions precedent to the making of such Swing Loan were not satisfied and, in fact, such conditions precedent were not satisfied at the time of the making of such Swing Loan or (ii) from Simpson that a Default has occurred and is continuing; provided that the obligation of such Lender to make such Revolving Loans and to purchase such participation interests shall be reinstated upon the earlier to occur of (x) the date on which such Lender or Simpson, as applicable, notifies the Swing Lender that its prior notice has been withdrawn and (y) the date on which all conditions precedent to the making of such Swing Loan have been satisfied (or waived by the Required Lenders or all Lenders, as applicable). SECTION 2.12. Conditions to Swing Loans. Notwithstanding any other provision of this Agreement, the Swing Lender shall not be obligated to make any Swing Loan if a Default exists or would result therefrom. SECTION 2.13. Swing Note. The Swing Loans shall be evidenced by the Swing Note of Simpson, payable to the order of the Swing Lender in an amount equal to the Swing Loans. The Swing Lender shall record in its records, or at its option on the schedule attached to such Swing Note, the date and amount of each Swing Loan and each repayment or prepayment thereof. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Swing Note. The failure to so record or any error in so recording any such amount shall not, however, limit or otherwise affect the obligations of Simpson hereunder or under the Swing Note to repay the principal amount of each Swing Loan, together with all interest accruing thereon. ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES SECTION 3.1. Repayments and Prepayments. The Borrowers shall repay in full the unpaid principal amount of each Loan upon the Stated Maturity Date. (a) Prior thereto, any Borrower may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part without penalty or premium, of the outstanding principal amount of any Loans; provided, however, that (i) any such prepayment shall be made to the Agent and shall be applied to Loans as the prepaying Borrower may specify and on a pro rata basis to the accounts of Loans of the same Rate Option and having the same Interest Period of all Lenders; (ii) no such prepayment of any Eurocurrency Rate Loan may be made on any day other than the last day of the Interest Period for such Loan; (iii) all such voluntary prepayments shall require at least three but no more than five Business Days' prior written notice to the Agent which notice shall be irrevocable once given; and (iv) all such voluntary partial prepayments shall be in an aggregate minimum Dollar Amount of $2,000,000 and an integral multiple of 100,000 units of the Available Currency; (b) In addition, the Borrowers shall, on each date when any reduction in the Commitment Amount shall become effective, including pursuant to Section 2.2, make a mandatory prepayment of outstanding Loans to the Agent equal to the excess, if any, of the aggregate Outstandings over the Commitment Amount as so reduced; (c) In addition, the Borrowers shall, on each Determination Date for any Borrowing of Eurocurrency Loans on which the Dollar Amount of the Outstandings of the Borrowers exceed (as the result of fluctuations in applicable foreign exchange rates or otherwise) the then Commitment Amount, make a mandatory repayment to the Agent of Loans outstanding in an aggregate Dollar Amount equal to the excess of (x) the aggregate Outstandings; over (y) the then Commitment Amount; (d) Each Borrower shall, immediately upon any acceleration of the Stated Maturity Date of any Loans pursuant to Section 9.2 or Section 9.3, repay all Loans, unless, pursuant to Section 9.3, only a portion of all Loans is so accelerated. Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by Section 5.4. No voluntary prepayment of principal of any Loans shall cause a reduction in the Commitment Amount. SECTION 3.2. Interest Provisions. Interest on the outstanding principal amount of Loans shall accrue and be payable in the applicable Available Currency in accordance with this Section 3.2. SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing Request or Continuation/Conversion Notice, the applicable Borrower may elect that Loans comprising a Borrowing accrue interest at a rate per annum: (a) on that portion of the Loans maintained from time to time as a Prime Rate Loan, equal to the sum of the Prime Rate from time to time in effect plus the applicable Margin; and (b) on that portion of the Loans maintained as a Eurocurrency Rate Loan, during each Interest Period applicable thereto, equal to the sum of the applicable Eurocurrency Rate (Reserve Adjusted) for such Interest Period plus the applicable Margin. SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount of any Loan is due and payable (whether on the Stated Maturity Date or upon acceleration), or after any other monetary Obligation of any Borrower shall have become due and payable, the Borrowers agree to pay, but only to the extent permitted by law, interest (after as well as before judgment) on Prime Rate Loans at a rate per annum equal to the Prime Rate plus a margin of 2% and on Eurocurrency Rate Loans at a rate per annum equal to 2% in excess of the rate otherwise applicable until the end of the then applicable Interest Period and thereafter at a rate equal to 2.75% per annum on the Eurocurrency Rate (Reserve Adjusted) for Interest Periods not to exceed one month as determined by the Agent; provided that any Eurocurrency Rate Loan denominated in Dollars shall convert to a Prime Rate Loan at the end of the applicable Interest Period. SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be payable, without duplication: (a) on the Stated Maturity Date therefor; (b) on the date of any payment or prepayment of any Eurocurrency Rate Loans, in whole or in part, of principal outstanding on such Eurocurrency Rate Loan; (c) with respect to Prime Rate Loans, on each Quarterly Payment Date occurring after the date of the initial Borrowing hereunder; (d) with respect to Eurocurrency Rate Loans, on the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, on a date three months after the commencement of said Interest Period, or if not a Business Day, on the next Business Day unless said next Business Day is in the next calendar month then on the preceding Business Day); and (e) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 9.2 or Section 9.3, immediately upon such acceleration. Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable by the applicable Borrower upon demand. SECTION 3.3. Fees. The Borrowers agree to pay the fees set forth in this Section 3.3. All such fees shall be non-refundable. SECTION 3.3.1. Commitment Fee. (a) Simpson agrees to pay to the Agent for the account of each Lender, for the period (including any portion thereof when its Commitment is suspended by reason of the Borrowers' inability to satisfy any condition of Article VI) commencing on the Effective Date and continuing through the Commitment Termination Date, a commitment fee on such Lender's Percentage of the average daily Dollar Amount of the unused portion of the Loan Commitment Availability at a rate equal to the applicable Margin; (b) For purposes of determining the commitment fee, the average daily Dollar Amount of all outstanding Loans and the unused portion of the Loan Commitment Availability shall be determined as of each applicable Determination Date; and (c) Such fee shall be payable in Dollars in immediately available funds in arrears on each Quarterly Payment Date. SECTION 3.3.2. Arrangement Fee; Agent's Fee. Simpson agrees to pay to the Agent for its own account, a non-refundable arrangement fee, and, thereafter, a non-refundable annual fee, in such amounts and payable at such times as has been agreed upon between the Agent and Simpson in the fee letter dated April 4, 1997 (as amended from time to time). SECTION 3.3.3. Letter of Credit Face Amount Fee. The applicable Borrower agrees to pay to the Agent, for the account of the Lenders, a fee for each Letter of Credit issued on the application of such Borrower for the period from and including the date of the issuance of such Letter of Credit to (but not including) the date upon which such Letter of Credit expires, at a per annum rate equal to the applicable Margin of the face amount of such Letter of Credit (which face amount shall be reduced by any reductions in such Letters of Credit pursuant to Section 4.1(d) hereof). Such fee shall be payable in immediately available funds in advance on the date of issuance of each Letter of Credit and on each Quarterly Payment Date thereafter. No portion of such fee shall be refunded after payment. SECTION 3.3.4. Letter of Credit Fronting Fee. The applicable Borrower agrees to pay to the Issuer for its own account a fronting fee for each Letter of Credit issued on the application of such Borrower for the period from and including the date of the issuance of such Letter of Credit to (but not including) the date upon which each Letter of Credit expires, of 0.02% (in the case of a standby Letter of Credit) or 0.05% (in the case of a commercial Letter of Credit) of the face amount of such Letter of Credit (which face amount shall be reduced by any reductions in such Letters of Credit pursuant to Section 4.1(c) hereof). Such fee shall be payable in immediately available funds on the date of issuance of such Letter of Credit. SECTION 3.3.5. Letter of Credit Administrative Fee. The Borrowers agree to pay to the Agent, for the account of the Issuer, the amounts set forth in Section 4.3. ARTICLE IV LETTERS OF CREDIT SECTION 4.1. Issuance Requests. By delivering to the Agent and the Issuer an Issuance Request on or before 10:00 A.M., New York time, any Borrower may request, from time to time prior to the Commitment Termination Date and on not less than three nor more than ten Business Days' notice, that the Issuer issue an irrevocable letter of credit in substantially the form of Exhibit D hereto, or in such other form as may be requested by a Borrower and approved by the Issuer (each a "Letter of Credit"), in support of financial obligations of such Borrower incurred in such Borrower's ordinary course of business and which are described in such Issuance Request. Upon receipt of an Issuance Request, the Agent shall promptly notify the Lenders thereof. Each Letter of Credit shall by its terms: (a) be issued in Dollars; (b) be issued in a Stated Amount which does not exceed (or would not exceed) the then Letter of Credit Availability; (c) be stated to expire on a date (its "Stated Expiry Date") no later than the earlier of (i) one year from the date of issuance, or (ii) the Commitment Termination Date; and (d) on or prior to its Stated Expiry Date (i) terminate immediately upon notice to the Issuer thereof from the beneficiary thereunder that all obligations covered thereby have been terminated, paid, or otherwise satisfied in full, or (ii) reduce in part immediately and to the extent the beneficiary thereunder has notified the Issuer thereof that the obligations covered thereby have been paid or otherwise satisfied in part. So long as no Default has occurred and is continuing and subject to the conditions set forth in this Agreement, by delivery to the Issuer and the Agent of an Issuance Request at least three but not more than ten Business Days prior to the Stated Expiry Date of any Letter of Credit, such Borrower may request the Issuer to extend the Stated Expiry Date of such Letter of Credit for an additional period not to extend beyond the Commitment Termination Date. SECTION 4.2. Issuances and Extensions. On the terms and subject to the conditions of this Agreement (including Article VI), the Issuer shall issue Letters of Credit, and extend the Stated Expiry Dates of outstanding Letters of Credit, in accordance with the Issuance Requests made therefor. The Issuer will make available the original of each Letter of Credit which it issues in accordance with the Issuance Request therefor to the beneficiary thereof (and will promptly notify each of the Lenders of the issuance) and will notify the beneficiary under any Letter of Credit of any extension of the Stated Expiry Date thereof. SECTION 4.3. Expenses. Each Borrower agrees to pay to the Agent for the account of the Issuer with respect to each Letter of Credit issued on the application of such Borrower all standard administrative expenses of the Issuer in connection with the issuance, maintenance, modification (if any) and administration of each Letter of Credit issued by the Issuer at the request of the Borrower upon demand from time to time. SECTION 4.4. Other Lenders' Participation. Each Letter of Credit issued pursuant to Section 4.2 shall, effective upon its issuance and without further action, be issued on behalf of all Lenders (including the Issuer thereof) pro rata according to their respective Percentages. Each Lender shall, to the extent of its Percentage (unless the Issuer shall have received written notice that the conditions precedent to the issuance of such Letter of Credit had not occurred prior to such issuance), be deemed irrevocably to have participated in the issuance of such Letter of Credit and shall be responsible to reimburse promptly the Issuer thereof for Reimbursement Obligations which have not been reimbursed by the applicable Borrower in accordance with Section 4.5, or which have been reimbursed by the applicable Borrower but must be returned, restored or disgorged by the Issuer for any reason, and each Lender shall, to the extent of its Percentage, be entitled to receive from the Agent a ratable portion of the letter of credit fees received by the Agent pursuant to Section 3.3.3, with respect to each Letter of Credit. In the event that the applicable Borrower shall fail to reimburse the Issuer, or if for any reason Revolving Loans shall not be made to fund any Reimbursement Obligation, all as provided in Section 4.5 and in an amount equal to the amount of any drawing honored by the Issuer under a Letter of Credit issued by it, or in the event the Issuer must for any reason return or disgorge such reimbursement, the Issuer shall promptly notify each Lender of the unreimbursed amount of such drawing and of such Lender's respective participation therein. Each Lender shall make available to the Issuer, whether or not any Default shall have occurred and be continuing, an amount equal to its respective participation in same day or immediately available funds at the office of the Issuer specified in such notice not later than 10:00 A.M., New York time, on the Business Day after the date the Lenders are notified by the Issuer. In the event that any Lender fails to make available to the Issuer the amount of such Lender's participation in such Letter of Credit as provided herein, the Issuer shall be entitled to recover such amount on demand from such Lender together with interest at the Federal Funds Rate for three Business Days (together with such other compensatory amounts as may be required to be paid by such Lender to the Agent pursuant to the Rules for Interbank Compensation of the Council on International Banking or the Clearinghouse Compensation Committee, as the case may be, as in effect from time to time) and thereafter at the Prime Rate plus 2%. Nothing in this Section shall be deemed to prejudice the right of any Lender to recover from the Issuer any amounts made available by such Lender to the Issuer pursuant to this Section in the event that it is determined by a court of competent jurisdiction that the payment with respect to a Letter of Credit by the Issuer in respect of which payment was made by such Lender constituted gross negligence or wilful misconduct on the part of the Issuer. The Issuer shall distribute to each other Lender which has paid all amounts payable by it under this Section with respect to any Letter of Credit issued by the Issuer such other Lender's Percentage of all payments received by the Issuer from the applicable Borrower in reimbursement of drawings honored by the Issuer under such Letter of Credit when such payments are received. SECTION 4.5. Disbursements. The Issuer will notify the applicable Borrower and the Agent promptly of the presentment for payment of any Letter of Credit, together with notice of the date (a "Disbursement Date") such payment shall be made. Subject to the terms and provisions of such Letter of Credit, the Issuer shall make such payment to the beneficiary (or its designee) of such Letter of Credit. Prior to 10:00 A.M., New York time, on the Disbursement Date, the applicable Borrower will reimburse the Issuer for all amounts which it has disbursed under the Letter of Credit. To the extent the Issuer is not reimbursed in full in accordance with the third sentence of this Section, the Borrower's Reimbursement Obligation shall accrue interest (i) during the three days following the Disbursement Date at the Prime Rate and (ii) thereafter at the Prime Rate plus a margin of 2% per annum, payable on demand. In the event the Issuer is not reimbursed by the applicable Borrower on the Disbursement Date (other than upon a deemed Disbursement under Section 4.7 when an actual Disbursement has not been made), or if the Issuer must for any reason return or disgorge such reimbursement, the Lenders (including the Issuer) shall, on the terms and subject to the conditions of this Agreement, fund the Reimbursement Obligation therefor by making Revolving Loans which shall be Prime Rate Loans (the applicable Borrower being deemed to have given a timely Borrowing Request therefor for such amount); provided, however, for the purpose of determining the availability of the Commitments to make Revolving Loans immediately prior to giving effect to the application of the proceeds of such Revolving Loans, such Reimbursement Obligation shall be deemed not to be outstanding at such time. SECTION 4.6. Reimbursement. The obligation of each Borrower (a "Reimbursement Obligation") under Section 4.5 to reimburse the Issuer with respect to each Disbursement (including interest thereon) with respect to each Letter of Credit issued on such Borrower's application, and each Lender's obligation to make participation payments in each drawing which has not been reimbursed by the Borrower, shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim, or defense to payment which the applicable Borrower may have or have had against any Lender or any beneficiary of a Letter of Credit, including any defense based upon the occurrence of any Default, any draft, demand or certificate or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient, the failure of any Disbursement to conform to the terms of the applicable Letter of Credit (if, in the Issuer's opinion, such Disbursement conforms to the terms of the applicable Letter of Credit, unless such determination is the result of the Issuer's gross negligence or wilful misconduct) or any non-application or misapplication by the beneficiary of the proceeds of such Disbursement, or the legality, validity, form, regularity, or enforceability of such Letter of Credit; provided, however, that nothing herein shall adversely affect the right of the applicable Borrower to commence any proceeding against the Issuer for any wrongful Disbursement made by the Issuer under a Letter of Credit as a result of acts or omissions constituting gross negligence or wilful misconduct on the part of the Issuer. SECTION 4.7. Deemed Disbursements. Upon the occurrence and during the continuation of any Event of Default or the occurrence of the Commitment Termination Date, an amount equal to that portion of Letter of Credit Outstandings attributable to outstanding and undrawn Letters of Credit shall, at the election of the Issuer acting on instructions from the Required Lenders, and without demand upon or notice to the applicable Borrower, be deemed to have been paid or disbursed by the Issuer under such Letters of Credit (notwithstanding that such amount may not in fact have been so paid or disbursed), and, upon notification by the Issuer to the Agent and the applicable Borrower of its obligations under this Section, the applicable Borrower shall be immediately obligated to reimburse the Issuer the amount deemed to have been so paid or disbursed by the Issuer. Any amounts so received by the Issuer from the applicable Borrower pursuant to this Section shall be held as collateral security for the repayment of the applicable Borrower's obligations in connection with the Letters of Credit issued by the Issuer. At any time when such Letters of Credit shall terminate and all Obligations of the Issuer are either terminated or paid or reimbursed to the Issuer in full, the Obligations under this Section shall be reduced accordingly (subject, however, to reinstatement in the event any payment in respect of such Letters of Credit is recovered in any manner from the Issuer), and the Issuer will return to the Borrowers the excess, if any, of (a) the aggregate amount deposited by the applicable Borrower with the Issuer and not theretofore applied by the Issuer to any Reimbursement Obligation or other Obligation over (b) the aggregate amount of all Reimbursement Obligations to the Issuer pursuant to this Section, as so adjusted and other Obligations. At such time when all Events of Default shall have been cured or waived or when all Obligations of the Borrowers shall have been terminated, paid, or otherwise satisfied in full, the Issuer shall return to the Borrowers all amounts then on deposit with the Issuer pursuant to this Section. SECTION 4.8. Nature of Reimbursement Obligations. The Borrowers shall assume all risks of the acts, omissions, or misuse of any Letter of Credit by the beneficiary thereof. Neither the Issuer nor any Lender (except to the extent of its own gross negligence or wilful misconduct) shall be responsible for: (a) the form, genuineness, or legal effect of any Letter of Credit or the form, validity, sufficiency, accuracy, genuineness, or legal effect of any document submitted by any party in connection with the application for and issuance of a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent, or forged; (b) the form, validity, sufficiency, accuracy, genuineness, or legal effect of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof in whole or in part, which may prove to be invalid or ineffective for any reason; (c) failure of the beneficiary to comply fully with conditions required in order to demand payment under a Letter of Credit; (d) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, or otherwise; or (e) any loss or delay in the transmission or otherwise of any document or draft required in order to make a Disbursement under a Letter of Credit or of the proceeds thereof. SECTION 4.9. Increased Costs; Indemnity. If by reason of (a) any change in applicable law, regulation, rule, decree or regulatory requirement or any change in the interpretation or application by any judicial or regulatory authority of any law, regulation, rule, decree or regulatory requirement, or (b) compliance by the Issuer or any Lender with any direction, request or requirement (whether or not having the force of law) of any governmental or monetary authority, including Regulation D of the F.R.S. Board: (i) the Issuer or any Lender shall be subject to any tax (other than taxes on net income and franchises), levy, charge or withholding of any nature or to any variation thereof or to any penalty with respect to the maintenance or fulfillment of its obligations under this Article IV, whether directly or by such being imposed on or suffered by the Issuer or any Lender; (ii) any reserve, deposit or similar requirement is or shall be applicable, imposed or modified in respect of any Letters of Credit issued by the Issuer or participations therein purchased by any Lender; or (iii) there shall be imposed on the Issuer or any Lender any other condition regarding this Article IV, any Letter of Credit or any participation therein; and the result of the foregoing is directly or indirectly to increase the cost to the Issuer or such Lender of issuing, making or maintaining any Letter of Credit or of purchasing or maintaining any participation therein, or to reduce any amount receivable in respect thereof by the Issuer or such Lender, then and in any such case the Issuer or such Lender may, at any time after the additional cost is incurred or the amount received is reduced, notify the Borrower on whose application such Letter of Credit was issued thereof, and such Borrower agrees to pay no later than three days after demand such amounts as the Issuer or Lender may specify to be necessary to compensate the Issuer or Lender for such additional cost or reduced receipt, together with interest on such amount from the date due until payment in full thereof at a rate equal at all times to the Prime Rate plus 2% per annum. The determination by the Issuer or Lender, as the case may be, of any amount due pursuant to this Section, as set forth in a statement setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest error, be final and conclusive and binding on all of the parties hereto. In addition to amounts payable as elsewhere provided in this Article IV, the Borrower on whose application such Letter of Credit was issued agrees to protect, indemnify, pay and save the Issuer harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees and allocated costs of internal counsel) which the Issuer may incur or be subject to as a consequence, direct or indirect, of (c) the issuance of any Letter of Credit, other than as a result of the gross negligence or wilful misconduct of the Issuer as determined by a court of competent jurisdiction or other than with respect to the validity, sufficiency or accuracy of any Letter of Credit, or (d) the failure of the Issuer to honor a drawing under any Letter of Credit requested by such Borrower as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority. SECTION 4.10. Uniform Customs. Each Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits, 1993 Revisions, ICC Publication No. 500. ARTICLE V CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS SECTION 5.1. Eurocurrency Rate Lending Unlawful. If any Lender shall determine in good faith (which determination shall, upon notice thereof to the Borrowers and the Lenders, be conclusive and binding) that the introduction of or any change in or in the interpretation of any law makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender to make, continue or maintain any Loan as, or to convert any Loan into, a Eurocurrency Rate Loan of a certain Available Currency, the obligations of all Lenders to make, continue, maintain or convert into any such Loans shall, upon such determination, forthwith be suspended until such Lender shall notify the Agent that the circumstances causing such suspension no longer exist, and all Eurocurrency Rate Loans of such Available Currency shall automatically convert into Prime Rate in an amount equal to the Dollar Amount thereof at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion. SECTION 5.2. Deposits Unavailable. If the Agent shall have determined that (a) deposits in the relevant Available Currency in the relevant amount and for the relevant Interest Period are not available to ABN in its relevant market; or (b) by reason of circumstances affecting ABN's relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to Eurocurrency Rate Loans of such type, then, upon notice from the Agent to the Borrowers and the Lenders, the obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue any Loans as, or to convert any Loans into, Eurocurrency Rate Loans of such Available Currency shall forthwith be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 5.3. Increased Eurocurrency Rate Loan Costs, etc. Each Borrower agrees to reimburse any Lender if, as a result of any change in any law, regulation, treaty or directive, or in any regulatory interpretation or application thereof or compliance by such Lender with any request or directive (whether or not having the force of law) from any court or governmental authority, agency or central bank (i) the basis of taxation of payments to such Lender of the principal of or interest on any Eurocurrency Rate Loan (other than taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office) is changed; (ii) any reserve, special deposit or similar requirements against assets of, deposits with or for the account of, or credit extended by, such Lender are imposed, modified or deemed applicable; or (iii) any other condition affecting this Agreement or any Eurocurrency Rate Loan is imposed on the interbank eurocurrency market; and such Lender determines that, by reason thereof, the cost to such Lender of making or maintaining any of the Eurocurrency Rate Loans is actually increased, or the amount of any sum receivable by such Lender hereunder in respect of any of the Eurocurrency Rate Loans is actually reduced; then the applicable Borrower shall pay to such Lender within three Business Days after demand (which demand shall be accompanied by a statement setting forth the basis for the calculation thereof but only to the extent not theretofore provided to the applicable Borrower) such additional amount or amounts as will compensate such Lender for such additional cost or reduction to the extent such cost or reduction has not been provided for in the calculation of the Eurocurrency Reserve Percentage. Determinations by such Lender for purposes of this section of the additional amounts required to compensate such Lender in respect of the foregoing shall be rebuttably presumed to be correct. SECTION 5.4. Funding Losses. In the event any Lender shall incur any loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a Eurocurrency Rate Loan) as a result of (a) any conversion or repayment or prepayment of the principal amount of any Eurocurrency Rate Loans on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3.1 or otherwise; (b) any Loans not being made as Eurocurrency Rate Loans in accordance with the Borrowing Request therefor; or (c) any Loans not being continued as, or converted into, Eurocurrency Rate Loans in accordance with the Continuation/Conversion Notice therefor, then, the applicable Borrower agrees that upon the written notice of such Lender (with a copy to the Agent), such Borrower shall pay directly to such Lender upon demand such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. SECTION 5.5. Increased Capital Costs. If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in its sole and absolute discretion) that the rate of return on its or such controlling Person's capital as a consequence of its Commitments, issuance of or participation in Letters of Credit or the Loans made by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender, the Borrowers agree immediately to pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return. A statement of such Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrowers. In determining such amount, such Lender may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable. SECTION 5.6. Taxes. All payments by any of the Borrowers of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (such non-excluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made by a Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the applicable Borrower agrees to (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (c) pay to the Agent for the account of the Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against the Agent or any Lender with respect to any payment received by the Agent or such Lender hereunder, the Agent or such Lender may pay such Taxes and the applicable Borrower agrees to promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such person would have received had not such Taxes been asserted. If the applicable Borrower fails to pay any Taxes when due to the appropriate taxing authority or fail to remit to the Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the applicable Borrower shall indemnify the Lenders for any incremental Taxes, interest or penalties that may become payable by any Lender as a result of any such failure. For purposes of this Section 5.6, a distribution hereunder by the Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower. Upon the request of Simpson or the Agent, each Lender that is organized under the laws of a jurisdiction other than the United States shall, prior to the due date of any payments under the Notes, execute and deliver to Simpson and the Agent, on or about the first scheduled payment date in each Fiscal Year, one or more (as Simpson or the Agent may reasonably request) United States Internal Revenue Service Forms 4224 or Forms 1001 or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable to establish the extent, if any, to which a payment to such Lender is exempt from withholding or deduction of Taxes. Notwithstanding anything to the contrary herein, the Borrowers shall not be responsible for any Taxes on the transfer by assignment or sale of a participation of any interest herein, nor shall the liability of the Borrowers under this Section 5.6 be increased by reason of any assignment or sale of a participation, except upon any change in law arising after said assignment or sale. SECTION 5.7. Payments, Computations, etc. (a) Currency of Payments. Each payment on account of an amount due from any Borrower hereunder shall be made by such Borrower to the Agent for the pro rata account of the Lenders entitled to receive such payment in the currency in which such amount is denominated and in such funds as are customary at the place and time of payment for the settlement of international payments in such currency. Upon request, the Agent will give the applicable Borrower a statement showing the computation used in calculating such amount, which statement shall be conclusive in the absence of manifest error. The obligation of the Borrowers to make each payment on account of such amount in the currency in which such amount is denominated shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any other currency, except to the extent such tender or recovery shall result in the actual receipt by the Agent of the full amount in the appropriate currency payable hereunder. Each Borrower agrees that its obligation to make each payment on account of such amount in the currency in which such amount is denominated shall be enforceable as an additional or alternative claim for recovery in such currency of the amount (if any) by which such actual receipt shall fall short of the full amount of such currency payable hereunder, and shall not be affected by judgment being obtained for such amount. (b) Conversion of Currencies. If for the purpose of obtaining judgment in any court it is necessary to convert an amount in any currency due from the Borrowers hereunder (hereinafter called the "Original Currency") into another currency (hereinafter called the "Other Currency"), the rate of exchange which shall be applied shall, to the fullest extent permitted by applicable law, be that at which the Agent could purchase, in Chicago, Illinois, in accordance with normal banking procedures, the Original Currency with the Other Currency on the Business Day preceding that on which final judgment is given. (c) Remittance to Lenders; Basis for Payments. The Agent shall promptly remit in same day funds to each Lender its share, if any, of such payments received by the Agent for the account of such Lender. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days (or, in the case of interest on Prime Rate Loan (other than when calculated with respect to the Federal Funds Rate) or Eurocurrency Rate Loans denominated in Pounds Sterling, 365 days or, if appropriate, 366 days). Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by clause (c) of the definition of the term "Interest Period" with respect to Eurocurrency Rate Loans) be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment. (d) Place of Payment. All payments hereunder shall be made to Agent in immediately available funds prior to 10:00 A.M., Chicago time on the date due at its office at 335 Madison Ave., N.Y., N.Y. 10017, or at such other place as may be designated by the Agent to Simpson in writing. Any payments received after such time shall be deemed received on the next succeeding Business Day. The Agent may, but shall not be obligated to, charge the account of any Borrower for the payment when due of all amounts payable by such Borrower hereunder. SECTION 5.8. Sharing of Payments. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to the terms of Sections 5.3, 5.4 and 5.5) or Letter of Credit in excess of its pro rata share of payments then or therewith obtained by all Lenders, such Lender shall purchase from the other Lenders such participations in Loans made by them and/or Letters of Credit as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender's ratable share (according to the proportion of (a) the amount of such selling Lender's required repayment to the purchasing Lender to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 5.9) with respect to such participation as fully as if such Lender were the direct creditor of the applicable Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim. SECTION 5.9. Setoff. Each Lender shall, upon the occurrence of any Default described in clauses (a) through (d) of Section 9.1.9 or any other Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due), and (as security for such Obligations) each Borrower hereby grants to each Lender a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of each such Borrower then or thereafter maintained with or otherwise held by such Lender; provided, however, that any such appropriation and application shall be subject to the provisions of Section 5.8. Each Lender agrees promptly to notify the applicable Borrower and the Agent after any such setoff and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have. SECTION 5.10. Use of Proceeds. The Borrowers shall use the proceeds of each Borrowing to finance acquisitions and for general corporate purposes. ARTICLE VI CONDITIONS PRECEDENT SECTION 6.1. Initial Credit Extension. The obligations of the Lenders to make the initial Credit Extension shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 6.1. SECTION 6.1.1. Resolutions, etc. The Agent shall have received from each Borrower a certificate, dated the date of the initial Borrowing, of its Secretary or Assistant Secretary as to (a) certified copies of its articles of incorporation and by-laws or comparable documentation in the case of foreign Borrowers; (b) resolutions of its board of directors then in full force and effect authorizing the execution, delivery and performance of this Agreement, the Notes and each other Loan Document to be executed by it; (c) the incumbency and signatures of those of its officers authorized to act with respect to this Agreement, the Notes and each other Loan Document executed by it; and (d) the incumbency and signature of the chief financial officer, the treasurer and any assistant treasurer of Simpson; upon which certificate each Lender may conclusively rely until it shall have received a further certificate of the Secretary of such Borrower canceling or amending such prior certificate. SECTION 6.1.2. Delivery of Notes. The Agent shall have received, for the account of each Lender, its Notes duly executed and delivered by the Borrowers. SECTION 6.1.3. Outstanding Indebtedness, etc. (a) All Indebtedness under that Third Amended and Restated Revolving Credit Agreement, dated as of August 1, 1996, between the Borrower and Comerica Bank, a Michigan Banking Corporation, together with all interest, all prepayment premiums and other amounts due and payable with respect thereto, shall have been paid in full (including, to the extent necessary, from proceeds of the initial Borrowing) and the related commitments terminated; and all Liens securing payment of any such Indebtedness have been released and the Agent shall have received all Uniform Commercial Code Form UCC-3 termination statements or other instruments as may be suitable or appropriate in connection therewith. (b) The Borrowers shall have obtained and delivered any amendments to agreements regarding Indebtedness existing as of the Effective Date which are necessary to permit the transactions contemplated by this Agreement. SECTION 6.1.4. Delivery of Simpson Guaranty. The Agent shall have received the Simpson Guaranty duly executed and delivered by Simpson. SECTION 6.1.5. Opinions of Counsel. The Agent shall have received the opinion, dated the date of the initial Borrowing and addressed to the Agent and all Lenders, from Dykema Gossett PLLC, substantially in the form of Exhibit I hereto. SECTION 6.1.6. Regulatory Restriction. All regulatory approvals and licenses necessary to the execution, delivery and performance of the Agreement and the Loan Documents shall have been obtained and be in full force and effect and such execution, delivery and performance shall not be prohibited or restricted in any material way pursuant to any law or regulation. SECTION 6.1.7. Closing Fees, Expenses, etc. The Agent shall have received for its own account, or for the account of each Lender, as the case may be, all fees, costs and expenses due and payable pursuant to Sections 3.3 and 11.3, if then invoiced. SECTION 6.2. All Credit Extensions. The obligation of each Lender to make any Credit Extension (including the initial Credit Extension) shall be subject to the satisfaction of each of the conditions precedent set forth in this Section 6.2. SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both before and after giving effect to any Credit Extension (but, if any Default of the nature referred to in Section 9.1.5 shall have occurred with respect to any other Indebtedness, without giving effect to the application, directly or indirectly, of the proceeds of any Borrowing) the following statements shall be true and correct (a) the representations and warranties set forth in Article VII (excluding, however, those contained in Section 7.8) shall be true and correct with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); (b) except as disclosed by the Borrowers to the Agent and the Lenders pursuant to Section 7.8 (i) no litigation, arbitration, or governmental investigation, proceeding or inquiry shall be pending or, to the knowledge of the Borrowers, threatened against any Borrower which, if adversely determined, would materially adversely affect the business, operations, assets, revenues or financial condition of Simpson and its Subsidiaries taken as a whole; and (ii) no development shall have occurred in any such litigation, arbitration or governmental investigation, proceeding or inquiry so disclosed, which, if adversely determined, would materially adversely affect the business, operations, assets, revenues or financial condition of Simpson and its Subsidiaries taken as a whole. (c) no Default shall have then occurred and be continuing, and neither Simpson nor any of its Subsidiaries are in violation of any applicable law or governmental regulation or court order or decree which would materially adversely affect the business, operations, assets, revenues or financial condition of Simpson and its Subsidiaries taken as a whole. SECTION 6.2.2. Credit Request. The Agent shall have received the related Borrowing Request or Issuance Request, as the case may be, for such Credit Extension, which Borrowing Request or Issuance Request will include a statement that all conditions to such Borrowing have been met. Each of the delivery of a Borrowing Request or an Issuance Request and the acceptance by any Borrower of the proceeds of the Borrowing or the issuance of the Letter of Credit, as applicable, shall constitute a representation and warranty by the Borrowers that on the date of such Borrowing (both immediately before and after giving effect to such Borrowing and the application of the proceeds thereof) or the issuance of the Letter of Credit, as applicable, the statements made in Section 6.2.1 are true and correct. SECTION 6.2.3. Satisfactory Legal Form. All documents executed or submitted pursuant hereto by or on behalf of any Borrower or any other Subsidiary shall be satisfactory in form and substance to the Agent and its counsel; the Agent and its counsel shall have received all information, approvals, opinions, documents or instruments as the Agent or its counsel may reasonably request. ARTICLE VII REPRESENTATIONS AND WARRANTIES In order to induce the Lenders and the Agent to enter into this Agreement and to make Loans and issue Letters of Credit hereunder, the Borrowers represent and warrant unto the Agent and each Lender as set forth in this Article VII. SECTION 7.1. Organization, etc. Each of the Borrowers is a corporation validly organized and existing and in good standing under the laws of the jurisdiction of its incorporation, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business or properties requires such qualification, and has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into and perform its Obligations under this Agreement, the Notes and each other Loan Document to which it is a party and to own and hold under lease its property and to conduct its business substantially as currently conducted by it. SECTION 7.2. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by each of the Borrowers of this Agreement, the Notes and each other Loan Document executed or to be executed by it, are within each such Borrower's powers, have been duly authorized by all necessary action, and do not (a) contravene such Borrower's Organic Documents; (b) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting such Borrower; or (c) result in, or require the creation or imposition of, any Lien on any of such Borrower's properties. SECTION 7.3. Government Approval, Regulation, etc. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by any of the Borrowers of this Agreement, the Notes or any other Loan Document to which it is a party. No Borrower nor any of its Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 7.4. Validity, etc. This Agreement constitutes, and the Notes and each other Loan Document executed by each of the Borrowers will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of such Borrower enforceable in accordance with their respective terms. SECTION 7.5. Financial Information. The consolidated balance sheets of Simpson as at December 31, 1996, and the related consolidated statements of earnings and cash flow of Simpson, copies of which have been furnished to the Agent and each Lender, have been prepared in accordance with GAAP consistently applied, and present fairly the consolidated financial condition of the corporations covered thereby as at the dates thereof and the results of their operations for the periods then ended. SECTION 7.6. No Material Adverse Change. Since the date of the financial statements described in Section 7.5, there has been no material adverse change in the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries taken as a whole. SECTION 7.7. Environmental Warranties. Except as set forth in Item 7.7 ("Environmental Matters") of the Disclosure Schedule: (a) all facilities and property (including underlying groundwater) owned or leased by Simpson or any of its Subsidiaries have been, and continue to be, owned or leased by Simpson and its Subsidiaries in material compliance with all Environmental Laws; (b) there have been no past, and there are no pending or to Simpson's knowledge threatened (i) claims, complaints, notices or requests for information received by Simpson or any of its Subsidiaries with respect to any alleged violation of any Environmental Law, or (ii) complaints, notices or inquiries to Simpson or any of its Subsidiaries regarding potential liability under any Environmental Law; (c) there have been no Releases of Hazardous Materials at, on or under any property now or previously owned or leased by Simpson or any of its Subsidiaries that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries; (d) Simpson and its Subsidiaries have been issued and are in material compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary or desirable for their businesses; (e) no property now or previously owned or leased by Simpson or any of its Subsidiaries is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up; (f) there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now or previously owned or leased by Simpson or any of its Subsidiaries that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries; (g) neither Simpson nor any of its Subsidiaries has directly transported or directly arranged for the transportation of any Hazardous Material to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations which may lead to material claims against Simpson or such Subsidiary thereof for any remedial work, damage to natural resources or personal injury, including claims under CERCLA; (h) there are no polychlorinated biphenyls or friable asbestos present at any property now or previously owned or leased by Simpson or any of its Subsidiaries that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries; and (i) no conditions exist at, on or, to Simpson's knowledge, under any property now or previously owned or leased by Simpson or any of its Subsidiaries which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law. SECTION 7.8. Litigation, Labor Controversies, etc. There is no pending or, to the knowledge of any Borrower, threatened litigation, action, proceeding, or labor controversy affecting Simpson or its Subsidiaries, or any of their respective properties, businesses, assets or revenues, which may materially adversely affect the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries taken as a whole or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document, except as disclosed in Item 7.8 ("Litigation") of the Disclosure Schedule. SECTION 7.9. Subsidiaries. Neither Simpson nor any other Borrower has any Subsidiaries or Significant Subsidiaries other than those (a) which are identified in Item 7.9 ("Existing Subsidiaries") of the Disclosure Schedule; or (b) which are permitted to have been acquired in accordance with Section 8.2.4 or 8.2.5. SECTION 7.10. Ownership of Properties. Each Borrower and each of its Subsidiaries owns good and marketable title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges or claims (including infringement claims with respect to patents, trademarks, copyrights and the like) except as permitted pursuant to Section 8.2.2. SECTION 7.11. Taxes. Each Borrower and each of its Subsidiaries has filed all tax returns and reports required by law to have been filed by it (unless any extension period properly obtained with respect thereto shall not have expired) and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 7.12. Pension and Welfare Plans. During the twelve-consecutive - -month period prior to the date of the execution and delivery of this Agreement and prior to the date of any Borrowing hereunder, no steps have been taken to terminate any Pension Plan, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which might result in the incurrence by Simpson or any member of the Controlled Group of any material liability, fine or penalty. Except as disclosed in Item 7.12 ("Employee Benefit Plans") of the Disclosure Schedule, neither Simpson nor any member of the Controlled Group has any contingent liability with respect to any post- retirement benefit under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA. SECTION 7.13. Regulations G, U and X. No Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loans will be used for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings. SECTION 7.14. Accuracy of Information. All material factual information heretofore or contemporaneously furnished by or on behalf of any Borrower in writing to the Agent or any Lender for purposes of or in connection with this Agreement is, and all other such material factual information hereafter furnished by or on behalf of such Borrower to the Agent or any Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified and as of the date of execution and delivery of this Agreement by the Agent and such Lender, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. SECTION 7.15. Solvency. Each Subsidiary Borrower is Solvent. ARTICLE VIII COVENANTS SECTION 8.1. Affirmative Covenants. The Borrowers agree with the Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, the Borrowers will perform the obligations set forth in this Section 8.1. SECTION 8.1.1. Legal Existence. Each Borrower shall, and shall cause each Subsidiary to: (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses, franchises and contracts necessary or desirable in the normal conduct of its business; (c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill; and (d) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. SECTION 8.1.2. Financial Information, Reports, Notices, etc. Simpson will furnish, or will cause to be furnished, to each Lender and the Agent copies of the following financial statements, reports, notices and information: (a) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of Simpson, consolidated balance sheets of Simpson and its Subsidiaries as of the end of such Fiscal Quarter and consolidated statements of earnings and cash flow of Simpson and its Subsidiaries for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, certified by the chief financial officer, treasurer or assistant treasurer of Simpson; (b) as soon as available and in any event within 90 days after the end of each Fiscal Year of Simpson a copy of the annual audit report for such Fiscal Year for Simpson and its Subsidiaries, including therein consolidated balance sheets of Simpson and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of earnings and cash flow of Simpson and its Subsidiaries for such Fiscal Year, in each case certified (without any Impermissible Qualification) in a manner reasonably acceptable to the Agent and the Required Lenders by KPMG Peat Marwick or other independent public accountants reasonably acceptable to the Agent and the Required Lenders, together with a report from such accountants containing a computation of, and showing compliance with, each of the financial ratios and restrictions contained in Section 8.2.3 and to the effect that, in making the examination necessary for the signing of such annual report by such accountants, they have not become aware of any Default that has occurred and is continuing, or, if they have become aware of such Default, describing such Default and the steps, if any, being taken to cure it; (c) as soon as available and in any event within 90 days after the end of each Fiscal Year of Simpson, consolidating balance sheets of Simpson and its Subsidiaries as of the end of such Fiscal Year and consolidating statements of earnings and cash flow of Simpson and its Subsidiaries for such Fiscal Year, in each case certified by the chief financial officer, treasurer or assistant treasurer of Simpson. (d) as soon as possible and in any event within 90 days after the end of each Fiscal Year of Simpson, annual financial projections for the following three Fiscal Years; (e) together with the delivery of financial statements in clauses (a) and (b) above, a Compliance Certificate showing (in reasonable detail and with appropriate calculations and computations in all respects satisfactory to the Agent) compliance with the financial covenants set forth in Section 8.2.3 and stating that no Default has occurred and is continuing; (f) as soon as possible and in any event within five days after any officer of a Borrower shall be aware of the occurrence of each Default (other than a Default described in Section 9.1.1 or Section 9.1.5), a statement of the chief financial officer, treasurer or assistant treasurer of Simpson setting forth details of such Default and the action which the applicable Borrower has taken and proposes to take with respect thereto; (g) immediately upon the occurrence of any Default described in Section 9.1.1 or Section 9.1.5, a statement of the chief financial officer, treasurer or assistant treasurer of Simpson setting forth details of such Default and the action which Simpson has taken and proposes to take with respect thereto; (h) within ten days after the sending or filing thereof, copies of all reports which Simpson sends to any of its securityholders, and all reports and registration statements which Simpson or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; (i) as soon as possible and in any event within five days after (x) the occurrence of any material adverse development with respect to any litigation, action, proceeding, or labor controversy described in Section 7.8 or (y) the commencement of, and if and when applicable, the subsequent occurrence of any material adverse development with respect to, any labor controversy, litigation, action, proceeding, in each case, of the type described in Section 7.8, notice thereof and copies of all documentation relating thereto; (j) immediately upon becoming aware of the institution of any steps by any Borrower or any other Person to terminate any Pension Plan, or the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA, or the taking of any action with respect to a Pension Plan which could result in the requirement that the Borrower or Subsidiary furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan which could result in the incurrence by any Borrower or any Subsidiary of any material liability, fine or penalty, or any material increase in the contingent liability of any Borrower or any Subsidiary with respect to any post-retirement Welfare Plan benefit, notice thereof and copies of all documentation relating thereto; (k) such other information respecting the condition or operations, financial or otherwise, of any Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. SECTION 8.1.3. Compliance with Laws, etc. Each Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all applicable laws, rules, regulations and orders, where noncompliance would result in a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries taken as a whole, such compliance to include (without limitation): (a) the maintenance and preservation of its legal existence and qualification as a foreign corporation; and (b) the payment, before the same become delinquent, of all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 8.1.4. Maintenance of Properties. Each Borrower will, and will cause each of its Subsidiaries to, maintain, preserve, protect and keep its properties in good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times unless such Borrower determines in good faith that the continued maintenance of any of its, or its Subsidiaries' properties is no longer economically desirable. SECTION 8.1.5. Insurance. Each Borrower will, and will cause each of its Subsidiaries to, maintain or cause to be maintained with responsible insurance companies insurance with respect to its properties and business (including business interruption insurance) against such casualties and contingencies and of such types, in such amounts and with such deductibles as is customary in the case of similar businesses and will, upon request of the Agent, furnish to each Lender at reasonable intervals a certificate of an Authorized Officer of Simpson setting forth the nature and extent of all insurance maintained by Simpson and its Subsidiaries in accordance with this Section. SECTION 8.1.6. Books, Records and Access. Subject to Section 8.1.2, each Borrower will maintain, and cause each of its Subsidiaries to maintain, complete and accurate books and records in which full and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to its respective business and activities. Each Borrower will permit, and cause each of its Subsidiaries to permit, access by the Lenders to the books and records of each Borrower and each of its Subsidiaries during normal business hours and permit, and cause each Subsidiary to permit, the Lenders to make copies of such books and records. SECTION 8.1.7. Environmental Covenant. Each Borrower will, and will cause each of its Subsidiaries to, (a) use and operate all of its facilities and properties in material compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in material compliance therewith, and handle all Hazardous Materials in material compliance with all applicable Environmental Laws; (b) immediately notify the Agent and provide copies upon receipt of all material written claims, complaints, notices or inquiries relating to the condition of its facilities and properties or compliance with Environmental Laws; and (c) provide such information and certifications which the Agent may reasonably request from time to time to evidence compliance with this Section 8.1.7. SECTION 8.1.8. Guaranty. The Borrowers shall cause each U.S. Subsidiary which is a Significant Subsidiary to deliver a Guaranty. SECTION 8.2. Negative Covenants. Each Borrower agrees with the Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, the Borrowers will perform the obligations set forth in this Section 8.2. SECTION 8.2.1. Business Activities. The Borrowers will not, and will not permit any of their Subsidiaries to, engage, to any material extent, in any business activity except business activities similar to present lines of business and such activities as may be incidental or related thereto. SECTION 8.2.2. Liens. Simpson will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any asset, whether now owned or hereafter acquired, except: (a) Liens existing on the date of this Agreement and identified on Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure Schedule, securing Indebtedness outstanding on the date of this Agreement described in said Item; (b) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and not for which adequate reserves in accordance with GAAP shall have been set aside on its books; (c) Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (d) Liens incurred in the ordinary course of business other than in connection with borrowed money; (e) judgment Liens in existence less than 15 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; (f) Liens in connection with Capitalized Lease Liabilities in amounts permitted hereunder; and (g) Liens on newly acquired assets of, and stock of, special purpose entities. SECTION 8.2.3. Financial Condition. Simpson shall not permit: (a) the ratio, on a consolidated basis for Simpson and its Subsidiaries as at the end of any Fiscal Quarter for the four Fiscal Quarters then ending, of EBITDA to interest expense to be less than 3.0 to 1.0; (b) the Funded Debt to EBITDA Ratio to exceed 3.5 to 1.0; or (c) the Net Worth of Simpson at any time to be less than $100,000,000 plus 50% of net income (if any) for each Fiscal Quarter after the date hereof plus 50% of the proceeds of any equity issuance by Simpson or any Subsidiary after the date hereof less non-cash charges for plant closings in the U.S. after the date hereof in an amount not to exceed $5,000,000. SECTION 8.2.4. Acquisitions. The Borrowers will not, and will not permit any of their Subsidiaries to, acquire all or substantially all of the stock (or other ownership interests) or, all or substantially all of the assets of any Person except the acquisition of stock (or other ownership interests) or assets in an entity which is in a business that is the same, similar, related or incidental to the business activities described in Section 8.2.1 hereof pursuant to a transaction which is approved by the Board of Directors of the acquired entity, with respect to which a Borrower is the surviving entity and with respect to which the resulting entity would be in pro forma compliance with this Agreement as evidenced by a certificate of the chief financial officer, treasurer or assistant treasurer of Simpson in form satisfactory to the Required Lenders, which certificate shall have been delivered at least fourteen days prior to the consummation of such transaction. SECTION 8.2.5. Investments. The Borrowers will not, and will not permit any of their Subsidiaries to, make, incur, assume or suffer to exist any Investment in any other Person, except: (a) Investments existing on the Effective Date and identified in Item 8.2.5(a) ("Ongoing Investments") of the Disclosure Schedule; (b) Cash Equivalent Investments; (c) without duplication, Investments permitted as Indebtedness pursuant to Section 8.2.6; (d) without duplication, Investments permitted as Capital Expenditures pursuant to Section 8.2.8; (e) without duplication, Investments permitted under Section 8.2.4; (f) in the ordinary course of business, Investments at any time outstanding by any Borrower in any of its Subsidiaries, or by any such Subsidiary in any of its Subsidiaries, by way of contributions to capital or loans or advances, not to exceed in the aggregate 50% of the Tangible Net Worth of Simpson and its Subsidiaries; and (g) other Investments in an aggregate amount at any one time not to exceed $10,000,000; provided, however, that (x) any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; and (y) no Investment otherwise permitted by clause (e) or (f) shall be permitted to be made if, immediately before or after giving effect thereto, any Default shall have occurred and be continuing. SECTION 8.2.6. Indebtedness. (a) The Borrowers will not, and will not permit any of their Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following: (i) Indebtedness in respect of the Loans and other Obligations; (ii) until the date of the initial Borrowing, Indebtedness identified in Item 8.2.6(a)(ii) ("Indebtedness to be Paid") of the Disclosure Schedule; (iii) Indebtedness existing as of the Effective Date which is identified in Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure Schedule; (iv) Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any time outstanding which is incurred by any Borrower or any of its Subsidiaries to a vendor of any assets to finance its acquisition of such assets; (v) unsecured Indebtedness incurred in the ordinary course of business (including open accounts extended by suppliers on normal trade terms in connection with purchases of goods and services, but excluding Indebtedness incurred through the borrowing of money or Contingent Liabilities); (vi) Indebtedness in respect of Capitalized Lease Liabilities in amounts not in excess of $10,000,000 at any time outstanding; (vii) Subordinated Debt; (viii) other Indebtedness of the Borrowers and their Subsidiaries in an aggregate amount not to exceed $10,000,000; and (ix) other Indebtedness, provided that the net proceeds of such other Indebtedness are used to repay, on a pro rata basis, Indebtedness under this Agreement and the Companion Agreement, and further provided, that the Commitments under this Agreement and the Commitments (as defined in the Companion Agreement) shall be reduced, on a pro rata basis, by the amount of the net proceeds in excess of $50,000,000 of such other Indebtedness; provided, however, that no Indebtedness otherwise permitted by clauses (iv), (v), (vi), (vii), (viii) or (ix) shall be permitted if, after giving effect to the incurrence thereof, any Default shall have occurred and be continuing. (b) Simpson shall not permit any Indebtedness of any of its Subsidiaries to exist except: (i) Indebtedness to Simpson or another Subsidiary; and (ii) Indebtedness in an amount which, when added to the amount of Indebtedness of Simpson subject to Liens (other than Liens described in Sections 8.2.2(b) and (c)), shall not exceed 15% of the sum of the total Indebtedness of Simpson and its Subsidiaries and the Net Worth of Simpson and its Subsidiaries. SECTION 8.2.7. Subordinated Debt. On and at all times after the Effective Date the Borrowers will not make any prepayments on any Subordinated Debt. SECTION 8.2.8. Capital Expenditures, etc. The Borrowers will not, and will not permit any of their Subsidiaries to, make or commit to make Capital Expenditures in any Fiscal Year, except Capital Expenditures which do not aggregate in excess of the amount set forth below opposite such Fiscal Year: 1997 $45,000,000 1998 $45,000,000 1999 $50,000,000 2000 and each Fiscal Year thereafter $55,000,000; provided, however, that the Borrowers may make additional Capital Expenditures for new plant openings in an aggregate amount not to exceed $20,000,000. SECTION 8.2.9. Rental Obligations. The Borrowers will not, and will not permit any of their Subsidiaries to, enter into at any time any arrangement which does not create a Capitalized Lease Liability and which involves the leasing by any Borrower or any of its Subsidiaries from any lessor of any real or personal property (or any interest therein), except arrangements which, together with all other such arrangements which shall then be in effect, will not require the payment of an aggregate amount of rentals by the Borrowers and their Subsidiaries in excess of $5,000,000 for any Fiscal Year; provided, however, that any calculation made for purposes of this Section shall exclude any amounts required to be expended for maintenance and repairs, insurance, taxes, assessments, and other similar charges. SECTION 8.2.10. Sale/Leaseback. The Borrowers will not, and will not permit any of their Subsidiaries to, sell or otherwise transfer any assets with the intent to lease such assets as lessee other than the transfer of Simpson's headquarters so long as the headquarters so transferred shall have a value not in excess of $15,000,000. SECTION 8.2.11. Consolidation, Merger, Etc. The Borrowers will not, and will not permit any of their Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with, any other corporation, or purchase or otherwise acquire all or substantially all of the assets of any Person (or of any division thereof) except any such Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, a Borrower or any other Subsidiary, and the assets or stock of any Subsidiary may be purchased or otherwise acquired by a Borrower or any other Subsidiary except that a Borrower and any Subsidiary may enter into a consolidation, merger or acquisition so long as a Borrower (if a party) or a Subsidiary (if no Borrower is a party) shall be the surviving entity and the surviving entity would be in pro forma compliance with this Agreement as evidenced by a certificate of the chief financial officer, treasurer or assistant treasurer of Simpson in form satisfactory to the Required Lenders. SECTION 8.2.12. Asset Dispositions, etc. The Borrowers will not, and will not permit any of their Subsidiaries to, sell, transfer, lease, contribute or otherwise convey, or grant options, warrants or other rights with respect to, all or any substantial part of its assets (including accounts receivable and capital stock of Subsidiaries) to any Person, unless (a) such sale, transfer, lease, contribution or conveyance is in the ordinary course of its business; or (b) the net book value of such assets, together with the net book value of all other assets sold, transferred, leased, contributed or conveyed otherwise than in the ordinary course of business by the Borrower or any of its Subsidiaries pursuant to this clause in any Fiscal Year, does not exceed $10,000,000 in addition to any transfer in connection with a sale and leaseback permitted pursuant to Section 8.2.10. SECTION 8.2.13. Transactions with Affiliates. The Borrowers will not, and will not permit any of their Subsidiaries to, enter into, or cause, suffer or permit to exist any arrangement or contract with any of its other Affiliates unless such arrangement or contract is fair and equitable to such Borrower or such Subsidiary and is an arrangement or contract of the kind which would be entered into by a prudent Person in the position of such Borrower or such Subsidiary with a Person which is not one of its Affiliates. ARTICLE IX EVENTS OF DEFAULT SECTION 9.1. Listing of Events of Default. Each of the following events or occurrences described in this Section 9.1 shall constitute an "Event of Default". SECTION 9.1.1. Non-Payment of Obligations. Any Borrower shall default in the payment or prepayment when due of any principal of any Loan, any Borrower shall default in the payment when due of any Reimbursement Obligation, or any Borrower shall default (and such default shall continue unremedied for a period of two days) in the payment when due of any interest on any Loan, of any fee or of any other Obligation. SECTION 9.1.2. Breach of Warranty. Any representation or warranty of any Borrower made or deemed to be made hereunder or in any other Loan Document or any other writing or certificate furnished by or on behalf of any Borrower to the Agent or any Lender for the purposes of or in connection with this Agreement or any such other Loan Document (including any certificates delivered pursuant to Article VI) is or shall be incorrect when made in any material respect. SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations. Any Borrower shall default in the due performance and observance of any of its obligations under Sections 8.1.2 or 8.2. SECTION 9.1.4. Non-Performance of Other Covenants and Obligations. Any Borrower shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document, and such default shall continue unremedied for a period of 30 days after written notice thereof shall have been given to any Borrower by the Agent or any Lender. SECTION 9.1.5. Default on Other Indebtedness. A default shall occur in the payment when due (subject to any applicable grace period or unless there shall have been a waiver of such default by the applicable creditor), whether by acceleration or otherwise, of any Indebtedness (other than Indebtedness described in Section 9.1.1) of any Borrower or any of its Subsidiaries having a principal amount, individually or in the aggregate, in excess of $5,000,000, or a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness if the effect of such default is to accelerate the maturity of any such Indebtedness or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause such Indebtedness to become due and payable prior to its expressed maturity. SECTION 9.1.6. Judgments. Any judgment or order for the payment of money in excess of $5,000,000 shall be rendered against any Borrower or any of its Subsidiaries and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. SECTION 9.1.7. Pension Plans. Any of the following events shall occur with respect to any Pension Plan and shall continue for a period of 30 days (a) the institution of any steps by Simpson, any member of its Controlled Group or any other Person to terminate a Pension Plan if, as a result of such termination, the Borrower or any such member could be required to make a contribution to such Pension Plan, or could reasonably expect to incur a liability or obligation to such Pension Plan; or (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. SECTION 9.1.8. Change in Control. Any Change in Control shall occur. SECTION 9.1.9. Bankruptcy, Insolvency, etc. Any Borrower or any of its Subsidiaries shall (a) become insolvent or generally fail to pay, or admit in writing its inability or unwillingness to pay, debts as they become due; (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for such Borrower or such Subsidiary or any property of any thereof, or make a general assignment for the benefit of creditors; (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for such Borrower or such Subsidiary or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days, provided that such Borrower, and each of its Subsidiaries hereby expressly authorizes the Agent and each Lender to appear in any court conducting any relevant proceeding during such 60- day period to preserve, protect and defend their rights under the Loan Documents; (d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of such Borrower or such Subsidiary, and, if any such case or proceeding is not commenced by such Borrower or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by such Borrower or such Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed or any order of attachment is issued against any substantial part of the assets of such Borrower, any of its Subsidiaries which is not released within 30 days of service provided, that each Borrower and each of its Subsidiaries hereby expressly authorizes the Agent and each Lender to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; or (e) take any action authorizing, or in furtherance of, any of the foregoing. SECTION 9.1.10. Impairment of Security, etc. Any Loan Document, or any Lien granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any party thereto; any Borrower, or any other party shall, directly or indirectly, contest in any manner such effectiveness, validity, binding nature or enforceability; or any Lien securing any Obligation shall, in whole or in part, cease to be a perfected first priority Lien. SECTION 9.1.11. Governmental Approvals. Any material approval or license granted to any Borrower with respect to this Agreement, any Loan Document or the business of such Borrower shall not be in full force and effect. SECTION 9.2. Action if Bankruptcy. If any Event of Default described in clauses (a) through (d) of Section 9.1.9 shall occur with respect to any Borrower or any of its Subsidiaries, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand. SECTION 9.3. Action if Other Event of Default. If any Event of Default (other than any Event of Default described in clauses (a) through (d) of Section 9.1.9 with respect to any Borrower or any of its Subsidiaries) shall occur for any reason, and be continuing, the Agent, upon the direction of the Required Lenders, shall by notice to Simpson declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Commitments shall terminate. ARTICLE X THE AGENT SECTION 10.1. Actions. Each Lender hereby appoints ABN as its Agent under and for purposes of this Agreement, the Notes and each other Loan Document. Each Lender authorizes the Agent to act on behalf of such Lender under this Agreement, the Notes and each other Loan Document and, in the absence of other written instructions from the Required Lenders received from time to time by the Agent (with respect to which the Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity shall survive any termination of this Agreement) the Agent, pro rata according to such Lender's Percentage, from and against any and all liabilities, obligations, losses, damages, claims, costs or expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against, the Agent in any way relating to or arising out of this Agreement, the Notes and any other Loan Document, including reasonable attorneys' fees, and as to which the Agent is not reimbursed by the Borrowers; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, costs or expenses which are determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Agent's gross negligence or wilful misconduct. The Agent shall not be required to take any action hereunder, under the Notes or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement, the Notes or any other Loan Document, unless it is indemnified hereunder to its satisfaction. If any indemnity in favor of the Agent shall be or become, in the Agent's determination, inadequate, the Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given. SECTION 10.2. Funding Reliance, etc. Unless the Agent shall have been notified by telephone, confirmed in writing, by any Lender by 5:00 P.M., New York time, on the Business Day prior to a Borrowing with respect to Borrowings in Dollars and by 9:00 A.M., New York time, two Business Days prior to a Borrowing in any other currency that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Agent may assume that such Lender has made such amount available to the Agent and, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Agent, such Lender and the applicable Borrower agrees to repay the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Agent made such amount available to such Borrower to the date such amount is repaid to the Agent, at the interest rate applicable at the time to Loans comprising such Borrowing. SECTION 10.3. Exculpation. Neither the Agent nor any of its directors, officers, employees or agents shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for gross negligence or wilful misconduct, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of this Agreement or any other Loan Document, nor to make any inquiry respecting the performance by any Borrower of its obligations hereunder or under any other Loan Document. Any such inquiry which may be made by the Agent shall not obligate it to make any further inquiry or to take any action. The Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which the Agent believes to be genuine and to have been presented by a proper Person. SECTION 10.4. Successor. The Agent may resign as such at any time upon at least 30 days' prior notice to the Borrowers and all Lenders, so long as a successor Agent shall have been appointed as of the effectiveness of such resignation. If the Agent at any time shall resign, the Required Lenders may appoint another Lender (with the consent of Simpson which shall not be unreasonably withheld) as a successor Agent which shall thereupon become the Agent hereunder. If no successor Agent shall have been so appointed by the Required Lenders within 30 days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent (with the consent of Simpson which shall not be unreasonably withheld), which shall be one of the Lenders or a commercial banking institution organized under the laws of the U.S. (or any State thereof) or a U.S. branch or agency of a commercial banking institution, and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall be entitled to receive from the retiring Agent such documents of transfer and assignment as such successor Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation hereunder as the Agent, the provisions of (a) this Article X shall inure to its benefit as to, and the Agent shall continue to be responsible hereunder for, any actions taken or omitted to be taken by it while it was the Agent under this Agreement; and (b) Section 11.3, Section 11.4 and Section 11.5 shall continue to inure to its benefit. The Borrowers shall not be responsible for payment of any costs related to the resignation of the Agent and the substitution of a new Agent. The resigning Agent shall pay to the successor Agent any portion of the Agent's annual fee paid to it applicable to the period after the effectiveness of such resignation. SECTION 10.5. Loans or Letters of Credit Issued by ABN. ABN shall have the same rights and powers with respect to (x) the Loans made by it or any of its Affiliates, (y) the Notes held by it or any of its Affiliates, and (z) its participating interests in the Letters of Credit as any other Lender and may exercise the same as if it were not the Agent. ABN and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with any Borrower or any Subsidiary or Affiliate of any Borrower as if ABN were not the Agent hereunder. SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has, independently of the Agent and each other Lender, and based on such Lender's review of the financial information of the Borrowers, this Agreement, the other Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Commitments. Each Lender also acknowledges that it will, independently of the Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document. SECTION 10.7. Copies, etc. The Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Agent by any Borrower pursuant to the terms of this Agreement (unless concurrently delivered to the Lenders by such Borrower). The Agent will distribute to each Lender such financial statements and compliance certificates received by the Agent from any Borrower for distribution to the Lenders by the Agent in accordance with the terms of this Agreement. SECTION 10.8. Documentation Agent. Each Lender hereby appoints Comerica Bank as Documentation Agent for the Lenders. The Documentation Agent shall have no rights, powers, obligations, liabilities, responsibilities or duties under this Agreement other than those applicable to all Lenders as such. Each Lender acknowledges that it has not relied and will not rely on the Documentation Agent in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE XI MISCELLANEOUS PROVISIONS SECTION 11.1. Waivers, Amendments, etc. The provisions of this Agreement and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by Simpson and the Required Lenders; provided, however, that no such amendment, modification or waiver which would: (a) modify any requirement hereunder that any particular action be taken by all the Lenders or by the Required Lenders shall be effective unless consented to by each Lender; (b) modify this Section 11.1, change the definition of "Required Lenders", increase any Commitment Amount or the Percentage of any Lender, reduce any fees described in Article III, or extend the Commitment Termination Date shall be made without the consent of each Lender and each holder of a Note; (c) extend the due date for, or reduce the amount of, any scheduled repayment or prepayment of principal of or interest on any Loan (or reduce the principal amount of or rate of interest on any Loan) shall be made without the consent of the holder of that Note evidencing such Loan; (d) affect adversely the interests, rights or obligations of the Issuer in its capacity as the Issuer shall be made without the consent of the Issuer; (e) affect adversely the interests, rights or obligations of the Agent in its capacity as the Agent shall be made without consent of the Agent; or (f) change the definitions of "Available Currency", "Determination Date" or "Dollar Amount" without the consent of each Lender. No failure or delay on the part of the Agent, any Lender or the holder of any Note in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on any Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Agent, any Lender or the holder of any Note under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. SECTION 11.2. Notices. All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address or facsimile number set forth below its signature hereto or set forth in the Lender Assignment Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when transmitted. Any notice to a Borrower other than Simpson shall also be sent to Simpson. SECTION 11.3. Payment of Costs and Expenses. Simpson agrees to pay on demand all reasonable out-of-pocket expenses of the Agent (including the reasonable fees and out-of-pocket expenses of counsel to the Agent and of local counsel, if any, who may be retained by counsel to the Agent) in connection with (a) the negotiation, preparation, execution and delivery of this Agreement and of each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements or other modifications to this Agreement or any other Loan Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby are consummated; and (b) the preparation and review of the form of any document or instrument relevant to this Agreement or any other Loan Document. Simpson further agrees to pay, and to save the Agent and the Lenders harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution or delivery of this Agreement, the borrowings hereunder, the issuance of the Notes, the issuance of the Letters of Credit, or any other Loan Documents. Simpson agrees to reimburse the Agent and each Lender upon demand for all reasonable out-of-pocket expenses (including attorneys' fees and legal expenses) incurred by the Agent or such Lender in connection with the enforcement of any Obligations. SECTION 11.4. Indemnification. In consideration of the execution and delivery of this Agreement by each Lender and the extension of the Commitments, Simpson hereby indemnifies, exonerates and holds harmless the Agent, the Issuer and each Lender and each of their respective officers, directors, employees and agents (collectively, the "Indemnified Parties") free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"), incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to (a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loan or the use of any Letter of Credit; (b) the entering into and performance of this Agreement and any other Loan Document by any of the Indemnified Parties; (c) any investigation, litigation or proceeding related to any acquisition or proposed acquisition by any Borrower or any of its Subsidiaries of all or any portion of the stock or assets of any Person, whether or not the Agent or such Lender is party thereto; (d) any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter relating to the protection of the environment or the Release by any Borrower or any of its Subsidiaries of any Hazardous Material; or (e) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or releases from, any real property owned or operated by any Borrower or any Subsidiary thereof of any Hazardous Material (including any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Environmental Law), regardless of whether caused by, or within the control of, the Borrower or such Subsidiary, except for any such Indemnified Liabilities arising for the account of a particular Indemnified Party by reason of the relevant Indemnified Party's gross negligence or wilful misconduct. If and to the extent that the foregoing undertaking may be unenforceable for any reason, Simpson hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. SECTION 11.5. Survival. The obligations of the Borrower under Sections 5.3, 5.4, 5.5, 5.6, 11.3, and 11.4, and the obligations of the Lenders under Section 10.1, shall in each case survive any termination of this Agreement, the payment in full of all Obligations and the termination of all Commitments. The representations and warranties made by the Borrower in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document. SECTION 11.6. Severability. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 11.7. Headings. The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof. SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be executed by the Borrowers and the Agent and be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrowers and each Lender (or notice thereof satisfactory to the Agent) shall have been received by the Agent and notice thereof shall have been given by the Agent to each Borrower and each Lender. SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This Agreement, the Notes and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto. SECTION 11.10. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that: (a) the Borrowers may not assign or transfer their rights or obligations hereunder without the prior written consent of the Agent and all Lenders; and (b) the rights of sale, assignment and transfer of the Lenders are subject to Section 11.11. SECTION 11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes. Each Lender may assign, or sell participations in, its Loans and Commitments to one or more commercial banks in accordance with this Section 11.11. SECTION 11.11.1. Assignments. Any Lender, with the written consents of Simpson and the Agent (which consents shall not be unreasonably delayed or withheld and which consent, in the case of Simpson, shall be deemed to have been given in the absence of a written notice delivered by Simpson to the Agent, on or before the seventh Business Day after receipt by Simpson of such Lender's request for consent, stating, in reasonable detail, the reasons why Simpson proposes to withhold such consent and which consent of Simpson shall not be required, if a Default shall have occurred and be continuing) may at any time assign and delegate to one or more financial institutions, (each Person described in either of the foregoing clauses as being the Person to whom such assignment and delegation is to be made, being hereinafter referred to as an "Assignee Lender"), all or any fraction of such Lender's total Loans and Commitments (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender's Loans and Commitments) in a minimum aggregate amount of $10,000,000; provided, however, that any such Assignee Lender will comply, if applicable, with the provisions contained in the last sentence of Section 5.6 and further, provided, however, that, each Borrower and the Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee Lender until the Assignment Effective Date (the "Assignment Effective Date"). The Assignment Effective Date shall be the date when all the following conditions shall have been met: (i) five Business Days shall have passed after written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee Lender, shall have been given to Simpson and the Agent by such Lender and such Assignee Lender, (ii) such Assignee Lender shall have executed and delivered to Simpson and the Agent a Lender Assignment Agreement, accepted by the Agent, and (iii) the processing fees described below shall have been paid. From and after the date that the Agent accepts such Lender Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to have become a party hereto and to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee Lender in connection with such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder and under the other Loan Documents, and (y) the assignor Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it in connection with such Lender Assignment Agreement, shall be released from its obligations hereunder and under the other Loan Documents. Within five Business Days after receipt of notice that the Agent has received an executed Lender Assignment Agreement, the Borrowers shall execute and deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes evidencing such Assignee Lender's assigned Loans and Commitments and, if the assignor Lender has retained Loans and Commitments hereunder, replacement Notes in the principal amount of the Loans and Commitments retained by the assignor Lender hereunder (such Notes to be in exchange for, but not in payment of, those Notes then held by such assignor Lender). Each such Note shall be dated the date of the predecessor Notes. The assignor Lender shall mark the predecessor Notes "exchanged" and deliver them to such Borrower. Accrued interest on that part of the predecessor Notes evidenced by the new Notes, and accrued fees, shall be paid as provided in the Lender Assignment Agreement. Accrued interest on that part of the predecessor Notes evidenced by the replacement Notes shall be paid to the assignor Lender. Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Notes and in this Agreement. Such assignor Lender or such Assignee Lender must also pay a processing fee to the Agent upon delivery of any Lender Assignment Agreement in the amount of $3500. Any attempted assignment and delegation not made in accordance with this Section 11.11.1 shall be null and void. Nothing herein shall prohibit any Lender from pledging or assigning any Note or any of its rights under this Agreement to any Federal Reserve Bank in accordance with applicable law. SECTION 11.11.2. Participations. Any Lender may at any time sell to one or more commercial banks (each of such commercial banks being herein called a "Participant") participating interests (or a sub-participating interest, in the case of a Lender's participating interest in a Letter of Credit) in any of the Loans, Commitments, or other interests of such Lender hereunder; provided, however, that (a) no participation or sub-participation contemplated in this Section 11.11 shall relieve such Lender from its Commitments or its other obligations hereunder or under any other Loan Document, (b) such Lender shall remain solely responsible for the performance of its Commitments and such other obligations, (c) each Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and each of the other Loan Documents, (d) no Participant, unless such Participant is an Affiliate of such Lender, or is itself a Lender, shall be entitled to require such Lender to take or refrain from taking any action hereunder or under any other Loan Document, except that such Lender may agree with any Participant that such Lender will not, without such Participant's consent, take any actions of the type described in clause (b) or (c) of Section 11.1, and (e) no Borrower shall be required to pay any amount under Section 5.6 that is greater than the amount which it would have been required to pay had no participating interest been sold. The Borrower acknowledges and agrees that each Participant, for purposes of Sections 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 11.3 and 11.4 shall be considered a Lender. SECTION 11.11.3. Information. Each Lender is hereby authorized to disclose all information concerning the Borrowers to assignees, participants, potential assignees and potential participants. SECTION 11.11.4. Confidentiality. The Lenders shall hold all non-public information (which has been identified as such by a Borrower) obtained pursuant to the requirements of this Agreement in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices and in any event may make disclosure to any of their examiners, Affiliates, outside auditors, counsel and other professional advisors in connection with this Agreement or as reasonably required by any bona fide transferee, participant or assignee or as required or requested by any governmental agency or representative thereof or pursuant to legal process; provided however, that (a) unless specifically prohibited by applicable law or court order, each Lender shall notify the Borrowers of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non- public information prior to disclosure of such information; (b) prior to any such disclosure pursuant to this Section 11.11.4, each Lender shall require any such bona fide transferee, participant and assignee receiving a disclosure of non-public information to agree in writing (i) to be bound by this Section 11.11.4; and (ii) to require such Person to require any other Person to whom such Person discloses such non-public information to be similarly bound by this Section 11.11.4; and (c) except as may be required by an order of a court of competent jurisdiction and to the extent set forth therein, no Lender shall be obligated or required to return any materials furnished by the Borrowers or any Subsidiary. SECTION 11.12. Additional Borrowers. Each Subsidiary of Simpson may become a Borrower hereunder upon becoming such a Subsidiary. Simpson shall deliver an Additional Borrower Certificate executed by any such Subsidiary and Simpson together with such supporting resolutions, incumbency certificates and opinions of counsel as the Agent may reasonably request. Such Subsidiary shall thereupon become a party hereto and a Borrower hereunder and shall be (i) entitled to all rights and benefits of a Borrower hereunder and under each instrument executed pursuant hereto and (ii) subject to all obligations of a Borrower hereunder and thereunder. SECTION 11.13. Joint and Several Liability. (a) The Obligations of the Borrowers are joint and several; except that each Subsidiary Borrower which is not a U.S. Subsidiary of Simpson shall be liable only for Loans made to it and with respect to Letters of Credit issued for its account. (b) Each Borrower acknowledges and agrees that it is the intent of the parties that each Borrower be primarily liable for the Obligations as a joint and several obligor (except as specifically set forth in this Section 11.13). It is the intention of the parties that with respect to liability of any Borrower hereunder arising solely by reason of its being jointly and severally liable for Borrowings and Loans taken by other Borrowers, the obligations of such Borrower shall be absolute, unconditional and irrevocable irrespective of: (i) any lack of validity, legality or enforceability of this Agreement or any Note as to any other Borrower; (ii) the failure of any Lender or any holder of any Note (A) to enforce any right or remedy against any Borrower or any other Person (including any guarantor) under the provisions of this Agreement, the Note, or otherwise, or (B) to exercise any right or remedy against any guarantor of, or collateral securing, any Obligations; (iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other extension, compromise or renewal of any Obligations; (iv) any reduction, limitation, impairment or termination of any Obligations with respect to any other Borrower for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Borrower hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations with respect to any other Borrower; (v) any addition, exchange, release, surrender or nonperfection of any collateral, or any amendment to or waiver or release or addition of, or consent to departure from, any guaranty, held by any Lender or any holder of the Note securing any of the Obligations; or (vi) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any other Borrower, any surety or any guarantor. Each Borrower agrees that its joint and several liability hereunder shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations is rescinded or must be restored by any Lender or any holder of any Note, upon the insolvency, bankruptcy or reorganization of any Borrower as though such payment had not been made. Each Borrower hereby expressly waives: (a) notice of the Lenders' acceptance of this Agreement; (b) notice of the existence or creation or non payment of all or any of the Obligations; (e) presentment, demand, notice of dishonor, protest, and all other notices whatsoever other than notices expressly provided for in this Agreement; and (d) all diligence in collection or protection of or realization upon the Obligations or any thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing. No delay on any of the Lenders' part in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by any of the Lenders of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. No action of any of the Lenders permitted hereunder shall in any way affect or impair any such Lenders' rights or any Borrower's obligations under this Agreement. Notwithstanding the foregoing, each Borrower other than Simpson shall be liable for the Obligations for the maximum amount of such liability that can be hereby incurred without rendering this Agreement, any Note or any other Loan Document voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. Each Borrower hereby represents and warrants to each of the Lenders that it now has and will continue to have independent means of obtaining information concerning the Borrowers' affairs, financial condition and business. Lenders shall not have any duty or responsibility to provide any Borrower with any credit or other information concerning the Borrowers' affairs, financial condition or business which may come into the Lenders' possession. 11.14. Judgment Currency. Each Borrower, the Agent and each Lender hereby agree that if, in the event that a judgment is given in relation to any sum due to the Agent or any Lender hereunder, such judgment is given in a currency (the "Judgment Currency") other than that in which such sum was originally denominated (the "Original Currency"), the Borrower jointly and severally agree to indemnify the Agent or such Lender, as the case may be, to the extent that the amount of the Original Currency which could have been purchased by the Agent in accordance with normal banking procedures on the Business Day following receipt of such sum is less than the sum which could have been so purchased by the Agent had such purchase been made on the day on which such judgment was given or, if such day is not a Business Day, on the Business Day immediately preceding the giving of such judgment. The agreements in this Section shall survive payment of all other Obligations. SECTION 11.15. Other Transactions. Nothing contained herein shall preclude the Agent or any other Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with any Borrower or any of its Affiliates in which any Borrower or such Affiliate is not restricted hereby from engaging with any other Person. SECTION 11.16. Consent to Jurisdiction. THE BORROWERS HEREBY ABSOLUTELY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS OR THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS BROUGHT AGAINST ANY OF THE BORROWERS BY THE AGENT OR THE LENDER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES OR THE BANKING RELATIONSHIP GIVING RISE TO THIS AGREEMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE BORROWERS HEREBY WAIVE AND AGREE NOT TO ASSERT IN SUCH ACTION OR PROCEEDING, IN EACH CASE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (a) ANY BORROWER IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT; (b) ANY BORROWER IS IMMUNE FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO IT OR ITS PROPERTY; (c) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM; OR (d) THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. IN ANY SUCH ACTION OR PROCEEDING, ANY BORROWER HEREBY ABSOLUTELY AND IRREVOCABLY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, DECLARATION OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED AIRMAIL, POSTAGE PREPAID, DIRECTED TO SUCH BORROWER AT THE ADDRESS SHOWN ON THE SIGNATURE PAGE HEREOF (OR AT SUCH OTHER ADDRESS AS SUCH BORROWER SHALL LAST SPECIFY TO THE AGENT IN WRITING). NOTHING CONTAINED IN THIS AGREEMENT OR THE NOTES SHALL AFFECT ANY RIGHT THAT THE AGENT, THE LENDERS OR ANY BORROWER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR THE BANKING RELATIONSHIP GIVING RISE TO THIS AGREEMENT AGAINST ANY BORROWER, THE AGENT OR THE LENDERS, AS THE CASE MAY BE, OR THEIR PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION, OR ANY RIGHT THAT THE LENDERS, THE AGENT OR ANY BORROWER MAY HAVE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. SECTION 11.17. Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWERS. THE BORROWERS ACKNOWLEDGE AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. PAGE IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. SIMPSON INDUSTRIES, INC. By: Its: Address: 47603 Halyard Drive Plymouth, Michigan 48170 Facsimile No.: (313) 207-6680 Attention: James E. Garpow with a copy to Mr. Frank Zinn Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 ABN AMRO BANK N.V., CHICAGO BRANCH, AS AGENT By Title: By Title: Address: 135 South LaSalle Street Chicago, Illinois 60674 Facsimile No.: (312) 606-8425 Attention: Laurie Flom COMERICA BANK, AS DOCUMENTATION AGENT By Title By Title Address: 500 Woodward Avenue Detroit, Michigan 48226 Facsimile No.: (313) 222-3776 Attention: Louis A. Zedan PERCENTAGE LENDERS 30.0% ABN AMRO BANK N.V., CHICAGO BRANCH By Title: By Title: Domestic/ Eurodollar Office: 135 South LaSalle Street Chicago, Illinois 60674 Facsimile No.: (312) 606-8425 Attention: Laurie Flom 30.0% COMERICA BANK By Title: By Title: Address: 500 Woodward Avenue Detroit, Michigan 48226 Facsimile No.: (313) 222-3776 Attention: Louis A. Zedan 20.0% HARRIS TRUST AND SAVINGS BANK By Title: By Title: Address: 111 West Monroe Street Chicago, Illinois 60603 Facsimile No.: (312) 461-2591 Attention: Peter Dancy 20.0% THE BANK OF NEW YORK By Title: By Title: Address: One Wall Street, 22nd Floor New York, New York 10286 Facsimile No.: (212) 635-6434 Attention: William Barnum EX-10.25 10 CREDIT AGREEMENT (364 DAY), DATED JUNE 17, 1997 U.S. $50,000,000 CREDIT AGREEMENT, (364 Day) dated as of June 17, 1997 among SIMPSON INDUSTRIES, INC. certain other Borrowers as the Borrowers, CERTAIN COMMERCIAL LENDING INSTITUTIONS as the Lenders, ABN AMRO BANK N.V. as the Agent for the Lenders and COMERICA BANK as Documentation Agent for the Lenders PAGE TABLE OF CONTENTS SECTION PAGE I DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . .1 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . .1 1.2. Use of Defined Terms. . . . . . . . . . . . . . . . 19 1.3. Cross-References. . . . . . . . . . . . . . . . . . 19 1.4. Accounting and Financial Determinations . . . . . . 19 IICOMMITMENTS, BORROWING PROCEDURES AND NOTES. . . . . . . . . 19 2.1. Commitments . . . . . . . . . . . . . . . . . . . . 19 2.1.1. Revolving Loan Commitment. . . . . . . . 19 2.1.2. Commitment to Issue Letters of Credit. . 20 2.1.3. Lenders Not Permitted or Required To Make Loans or Issue or Participate in Letters of Credit Under Certain Circumstances. . . . . . . . . . . . . . 20 2.2. Reduction of Commitment Amounts . . . . . . . . . . 21 2.3. Borrowing Procedure . . . . . . . . . . . . . . . . 21 2.4. Continuation and Conversion Elections . . . . . . . 22 2.5. Funding . . . . . . . . . . . . . . . . . . . . . . 22 2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . 23 2.7. Swing Line Commitment . . . . . . . . . . . . . . . 23 2.8. Borrowing Procedure Swing Loans . . . . . . . . . 23 2.9. Refunding of Swing Loans. . . . . . . . . . . . . . 23 2.10. Participations in Swing Loans. . . . . . . . . . . 24 2.11. Swing Loan Participation Obligations Unconditional 24 2.12. Conditions to Swing Loans. . . . . . . . . . . . . 25 2.13. Swing Note . . . . . . . . . . . . . . . . . . . . 25 2.14. Stated Maturity Date Extension . . . . . . . . . . 26 III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES. . . . . . . . 27 3.1. Repayments and Prepayments. . . . . . . . . . . . . 27 3.2. Interest Provisions . . . . . . . . . . . . . . . . 28 3.2.1. Rates. . . . . . . . . . . . . . . . . . 28 3.2.2. Post-Maturity Rates. . . . . . . . . . . 28 3.2.3. Payment Dates. . . . . . . . . . . . . . 29 3.3. Fees. . . . . . . . . . . . . . . . . . . . . . . . 29 3.3.1. Commitment Fee . . . . . . . . . . . . . 29 3.3.2. Arrangement Fee; Agent's Fee . . . . . . 30 3.3.3. Letter of Credit Face Amount Fee . . . . 30 3.3.4. Letter of Credit Fronting Fee. . . . . . 30 3.3.5. Letter of Credit Administrative Fee. . . 31 IV LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . .. 31 4.1. Issuance Requests . . . . . . . . . . . . . . . . . 31 4.2. Issuances and Extensions. . . . . . . . . . . . . . 32 4.3. Expenses. . . . . . . . . . . . . . . . . . . . . . 32 4.4. Other Lenders' Participation. . . . . . . . . . . . 32 4.5. Disbursements . . . . . . . . . . . . . . . . . . . 33 4.6. Reimbursement . . . . . . . . . . . . . . . . . . . 34 4.7. Deemed Disbursements. . . . . . . . . . . . . . . . 34 4.8. Nature of Reimbursement Obligations . . . . . . . . 35 4.9. Increased Costs; Indemnity. . . . . . . . . . . . . 36 V GCERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS. . . . . 37 5.1. Eurocurrency Rate Lending Unlawful. . . . . . . . . 37 5.2. Deposits Unavailable. . . . . . . . . . . . . . . . 38 5.3. Increased Eurocurrency Rate Loan Costs, etc . . . . 38 5.4. Funding Losses. . . . . . . . . . . . . . . . . . . 39 5.5. Increased Capital Costs . . . . . . . . . . . . . . 40 5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . 40 5.7. Payments, Computations, etc . . . . . . . . . . . . 41 5.8. Sharing of Payments . . . . . . . . . . . . . . . . 43 5.9. Setoff. . . . . . . . . . . . . . . . . . . . . . . 44 5.10. Use of Proceeds. . . . . . . . . . . . . . . . . . 44 VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . .. 44 6.1. Initial Credit Extension. . . . . . . . . . . . . . 44 6.1.1. Resolutions, etc . . . . . . . . . . . . .. 44 6.1.2. Delivery of Notes. . . . . . .. . . . . . . 45 6.1.3. Outstanding Indebtedness, etc. . . .. . . . 45 6.1.4 Delivery of Simpson Guaranty . . . . .. . . 45 6.1.5. Opinions of Counsel. . . . . . . . . . .. . 45 6.1.6. Regulatory Restriction . . . . . . .. . . . 45 6.1.7. Closing Fees, Expenses, etc. . . .. . . . . 46 6.2. All Credit Extensions. . . . . . . . . . . . .. . . 46 6.2.1. Compliance with Warranties, No Default, etc.46 6.2.2. Credit Request . . . . . . . . . . . . . .. 47 6.2.3. Satisfactory Legal Form. . . . . . . . .. . 47 VII REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 47 7.1. Organization, etc . . . . . . . . . . . . . . . . . 47 7.2. Due Authorization, NonContravention, etc. . . . . . 47 7.3. Government Approval, Regulation, etc. . . . . . . . 48 7.4. Validity, etc . . . . . . . . . . . . . . . . . . . 48 7.5. Financial Information . . . . . . . . . . . . . . . 48 7.6. No Material Adverse Change. . . . . . . . . . . . . 48 7.7. Environmental Warranties. . . . . . . . . . . . . . 48 7.8. Litigation, Labor Controversies, etc. . . . . . . . 50 7.9. Subsidiaries. . . . . . . . . . . . . . . . . . . . 50 7.10. Ownership of Properties. . . . . . . . . . . . . . 50 7.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . 51 7.12. Pension and Welfare Plans. . . . . . . . . . . . . 51 7.13. Regulations G, U and X . . . . . . . . . . . . . . 51 7.14. Accuracy of Information. . . . . . . . . . . . . . 51 7.15. Solvency . . . . . . . . . . . . . . . . . . . . 52 VIII COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 52 8.1. Affirmative Covenants . . . . . . . . . . . . . . . 52 8.1.1. Legal Existence. . . . . . . . . . . . . .. 52 8.1.2. Financial Information, Reports, Notices etc 52 8.1.3. Compliance with Laws, etc. . . .. . . . . . 54 8.1.4. Maintenance of Properties. . . .. . . . . . 55 8.1.5. Insurance. . . . . . . . . . . . . . .. . . 55 8.1.6. Books, Records and Access. . . . . . .. . . 55 8.1.7. Environmental Covenant . . . . . .. . . . . 55 8.1.8. Guaranty . . . . . . . . . . . . .. . . . . 56 8.2. Negative Covenants. . . . . . . . . . . . . . . . . 56 8.2.1. Business Activities. . . .. . . . . . . . . 56 8.2.2. Liens. . . . . . . . . . .. . . . . . . . . 56 8.2.3. Financial Condition. . . . . . .. . . . . . 57 8.2.4. Acquisitions . . . . . . . . . .. . . . . . 57 8.2.5. Investments. . . . . . . . . . . .. . . . . 58 8.2.6. Indebtedness . . . . . . . . . . . . . .. . 58 8.2.7. Subordinated Debt. . . . . . . . . . . .. . 60 8.2.8 Capital Expenditures, etc .. . . . . . . . 60 8.2.9. Rental Obligations . . . . . .. . . . . . . 60 8.2.10 Sale/Leaseback. . . . . . . . . .. . . . . 61 8.2.11 Consolidation, Merger, Etc. . . . . .. .. . 61 8.2.12 Asset Dispositions, etc.. . . . . . ... . . 61 8.2.13 Transactions with Affiliates. . . . . .. .. 61 IX EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 62 9.1. Listing of Events of Default. . . . . . . . . . . . 62 9.1.1. NonPayment of Obligations. . . . . . . .. . 62 9.1.2. Breach of Warranty . . . . . . . . . .. . . 62 9.1.3. Non-Performance of Certain Covenants and Obligations. . . . . . . . . . . . . . .62 9.1.4. Non-Performance of Other Covenants and Obligations. . . . . . . . . . . . . . .62 9.1.5. Default on Other Indebtedness. . . . .. . . 62 9.1.6. Judgments. . . . . . . . . . . . . . . .. . 63 9.1.7. Pension Plans. . . . . . . . . . . . .. . . 63 9.1.8. Change in Control. . . . . . . . . . . .. . 63 9.1.9. Bankruptcy, Insolvency, etc. . . . . . . .. 63 9.2. Action if Bankruptcy. . . . . . . . . . . . . . . . 64 9.3. Action if Other Event of Default. . . . . . . . . . 65 X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 65 10.1. Actions. . . . . . . . . . . . . . . . . . . . . . 65 10.2. Funding Reliance, etc. . . . . . . . . . . . . . . 66 10.3. Exculpation. . . . . . . . . . . . . . . . . . . . 66 10.4. Successor. . . . . . . . . . . . . . . . . . . . . 66 10.5. Loans or Letters of Credit Issued by ABN . . . . . 67 10.6. Credit Decisions . . . . . . . . . . . . . . . . . 67 10.7. Copies, etc. . . . . . . . . . . . . . . . . . . . 68 10.8. Documentation Agent. . . . . . . . . . . . . . . . 68 XI MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . .. 68 11.1. Waivers, Amendments, etc . . . . . . . . . . . . . 68 11.2. Notices. . . . . . . . . . . . . . . . . . . . . . 69 11.3. Payment of Costs and Expenses. . . . . . . . . . . 69 11.4. Indemnification. . . . . . . . . . . . . . . . . . 70 11.5. Survival . . . . . . . . . . . . . . . . . . . . . 71 11.6. Severability . . . . . . . . . . . . . . . . . . . 71 11.7. Headings . . . . . . . . . . . . . . . . . . . . . 71 11.8. Execution in Counterparts, Effectiveness, etc. . . 72 11.9. Governing Law; Entire Agreement. . . . . . . . . . 72 11.10 Successors and Assigns. . . . . . . . . . . . .. . 72 11.11 Sale and Transfer of Loans and Notes; Participations in Loans and Notes. . . . . . .. . . . . . . . . . . . . .. 72 11.11.1. Assignments. . . . . . . . . . . . .. . 72 11.11.2. Participations . . . . . . . . . . . . . 74 11.12 Additional Borrowers. . . . . . . . . . . . . . . 75 11.13 Joint and Several Liability . . . . . . . . . . . 76 11.14 Judgment Currency . . . . . . . . . . . . . . . . 78 11.15 Other Transactions. . . . . . . . . . . . . . . . 78 11.16 Consent to Jurisdiction . . . . . . . . . . . . . 78 11.17 Waiver of Jury Trial. . . . . . . . . . . . . . . 79 PAGE SCHEDULE I - Disclosure Schedule EXHIBIT A - Form of Additional Borrower Certificate EXHIBIT B - Form of Revolving Note EXHIBIT C - Form of Swing Note EXHIBIT D - Form of Irrevocable Standby Letter of Credit EXHIBIT E - Form of Borrowing Request EXHIBIT F - Form of Continuation/Conversion Notice EXHIBIT G - Form of Issuance Request EXHIBIT H - Form of Lender Assignment Agreement EXHIBIT I - Form of Opinion of Counsel to Simpson EXHIBIT J - Form of Compliance Certificate EXHIBIT K - Form of Guaranty EXHIBIT L - Form of Simpson Guaranty PAGE CREDIT AGREEMENT (364 Day) THIS CREDIT AGREEMENT, dated as of June 17, 1997 among SIMPSON INDUSTRIES, INC. ("Simpson"), a Michigan corporation, certain subsidiaries that from time to time become a party hereto pursuant to Section 11.13 (such subsidiaries, together with Simpson, the "Borrowers"), the commercial lending institutions as are or may become parties hereto (the "Lenders"), ABN AMRO BANK N.V. ("ABN"), as agent (the "Agent") for the Lenders, and COMERICA BANK, as documentation agent (the "Documentation Agent") for the Lenders. W I T N E S S E T H: WHEREAS, the Borrowers desire to obtain Commitments from the Lenders pursuant to which (a) Loans will be made to the Borrowers from time to time prior to the Commitment Termination Date; and (b) Letters of Credit will be issued by the Issuer for the accounts of the Borrowers from time to time prior to the Commitment Termination Date; in aggregate principal amount for Loans plus Letter of Credit Outstandings at any one time not to exceed $50,000,000 in the aggregate; and WHEREAS, the Lenders are willing, on the terms and subject to the conditions hereinafter set forth (including Article VI), to extend such Commitments, make such Loans to the Borrowers and issue and participate in such Letters of Credit; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE XII DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1. Defined Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "ABN" is defined in the preamble. "Additional Borrower Certificate" means a certificate in the form of Exhibit A hereto. "Affiliate" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Agent" is defined in the preamble and includes each other Person as shall have subsequently been appointed as the successor Agent pursuant to Section 10.4. "Agreement" means, on any date, this Credit Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date. "Assignee Lender" is defined in Section 11.12.1. "Assignment Effective Date" is defined in Section 11.12.1. "Authorized Officer" means, as to any Borrower, those of its officers whose signatures and incumbency shall have been certified to the Agent and the Lenders pursuant to Section 6.1.1. "Available Currency" means Dollars, Pounds Sterling, French Francs, Spanish Peseta and such other currencies as the Lenders agree to make available from time to time and which the Agent determines in its sole discretion are freely transferable. "Borrower" means any of Simpson and any Subsidiary that from time to time becomes a party hereto pursuant to Section 11.13. "Borrowing" means a borrowing made hereunder consisting of the aggregate amount of the several Loans made by the Lenders to the applicable Borrower on the same Borrowing Date, in the same currency, for the same Rate Option and for the same Interest Period. "Borrowing Date" means any Business Day on which a Borrowing is made. "Borrowing Request" means a loan request and certificate duly executed by an Authorized Officer of the applicable Borrower, substantially in the form of Exhibit E hereto. "Business Day" means any day (a) other than (i) a Saturday or Sunday; or (ii) a legal holiday on which banks are authorized or required to be closed in Chicago, Illinois or New York, New York; and (b) with respect to Eurocurrency Rate Loans on which dealings in the applicable Available Currency are being carried on in the interbank eurocurrency market. "Capital Expenditures" means, for any period, the sum of (a) the aggregate amount of all expenditures of Simpson and its Subsidiaries for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures; and (b) the aggregate amount of all Capitalized Lease Liabilities incurred during such period; less any expenditures pursuant to an acquisition transaction of the type described in Section 8.2.4. "Capitalized Lease Liabilities" means all monetary obligations of a Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Cash Equivalent Investment" means, at any time: (a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government; (b) commercial paper, maturing not more than nine months from the date of issue, which is issued by (i) a corporation (other than an Affiliate of a Borrower) organized under the laws of any state of the United States or of the District of Columbia and rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., or (ii) any Lender (or its holding company); (c) any certificate of deposit or bankers acceptance, maturing not more than one year after such time, which is issued by either (i) a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, or (ii) any Lender; or (d) any repurchase agreement entered into with any Lender (or other commercial banking institution of the stature referred to in clause (c)(i)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c); and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response Compensation Liability Information System List. "Change in Control" means (a) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock of Simpson; or (b) any Borrower (other than Simpson) shall not be 100% owned, directly or indirectly by Simpson. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Commitment" means, relative to any Lender, such Lender's obligation to make Loans pursuant to Section 2.1.2 and to issue (in the case of the Issuer) or participate in (in the case of all Lenders) Letters of Credit pursuant to Section 2.1.3. "Commitment Amount" means, on any date, $50,000,000, as such amount may be reduced from time to time pursuant to Section 2.2. "Commitment Termination Date" means the earliest of (a) the Stated Maturity Date; (b) the date on which the Commitment Amount is terminated in full or reduced to zero pursuant to Section 2.2; and (c) the date on which any Commitment Termination Event occurs. Upon the occurrence of any event described in clause (b) or (c), the Commitments shall terminate automatically and without any further action. "Commitment Termination Event" means (a) the occurrence of any Default described in clauses (a) through (d) of Section 9.1.9; or (b) the occurrence and continuance of any other Event of Default and either (i) the declaration of the Loans to be due and payable pursuant to Section 9.3, or (ii) in the absence of such declaration, the giving of notice by the Agent, acting at the direction of the Required Lenders, to the Borrower that the Commitments have been terminated. "Companion Agreement" means the Credit Agreement of even date herewith among Simpson, certain Subsidiaries, the Lenders, ABN, as agent, and Comerica Bank, as documentation agent, providing for a $50,000,000 364-day credit facility. "Compliance Certificate" means a certificate duly executed by the chief financial officer, treasurer or assistant treasurer of Simpson, substantially in the form of Exhibit J hereto, as the same may be amended, modified or supplemented from time to time by the Required Lenders and Simpson, for the purposes of monitoring Simpson's compliance herewith. "Contingent Liability" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the debt, obligation or other liability guaranteed thereby. "Continuation/Conversion Notice" means a notice of continuation or conversion and certificate duly executed by an Authorized Officer of Simpson, substantially in the form of Exhibit F hereto. "Controlled Group" means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with Simpson, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA. "Credit Extension" means and includes (a) the advancing of any Loans by the Lenders in connection with a Borrowing, and (b) any issuance or extension by the Issuer of a Letter of Credit. "Default" means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default. "Determination Date" means with respect to any Loan in an Available Currency other than Dollars: (a) the date a Loan is made; (b) if such Loan is a Eurocurrency Rate Loan, the last Business Day of each month, and the date such Eurocurrency Rate Loan is continued from the current Interest Period of such Loan into a subsequent Interest Period; or (c) the date such outstanding Loan is converted from one type of Loan into another or from a Eurocurrency Rate Loan in one currency into a Eurocurrency Rate Loan in another currency. "Disbursement" means a payment by the Issuer to a beneficiary (or its designee) under a Letter of Credit. "Disbursement Date" is defined in Section 4.5. "Disclosure Schedule" means the Disclosure Schedule attached hereto as Schedule I, as it may be amended, supplemented or otherwise modified from time to time by Simpson with the written consent of the Agent and the Required Lenders. "Documentation Agent" is defined in the preamble. "Dollar" and the sign "$" mean the lawful currency of the United States. "Dollar Amount" means (a) with respect to Dollars or an amount denominated in Dollars, such amount and (b) with respect to an amount of any other Available Currency or an amount denominated in such Available Currency, the amount of Dollars into which the Agent could, in accordance with its practice from time to time in the interbank foreign exchange market, convert such amount of Available Currency at its spot rate of exchange (inclusive of all related costs of conversion) applicable to the relevant transaction at or about 10:00 A.M., New York time, on the date of calculation. "Domestic Office" means, relative to any Lender, the office of such Lender designated as such below its signature hereto or designated in the Lender Assignment Agreement or such other office of a Lender (or any successor or assign of such Lender) within the United States as may be designated from time to time by notice from such Lender, as the case may be, to each other Person party hereto. "EBITDA" means, at the end of any Fiscal Quarter for the four Fiscal Quarter period then ending, net earnings plus interest expense (net of interest income), depreciation, amortization and all other non-cash charges, and income tax expenses, excluding any non-cash gains or losses used in determining net income, all calculated on a consolidated basis for Simpson and its Subsidiaries. "Effective Date" means the date this Agreement becomes effective pursuant to Section 11.8. "Environmental Laws" means all applicable foreign, federal, state or local statutes, laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders) relating to public health and safety and protection of the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections. "Eurocurrency Office" means with respect to any Lender the office or offices of such Lender which shall be making or maintaining the Eurocurrency Loans of such Lender hereunder or such other office or offices through which such Lender determines its Eurocurrency Rate. A Eurocurrency Office of any Lender may be, at the option of such Lender, either a domestic or foreign office. "Eurocurrency Rate" means, with respect to any Eurocurrency Rate Loan for any Interest Period, the rate per annum at which deposits in the relevant Available Currency in immediately available funds are offered to the Eurocurrency Office of ABN two Business Days prior to the beginning of such Interest Period by major banks in the London interbank eurocurrency market as at or about 11:00 A.M. London time for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount equal or comparable to the amount of the Eurocurrency Rate Loan of ABN for such Interest Period. "Eurocurrency Rate Loan" means a Loan bearing interest at a fixed rate of interest determined by reference to the Eurocurrency Rate. "Eurocurrency Rate (Reserve Adjusted)" means, with respect to any Eurocurrency Rate Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurocurrency Rate EQUALS Eurocurrency Rate __________________________ (Reserve Adjusted) 1-Eurocurrency Reserve Percentage "Eurocurrency Reserve Percentage" means, with respect to any Eurocurrency Rate Loan for any Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the percentage in effect on each day of such Interest Period, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the aggregate maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable regulation of such Board of Governors which prescribes reserve requirements applicable to "Eurocurrency Liabilities" as presently defined in Regulation D. "Event of Default" is defined in Section 9.1. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to (a) 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 for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. "Fiscal Quarter" means any quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31, references to a Fiscal Year with a number corresponding to any calendar year (e.g. the "1997 Fiscal Year") refer to the Fiscal Year ending on December 31 occurring during such calendar year. "French Francs" means lawful currency of France. "F.R.S. Board" means the Board of Governors of the Federal Reserve System or any successor thereto. "Funded Debt" means any Indebtedness as described within clauses (a), (b), (c), (e), and (f) of the definition of "Indebtedness" and any Contingent Liabilities with respect to any such Indebtedness. "Funded Debt to EBITDA Ratio" means at any Fiscal Quarter end the ratio on a consolidated basis for Simpson and its Subsidiaries of Funded Debt at such Fiscal Quarter end to EBITDA for the four Fiscal Quarters then ending. "GAAP" is defined in Section 1.4. "Guaranty" means the guaranty of the U.S. Subsidiaries of Simpson executed and delivered pursuant to Section 8.1.8, substantially in the form of Exhibit K hereto, as amended, supplemented, restated or otherwise modified from time to time. "Hazardous Materials" means (a) any "hazardous substance", as defined by CERCLA; (b) any "hazardous waste", as defined by the Resource Conservation and Recovery Act, as amended; (c) any petroleum product; or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other applicable foreign, federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as amended or hereafter amended. "Hedging Obligations" means, with respect to any Person, all liabilities of such Person under interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "herein", "hereof", "hereto", "hereunder" and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document. "Impermissible Qualification" means, relative to the opinion or certification of any independent public accountant as to any financial statement of any Borrower, any qualification or exception to such opinion or certification (a) which is of a "going concern" nature; (b) which relates to the limited scope of examination of matters relevant to such financial statement; or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause such Borrower to be in default of any of its obligations under Section 8.2.3. "including" means including without limiting the generality of any description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned. "Indebtedness" of any Person means, without duplication: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person; (c) all obligations of such Person as lessee under leases which have been or should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities; (d) all other items which, in accordance with GAAP, would be included as liabilities on the liability side of the balance sheet of such Person as of the date at which Indebtedness is to be determined; (e) net liabilities of such Person under all Hedging Obligations; (f) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; and (g) all Contingent Liabilities of such Person in respect of any of the foregoing. "Indemnified Liabilities" is defined in Section 11.4. "Indemnified Parties" is defined in Section 11.4. "Interest Period" means, relative to any Eurocurrency Rate Loans, the period beginning on (and including) the date on which such Eurocurrency Rate Loan is made or continued as, or converted into, a Eurocurrency Rate Loan pursuant to Section 2.3, 2.4 or 2.9 and ending on (but excluding) the day which, numerically corresponds to such date one, two, three or six months thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month), in each case as the Borrowers may select in their relevant notice pursuant to Section 2.3, 2.4 or 2.9; provided, however, that (a) no more than 10 Interest Periods shall be outstanding at any one time in the aggregate; (b) if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day (unless, such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding such numerically corresponding day); and (c) no Interest Period may end later than the date set forth in clause (a) of the definition of "Commitment Termination Date". "Investment" means, relative to any Person, (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business); (b) any Contingent Liability of such Person; and (c) any ownership or similar interest held by such Person in any other Person. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property. "Issuance Request" means a properly completed application for a Letter of Credit on the Issuer's standard form, attached hereto as Exhibit G, executed by an Authorized Officer of the Borrower. "Issuer" means any affiliate, unit or agency of ABN which has agreed to issue one or more Letters of Credit at the request of the Agent. "Lender Assignment Agreement" means a Lender Assignment Agreement substantially in the form of Exhibit H hereto. "Lenders" is defined in the preamble. "Letter of Credit" is defined in Section 4.1. "Letter of Credit Availability" means, at any time, the lesser of (a) the Dollar Amount of $5,000,000 minus the Dollar Amount of the Letter of Credit Outstandings on such date and (b) the excess of (i) the then Commitment Amount over (ii) the sum of (A) the Dollar Amount of the outstanding principal amount of all Loans on such date plus (B) the Dollar Amount of the Letter of Credit Outstandings on such date. "Letter of Credit Outstandings" means, at any time, an amount equal to the sum of (a) the Dollar Amount of the aggregate Stated Amount at such time of all Letters of Credit then outstanding and undrawn (as such aggregate Stated Amount shall be adjusted, from time to time, as a result of drawings, the issuance of Letters of Credit, or otherwise), plus (b) the then aggregate amount of all unpaid and outstanding Reimbursement Obligations. "Lien" means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever. "Loan" means, as the context may require, either a Revolving Loan or a Swing Loan. "Loan Commitment Availability" means, on any date, the excess of (a) the then Commitment Amount, over (b) the sum of (i) the Dollar Amount of the outstanding principal amount of all Revolving Loans on such date, plus (ii) the Dollar Amount of the Letter of Credit Outstandings on such date. "Loan Document" means this Agreement, the Notes, the Issuance Requests, the Guaranty and the Simpson Guaranty. "Margin" means, for any period beginning on (and including) a Margin Determination Date until (but excluding) the next Margin Determination Date, a percentage equal to the Margin set forth in the following table corresponding to the Funded Debt to EBITDA Ratio as at the end of the Fiscal Quarter immediately preceding such Margin Determination Date, provided that for the period from the Effective Date through the first Margin Determination Date after June 30, 1997, the applicable Margin set forth opposite Level II shall be used: STANDBY LETTER MARGIN OF FOR CREDIT COMMERCIAL MARGIN FOR EURO- FACE LETTER OF FUNDED DEBT TO PRIME CURRENCY AMOUNT CREDIT FACE LEVEL EBITDA RATIO RATE LOANS LOANS FEE AMOUNT FEE I Greater than 3.0:1.0 0.00% 0.75% 0.73% 0.325% II Less than or equal to 3.0:1.0, but greater than 2.50:1.0 0.00% 0.60% 0.58% 0.20% III Less than or equal to 2.50:1.0, but greater than 2.00:1.0 0.00% 0.475% 0.455% 0.1175% IV Less than or equal to 2.00:1.0, but greater than 1.50:1.0 0.00% 0.325% 0.305% 0.075% V Less than or equal to 1.5:1.0 0.00% 0.225% 0.205% 0.0625%
Notwithstanding the foregoing, in the event Simpson fails to report the Funded Debt to EBITDA Ratio at the end of any Fiscal Quarter by the Margin Determination Date following such Fiscal Quarter, "Margin" shall mean the Margin set forth in Level I. Nothing in this definition shall constitute a waiver of the financial covenant set forth in Section 8.2.3(b) or limit the right of the Lenders to receive interest at the rates set forth in Section 3.2.2 hereof. "Margin Determination Date" means each date on which a quarterly Compliance Certificate is delivered. The first Margin Determination Date shall be the first such date after June 30, 1997. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, or condition (financial or otherwise) of Simpson and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Borrower to perform under any Loan Document and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Borrower of any Loan Document. "Net Worth" means, as to Simpson, the consolidated net worth of Simpson and its Subsidiaries. "Note" means, as the context may require, either a Revolving Note or a Swing Note. "Obligations" means all obligations (monetary or otherwise) of the Borrowers arising under or in connection with this Agreement, the Notes and each other Loan Document. "Organic Document" means, relative to any Borrower, its certificate of incorporation or other organizational documents comparable thereto, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock. "Outstandings" means at any time the sum of: (a) the aggregate Dollar Amount of the principal amount of all Loans outstanding at such time; (b) the aggregate Dollar Amount of the face amount of all Letters of Credit outstanding and undrawn at such time; and (c) the aggregate Dollar Amount at such time of Obligations to reimburse drawings under any Letters of Credit which have been paid by the Issuer. "Participant" is defined in Section 11.12. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Pension Plan" means a "pension plan", as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which Simpson or any corporation, trade or business that is, along with Simpson, a member of a Controlled Group, may have liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "Percentage" means, relative to any Lender, the percentage set forth opposite its signature hereto or set forth in the Lender Assignment Agreement, as such percentage may be adjusted from time to time pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 11.12. "Person" means any natural person, corporation, partnership, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "Plan" means any Pension Plan or Welfare Plan. "Pounds Sterling" means lawful currency of the United Kingdom. "Prime Rate" means a floating rate of interest equal to the higher (redetermined daily) of (a) the per annum rate of interest announced by ABN at its office in Chicago, Illinois as its prime rate for Dollar loans; and (b) the Federal Funds Rate plus 1/2%. (The "prime rate" is set by ABN based upon various factors and is used as a reference for pricing some loans. It is not the best rate available to the customers of ABN at any point in time.) Changes in the rate of interest on that portion of any Loans maintained as Prime Rate Loans will take effect simultaneously with each change in the Prime Rate. The Agent will give notice promptly to the Borrowers and the Lenders of changes in the Prime Rate. "Prime Rate Loan" means a Loan in Dollars bearing interest at a fluctuating rate determined by reference to the Prime Rate. "Quarterly Payment Date" means the last day of each March, June, September, and December or, if any such day is not a Business Day, the next succeeding Business Day. "Rate Option" means, with respect to any Loan, a Eurocurrency Rate Loan or Prime Rate Loan. "Reimbursement Obligation" is defined in Section 4.6. "Release" means a "release", as such term is defined in CERCLA. "Required Lenders" means, at any time, any Lenders having Percentages aggregating at least 66 2/3%. "Revolving Loan" is defined in Section 2.1.2. "Revolving Note" means a promissory note of any Borrower payable to the order of any Lender, in the form of Exhibit B hereto (as such promissory notes may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of such Borrower to such Lender resulting from outstanding Revolving Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Significant Subsidiary" means a Subsidiary which accounted for in excess of either 5% of the consolidated assets of Simpson and its Subsidiaries as of the end of the last Fiscal Quarter or 5% of the consolidated revenue of Simpson and its Subsidiaries for the four Fiscal Quarter period ending as of the end of the last Fiscal Quarter. "Simpson Guaranty" means the guaranty of Simpson substantially in the form of Exhibit L hereto, as amended, supplemented, restated or otherwise modified from time to time. "Solvent" means, as to any Person at any time, that (a) the fair value of the property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts of liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital. "Spanish Pesetas" means lawful currency of Spain. "Stated Amount" of each Letter of Credit means the "Stated Amount" as defined therein. "Stated Expiry Date" is defined in Section 4.1. "Stated Maturity Date" means June 16, 1998, as such date may be extended pursuant to Section 2.14. "Subordinated Debt" means Indebtedness of any Borrower subordinated in form and substance satisfactory to the Agent. "Subsidiary" means, with respect to any Person, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person and (ii) any other entity of which more than 50% of the outstanding capital interest, profit interest or beneficial interest is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person or by one or more other Subsidiaries of such Person. "Subsidiary Borrower" means each Borrower other than Simpson. "Swing Lender" means ABN in its capacity as swing lender hereunder. "Swing Loan" is defined in Section 2.7. "Swing Note" means a promissory note of Simpson payable to the order of the Swing Lender, in the form of Exhibit C hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of Simpson to the Swing Lender resulting from outstanding Swing Loans, and also means any other promissory note accepted from time to time in substitution therefor or renewal thereof. "Tangible Net Worth" means, as to Simpson, the consolidated net worth of Simpson and its Subsidiaries after subtracting therefrom the aggregate amount of any intangible assets of Simpson and its Subsidiaries, including goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service marks and brand names. "Taxes" is defined in Section 5.6. "United States" or "U.S." means the United States of America, its fifty States and the District of Columbia. "U.S. Subsidiary" means a Subsidiary of Simpson organized under the laws of a state of the United States or the District of Columbia. "Welfare Plan" means a "welfare plan", as such term is defined in section 3(1) of ERISA, of Simpson or any member of its Controlled Group. SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and in each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document. SECTION 1.3. Cross-References. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition. SECTION 1.4. Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 8.2.3) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with, those generally accepted accounting principles ("GAAP") in the United States at the time in effect. ARTICLE II COMMITMENTS, BORROWING PROCEDURES AND NOTES SECTION 2.1. Commitments. On the terms and subject to the conditions of this Agreement (including Article V), each Lender severally agrees as follows: SECTION 2.1.1. Revolving Loan Commitment. From time to time on any Business Day occurring prior to the Commitment Termination Date, each Lender will make Revolving Loans in Dollars and/or other Available Currencies (relative to such Lender, its "Revolving Loans") to any Borrower equal to such Lender's Percentage of the aggregate amount of the Borrowing of Revolving Loans requested by such Borrower to be made on such day; provided, however that the aggregate Dollar Amount of the principal amount of Loans by all the Lenders in currencies other than Dollars shall not at any time exceed $20,000,000 at any time outstanding. On the terms and subject to the conditions hereof, each Borrower may from time to time borrow, prepay and reborrow Revolving Loans. SECTION 2.1.2. Commitment to Issue Letters of Credit. From time to time on any Business Day, the Issuer will issue, and each Lender will participate in, the Letters of Credit, in accordance with Article IV. SECTION 2.1.3. Lenders Not Permitted or Required To Make Loans or Issue or Participate in Letters of Credit Under Certain Circumstances. No Lender shall be permitted or required to (a) make any Loan if, after giving effect thereto, an amount equal to the Dollar Amount of the aggregate outstanding principal amount of all Revolving Loans (i) of all Lenders, together with the Dollar Amount of all outstanding Swing Loans and the Dollar Amount of all Letter of Credit Outstandings, would exceed the Commitment Amount, or (ii) of such Lender, together with the Dollar Amount of its Percentage of the Dollar Amount of the principal amount of all Swing Loans and the Dollar Amount of its Percentage of all Letter of Credit Outstandings, would exceed such Lender's Percentage of the Commitment Amount; or (b) issue (in the case of the Issuer), extend or participate in (in the case of each Lender) any Letter of Credit if, after giving effect thereto (i) the Dollar Amount of all Letter of Credit Outstandings together with an aggregate amount equal to the Dollar Amount of the aggregate outstanding principal amount of all Loans would exceed the Commitment Amount, or (ii) the Dollar Amount of such Lender's Percentage of all Letter of Credit Outstandings together with an aggregate amount equal to the Dollar Amount of the aggregate outstanding principal amount of all Revolving Loans of such Lender and such Lender's Percentage of the Dollar Amount of the aggregate principal amount of all Swing Loans would exceed such Lender's Percentage of the Commitment Amount. For the purposes of this Section 2.1.3, the Dollar Amount of any Loans not denominated in Dollars shall be determined as of the most recent Determination Date for each such Loan. SECTION 2.2. Reduction of Commitment Amounts. Simpson may, from time to time on any Business Day, voluntarily reduce the amount of the Commitment Amount; provided, however, that Simpson shall simultaneously reduce the amount of Commitment Amount (as such term is defined in the Companion Agreement) under the Companion Agreement by an equal amount; provided, further, that the Commitment Amount shall not be reduced to an amount less than the Outstandings (after giving effect to any concurrent repayment of Loans); and provided further, that all such reductions shall require at least 5 Business Days' prior notice to the Agent and be permanent, and any partial reduction of such Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral multiple of $250,000. SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to the Agent on or before 11:00 A.M., New York time, on a Business Day, Simpson may from time to time irrevocably request (on not less than three nor more than five Business Days' notice with respect to a Eurocurrency Rate Loan, and not less than one nor more than five Business Days' notice with respect to Prime Rate Loan) that a Borrowing of Revolving Loans be made to the Borrower specified by Simpson in an Available Currency, if in Dollars, in a minimum amount of $2,000,000 and an integral multiple of $100,000 or if in another Available Currency, in a minimum amount of the Dollar Amount of $2,000,000 and an integral multiple of 100,000 units of such Available Currency, or in the unused amount of the applicable Commitment. On the terms and subject to the conditions of this Agreement, each Borrowing shall be comprised of the same Rate Option of Loans (and, in the case of Eurocurrency Rate Loans, the same Available Currency), and shall be made on the Business Day, specified in such Borrowing Request. The proceeds of each Borrowing shall be advanced to the Borrower specified in the applicable Borrowing Request. On or before 10:00 A.M., New York time, on such Business Day each Lender shall deposit with the Agent same day funds in the applicable Available Currency in an amount equal to such Lender's Percentage of the requested Borrowing. Such deposit will be made to such accounts which the Agent shall specify from time to time by notice to the Lenders. To the extent funds are received from the Lenders, the Agent shall make such funds available to the Borrower specified by Simpson by wire transfer to such accounts as Simpson shall have specified in its Borrowing Request. No Lender's obligation to make any Loan shall be affected by any other Lender's failure to make any Loan. SECTION 2.4. Continuation and Conversion Elections. By delivering a Continuation/Conversion Notice to the Agent on or before 11:00 A.M., New York time, on a Business Day, Simpson may from time to time irrevocably elect (on not less than three nor more than five Business Days' notice with respect to a conversion into or a continuation of a Eurocurrency Loan to a Borrower specified by Simpson and not less than one nor more than five Business Days' notice with respect to a conversion into Prime Rate Loan) that all, or any portion in an aggregate minimum amount, if in Dollars of $2,000,000 and an integral multiple of $100,000 or in the case of an Available Currency other than Dollars, in an aggregate minimum amount of the Dollar Amount of $2,000,000 and an integral multiple of 100,000 units of such currency, of any Revolving Loans be, in the case of Prime Rate Loans, converted into Eurocurrency Rate Loans or, in the case of Eurocurrency Rate Loans be converted into Prime Rate Loans or Eurocurrency Rate Loans in another Available Currency or continued as Eurocurrency Rate Loans in the same currency. In the absence of delivery of a Continuation/ Conversion Notice with respect to any Revolving Loan constituting a Eurocurrency Rate Loan by 11:00 A.M. New York time at least three Business Days before the last day of the then current Interest Period with respect thereto, such Eurocurrency Rate Loan shall, on such last day, automatically convert to a Eurocurrency Rate Loan in the same currency having an Interest Period equal to the shorter of (i) one month and (ii) the number of days in the period from and including such last day to but excluding the Commitment Termination Date; provided that such period determined under this clause (ii) is acceptable to the Agent, otherwise the Loan shall become due and payable. Each such conversion or continuation shall be prorated among the applicable outstanding Loans of such Borrower to all Lenders, and when any Default has occurred and is continuing, no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, Eurocurrency Rate Loans. SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its obligation to make, continue or convert Eurocurrency Rate Loans hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to make or maintain such Eurocurrency Rate Loan; provided, however, that such Eurocurrency Rate Loan shall nonetheless be deemed to have been made and to be held by such Lender, and the obligation of the Borrowers to repay such Eurocurrency Rate Loan shall nevertheless be to such Lender for the account of such foreign branch, Affiliate or international banking facility. In addition, the Borrowers hereby consent and agree that, for purposes of any determination to be made for purposes of Section 5.1, 5.2, 5.3 or 5.4, it shall be conclusively assumed that each Lender elected to fund all Eurocurrency Rate Loans by purchasing deposits, in the interbank eurocurrency market having a maturity corresponding to the Interest Period for such Loan and bearing an interest rate equal to the Eurocurrency Rate for such Loan. SECTION 2.6. Notes. The Revolving Loans of each Lender to each Borrower shall be evidenced by a Note of such Borrower, payable to the order of such Lender in an amount equal to the Lender's Revolving Loans. Each Lender shall record in its records, or at its option on the schedule attached to its applicable Note, the date, amount and Available Currency of each Loan made by such Lender thereunder, each repayment or prepayment thereof, and the dates on which the Interest Period for such Loan shall begin and end. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Note. The failure to so record or any error in so recording any such amount shall not, however, limit or otherwise affect the obligations of any Borrower hereunder or under any Note to repay the principal amount of each Revolving Loan, together with all interest accruing thereon. SECTION 2.7. Swing Line Commitment. From time to time on any Business Day occurring prior to the Commitment Termination Date, the Swing Lender agrees to make loans to Simpson (each such loan, a "Swing Loan") in an aggregate principal amount not to exceed $10,000,000. All Swing Loans shall be in Dollars. On the terms and subject to the conditions hereof, Simpson may from time to time borrow, prepay and reborrow Swing Loans. SECTION 2.8. Borrowing Procedure Swing Loans. By delivering a Borrowing Request to the Swing Lender and the Agent on or before 1:00 p.m., New York time, on a proposed Borrowing Date, Simpson may from time to time irrevocably request that a Borrowing be made in a minimum amount of $2,000,000 and an integral multiple of $100,000. On or before 4:00 P.M., Chicago time, on such Borrowing Date the Swing Lender shall deposit with the Agent same day funds in an amount equal to the requested Borrowing. Such deposit will be made to such accounts which the Agent shall specify from time to time by notice to the Swing Lender. To the extent funds are received from the Swing Lender, the Agent shall make such funds available to Simpson by wire transfer to such accounts as Simpson shall have specified in its Borrowing Request. SECTION 2.9. Refunding of Swing Loans. The Swing Lender may, at any time later than five Business Days after the Borrowing Date of a Swing Loan, in its sole and absolute discretion, on behalf of Simpson (which hereby irrevocably directs the Swing Lender to act on its behalf), request each Lender to make a Revolving Loan in Dollars in an amount equal to such Lender's Percentage of the Dollar Amount of the principal amount of the Swing Loans outstanding on the date such notice is given. Unless any of the events described in Section 9.1.9 shall have occurred (in which event the procedures of Section 2.10 shall apply), and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Loan are then satisfied or the aggregate amount of such Revolving Loans is not in the minimum or integral amount otherwise required hereunder, each Lender shall make the proceeds of its Revolving Loan available to the Agent for the account of the Swing Lender at 10:00 A.M. Chicago time in immediately available funds on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Loans shall be in Dollars and shall be immediately applied to repay the outstanding Swing Loans. All Revolving Loans made pursuant to this Section 2.9 shall be in Dollars and shall be Prime Rate Loans (but, subject to the other provisions of this Agreement, may be converted to Eurocurrency Rate Loans). SECTION 2.10. Participations in Swing Loans. (a) If an event described in Section 9.1.9 occurs (or for any reason the Lenders may not make Revolving Loans pursuant to Section 2.9), each Lender will, upon notice from the Agent, purchase from the Swing Lender (and the Swing Lender will sell to each such Lender) an undivided participation interest in all outstanding Swing Loans in an amount equal to its Percentage of the outstanding principal amount of the Swing Loans (and each Lender will immediately transfer to the Agent, for the account of the Swing Lender, in immediately available funds, the amount of its participation). (b) Whenever, at any time after the Swing Lender has received payment for any Lender's participation interest in the Swing Loans pursuant to Section 2.10(a), the Swing Lender receives any payment on account thereof, the Swing Lender will distribute to the Agent for the account of such Lender its participation interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participation interest was outstanding and funded) in like funds as received; provided, however, that in the event that such payment received by the Swing Lender is required to be returned, such Lender will return to the Agent for the account of the Swing Lender any portion thereof previously distributed by the Swing Lender to it in like funds as such payment is required to be returned by the Swing Lender. SECTION 2.11. Swing Loan Participation Obligations Unconditional. (a) Each Lender's obligation to make Revolving Loans pursuant to Section 2.9 and/or to purchase participation interests in Swing Loans pursuant to Section 2.10 shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Lender, Simpson or any other Person for any reason whatsoever; (b) the occurrence or continuance of an Event of Default; (c) any adverse change in the condition (financial or otherwise) of Simpson or any other Person; (d) any breach of this Agreement by Simpson or any other Lender; (e) any inability of Simpson to satisfy the conditions precedent to borrowing set forth in this Agreement on the date upon which any Swing Loan is to be refunded or any participation interest therein is to be purchased; or (f) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (b) Notwithstanding the provisions of subsection 2.11(a), no Lender shall be required to make any Revolving Loan to Simpson to refund a Swing Loan pursuant to Section 2.9 or to purchase a participation interest in a Swing Loan pursuant to Section 2.10 if, prior to the making by the Swing Lender of such Swing Loan, the Swing Lender received written notice (i) from a Lender specifying that such Lender believes in good faith that one or more of the conditions precedent to the making of such Swing Loan were not satisfied and, in fact, such conditions precedent were not satisfied at the time of the making of such Swing Loan or (ii) from Simpson that a Default has occurred and is continuing; provided that the obligation of such Lender to make such Revolving Loans and to purchase such participation interests shall be reinstated upon the earlier to occur of (x) the date on which such Lender or Simpson, as applicable, notifies the Swing Lender that its prior notice has been withdrawn and (y) the date on which all conditions precedent to the making of such Swing Loan have been satisfied (or waived by the Required Lenders or all Lenders, as applicable). SECTION 2.12. Conditions to Swing Loans. Notwithstanding any other provision of this Agreement, the Swing Lender shall not be obligated to make any Swing Loan if a Default exists or would result therefrom. SECTION 2.13. Swing Note. The Swing Loans shall be evidenced by the Swing Note of Simpson, payable to the order of the Swing Lender in an amount equal to the Swing Loans. The Swing Lender shall record in its records, or at its option on the schedule attached to such Swing Note, the date and amount of each Swing Loan and each repayment or prepayment thereof. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Swing Note. The failure to so record or any error in so recording any such amount shall not, however, limit or otherwise affect the obligations of Simpson hereunder or under the Swing Note to repay the principal amount of each Swing Loan, together with all interest accruing thereon. SECTION 2.14. Stated Maturity Date Extension. (a) Simpson may, by notice to the Agent given not more than 60 days and not less than 45 days prior to the scheduled Stated Maturity Date (the "Extension Request Date"), request that the Lenders extend the Stated Maturity Date for 364 days from the then scheduled Stated Maturity Date. The Agent shall notify the Lenders of its receipt of any notice given pursuant to this Section 2.14(a) within two Business Days after the Agent's receipt thereof. Each Lender (a "Consenting Lender") may, by irrevocable notice to Simpson and the Agent delivered to Simpson and the Agent not later than 30 days after the Extension Request Date (the "Consent Period"), consent to such extension of the Stated Maturity Date, which consent may be given or withheld by each Lender in its absolute and sole discretion. No extension shall be effective (i) unless consented to by Lenders holding at least 66 % of the Commitments and (ii) if as of the Stated Maturity Date, prior to the effectiveness of the extension, (i) any representation or warranty set forth in Article VII hereof shall not be true and correct with the same effect as if then made or (ii) any Default shall have occurred and be continuing. (b) Withdrawing Lenders. No extension pursuant to Section 2.14(a) shall be effective with respect to a Lender that either (i) by a notice (a "Withdrawal Notice") delivered to Simpson and the Agent, declines to consent to such extension or (ii) has failed to respond to Simpson and the Agent within the Consent Period (each such Lender giving a Withdrawal Notice or failing to respond in a timely manner being "Withdrawing Lender"). (c) Replacement of Withdrawing Lender. Simpson shall have the right during the period following the end of the Consent Period until the then scheduled Stated Maturity Date to replace the Withdrawing Lender with an existing Lender or a new Lender who consents to the extension of the Stated maturity Date (a "Replacement Lender"), in the case of a new Lender, with the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed. In the event Simpson has not replaced the Withdrawing Lender within said period, the Stated Maturity Date shall not be extended. (d) Assignment by Withdrawing Lender. A Withdrawing Lender shall be obliged, at the request of Simpson and subject to the Withdrawing Lender receiving payment in full of all amounts owing to it under this Agreement concurrently with the effectiveness of an assignment, to assign, without recourse or warranty and pursuant to the terms of Section 11.11.1 hereof, all of its rights and obligations hereunder to any Replacement Lender nominated by the Borrower and willing to accept such assignment provided that if the Replacement Lender or the Withdrawing Lender shall suffer any loss as a result of such assignment during an Interest Period, Simpson shall reimburse such Lender therefor. The amount of any such loss shall be certified to Simpson by such Lender, which certificate shall be conclusive absent manifest error. (e) Scheduled Stated Maturity Date. If the scheduled Stated Maturity Date shall have been extended in respect of Consenting Lenders and any Replacement Lender in accordance with Section 2.14, all references herein and in any Note to the "Stated Maturity Date" shall refer to the Stated Maturity Date as so extended. ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES SECTION 3.1. Repayments and Prepayments. The Borrowers shall repay in full the unpaid principal amount of each Loan upon the Stated Maturity Date. (a) Prior thereto, any Borrower may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part without penalty or premium, of the outstanding principal amount of any Loans; provided, however, that (i) any such prepayment shall be made to the Agent and shall be applied to Loans as the prepaying Borrower may specify and on a pro rata basis to the accounts of Loans of the same Rate Option and having the same Interest Period of all Lenders; (ii) no such prepayment of any Eurocurrency Rate Loan may be made on any day other than the last day of the Interest Period for such Loan; (iii) all such voluntary prepayments shall require at least three but no more than five Business Days' prior written notice to the Agent which notice shall be irrevocable once given; and (iv) all such voluntary partial prepayments shall be in an aggregate minimum Dollar Amount of $2,000,000 and an integral multiple of 100,000 units of the Available Currency; (b) In addition, the Borrowers shall, on each date when any reduction in the Commitment Amount shall become effective, including pursuant to Section 2.2, make a mandatory prepayment of outstanding Loans to the Agent equal to the excess, if any, of the aggregate Outstandings over the Commitment Amount as so reduced; (c) In addition, the Borrowers shall, on each Determination Date for any Borrowing of Eurocurrency Loans on which the Dollar Amount of the Outstandings of the Borrowers exceed (as the result of fluctuations in applicable foreign exchange rates or otherwise) the then Commitment Amount, make a mandatory repayment to the Agent of Loans outstanding in an aggregate Dollar Amount equal to the excess of (x) the aggregate Outstandings; over (y) the then Commitment Amount; (d) Each Borrower shall, immediately upon any acceleration of the Stated Maturity Date of any Loans pursuant to Section 9.2 or Section 9.3, repay all Loans, unless, pursuant to Section 9.3, only a portion of all Loans is so accelerated. Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by Section 5.4. No voluntary prepayment of principal of any Loans shall cause a reduction in the Commitment Amount. SECTION 3.2. Interest Provisions. Interest on the outstanding principal amount of Loans shall accrue and be payable in the applicable Available Currency in accordance with this Section 3.2. SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing Request or Continuation/Conversion Notice, the applicable Borrower may elect that Loans comprising a Borrowing accrue interest at a rate per annum: (a) on that portion of the Loans maintained from time to time as a Prime Rate Loan, equal to the sum of the Prime Rate from time to time in effect plus the applicable Margin; and (b) on that portion of the Loans maintained as a Eurocurrency Rate Loan, during each Interest Period applicable thereto, equal to the sum of the applicable Eurocurrency Rate (Reserve Adjusted) for such Interest Period plus the applicable Margin. SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount of any Loan is due and payable (whether on the Stated Maturity Date or upon acceleration), or after any other monetary Obligation of any Borrower shall have become due and payable, the Borrowers agree to pay, but only to the extent permitted by law, interest (after as well as before judgment) on Prime Rate Loans at a rate per annum equal to the Prime Rate plus a margin of 2% and on Eurocurrency Rate Loans at a rate per annum equal to 2% in excess of the rate otherwise applicable until the end of the then applicable Interest Period and thereafter at a rate equal to 2.75% per annum on the Eurocurrency Rate (Reserve Adjusted) for Interest Periods not to exceed one month as determined by the Agent; provided that any Eurocurrency Rate Loan denominated in Dollars shall convert to a Prime Rate Loan at the end of the applicable Interest Period. SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be payable, without duplication: (a) on the Stated Maturity Date therefor; (b) on the date of any payment or prepayment of any Eurocurrency Rate Loans, in whole or in part, of principal outstanding on such Eurocurrency Rate Loan; (c) with respect to Prime Rate Loans, on each Quarterly Payment Date occurring after the date of the initial Borrowing hereunder; (d) with respect to Eurocurrency Rate Loans, on the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, on a date three months after the commencement of said Interest Period, or if not a Business Day, on the next Business Day unless said next Business Day is in the next calendar month then on the preceding Business Day); and (e) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 9.2 or Section 9.3, immediately upon such acceleration. Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable by the applicable Borrower upon demand. SECTION 3.3. Fees. The Borrowers agree to pay the fees set forth in this Section 3.3. All such fees shall be non-refundable. SECTION 3.3.1. Commitment Fee. (a) Simpson agrees to pay to the Agent for the account of each Lender, for the period (including any portion thereof when its Commitment is suspended by reason of the Borrowers' inability to satisfy any condition of Article VI) commencing on the Effective Date and continuing through the Commitment Termination Date, a commitment fee on such Lender's Percentage of the average daily Dollar Amount of the unused portion of the Loan Commitment Availability at the rate of 0.10% per annum; (b) For purposes of determining the commitment fee, the average daily Dollar Amount of all outstanding Loans and the unused portion of the Loan Commitment Availability shall be determined as of each applicable Determination Date; and (c) Such fee shall be payable in Dollars in immediately available funds in arrears on each Quarterly Payment Date. SECTION 3.3.2. Arrangement Fee; Agent's Fee. Simpson agrees to pay to the Agent for its own account, a non-refundable arrangement fee, and, thereafter, a non-refundable annual fee, in such amounts and payable at such times as has been agreed upon between the Agent and Simpson in the fee letter dated April 4, 1997 (as amended from time to time). SECTION 3.3.3. Letter of Credit Face Amount Fee. The applicable Borrower agrees to pay to the Agent, for the account of the Lenders, a fee for each Letter of Credit issued on the application of such Borrower for the period from and including the date of the issuance of such Letter of Credit to (but not including) the date upon which such Letter of Credit expires, at a per annum rate equal to the applicable Margin of the face amount of such Letter of Credit (which face amount shall be reduced by any reductions in such Letters of Credit pursuant to Section 4.1(d) hereof). Such fee shall be payable in immediately available funds in advance on the date of issuance of each Letter of Credit and on each Quarterly Payment Date thereafter. No portion of such fee shall be refunded after payment. SECTION 3.3.4. Letter of Credit Fronting Fee. The applicable Borrower agrees to pay to the Issuer for its own account a fronting fee for each Letter of Credit issued on the application of such Borrower for the period from and including the date of the issuance of such Letter of Credit to (but not including) the date upon which each Letter of Credit expires, of 0.02% (in the case of a standby Letter of Credit) or 0.05% (in the case of a commercial Letter of Credit) of the face amount of such Letter of Credit (which face amount shall be reduced by any reductions in such Letters of Credit pursuant to Section 4.1(c) hereof). Such fee shall be payable in immediately available funds on the date of issuance of such Letter of Credit. SECTION 3.3.5. Letter of Credit Administrative Fee. The Borrowers agree to pay to the Agent, for the account of the Issuer, the amounts set forth in Section 4.3. ARTICLE IV LETTERS OF CREDIT SECTION 4.1. Issuance Requests. By delivering to the Agent and the Issuer an Issuance Request on or before 10:00 A.M., New York time, any Borrower may request, from time to time prior to the Commitment Termination Date and on not less than three nor more than ten Business Days' notice, that the Issuer issue an irrevocable letter of credit in substantially the form of Exhibit D hereto, or in such other form as may be requested by a Borrower and approved by the Issuer (each a "Letter of Credit"), in support of financial obligations of such Borrower incurred in such Borrower's ordinary course of business and which are described in such Issuance Request. Upon receipt of an Issuance Request, the Agent shall promptly notify the Lenders thereof. Each Letter of Credit shall by its terms: (a) be issued in Dollars; (b) be issued in a Stated Amount which does not exceed (or would not exceed) the then Letter of Credit Availability; (c) be stated to expire on a date (its "Stated Expiry Date") no later than the earlier of (i) one year from the date of issuance, or (ii) the Commitment Termination Date; and (d) on or prior to its Stated Expiry Date (i) terminate immediately upon notice to the Issuer thereof from the beneficiary thereunder that all obligations covered thereby have been terminated, paid, or otherwise satisfied in full, or (ii) reduce in part immediately and to the extent the beneficiary thereunder has notified the Issuer thereof that the obligations covered thereby have been paid or otherwise satisfied in part. So long as no Default has occurred and is continuing and subject to the conditions set forth in this Agreement, by delivery to the Issuer and the Agent of an Issuance Request at least three but not more than ten Business Days prior to the Stated Expiry Date of any Letter of Credit, such Borrower may request the Issuer to extend the Stated Expiry Date of such Letter of Credit for an additional period not to extend beyond the Commitment Termination Date. SECTION 4.2. Issuances and Extensions. On the terms and subject to the conditions of this Agreement (including Article VI), the Issuer shall issue Letters of Credit, and extend the Stated Expiry Dates of outstanding Letters of Credit, in accordance with the Issuance Requests made therefor. The Issuer will make available the original of each Letter of Credit which it issues in accordance with the Issuance Request therefor to the beneficiary thereof (and will promptly notify each of the Lenders of the issuance) and will notify the beneficiary under any Letter of Credit of any extension of the Stated Expiry Date thereof. SECTION 4.3. Expenses. Each Borrower agrees to pay to the Agent for the account of the Issuer with respect to each Letter of Credit issued on the application of such Borrower all standard administrative expenses of the Issuer in connection with the issuance, maintenance, modification (if any) and administration of each Letter of Credit issued by the Issuer at the request of the Borrower upon demand from time to time. SECTION 4.4. Other Lenders' Participation. Each Letter of Credit issued pursuant to Section 4.2 shall, effective upon its issuance and without further action, be issued on behalf of all Lenders (including the Issuer thereof) pro rata according to their respective Percentages. Each Lender shall, to the extent of its Percentage (unless the Issuer shall have received written notice that the conditions precedent to the issuance of such Letter of Credit had not occurred prior to such issuance), be deemed irrevocably to have participated in the issuance of such Letter of Credit and shall be responsible to reimburse promptly the Issuer thereof for Reimbursement Obligations which have not been reimbursed by the applicable Borrower in accordance with Section 4.5, or which have been reimbursed by the applicable Borrower but must be returned, restored or disgorged by the Issuer for any reason, and each Lender shall, to the extent of its Percentage, be entitled to receive from the Agent a ratable portion of the letter of credit fees received by the Agent pursuant to Section 3.3.3, with respect to each Letter of Credit. In the event that the applicable Borrower shall fail to reimburse the Issuer, or if for any reason Revolving Loans shall not be made to fund any Reimbursement Obligation, all as provided in Section 4.5 and in an amount equal to the amount of any drawing honored by the Issuer under a Letter of Credit issued by it, or in the event the Issuer must for any reason return or disgorge such reimbursement, the Issuer shall promptly notify each Lender of the unreimbursed amount of such drawing and of such Lender's respective participation therein. Each Lender shall make available to the Issuer, whether or not any Default shall have occurred and be continuing, an amount equal to its respective participation in same day or immediately available funds at the office of the Issuer specified in such notice not later than 10:00 A.M., New York time, on the Business Day after the date the Lenders are notified by the Issuer. In the event that any Lender fails to make available to the Issuer the amount of such Lender's participation in such Letter of Credit as provided herein, the Issuer shall be entitled to recover such amount on demand from such Lender together with interest at the Federal Funds Rate for three Business Days (together with such other compensatory amounts as may be required to be paid by such Lender to the Agent pursuant to the Rules for Interbank Compensation of the Council on International Banking or the Clearinghouse Compensation Committee, as the case may be, as in effect from time to time) and thereafter at the Prime Rate plus 2%. Nothing in this Section shall be deemed to prejudice the right of any Lender to recover from the Issuer any amounts made available by such Lender to the Issuer pursuant to this Section in the event that it is determined by a court of competent jurisdiction that the payment with respect to a Letter of Credit by the Issuer in respect of which payment was made by such Lender constituted gross negligence or wilful misconduct on the part of the Issuer. The Issuer shall distribute to each other Lender which has paid all amounts payable by it under this Section with respect to any Letter of Credit issued by the Issuer such other Lender's Percentage of all payments received by the Issuer from the applicable Borrower in reimbursement of drawings honored by the Issuer under such Letter of Credit when such payments are received. SECTION 4.5. Disbursements. The Issuer will notify the applicable Borrower and the Agent promptly of the presentment for payment of any Letter of Credit, together with notice of the date (a "Disbursement Date") such payment shall be made. Subject to the terms and provisions of such Letter of Credit, the Issuer shall make such payment to the beneficiary (or its designee) of such Letter of Credit. Prior to 10:00 A.M., New York time, on the Disbursement Date, the applicable Borrower will reimburse the Issuer for all amounts which it has disbursed under the Letter of Credit. To the extent the Issuer is not reimbursed in full in accordance with the third sentence of this Section, the Borrower's Reimbursement Obligation shall accrue interest (i) during the three days following the Disbursement Date at the Prime Rate and (ii) thereafter at the Prime Rate plus a margin of 2% per annum, payable on demand. In the event the Issuer is not reimbursed by the applicable Borrower on the Disbursement Date (other than upon a deemed Disbursement under Section 4.7 when an actual Disbursement has not been made), or if the Issuer must for any reason return or disgorge such reimbursement, the Lenders (including the Issuer) shall, on the terms and subject to the conditions of this Agreement, fund the Reimbursement Obligation therefor by making Revolving Loans which shall be Prime Rate Loans (the applicable Borrower being deemed to have given a timely Borrowing Request therefor for such amount); provided, however, for the purpose of determining the availability of the Commitments to make Revolving Loans immediately prior to giving effect to the application of the proceeds of such Revolving Loans, such Reimbursement Obligation shall be deemed not to be outstanding at such time. SECTION 4.6. Reimbursement. The obligation of each Borrower (a "Reimbursement Obligation") under Section 4.5 to reimburse the Issuer with respect to each Disbursement (including interest thereon) with respect to each Letter of Credit issued on such Borrower's application, and each Lender's obligation to make participation payments in each drawing which has not been reimbursed by the Borrower, shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim, or defense to payment which the applicable Borrower may have or have had against any Lender or any beneficiary of a Letter of Credit, including any defense based upon the occurrence of any Default, any draft, demand or certificate or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient, the failure of any Disbursement to conform to the terms of the applicable Letter of Credit (if, in the Issuer's opinion, such Disbursement conforms to the terms of the applicable Letter of Credit, unless such determination is the result of the Issuer's gross negligence or wilful misconduct) or any non-application or misapplication by the beneficiary of the proceeds of such Disbursement, or the legality, validity, form, regularity, or enforceability of such Letter of Credit; provided, however, that nothing herein shall adversely affect the right of the applicable Borrower to commence any proceeding against the Issuer for any wrongful Disbursement made by the Issuer under a Letter of Credit as a result of acts or omissions constituting gross negligence or wilful misconduct on the part of the Issuer. SECTION 4.7. Deemed Disbursements. Upon the occurrence and during the continuation of any Event of Default or the occurrence of the Commitment Termination Date, an amount equal to that portion of Letter of Credit Outstandings attributable to outstanding and undrawn Letters of Credit shall, at the election of the Issuer acting on instructions from the Required Lenders, and without demand upon or notice to the applicable Borrower, be deemed to have been paid or disbursed by the Issuer under such Letters of Credit (notwithstanding that such amount may not in fact have been so paid or disbursed), and, upon notification by the Issuer to the Agent and the applicable Borrower of its obligations under this Section, the applicable Borrower shall be immediately obligated to reimburse the Issuer the amount deemed to have been so paid or disbursed by the Issuer. Any amounts so received by the Issuer from the applicable Borrower pursuant to this Section shall be held as collateral security for the repayment of the applicable Borrower's obligations in connection with the Letters of Credit issued by the Issuer. At any time when such Letters of Credit shall terminate and all Obligations of the Issuer are either terminated or paid or reimbursed to the Issuer in full, the Obligations under this Section shall be reduced accordingly (subject, however, to reinstatement in the event any payment in respect of such Letters of Credit is recovered in any manner from the Issuer), and the Issuer will return to the Borrowers the excess, if any, of (a) the aggregate amount deposited by the applicable Borrower with the Issuer and not theretofore applied by the Issuer to any Reimbursement Obligation or other Obligation over (b) the aggregate amount of all Reimbursement Obligations to the Issuer pursuant to this Section, as so adjusted and other Obligations. At such time when all Events of Default shall have been cured or waived or when all Obligations of the Borrowers shall have been terminated, paid, or otherwise satisfied in full, the Issuer shall return to the Borrowers all amounts then on deposit with the Issuer pursuant to this Section. SECTION 4.8. Nature of Reimbursement Obligations. The Borrowers shall assume all risks of the acts, omissions, or misuse of any Letter of Credit by the beneficiary thereof. Neither the Issuer nor any Lender (except to the extent of its own gross negligence or wilful misconduct) shall be responsible for: (a) the form, genuineness, or legal effect of any Letter of Credit or the form, validity, sufficiency, accuracy, genuineness, or legal effect of any document submitted by any party in connection with the application for and issuance of a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent, or forged; (b) the form, validity, sufficiency, accuracy, genuineness, or legal effect of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof in whole or in part, which may prove to be invalid or ineffective for any reason; (c) failure of the beneficiary to comply fully with conditions required in order to demand payment under a Letter of Credit; (d) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, or otherwise; or (e) any loss or delay in the transmission or otherwise of any document or draft required in order to make a Disbursement under a Letter of Credit or of the proceeds thereof. SECTION 4.9. Increased Costs; Indemnity. If by reason of (a) any change in applicable law, regulation, rule, decree or regulatory requirement or any change in the interpretation or application by any judicial or regulatory authority of any law, regulation, rule, decree or regulatory requirement, or (b) compliance by the Issuer or any Lender with any direction, request or requirement (whether or not having the force of law) of any governmental or monetary authority, including Regulation D of the F.R.S. Board: (i) the Issuer or any Lender shall be subject to any tax (other than taxes on net income and franchises), levy, charge or withholding of any nature or to any variation thereof or to any penalty with respect to the maintenance or fulfillment of its obligations under this Article IV, whether directly or by such being imposed on or suffered by the Issuer or any Lender; (ii) any reserve, deposit or similar requirement is or shall be applicable, imposed or modified in respect of any Letters of Credit issued by the Issuer or participations therein purchased by any Lender; or (iii) there shall be imposed on the Issuer or any Lender any other condition regarding this Article IV, any Letter of Credit or any participation therein; and the result of the foregoing is directly or indirectly to increase the cost to the Issuer or such Lender of issuing, making or maintaining any Letter of Credit or of purchasing or maintaining any participation therein, or to reduce any amount receivable in respect thereof by the Issuer or such Lender, then and in any such case the Issuer or such Lender may, at any time after the additional cost is incurred or the amount received is reduced, notify the Borrower on whose application such Letter of Credit was issued thereof, and such Borrower agrees to pay no later than three days after demand such amounts as the Issuer or Lender may specify to be necessary to compensate the Issuer or Lender for such additional cost or reduced receipt, together with interest on such amount from the date due until payment in full thereof at a rate equal at all times to the Prime Rate plus 2% per annum. The determination by the Issuer or Lender, as the case may be, of any amount due pursuant to this Section, as set forth in a statement setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest error, be final and conclusive and binding on all of the parties hereto. In addition to amounts payable as elsewhere provided in this Article IV, the Borrower on whose application such Letter of Credit was issued agrees to protect, indemnify, pay and save the Issuer harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees and allocated costs of internal counsel) which the Issuer may incur or be subject to as a consequence, direct or indirect, of (c) the issuance of any Letter of Credit, other than as a result of the gross negligence or wilful misconduct of the Issuer as determined by a court of competent jurisdiction or other than with respect to the validity, sufficiency or accuracy of any Letter of Credit, or (d) the failure of the Issuer to honor a drawing under any Letter of Credit requested by such Borrower as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority. SECTION 4.10. Uniform Customs. Each Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits, 1993 Revisions, ICC Publication No. 500. ARTICLE V CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS SECTION 5.1. Eurocurrency Rate Lending Unlawful. If any Lender shall determine in good faith (which determination shall, upon notice thereof to the Borrowers and the Lenders, be conclusive and binding) that the introduction of or any change in or in the interpretation of any law makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender to make, continue or maintain any Loan as, or to convert any Loan into, a Eurocurrency Rate Loan of a certain Available Currency, the obligations of all Lenders to make, continue, maintain or convert into any such Loans shall, upon such determination, forthwith be suspended until such Lender shall notify the Agent that the circumstances causing such suspension no longer exist, and all Eurocurrency Rate Loans of such Available Currency shall automatically convert into Prime Rate in an amount equal to the Dollar Amount thereof at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion. SECTION 5.2. Deposits Unavailable. If the Agent shall have determined that (a) deposits in the relevant Available Currency in the relevant amount and for the relevant Interest Period are not available to ABN in its relevant market; or (b) by reason of circumstances affecting ABN's relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to Eurocurrency Rate Loans of such type, then, upon notice from the Agent to the Borrowers and the Lenders, the obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue any Loans as, or to convert any Loans into, Eurocurrency Rate Loans of such Available Currency shall forthwith be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 5.3. Increased Eurocurrency Rate Loan Costs, etc. Each Borrower agrees to reimburse any Lender if, as a result of any change in any law, regulation, treaty or directive, or in any regulatory interpretation or application thereof or compliance by such Lender with any request or directive (whether or not having the force of law) from any court or governmental authority, agency or central bank (i) the basis of taxation of payments to such Lender of the principal of or interest on any Eurocurrency Rate Loan (other than taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office) is changed; (ii) any reserve, special deposit or similar requirements against assets of, deposits with or for the account of, or credit extended by, such Lender are imposed, modified or deemed applicable; or (iii) any other condition affecting this Agreement or any Eurocurrency Rate Loan is imposed on the interbank eurocurrency market; and such Lender determines that, by reason thereof, the cost to such Lender of making or maintaining any of the Eurocurrency Rate Loans is actually increased, or the amount of any sum receivable by such Lender hereunder in respect of any of the Eurocurrency Rate Loans is actually reduced; then the applicable Borrower shall pay to such Lender within three Business Days after demand (which demand shall be accompanied by a statement setting forth the basis for the calculation thereof but only to the extent not theretofore provided to the applicable Borrower) such additional amount or amounts as will compensate such Lender for such additional cost or reduction to the extent such cost or reduction has not been provided for in the calculation of the Eurocurrency Reserve Percentage. Determinations by such Lender for purposes of this section of the additional amounts required to compensate such Lender in respect of the foregoing shall be rebuttably presumed to be correct. SECTION 5.4. Funding Losses. In the event any Lender shall incur any loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a Eurocurrency Rate Loan) as a result of (a) any conversion or repayment or prepayment of the principal amount of any Eurocurrency Rate Loans on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3.1 or otherwise; (b) any Loans not being made as Eurocurrency Rate Loans in accordance with the Borrowing Request therefor; or (c) any Loans not being continued as, or converted into, Eurocurrency Rate Loans in accordance with the Continuation/Conversion Notice therefor, then, the applicable Borrower agrees that upon the written notice of such Lender (with a copy to the Agent), such Borrower shall pay directly to such Lender upon demand such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. SECTION 5.5. Increased Capital Costs. If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in its sole and absolute discretion) that the rate of return on its or such controlling Person's capital as a consequence of its Commitments, issuance of or participation in Letters of Credit or the Loans made by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender, the Borrowers agree immediately to pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return. A statement of such Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrowers. In determining such amount, such Lender may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable. SECTION 5.6. Taxes. All payments by any of the Borrowers of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (such non-excluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made by a Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the applicable Borrower agrees to (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (c) pay to the Agent for the account of the Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against the Agent or any Lender with respect to any payment received by the Agent or such Lender hereunder, the Agent or such Lender may pay such Taxes and the applicable Borrower agrees to promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such person would have received had not such Taxes been asserted. If the applicable Borrower fails to pay any Taxes when due to the appropriate taxing authority or fail to remit to the Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the applicable Borrower shall indemnify the Lenders for any incremental Taxes, interest or penalties that may become payable by any Lender as a result of any such failure. For purposes of this Section 5.6, a distribution hereunder by the Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower. Upon the request of Simpson or the Agent, each Lender that is organized under the laws of a jurisdiction other than the United States shall, prior to the due date of any payments under the Notes, execute and deliver to Simpson and the Agent, on or about the first scheduled payment date in each Fiscal Year, one or more (as Simpson or the Agent may reasonably request) United States Internal Revenue Service Forms 4224 or Forms 1001 or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable to establish the extent, if any, to which a payment to such Lender is exempt from withholding or deduction of Taxes. Notwithstanding anything to the contrary herein, the Borrowers shall not be responsible for any Taxes on the transfer by assignment or sale of a participation of any interest herein, nor shall the liability of the Borrowers under this Section 5.6 be increased by reason of any assignment or sale of a participation, except upon any change in law arising after said assignment or sale. SECTION 5.7. Payments, Computations, etc. (a) Currency of Payments. Each payment on account of an amount due from any Borrower hereunder shall be made by such Borrower to the Agent for the pro rata account of the Lenders entitled to receive such payment in the currency in which such amount is denominated and in such funds as are customary at the place and time of payment for the settlement of international payments in such currency. Upon request, the Agent will give the applicable Borrower a statement showing the computation used in calculating such amount, which statement shall be conclusive in the absence of manifest error. The obligation of the Borrowers to make each payment on account of such amount in the currency in which such amount is denominated shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any other currency, except to the extent such tender or recovery shall result in the actual receipt by the Agent of the full amount in the appropriate currency payable hereunder. Each Borrower agrees that its obligation to make each payment on account of such amount in the currency in which such amount is denominated shall be enforceable as an additional or alternative claim for recovery in such currency of the amount (if any) by which such actual receipt shall fall short of the full amount of such currency payable hereunder, and shall not be affected by judgment being obtained for such amount. (b) Conversion of Currencies. If for the purpose of obtaining judgment in any court it is necessary to convert an amount in any currency due from the Borrowers hereunder (hereinafter called the "Original Currency") into another currency (hereinafter called the "Other Currency"), the rate of exchange which shall be applied shall, to the fullest extent permitted by applicable law, be that at which the Agent could purchase, in Chicago, Illinois, in accordance with normal banking procedures, the Original Currency with the Other Currency on the Business Day preceding that on which final judgment is given. (c) Remittance to Lenders; Basis for Payments. The Agent shall promptly remit in same day funds to each Lender its share, if any, of such payments received by the Agent for the account of such Lender. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days (or, in the case of interest on Prime Rate Loan (other than when calculated with respect to the Federal Funds Rate) or Eurocurrency Rate Loans denominated in Pounds Sterling, 365 days or, if appropriate, 366 days). Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by clause (c) of the definition of the term "Interest Period" with respect to Eurocurrency Rate Loans) be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment. (d) Place of Payment. All payments hereunder shall be made to Agent in immediately available funds prior to 10:00 A.M., Chicago time on the date due at its office at 335 Madison Ave., N.Y., N.Y. 10017, or at such other place as may be designated by the Agent to Simpson in writing. Any payments received after such time shall be deemed received on the next succeeding Business Day. The Agent may, but shall not be obligated to, charge the account of any Borrower for the payment when due of all amounts payable by such Borrower hereunder. SECTION 5.8. Sharing of Payments. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to the terms of Sections 5.3, 5.4 and 5.5) or Letter of Credit in excess of its pro rata share of payments then or therewith obtained by all Lenders, such Lender shall purchase from the other Lenders such participations in Loans made by them and/or Letters of Credit as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender's ratable share (according to the proportion of (a) the amount of such selling Lender's required repayment to the purchasing Lender to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 5.9) with respect to such participation as fully as if such Lender were the direct creditor of the applicable Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim. SECTION 5.9. Setoff. Each Lender shall, upon the occurrence of any Default described in clauses (a) through (d) of Section 9.1.9 or any other Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due), and (as security for such Obligations) each Borrower hereby grants to each Lender a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of each such Borrower then or thereafter maintained with or otherwise held by such Lender; provided, however, that any such appropriation and application shall be subject to the provisions of Section 5.8. Each Lender agrees promptly to notify the applicable Borrower and the Agent after any such setoff and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have. SECTION 5.10. Use of Proceeds. The Borrowers shall use the proceeds of each Borrowing to finance acquisitions and for general corporate purposes. ARTICLE VI CONDITIONS PRECEDENT SECTION 6.1. Initial Credit Extension. The obligations of the Lenders to make the initial Credit Extension shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 6.1. SECTION 6.1.1. Resolutions, etc. The Agent shall have received from each Borrower a certificate, dated the date of the initial Borrowing, of its Secretary or Assistant Secretary as to (a) certified copies of its articles of incorporation and by-laws or comparable documentation in the case of foreign Borrowers; (b) resolutions of its board of directors then in full force and effect authorizing the execution, delivery and performance of this Agreement, the Notes and each other Loan Document to be executed by it; (c) the incumbency and signatures of those of its officers authorized to act with respect to this Agreement, the Notes and each other Loan Document executed by it; and (d) the incumbency and signature of the chief financial officer, the treasurer and any assistant treasurer of Simpson; upon which certificate each Lender may conclusively rely until it shall have received a further certificate of the Secretary of such Borrower canceling or amending such prior certificate. SECTION 6.1.2. Delivery of Notes. The Agent shall have received, for the account of each Lender, its Notes duly executed and delivered by the Borrowers. SECTION 6.1.3. Outstanding Indebtedness, etc. (a) All Indebtedness under that Third Amended and Restated Revolving Credit Agreement, dated as of August 1, 1996, between the Borrower and Comerica Bank, a Michigan Banking Corporation, together with all interest, all prepayment premiums and other amounts due and payable with respect thereto, shall have been paid in full (including, to the extent necessary, from proceeds of the initial Borrowing) and the related commitments terminated; and all Liens securing payment of any such Indebtedness have been released and the Agent shall have received all Uniform Commercial Code Form UCC-3 termination statements or other instruments as may be suitable or appropriate in connection therewith. (b) The Borrowers shall have obtained and delivered any amendments to agreements regarding Indebtedness existing as of the Effective Date which are necessary to permit the transactions contemplated by this Agreement. SECTION 6.1.4. Delivery of Simpson Guaranty. The Agent shall have received the Simpson Guaranty duly executed and delivered by Simpson. SECTION 6.1.5. Opinions of Counsel. The Agent shall have received the opinion, dated the date of the initial Borrowing and addressed to the Agent and all Lenders, from Dykema Gossett PLLC, substantially in the form of Exhibit I hereto. SECTION 6.1.6. Regulatory Restriction. All regulatory approvals and licenses necessary to the execution, delivery and performance of the Agreement and the Loan Documents shall have been obtained and be in full force and effect and such execution, delivery and performance shall not be prohibited or restricted in any material way pursuant to any law or regulation. SECTION 6.1.7. Closing Fees, Expenses, etc. The Agent shall have received for its own account, or for the account of each Lender, as the case may be, all fees, costs and expenses due and payable pursuant to Sections 3.3 and 11.3, if then invoiced. SECTION 6.2. All Credit Extensions. The obligation of each Lender to make any Credit Extension (including the initial Credit Extension) shall be subject to the satisfaction of each of the conditions precedent set forth in this Section 6.2. SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both before and after giving effect to any Credit Extension (but, if any Default of the nature referred to in Section 9.1.5 shall have occurred with respect to any other Indebtedness, without giving effect to the application, directly or indirectly, of the proceeds of any Borrowing) the following statements shall be true and correct (a) the representations and warranties set forth in Article VII (excluding, however, those contained in Section 7.8) shall be true and correct with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); (b) except as disclosed by the Borrowers to the Agent and the Lenders pursuant to Section 7.8 (i) no litigation, arbitration, or governmental investigation, proceeding or inquiry shall be pending or, to the knowledge of the Borrowers, threatened against any Borrower which, if adversely determined, would materially adversely affect the business, operations, assets, revenues or financial condition of Simpson and its Subsidiaries taken as a whole; and (ii) no development shall have occurred in any such litigation, arbitration or governmental investigation, proceeding or inquiry so disclosed, which, if adversely determined, would materially adversely affect the business, operations, assets, revenues or financial condition of Simpson and its Subsidiaries taken as a whole. (c) no Default shall have then occurred and be continuing, and neither Simpson nor any of its Subsidiaries are in violation of any applicable law or governmental regulation or court order or decree which would materially adversely affect the business, operations, assets, revenues or financial condition of Simpson and its Subsidiaries taken as a whole. SECTION 6.2.2. Credit Request. The Agent shall have received the related Borrowing Request or Issuance Request, as the case may be, for such Credit Extension, which Borrowing Request or Issuance Request will include a statement that all conditions to such Borrowing have been met. Each of the delivery of a Borrowing Request or an Issuance Request and the acceptance by any Borrower of the proceeds of the Borrowing or the issuance of the Letter of Credit, as applicable, shall constitute a representation and warranty by the Borrowers that on the date of such Borrowing (both immediately before and after giving effect to such Borrowing and the application of the proceeds thereof) or the issuance of the Letter of Credit, as applicable, the statements made in Section 6.2.1 are true and correct. SECTION 6.2.3. Satisfactory Legal Form. All documents executed or submitted pursuant hereto by or on behalf of any Borrower or any other Subsidiary shall be satisfactory in form and substance to the Agent and its counsel; the Agent and its counsel shall have received all information, approvals, opinions, documents or instruments as the Agent or its counsel may reasonably request. ARTICLE VII REPRESENTATIONS AND WARRANTIES In order to induce the Lenders and the Agent to enter into this Agreement and to make Loans and issue Letters of Credit hereunder, the Borrowers represent and warrant unto the Agent and each Lender as set forth in this Article VII. SECTION 7.1. Organization, etc. Each of the Borrowers is a corporation validly organized and existing and in good standing under the laws of the jurisdiction of its incorporation, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business or properties requires such qualification, and has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into and perform its Obligations under this Agreement, the Notes and each other Loan Document to which it is a party and to own and hold under lease its property and to conduct its business substantially as currently conducted by it. SECTION 7.2. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by each of the Borrowers of this Agreement, the Notes and each other Loan Document executed or to be executed by it, are within each such Borrower's powers, have been duly authorized by all necessary action, and do not (a) contravene such Borrower's Organic Documents; (b) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting such Borrower; or (c) result in, or require the creation or imposition of, any Lien on any of such Borrower's properties. SECTION 7.3. Government Approval, Regulation, etc. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by any of the Borrowers of this Agreement, the Notes or any other Loan Document to which it is a party. No Borrower nor any of its Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 7.4. Validity, etc. This Agreement constitutes, and the Notes and each other Loan Document executed by each of the Borrowers will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of such Borrower enforceable in accordance with their respective terms. SECTION 7.5. Financial Information. The consolidated balance sheets of Simpson as at December 31, 1996, and the related consolidated statements of earnings and cash flow of Simpson, copies of which have been furnished to the Agent and each Lender, have been prepared in accordance with GAAP consistently applied, and present fairly the consolidated financial condition of the corporations covered thereby as at the dates thereof and the results of their operations for the periods then ended. SECTION 7.6. No Material Adverse Change. Since the date of the financial statements described in Section 7.5, there has been no material adverse change in the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries taken as a whole. SECTION 7.7. Environmental Warranties. Except as set forth in Item 7.7 ("Environmental Matters") of the Disclosure Schedule: (a) all facilities and property (including underlying groundwater) owned or leased by Simpson or any of its Subsidiaries have been, and continue to be, owned or leased by Simpson and its Subsidiaries in material compliance with all Environmental Laws; (b) there have been no past, and there are no pending or to Simpson's knowledge threatened (i) claims, complaints, notices or requests for information received by Simpson or any of its Subsidiaries with respect to any alleged violation of any Environmental Law, or (ii) complaints, notices or inquiries to Simpson or any of its Subsidiaries regarding potential liability under any Environmental Law; (c) there have been no Releases of Hazardous Materials at, on or under any property now or previously owned or leased by Simpson or any of its Subsidiaries that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries; (d) Simpson and its Subsidiaries have been issued and are in material compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary or desirable for their businesses; (e) no property now or previously owned or leased by Simpson or any of its Subsidiaries is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up; (f) there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now or previously owned or leased by Simpson or any of its Subsidiaries that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries; (g) neither Simpson nor any of its Subsidiaries has directly transported or directly arranged for the transportation of any Hazardous Material to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations which may lead to material claims against Simpson or such Subsidiary thereof for any remedial work, damage to natural resources or personal injury, including claims under CERCLA; (h) there are no polychlorinated biphenyls or friable asbestos present at any property now or previously owned or leased by Simpson or any of its Subsidiaries that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries; and (i) no conditions exist at, on or, to Simpson's knowledge, under any property now or previously owned or leased by Simpson or any of its Subsidiaries which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law. SECTION 7.8. Litigation, Labor Controversies, etc. There is no pending or, to the knowledge of any Borrower, threatened litigation, action, proceeding, or labor controversy affecting Simpson or its Subsidiaries, or any of their respective properties, businesses, assets or revenues, which may materially adversely affect the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries taken as a whole or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document, except as disclosed in Item 7.8 ("Litigation") of the Disclosure Schedule. SECTION 7.9. Subsidiaries. Neither Simpson nor any other Borrower has any Subsidiaries or Significant Subsidiaries other than those (a) which are identified in Item 7.9 ("Existing Subsidiaries") of the Disclosure Schedule; or (b) which are permitted to have been acquired in accordance with Section 8.2.4 or 8.2.5. SECTION 7.10. Ownership of Properties. Each Borrower and each of its Subsidiaries owns good and marketable title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges or claims (including infringement claims with respect to patents, trademarks, copyrights and the like) except as permitted pursuant to Section 8.2.2. SECTION 7.11. Taxes. Each Borrower and each of its Subsidiaries has filed all tax returns and reports required by law to have been filed by it (unless any extension period properly obtained with respect thereto shall not have expired) and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 7.12. Pension and Welfare Plans. During the twelve-consecutive- month period prior to the date of the execution and delivery of this Agreement and prior to the date of any Borrowing hereunder, no steps have been taken to terminate any Pension Plan, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which might result in the incurrence by Simpson or any member of the Controlled Group of any material liability, fine or penalty. Except as disclosed in Item 7.12 ("Employee Benefit Plans") of the Disclosure Schedule, neither Simpson nor any member of the Controlled Group has any contingent liability with respect to any post- retirement benefit under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA. SECTION 7.13. Regulations G, U and X. No Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loans will be used for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings. SECTION 7.14. Accuracy of Information. All material factual information heretofore or contemporaneously furnished by or on behalf of any Borrower in writing to the Agent or any Lender for purposes of or in connection with this Agreement is, and all other such material factual information hereafter furnished by or on behalf of such Borrower to the Agent or any Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified and as of the date of execution and delivery of this Agreement by the Agent and such Lender, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. SECTION 7.15. Solvency. Each Subsidiary Borrower is Solvent. ARTICLE VIII COVENANTS SECTION 8.1. Affirmative Covenants. The Borrowers agree with the Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, the Borrowers will perform the obligations set forth in this Section 8.1. SECTION 8.1.1. Legal Existence. Each Borrower shall, and shall cause each Subsidiary to: (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses, franchises and contracts necessary or desirable in the normal conduct of its business; (c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill; and (d) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. SECTION 8.1.2. Financial Information, Reports, Notices, etc. Simpson will furnish, or will cause to be furnished, to each Lender and the Agent copies of the following financial statements, reports, notices and information: (a) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of Simpson, consolidated balance sheets of Simpson and its Subsidiaries as of the end of such Fiscal Quarter and consolidated statements of earnings and cash flow of Simpson and its Subsidiaries for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, certified by the chief financial officer, treasurer or assistant treasurer of Simpson; (b) as soon as available and in any event within 90 days after the end of each Fiscal Year of Simpson a copy of the annual audit report for such Fiscal Year for Simpson and its Subsidiaries, including therein consolidated balance sheets of Simpson and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of earnings and cash flow of Simpson and its Subsidiaries for such Fiscal Year, in each case certified (without any Impermissible Qualification) in a manner reasonably acceptable to the Agent and the Required Lenders by KPMG Peat Marwick or other independent public accountants reasonably acceptable to the Agent and the Required Lenders, together with a report from such accountants containing a computation of, and showing compliance with, each of the financial ratios and restrictions contained in Section 8.2.3 and to the effect that, in making the examination necessary for the signing of such annual report by such accountants, they have not become aware of any Default that has occurred and is continuing, or, if they have become aware of such Default, describing such Default and the steps, if any, being taken to cure it; (c) as soon as available and in any event within 90 days after the end of each Fiscal Year of Simpson, consolidating balance sheets of Simpson and its Subsidiaries as of the end of such Fiscal Year and consolidating statements of earnings and cash flow of Simpson and its Subsidiaries for such Fiscal Year, in each case certified by the chief financial officer, treasurer or assistant treasurer of Simpson. (d) as soon as possible and in any event within 90 days after the end of each Fiscal Year of Simpson, annual financial projections for the following three Fiscal Years; (e) together with the delivery of financial statements in clauses (a) and (b) above, a Compliance Certificate showing (in reasonable detail and with appropriate calculations and computations in all respects satisfactory to the Agent) compliance with the financial covenants set forth in Section 8.2.3 and stating that no Default has occurred and is continuing; (f) as soon as possible and in any event within five days after any officer of a Borrower shall be aware of the occurrence of each Default (other than a Default described in Section 9.1.1 or Section 9.1.5), a statement of the chief financial officer, treasurer or assistant treasurer of Simpson setting forth details of such Default and the action which the applicable Borrower has taken and proposes to take with respect thereto; (g) immediately upon the occurrence of any Default described in Section 9.1.1 or Section 9.1.5, a statement of the chief financial officer, treasurer or assistant treasurer of Simpson setting forth details of such Default and the action which Simpson has taken and proposes to take with respect thereto; (h) within ten days after the sending or filing thereof, copies of all reports which Simpson sends to any of its securityholders, and all reports and registration statements which Simpson or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange; (i) as soon as possible and in any event within five days after (x) the occurrence of any material adverse development with respect to any litigation, action, proceeding, or labor controversy described in Section 7.8 or (y) the commencement of, and if and when applicable, the subsequent occurrence of any material adverse development with respect to, any labor controversy, litigation, action, proceeding, in each case, of the type described in Section 7.8, notice thereof and copies of all documentation relating thereto; (j) immediately upon becoming aware of the institution of any steps by any Borrower or any other Person to terminate any Pension Plan, or the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA, or the taking of any action with respect to a Pension Plan which could result in the requirement that the Borrower or Subsidiary furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan which could result in the incurrence by any Borrower or any Subsidiary of any material liability, fine or penalty, or any material increase in the contingent liability of any Borrower or any Subsidiary with respect to any post-retirement Welfare Plan benefit, notice thereof and copies of all documentation relating thereto; (k) such other information respecting the condition or operations, financial or otherwise, of any Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. SECTION 8.1.3. Compliance with Laws, etc. Each Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all applicable laws, rules, regulations and orders, where noncompliance would result in a material adverse effect on the financial condition, operations, assets, business or properties of Simpson and its Subsidiaries taken as a whole, such compliance to include (without limitation): (a) the maintenance and preservation of its legal existence and qualification as a foreign corporation; and (b) the payment, before the same become delinquent, of all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 8.1.4. Maintenance of Properties. Each Borrower will, and will cause each of its Subsidiaries to, maintain, preserve, protect and keep its properties in good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times unless such Borrower determines in good faith that the continued maintenance of any of its, or its Subsidiaries' properties is no longer economically desirable. SECTION 8.1.5. Insurance. Each Borrower will, and will cause each of its Subsidiaries to, maintain or cause to be maintained with responsible insurance companies insurance with respect to its properties and business (including business interruption insurance) against such casualties and contingencies and of such types, in such amounts and with such deductibles as is customary in the case of similar businesses and will, upon request of the Agent, furnish to each Lender at reasonable intervals a certificate of an Authorized Officer of Simpson setting forth the nature and extent of all insurance maintained by Simpson and its Subsidiaries in accordance with this Section. SECTION 8.1.6. Books, Records and Access. Subject to Section 8.1.2, each Borrower will maintain, and cause each of its Subsidiaries to maintain, complete and accurate books and records in which full and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to its respective business and activities. Each Borrower will permit, and cause each of its Subsidiaries to permit, access by the Lenders to the books and records of each Borrower and each of its Subsidiaries during normal business hours and permit, and cause each Subsidiary to permit, the Lenders to make copies of such books and records. SECTION 8.1.7. Environmental Covenant. Each Borrower will, and will cause each of its Subsidiaries to, (a) use and operate all of its facilities and properties in material compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in material compliance therewith, and handle all Hazardous Materials in material compliance with all applicable Environmental Laws; (b) immediately notify the Agent and provide copies upon receipt of all material written claims, complaints, notices or inquiries relating to the condition of its facilities and properties or compliance with Environmental Laws; and (c) provide such information and certifications which the Agent may reasonably request from time to time to evidence compliance with this Section 8.1.7. SECTION 8.1.8. Guaranty. The Borrowers shall cause each U.S. Subsidiary which is a Significant Subsidiary to deliver a Guaranty. SECTION 8.2. Negative Covenants. Each Borrower agrees with the Agent and each Lender that, until all Commitments have terminated and all Obligations have been paid and performed in full, the Borrowers will perform the obligations set forth in this Section 8.2. SECTION 8.2.1. Business Activities. The Borrowers will not, and will not permit any of their Subsidiaries to, engage, to any material extent, in any business activity except business activities similar to present lines of business and such activities as may be incidental or related thereto. SECTION 8.2.2. Liens. Simpson will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any asset, whether now owned or hereafter acquired, except: (a) Liens existing on the date of this Agreement and identified on Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure Schedule, securing Indebtedness outstanding on the date of this Agreement described in said Item; (b) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and not for which adequate reserves in accordance with GAAP shall have been set aside on its books; (c) Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (d) Liens incurred in the ordinary course of business other than in connection with borrowed money; (e) judgment Liens in existence less than 15 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; (f) Liens in connection with Capitalized Lease Liabilities in amounts permitted hereunder; and (g) Liens on newly acquired assets of, and stock of, special purpose entities. SECTION 8.2.3. Financial Condition. Simpson shall not permit: (a) the ratio, on a consolidated basis for Simpson and its Subsidiaries as at the end of any Fiscal Quarter for the four Fiscal Quarters then ending, of EBITDA to interest expense to be less than 3.0 to 1.0; (b) the Funded Debt to EBITDA Ratio to exceed 3.5 to 1.0; or (c) the Net Worth of Simpson at any time to be less than $100,000,000 plus 50% of net income (if any) for each Fiscal Quarter after the date hereof plus 50% of the proceeds of any equity issuance by Simpson or any Subsidiary after the date hereof less non-cash charges for plant closings in the U.S. after the date hereof in an amount not to exceed $5,000,000. SECTION 8.2.4. Acquisitions. The Borrowers will not, and will not permit any of their Subsidiaries to, acquire all or substantially all of the stock (or other ownership interests) or, all or substantially all of the assets of any Person except the acquisition of stock (or other ownership interests) or assets in an entity which is in a business that is the same, similar, related or incidental to the business activities described in Section 8.2.1 hereof pursuant to a transaction which is approved by the Board of Directors of the acquired entity, with respect to which a Borrower is the surviving entity and with respect to which the resulting entity would be in pro forma compliance with this Agreement as evidenced by a certificate of the chief financial officer, treasurer or assistant treasurer of Simpson in form satisfactory to the Required Lenders, which certificate shall have been delivered at least fourteen days prior to the consummation of such transaction. SECTION 8.2.5. Investments. The Borrowers will not, and will not permit any of their Subsidiaries to, make, incur, assume or suffer to exist any Investment in any other Person, except: (a) Investments existing on the Effective Date and identified in Item 8.2.5(a) ("Ongoing Investments") of the Disclosure Schedule; (b) Cash Equivalent Investments; (c) without duplication, Investments permitted as Indebtedness pursuant to Section 8.2.6; (d) without duplication, Investments permitted as Capital Expenditures pursuant to Section 8.2.8; (e) without duplication, Investments permitted under Section 8.2.4; (f) in the ordinary course of business, Investments at any time outstanding by any Borrower in any of its Subsidiaries, or by any such Subsidiary in any of its Subsidiaries, by way of contributions to capital or loans or advances, not to exceed in the aggregate 50% of the Tangible Net Worth of Simpson and its Subsidiaries; and (g) other Investments in an aggregate amount at any one time not to exceed $10,000,000; provided, however, that (x) any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; and (y) no Investment otherwise permitted by clause (e) or (f) shall be permitted to be made if, immediately before or after giving effect thereto, any Default shall have occurred and be continuing. SECTION 8.2.6. Indebtedness. (a) The Borrowers will not, and will not permit any of their Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following: (i) Indebtedness in respect of the Loans and other Obligations; (ii) until the date of the initial Borrowing, Indebtedness identified in Item 8.2.6(a)(ii) ("Indebtedness to be Paid") of the Disclosure Schedule; (iii) Indebtedness existing as of the Effective Date which is identified in Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure Schedule; (iv) Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any time outstanding which is incurred by any Borrower or any of its Subsidiaries to a vendor of any assets to finance its acquisition of such assets; (v) unsecured Indebtedness incurred in the ordinary course of business (including open accounts extended by suppliers on normal trade terms in connection with purchases of goods and services, but excluding Indebtedness incurred through the borrowing of money or Contingent Liabilities); (vi) Indebtedness in respect of Capitalized Lease Liabilities in amounts not in excess of $10,000,000 at any time outstanding; (vii) Subordinated Debt; (viii) other Indebtedness of the Borrowers and their Subsidiaries in an aggregate amount not to exceed $10,000,000; and (ix) other Indebtedness, provided that the net proceeds of such other Indebtedness are used to repay, on a pro rata basis, Indebtedness under this Agreement and the Companion Agreement, and further provided, that the Commitments under this Agreement and the Commitments (as defined in the Companion Agreement) shall be reduced, on a pro rata basis, by the amount of the net proceeds in excess of $50,000,000 of such other Indebtedness; provided, however, that no Indebtedness otherwise permitted by clauses (iv), (v), (vi), (vii), (viii) or (ix) shall be permitted if, after giving effect to the incurrence thereof, any Default shall have occurred and be continuing. (b) Simpson shall not permit any Indebtedness of any of its Subsidiaries to exist except: (i) Indebtedness to Simpson or another Subsidiary; and (ii) Indebtedness in an amount which, when added to the amount of Indebtedness of Simpson subject to Liens (other than Liens described in Sections 8.2.2(b) and (c)), shall not exceed 15% of the sum of the total Indebtedness of Simpson and its Subsidiaries and the Net Worth of Simpson and its Subsidiaries. SECTION 8.2.7. Subordinated Debt. On and at all times after the Effective Date the Borrowers will not make any prepayments on any Subordinated Debt. SECTION 8.2.8. Capital Expenditures, etc. The Borrowers will not, and will not permit any of their Subsidiaries to, make or commit to make Capital Expenditures in any Fiscal Year, except Capital Expenditures which do not aggregate in excess of the amount set forth below opposite such Fiscal Year: 1997 $45,000,000 1998 $45,000,000 1999 $50,000,000 2000 and each Fiscal Year thereafter $55,000,000; provided, however, that the Borrowers may make additional Capital Expenditures for new plant openings in an aggregate amount not to exceed $20,000,000. SECTION 8.2.9. Rental Obligations. The Borrowers will not, and will not permit any of their Subsidiaries to, enter into at any time any arrangement which does not create a Capitalized Lease Liability and which involves the leasing by any Borrower or any of its Subsidiaries from any lessor of any real or personal property (or any interest therein), except arrangements which, together with all other such arrangements which shall then be in effect, will not require the payment of an aggregate amount of rentals by the Borrowers and their Subsidiaries in excess of $5,000,000 for any Fiscal Year; provided, however, that any calculation made for purposes of this Section shall exclude any amounts required to be expended for maintenance and repairs, insurance, taxes, assessments, and other similar charges. SECTION 8.2.10. Sale/Leaseback. The Borrowers will not, and will not permit any of their Subsidiaries to, sell or otherwise transfer any assets with the intent to lease such assets as lessee other than the transfer of Simpson's headquarters so long as the headquarters so transferred shall have a value not in excess of $15,000,000. SECTION 8.2.11. Consolidation, Merger, Etc. The Borrowers will not, and will not permit any of their Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with, any other corporation, or purchase or otherwise acquire all or substantially all of the assets of any Person (or of any division thereof) except any such Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, a Borrower or any other Subsidiary, and the assets or stock of any Subsidiary may be purchased or otherwise acquired by a Borrower or any other Subsidiary except that a Borrower and any Subsidiary may enter into a consolidation, merger or acquisition so long as a Borrower (if a party) or a Subsidiary (if no Borrower is a party) shall be the surviving entity and the surviving entity would be in pro forma compliance with this Agreement as evidenced by a certificate of the chief financial officer, treasurer or assistant treasurer of Simpson in form satisfactory to the Required Lenders. SECTION 8.2.12. Asset Dispositions, etc. The Borrowers will not, and will not permit any of their Subsidiaries to, sell, transfer, lease, contribute or otherwise convey, or grant options, warrants or other rights with respect to, all or any substantial part of its assets (including accounts receivable and capital stock of Subsidiaries) to any Person, unless (a) such sale, transfer, lease, contribution or conveyance is in the ordinary course of its business; or (b) the net book value of such assets, together with the net book value of all other assets sold, transferred, leased, contributed or conveyed otherwise than in the ordinary course of business by the Borrower or any of its Subsidiaries pursuant to this clause in any Fiscal Year, does not exceed $10,000,000 in addition to any transfer in connection with a sale and leaseback permitted pursuant to Section 8.2.10. SECTION 8.2.13. Transactions with Affiliates. The Borrowers will not, and will not permit any of their Subsidiaries to, enter into, or cause, suffer or permit to exist any arrangement or contract with any of its other Affiliates unless such arrangement or contract is fair and equitable to such Borrower or such Subsidiary and is an arrangement or contract of the kind which would be entered into by a prudent Person in the position of such Borrower or such Subsidiary with a Person which is not one of its Affiliates. ARTICLE IX EVENTS OF DEFAULT SECTION 9.1. Listing of Events of Default. Each of the following events or occurrences described in this Section 9.1 shall constitute an "Event of Default". SECTION 9.1.1. Non-Payment of Obligations. Any Borrower shall default in the payment or prepayment when due of any principal of any Loan, any Borrower shall default in the payment when due of any Reimbursement Obligation, or any Borrower shall default (and such default shall continue unremedied for a period of two days) in the payment when due of any interest on any Loan, of any fee or of any other Obligation. SECTION 9.1.2. Breach of Warranty. Any representation or warranty of any Borrower made or deemed to be made hereunder or in any other Loan Document or any other writing or certificate furnished by or on behalf of any Borrower to the Agent or any Lender for the purposes of or in connection with this Agreement or any such other Loan Document (including any certificates delivered pursuant to Article VI) is or shall be incorrect when made in any material respect. SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations. Any Borrower shall default in the due performance and observance of any of its obligations under Sections 8.1.2 or 8.2. SECTION 9.1.4. Non-Performance of Other Covenants and Obligations. Any Borrower shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document, and such default shall continue unremedied for a period of 30 days after written notice thereof shall have been given to any Borrower by the Agent or any Lender. SECTION 9.1.5. Default on Other Indebtedness. A default shall occur in the payment when due (subject to any applicable grace period or unless there shall have been a waiver of such default by the applicable creditor), whether by acceleration or otherwise, of any Indebtedness (other than Indebtedness described in Section 9.1.1) of any Borrower or any of its Subsidiaries having a principal amount, individually or in the aggregate, in excess of $5,000,000, or a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness if the effect of such default is to accelerate the maturity of any such Indebtedness or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause such Indebtedness to become due and payable prior to its expressed maturity. SECTION 9.1.6. Judgments. Any judgment or order for the payment of money in excess of $5,000,000 shall be rendered against any Borrower or any of its Subsidiaries and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. SECTION 9.1.7. Pension Plans. Any of the following events shall occur with respect to any Pension Plan and shall continue for a period of 30 days (a) the institution of any steps by Simpson, any member of its Controlled Group or any other Person to terminate a Pension Plan if, as a result of such termination, the Borrower or any such member could be required to make a contribution to such Pension Plan, or could reasonably expect to incur a liability or obligation to such Pension Plan; or (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. SECTION 9.1.8. Change in Control. Any Change in Control shall occur. SECTION 9.1.9. Bankruptcy, Insolvency, etc. Any Borrower or any of its Subsidiaries shall (a) become insolvent or generally fail to pay, or admit in writing its inability or unwillingness to pay, debts as they become due; (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for such Borrower or such Subsidiary or any property of any thereof, or make a general assignment for the benefit of creditors; (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for such Borrower or such Subsidiary or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days, provided that such Borrower, and each of its Subsidiaries hereby expressly authorizes the Agent and each Lender to appear in any court conducting any relevant proceeding during such 60- day period to preserve, protect and defend their rights under the Loan Documents; (d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of such Borrower or such Subsidiary, and, if any such case or proceeding is not commenced by such Borrower or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by such Borrower or such Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed or any order of attachment is issued against any substantial part of the assets of such Borrower, any of its Subsidiaries which is not released within 30 days of service provided, that each Borrower and each of its Subsidiaries hereby expressly authorizes the Agent and each Lender to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; or (e) take any action authorizing, or in furtherance of, any of the foregoing. SECTION 9.1.10. Impairment of Security, etc. Any Loan Document, or any Lien granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any party thereto; any Borrower, or any other party shall, directly or indirectly, contest in any manner such effectiveness, validity, binding nature or enforceability; or any Lien securing any Obligation shall, in whole or in part, cease to be a perfected first priority Lien. SECTION 9.1.11. Governmental Approvals. Any material approval or license granted to any Borrower with respect to this Agreement, any Loan Document or the business of such Borrower shall not be in full force and effect. SECTION 9.2. Action if Bankruptcy. If any Event of Default described in clauses (a) through (d) of Section 9.1.9 shall occur with respect to any Borrower or any of its Subsidiaries, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand. SECTION 9.3. Action if Other Event of Default. If any Event of Default (other than any Event of Default described in clauses (a) through (d) of Section 9.1.9 with respect to any Borrower or any of its Subsidiaries) shall occur for any reason, and be continuing, the Agent, upon the direction of the Required Lenders, shall by notice to Simpson declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Commitments shall terminate. ARTICLE X THE AGENT SECTION 10.1. Actions. Each Lender hereby appoints ABN as its Agent under and for purposes of this Agreement, the Notes and each other Loan Document. Each Lender authorizes the Agent to act on behalf of such Lender under this Agreement, the Notes and each other Loan Document and, in the absence of other written instructions from the Required Lenders received from time to time by the Agent (with respect to which the Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity shall survive any termination of this Agreement) the Agent, pro rata according to such Lender's Percentage, from and against any and all liabilities, obligations, losses, damages, claims, costs or expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against, the Agent in any way relating to or arising out of this Agreement, the Notes and any other Loan Document, including reasonable attorneys' fees, and as to which the Agent is not reimbursed by the Borrowers; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, costs or expenses which are determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Agent's gross negligence or wilful misconduct. The Agent shall not be required to take any action hereunder, under the Notes or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement, the Notes or any other Loan Document, unless it is indemnified hereunder to its satisfaction. If any indemnity in favor of the Agent shall be or become, in the Agent's determination, inadequate, the Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given. SECTION 10.2. Funding Reliance, etc. Unless the Agent shall have been notified by telephone, confirmed in writing, by any Lender by 5:00 P.M., New York time, on the Business Day prior to a Borrowing with respect to Borrowings in Dollars and by 9:00 A.M., New York time, two Business Days prior to a Borrowing in any other currency that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Agent may assume that such Lender has made such amount available to the Agent and, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Agent, such Lender and the applicable Borrower agrees to repay the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Agent made such amount available to such Borrower to the date such amount is repaid to the Agent, at the interest rate applicable at the time to Loans comprising such Borrowing. SECTION 10.3. Exculpation. Neither the Agent nor any of its directors, officers, employees or agents shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for gross negligence or wilful misconduct, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of this Agreement or any other Loan Document, nor to make any inquiry respecting the performance by any Borrower of its obligations hereunder or under any other Loan Document. Any such inquiry which may be made by the Agent shall not obligate it to make any further inquiry or to take any action. The Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which the Agent believes to be genuine and to have been presented by a proper Person. SECTION 10.4. Successor. The Agent may resign as such at any time upon at least 30 days' prior notice to the Borrowers and all Lenders, so long as a successor Agent shall have been appointed as of the effectiveness of such resignation. If the Agent at any time shall resign, the Required Lenders may appoint another Lender (with the consent of Simpson which shall not be unreasonably withheld) as a successor Agent which shall thereupon become the Agent hereunder. If no successor Agent shall have been so appointed by the Required Lenders within 30 days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent (with the consent of Simpson which shall not be unreasonably withheld), which shall be one of the Lenders or a commercial banking institution organized under the laws of the U.S. (or any State thereof) or a U.S. branch or agency of a commercial banking institution, and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall be entitled to receive from the retiring Agent such documents of transfer and assignment as such successor Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation hereunder as the Agent, the provisions of (a) this Article X shall inure to its benefit as to, and the Agent shall continue to be responsible hereunder for, any actions taken or omitted to be taken by it while it was the Agent under this Agreement; and (b) Section 11.3, Section 11.4 and Section 11.5 shall continue to inure to its benefit. The Borrowers shall not be responsible for payment of any costs related to the resignation of the Agent and the substitution of a new Agent. The resigning Agent shall pay to the successor Agent any portion of the Agent's annual fee paid to it applicable to the period after the effectiveness of such resignation. SECTION 10.5. Loans or Letters of Credit Issued by ABN. ABN shall have the same rights and powers with respect to (x) the Loans made by it or any of its Affiliates, (y) the Notes held by it or any of its Affiliates, and (z) its participating interests in the Letters of Credit as any other Lender and may exercise the same as if it were not the Agent. ABN and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with any Borrower or any Subsidiary or Affiliate of any Borrower as if ABN were not the Agent hereunder. SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has, independently of the Agent and each other Lender, and based on such Lender's review of the financial information of the Borrowers, this Agreement, the other Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Commitments. Each Lender also acknowledges that it will, independently of the Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document. SECTION 10.7. Copies, etc. The Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Agent by any Borrower pursuant to the terms of this Agreement (unless concurrently delivered to the Lenders by such Borrower). The Agent will distribute to each Lender such financial statements and compliance certificates received by the Agent from any Borrower for distribution to the Lenders by the Agent in accordance with the terms of this Agreement. SECTION 10.8. Documentation Agent. Each Lender hereby appoints Comerica Bank as Documentation Agent for the Lenders. The Documentation Agent shall have no rights, powers, obligations, liabilities, responsibilities or duties under this Agreement other than those applicable to all Lenders as such. Each Lender acknowledges that it has not relied and will not rely on the Documentation Agent in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE XI MISCELLANEOUS PROVISIONS SECTION 11.1. Waivers, Amendments, etc. The provisions of this Agreement and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by Simpson and the Required Lenders; provided, however, that no such amendment, modification or waiver which would: (a) modify any requirement hereunder that any particular action be taken by all the Lenders or by the Required Lenders shall be effective unless consented to by each Lender; (b) modify this Section 11.1, change the definition of "Required Lenders", increase any Commitment Amount or the Percentage of any Lender, reduce any fees described in Article III, or extend the Commitment Termination Date shall be made without the consent of each Lender and each holder of a Note; (c) extend the due date for, or reduce the amount of, any scheduled repayment or prepayment of principal of or interest on any Loan (or reduce the principal amount of or rate of interest on any Loan) shall be made without the consent of the holder of that Note evidencing such Loan; (d) affect adversely the interests, rights or obligations of the Issuer in its capacity as the Issuer shall be made without the consent of the Issuer; (e) affect adversely the interests, rights or obligations of the Agent in its capacity as the Agent shall be made without consent of the Agent; or (f) change the definitions of "Available Currency", "Determination Date" or "Dollar Amount" without the consent of each Lender. No failure or delay on the part of the Agent, any Lender or the holder of any Note in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on any Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Agent, any Lender or the holder of any Note under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. SECTION 11.2. Notices. All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address or facsimile number set forth below its signature hereto or set forth in the Lender Assignment Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when transmitted. Any notice to a Borrower other than Simpson shall also be sent to Simpson. SECTION 11.3. Payment of Costs and Expenses. Simpson agrees to pay on demand all reasonable out-of-pocket expenses of the Agent (including the reasonable fees and out-of-pocket expenses of counsel to the Agent and of local counsel, if any, who may be retained by counsel to the Agent) in connection with (a) the negotiation, preparation, execution and delivery of this Agreement and of each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements or other modifications to this Agreement or any other Loan Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby are consummated; and (b) the preparation and review of the form of any document or instrument relevant to this Agreement or any other Loan Document. Simpson further agrees to pay, and to save the Agent and the Lenders harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution or delivery of this Agreement, the borrowings hereunder, the issuance of the Notes, the issuance of the Letters of Credit, or any other Loan Documents. Simpson agrees to reimburse the Agent and each Lender upon demand for all reasonable out-of-pocket expenses (including attorneys' fees and legal expenses) incurred by the Agent or such Lender in connection with the enforcement of any Obligations. SECTION 11.4. Indemnification. In consideration of the execution and delivery of this Agreement by each Lender and the extension of the Commitments, Simpson hereby indemnifies, exonerates and holds harmless the Agent, the Issuer and each Lender and each of their respective officers, directors, employees and agents (collectively, the "Indemnified Parties") free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"), incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to (a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loan or the use of any Letter of Credit; (b) the entering into and performance of this Agreement and any other Loan Document by any of the Indemnified Parties; (c) any investigation, litigation or proceeding related to any acquisition or proposed acquisition by any Borrower or any of its Subsidiaries of all or any portion of the stock or assets of any Person, whether or not the Agent or such Lender is party thereto; (d) any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter relating to the protection of the environment or the Release by any Borrower or any of its Subsidiaries of any Hazardous Material; or (e) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or releases from, any real property owned or operated by any Borrower or any Subsidiary thereof of any Hazardous Material (including any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Environmental Law), regardless of whether caused by, or within the control of, the Borrower or such Subsidiary, except for any such Indemnified Liabilities arising for the account of a particular Indemnified Party by reason of the relevant Indemnified Party's gross negligence or wilful misconduct. If and to the extent that the foregoing undertaking may be unenforceable for any reason, Simpson hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. SECTION 11.5. Survival. The obligations of the Borrower under Sections 5.3, 5.4, 5.5, 5.6, 11.3, and 11.4, and the obligations of the Lenders under Section 10.1, shall in each case survive any termination of this Agreement, the payment in full of all Obligations and the termination of all Commitments. The representations and warranties made by the Borrower in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document. SECTION 11.6. Severability. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 11.7. Headings. The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof. SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be executed by the Borrowers and the Agent and be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrowers and each Lender (or notice thereof satisfactory to the Agent) shall have been received by the Agent and notice thereof shall have been given by the Agent to each Borrower and each Lender. SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This Agreement, the Notes and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto. SECTION 11.10. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that: (a) the Borrowers may not assign or transfer their rights or obligations hereunder without the prior written consent of the Agent and all Lenders; and (b) the rights of sale, assignment and transfer of the Lenders are subject to Section 11.11. SECTION 11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes. Each Lender may assign, or sell participations in, its Loans and Commitments to one or more commercial banks in accordance with this Section 11.11. SECTION 11.11.1. Assignments. Any Lender, with the written consents of Simpson and the Agent (which consents shall not be unreasonably delayed or withheld and which consent, in the case of Simpson, shall be deemed to have been given in the absence of a written notice delivered by Simpson to the Agent, on or before the seventh Business Day after receipt by Simpson of such Lender's request for consent, stating, in reasonable detail, the reasons why Simpson proposes to withhold such consent and which consent of Simpson shall not be required, if a Default shall have occurred and be continuing) may at any time assign and delegate to one or more financial institutions, (each Person described in either of the foregoing clauses as being the Person to whom such assignment and delegation is to be made, being hereinafter referred to as an "Assignee Lender"), all or any fraction of such Lender's total Loans and Commitments (which assignment and delegation shall be of a constant, and not a varying, percentage of all the assigning Lender's Loans and Commitments) in a minimum aggregate amount of $10,000,000; provided, however, that any such Assignee Lender will comply, if applicable, with the provisions contained in the last sentence of Section 5.6 and further, provided, however, that, each Borrower and the Agent shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee Lender until the Assignment Effective Date (the "Assignment Effective Date"). The Assignment Effective Date shall be the date when all the following conditions shall have been met: (i) five Business Days shall have passed after written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee Lender, shall have been given to Simpson and the Agent by such Lender and such Assignee Lender, (ii) such Assignee Lender shall have executed and delivered to Simpson and the Agent a Lender Assignment Agreement, accepted by the Agent, and (iii) the processing fees described below shall have been paid. From and after the date that the Agent accepts such Lender Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to have become a party hereto and to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee Lender in connection with such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder and under the other Loan Documents, and (y) the assignor Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it in connection with such Lender Assignment Agreement, shall be released from its obligations hereunder and under the other Loan Documents. Within five Business Days after receipt of notice that the Agent has received an executed Lender Assignment Agreement, the Borrowers shall execute and deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes evidencing such Assignee Lender's assigned Loans and Commitments and, if the assignor Lender has retained Loans and Commitments hereunder, replacement Notes in the principal amount of the Loans and Commitments retained by the assignor Lender hereunder (such Notes to be in exchange for, but not in payment of, those Notes then held by such assignor Lender). Each such Note shall be dated the date of the predecessor Notes. The assignor Lender shall mark the predecessor Notes "exchanged" and deliver them to such Borrower. Accrued interest on that part of the predecessor Notes evidenced by the new Notes, and accrued fees, shall be paid as provided in the Lender Assignment Agreement. Accrued interest on that part of the predecessor Notes evidenced by the replacement Notes shall be paid to the assignor Lender. Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Notes and in this Agreement. Such assignor Lender or such Assignee Lender must also pay a processing fee to the Agent upon delivery of any Lender Assignment Agreement in the amount of $3500. Any attempted assignment and delegation not made in accordance with this Section 11.11.1 shall be null and void. Nothing herein shall prohibit any Lender from pledging or assigning any Note or any of its rights under this Agreement to any Federal Reserve Bank in accordance with applicable law. SECTION 11.11.2. Participations. Any Lender may at any time sell to one or more commercial banks (each of such commercial banks being herein called a "Participant") participating interests (or a sub-participating interest, in the case of a Lender's participating interest in a Letter of Credit) in any of the Loans, Commitments, or other interests of such Lender hereunder; provided, however, that (a) no participation or sub-participation contemplated in this Section 11.11 shall relieve such Lender from its Commitments or its other obligations hereunder or under any other Loan Document, (b) such Lender shall remain solely responsible for the performance of its Commitments and such other obligations, (c) each Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and each of the other Loan Documents, (d) no Participant, unless such Participant is an Affiliate of such Lender, or is itself a Lender, shall be entitled to require such Lender to take or refrain from taking any action hereunder or under any other Loan Document, except that such Lender may agree with any Participant that such Lender will not, without such Participant's consent, take any actions of the type described in clause (b) or (c) of Section 11.1, and (e) no Borrower shall be required to pay any amount under Section 5.6 that is greater than the amount which it would have been required to pay had no participating interest been sold. The Borrower acknowledges and agrees that each Participant, for purposes of Sections 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 11.3 and 11.4 shall be considered a Lender. SECTION 11.11.3. Information. Each Lender is hereby authorized to disclose all information concerning the Borrowers to assignees, participants, potential assignees and potential participants. SECTION 11.11.4. Confidentiality. The Lenders shall hold all non- public information (which has been identified as such by a Borrower) obtained pursuant to the requirements of this Agreement in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices and in any event may make disclosure to any of their examiners, Affiliates, outside auditors, counsel and other professional advisors in connection with this Agreement or as reasonably required by any bona fide transferee, participant or assignee or as required or requested by any governmental agency or representative thereof or pursuant to legal process; provided however, that (a) unless specifically prohibited by applicable law or court order, each Lender shall notify the Borrowers of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non- public information prior to disclosure of such information; (b) prior to any such disclosure pursuant to this Section 11.11.4, each Lender shall require any such bona fide transferee, participant and assignee receiving a disclosure of non-public information to agree in writing (i) to be bound by this Section 11.11.4; and (ii) to require such Person to require any other Person to whom such Person discloses such non-public information to be similarly bound by this Section 11.11.4; and (c) except as may be required by an order of a court of competent jurisdiction and to the extent set forth therein, no Lender shall be obligated or required to return any materials furnished by the Borrowers or any Subsidiary. SECTION 11.12. Additional Borrowers. Each Subsidiary of Simpson may become a Borrower hereunder upon becoming such a Subsidiary. Simpson shall deliver an Additional Borrower Certificate executed by any such Subsidiary and Simpson together with such supporting resolutions, incumbency certificates and opinions of counsel as the Agent may reasonably request. Such Subsidiary shall thereupon become a party hereto and a Borrower hereunder and shall be (i) entitled to all rights and benefits of a Borrower hereunder and under each instrument executed pursuant hereto and (ii) subject to all obligations of a Borrower hereunder and thereunder. SECTION 11.13. Joint and Several Liability. (a) The Obligations of the Borrowers are joint and several; except that each Subsidiary Borrower which is not a U.S. Subsidiary of Simpson shall be liable only for Loans made to it and with respect to Letters of Credit issued for its account. (b) Each Borrower acknowledges and agrees that it is the intent of the parties that each Borrower be primarily liable for the Obligations as a joint and several obligor (except as specifically set forth in this Section 11.13). It is the intention of the parties that with respect to liability of any Borrower hereunder arising solely by reason of its being jointly and severally liable for Borrowings and Loans taken by other Borrowers, the obligations of such Borrower shall be absolute, unconditional and irrevocable irrespective of: (i) any lack of validity, legality or enforceability of this Agreement or any Note as to any other Borrower; (ii) the failure of any Lender or any holder of any Note (A) to enforce any right or remedy against any Borrower or any other Person (including any guarantor) under the provisions of this Agreement, the Note, or otherwise, or (B) to exercise any right or remedy against any guarantor of, or collateral securing, any Obligations; (iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other extension, compromise or renewal of any Obligations; (iv) any reduction, limitation, impairment or termination of any Obligations with respect to any other Borrower for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Borrower hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations with respect to any other Borrower; (v) any addition, exchange, release, surrender or nonperfection of any collateral, or any amendment to or waiver or release or addition of, or consent to departure from, any guaranty, held by any Lender or any holder of the Note securing any of the Obligations; or (vi) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any other Borrower, any surety or any guarantor. Each Borrower agrees that its joint and several liability hereunder shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations is rescinded or must be restored by any Lender or any holder of any Note, upon the insolvency, bankruptcy or reorganization of any Borrower as though such payment had not been made. Each Borrower hereby expressly waives: (a) notice of the Lenders' acceptance of this Agreement; (b) notice of the existence or creation or non payment of all or any of the Obligations; (e) presentment, demand, notice of dishonor, protest, and all other notices whatsoever other than notices expressly provided for in this Agreement; and (d) all diligence in collection or protection of or realization upon the Obligations or any thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing. No delay on any of the Lenders' part in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by any of the Lenders of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. No action of any of the Lenders permitted hereunder shall in any way affect or impair any such Lenders' rights or any Borrower's obligations under this Agreement. Notwithstanding the foregoing, each Borrower other than Simpson shall be liable for the Obligations for the maximum amount of such liability that can be hereby incurred without rendering this Agreement, any Note or any other Loan Document voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. Each Borrower hereby represents and warrants to each of the Lenders that it now has and will continue to have independent means of obtaining information concerning the Borrowers' affairs, financial condition and business. Lenders shall not have any duty or responsibility to provide any Borrower with any credit or other information concerning the Borrowers' affairs, financial condition or business which may come into the Lenders' possession. SECTION 11.14. Judgment Currency. Each Borrower, the Agent and each Lender hereby agree that if, in the event that a judgment is given in relation to any sum due to the Agent or any Lender hereunder, such judgment is given in a currency (the "Judgment Currency") other than that in which such sum was originally denominated (the "Original Currency"), the Borrower jointly and severally agree to indemnify the Agent or such Lender, as the case may be, to the extent that the amount of the Original Currency which could have been purchased by the Agent in accordance with normal banking procedures on the Business Day following receipt of such sum is less than the sum which could have been so purchased by the Agent had such purchase been made on the day on which such judgment was given or, if such day is not a Business Day, on the Business Day immediately preceding the giving of such judgment. The agreements in this Section shall survive payment of all other Obligations. SECTION 11.15. Other Transactions. Nothing contained herein shall preclude the Agent or any other Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with any Borrower or any of its Affiliates in which any Borrower or such Affiliate is not restricted hereby from engaging with any other Person. SECTION 11.16. Consent to Jurisdiction. THE BORROWERS HEREBY ABSOLUTELY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS OR THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS BROUGHT AGAINST ANY OF THE BORROWERS BY THE AGENT OR THE LENDER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES OR THE BANKING RELATIONSHIP GIVING RISE TO THIS AGREEMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE BORROWERS HEREBY WAIVE AND AGREE NOT TO ASSERT IN SUCH ACTION OR PROCEEDING, IN EACH CASE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (a) ANY BORROWER IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT; (b) ANY BORROWER IS IMMUNE FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO IT OR ITS PROPERTY; (c) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM; OR (d) THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. IN ANY SUCH ACTION OR PROCEEDING, ANY BORROWER HEREBY ABSOLUTELY AND IRREVOCABLY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, DECLARATION OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED AIRMAIL, POSTAGE PREPAID, DIRECTED TO SUCH BORROWER AT THE ADDRESS SHOWN ON THE SIGNATURE PAGE HEREOF (OR AT SUCH OTHER ADDRESS AS SUCH BORROWER SHALL LAST SPECIFY TO THE AGENT IN WRITING). NOTHING CONTAINED IN THIS AGREEMENT OR THE NOTES SHALL AFFECT ANY RIGHT THAT THE AGENT, THE LENDERS OR ANY BORROWER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR THE BANKING RELATIONSHIP GIVING RISE TO THIS AGREEMENT AGAINST ANY BORROWER, THE AGENT OR THE LENDERS, AS THE CASE MAY BE, OR THEIR PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION, OR ANY RIGHT THAT THE LENDERS, THE AGENT OR ANY BORROWER MAY HAVE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. SECTION 11.17. Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWERS. THE BORROWERS ACKNOWLEDGE AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. SIMPSON INDUSTRIES, INC. By: Its: Address: 47603 Halyard Drive Plymouth, Michigan 48170 Facsimile No.: (313) 207-6680 Attention: James E. Garpow with a copy to Mr. Frank Zinn Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 ABN AMRO BANK N.V., CHICAGO BRANCH, AS AGENT By Title: By Title: Address: 135 South LaSalle Street Chicago, Illinois 60674 Facsimile No.: (312) 606-8425 Attention: Laurie Flom COMERICA BANK, AS DOCUMENTATION AGENT By Title By Title Address: 500 Woodward Avenue Detroit, Michigan 48226 Facsimile No.: (313) 222-3776 Attention: Louis A. Zedan PERCENTAGE LENDERS 30.0% ABN AMRO BANK N.V., CHICAGO BRANCH By Title: By Title: Domestic/ Eurodollar Office: 135 South LaSalle Street Chicago, Illinois 60674 Facsimile No.: (312) 606-8425 Attention: Laurie Flom 30.0% COMERICA BANK By Title: By Title: Address: 500 Woodward Avenue Detroit, Michigan 48226 Facsimile No.: (313) 222-3776 Attention: Louis A. Zedan 20.0% HARRIS TRUST AND SAVINGS BANK By Title: By Title: Address: 111 West Monroe Street Chicago, Illinois 60603 Facsimile No.: (312) 461-2591 Attention: Peter Dancy 20.0% THE BANK OF NEW YORK By Title: By Title: Address: One Wall Street, 22nd Floor New York, New York 10286 Facsimile No.: (212) 635-6434 EX-11 11 COMPUTATION OF EARNINGS PER SHARE Six Months Ended Three Months Ended June 30 June 30 1997 1997 1997 1996 Primary Average number of common shares outstanding 18,116,990 18,057,121 18,133,025 18,078,413 Dilutive stock options outstanding 46,442 39,205 44,402 40,523 Average number of common and common equivalent shares 18,163,432 18,096,326 18,177,427 18,118,936 Net earnings appli- cable to common stock and common stock equivalents $9,805,000 $9,928,000 $5,418,000 $5,971,000 Primary earnings per share $0.54 $0.55 $0.30 $0.33 EX-27 12 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDING JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 DEC-31-1997 JUN-30-1997 6-MOS 920 0 63,589 0 18,206 94,610 309,327 135,460 322,945 57,100 0 18,128 0 0 103,852 322,945 216,148 216,674 192,292 6,223 0 0 2,717 15,442 5,637 9,805 0 0 0 9,805 0.54 0.54
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