-----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, HMXHO7OR4lQjkXuNlqSJHZfRHZJruiQC4rYzu1krQPvgXWx07NFzHjVCet61Xx3S JL3K6cMxKFiOuSXfbygIMA== 0000950134-97-002350.txt : 19970329 0000950134-97-002350.hdr.sgml : 19970329 ACCESSION NUMBER: 0000950134-97-002350 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL WIRE GROUP INC CENTRAL INDEX KEY: 0000947429 STANDARD INDUSTRIAL CLASSIFICATION: DRAWING AND INSULATING NONFERROUS WIRE [3357] IRS NUMBER: 431705942 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 033-93970 FILM NUMBER: 97566578 BUSINESS ADDRESS: STREET 1: 101 SOUTH HANLEY RD STREET 2: STE 1075 CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3147261323 10-K405 1 FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 1996 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ______________ Commission File Number 33-93970 INTERNATIONAL WIRE GROUP, INC. ------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 43-1705942 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 101 SOUTH HANLEY ROAD, ST. LOUIS, MISSOURI 63105 - ------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (314) 719-1000 -------------- Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. X YES No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] State the aggregate market value of the voting stock held by non-affiliates of the registrant. (The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing.) NO ESTABLISHED PUBLISHED PUBLIC TRADING MARKET EXISTS FOR THE COMMON STOCK, PAR VALUE $.01 PER SHARE, OF INTERNATIONAL WIRE GROUP, INC. ALL OF THE OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF INTERNATIONAL WIRE GROUP, INC. ARE HELD BY INTERNATIONAL WIRE HOLDING COMPANY. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date (applicable only to corporate registrants). OUTSTANDING AT CLASS MARCH 12, 1997 ----- -------------- COMMON STOCK 1,000 DOCUMENTS INCORPORATED BY REFERENCE NONE 2 PART I ITEM 1. BUSINESS GENERAL International Wire Holding Company ("Holding") is a holding company which owns all of the outstanding capital stock of International Wire Group, Inc. (the "Company"). Holding and the predecessor of the Company were incorporated in Delaware in April 1995 by an investor group led by Hicks, Muse, Tate & Furst Incorporated ("Hicks, Muse") and Mills & Partners, Inc. ("Mills & Partners") to facilitate the acquisitions of Wirekraft Holdings Corp. ("Wirekraft") and Omega Wire Corp. ("Omega") in June of 1995 (the "Acquisitions"). The Company is engaged in the design, manufacture and marketing of (i) non-insulated bare and tin-plated copper wire, (ii) insulated copper wire and (iii) wire harnesses. The Company's products are used by a wide variety of customers primarily in the appliance, computer and data communications, automotive and industrial equipment industries. The Acquisitions were effected with debt and equity financing valued at $420.5 million. Proceeds from the Acquisitions' financing were used to pay the cash portion of the Acquisitions' purchase price and to pay certain fees and expenses related to the Acquisitions. The Acquisitions' financing consisted of (i) $188.5 million of senior debt under a bank credit agreement among the Company, the several lenders party thereto, Chemical Bank N.A., as agent and Bankers Trust Company, as documentation agent (the "Credit Agreement"), (ii) $150.0 million from the sale of 11.75% Senior Subordinated Notes (the "Old Notes") due 2005, (iii) $82.0 million from the issuance of 82,000,000 shares of Holding Common Stock, par value $.01 per share ("Holding Common Stock"), and (iv) $91,111 from the issuance of 9,111,111 shares of Holding Class A Common Stock, par value $.01 per share ("Holding Class A Common Stock"). In November of 1995, the Company completed a registered exchange offer in which the Old Notes were exchanged for an identical principal amount of 11.75% Senior Subordinated Notes (the "Senior Notes") due 2005. BACKGROUND WB Holdings Inc. was formed in September 1992 by Hicks, Muse and Mills & Partners to participate in the acquisition of Kirtland Indiana, Limited Partnership ("KILP/Wirekraft" or the "Predecessor"). On December 21, 1992, WB Holdings Inc., through a series of acquisitions and mergers acquired all of the issued and outstanding common stock of Bristol Holding Corporation ("Bristol") and Burcliff Holdings Corporation ("Burcliff"), the parent companies of the general partners of KILP/Wirekraft. KILP/Wirekraft was engaged in the design, manufacture and marketing of insulated copper wire and wire harnesses. In December 1994, WB Holdings Inc., through a series of mergers, became a wholly-owned subsidiary of Wirekraft. Wirekraft was formed to participate in the acquisition of Electro Componentes de Mexico S.A. de C.V. ("ECM"). On December 2, 1994, Wirekraft acquired the stock of ECM and certain related assets from General Electric Company ("GE"). ECM was engaged in the manufacture of wire harnesses. Omega was formed in March 1995 by Hicks, Muse and Mills & Partners to participate in the acquisition of THL-Omega Holding Corporation ("THL-Omega"). On March 31, 1995, Omega acquired all of the issued and outstanding common stock of THL-Omega. THL-Omega was engaged in the design, manufacture and marketing of non-insulated bare and tin-plated copper wire. 1 3 On March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a wholly-owned subsidiary of the Company, acquired the businesses of Hoosier Wire, Inc. Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc., a group of affiliated companies operating together under the trade name Dekko Wire Technology Group (the "DWT Acquisition"). In recent years several key trends and events developed within the automotive and appliance industries which caused the Company to develop and execute new business strategies to maintain customer volume levels and meet competitive pressures. The trends and events included the implementation of the North American Free Trade Agreement ("NAFTA"), geographic relocation of production facilities and changes in customers' ordering patterns to match just-in-time inventory management practices. With the NAFTA agreement and competitive pressures, the automotive and appliance industry accelerated the shifting of production of harness assemblies to lower cost Mexican operations. In order to address the market's demands, the Company purchased ECM in December 1994 and began moving production from the Midwest to the Southwest and Mexico to retain its long-standing relationship with certain major customers and to achieve cost efficiencies. As the Company increased the transition of harness production to Mexican facilities it began closing several domestic harness facilities in fiscal 1995. At the time of the acquisition of KILP/Wirekraft in 1992, the automotive marketplace accepted KILP/Wirekraft's manufacturing philosophy and approach to customer service. KILP/Wirekraft's manufacturing philosophy was geared toward meeting long lead-time orders for large quantities of certain types of automotive insulated wire. However, due to overall economic trends and changes within the automotive industry, Wirekraft's customer base began to decrease the number and frequency of long lead-time orders and increased the number and frequency of short lead-time orders for small quantities of insulated wire. This allowed customers the ability to further reduce their on-hand inventories and led to more demanding customer service expectations and a change in KILP/Wirekraft's production philosophy to fill the small orders and meet stringent delivery schedules. As a result, KILP/Wirekraft's operating costs increased, because shorter production runs created more downtime, an increased number of setups and higher scrap rates. This shift was a significant factor in the Company's decision to acquire Dekko Wire Technology Group, which utilized product line focused facilities which were geared for shorter production runs and had a history of superior customer service and on-time delivery operating on that basis. In addition, several of these facilities were strategically located near the Southwest and Mexico. As the Company began integrating facilities purchased in the DWT Acquisition, it closed several insulated wire facilities during fiscal 1996. In connection with the execution of these new business strategies, the Company performed a comprehensive review of the goodwill carried on its books. This comprehensive review resulted in an impairment charge during fiscal 1996. See "Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 10 to the Company's Consolidated Financial Statements. RECENT EVENTS On February 12, 1997, the Company acquired all of the issued and outstanding common stock of Camden Wire Co., ("Camden") a wholly-owned subsidiary of Oneida LTD. (the "Camden Acquisition"). The total consideration paid in connection with the Camden Acquisition, including fees and expenses, consisted of (i) cash in the amount of $43.5 million, subject to final adjustments, and (ii) the assumption of $15.5 million of debt related to Industrial Revenue Bonds. The cash portion of the consideration paid and the transaction fees and expenses incurred in connection with the Camden Acquisition were funded with $65.0 million of senior debt under the Credit Agreement which was amended in connection with the Camden Acquisition pursuant to an Amendment to the Credit Agreement dated February 12, 1997 (the "Amended and Restated Credit Agreement"). Camden is engaged in the design, manufacture and marketing of non-insulated bare 2 4 and tin-plated copper wire. Camden had sales of approximately $138.0 million in 1996. PRODUCTS AND MARKETS The Company is engaged in the manufacture of non-insulated and insulated copper wire and wire harness products. See Note 12 of the Company's Consolidated Financial Statements for business segment information. The following is a description of the Company's primary products and markets served: Non-Insulated Wire The Company's non-insulated copper conductors are primarily used to (i) transmit digital, video and audio signals that generally control motor functions in appliances and industrial equipment, HVAC systems, safety control systems and switching equipment and (ii) conduct electricity. The Company's non-insulated wire products are primarily sold to wire insulators, who apply various insulating materials to the conductors through an extrusion process. These wire insulators, in turn, sell the insulated wire to a variety of customers, many of which are in the computer and data communications industry. Within this industry, the Company's non-insulated wire is generally used in wire and cable products that (i) connect circuit boards inside personal computers ("PCs"), (ii) join PCs to peripheral equipment and (iii) link PCs in local area and wide area networks. The Company also manufactures non-insulated wire that is used in a variety of industrial markets including appliance, fine wire automotive, mining and mass transportation. The Company manufactures a broad array of non-insulated copper conductors including the following: o Single End Wire. Single end wire is an individual wire drawn to the customer's size requirements ranging from .08 to .002 inches in diameter. Single end wire is used to transmit digital, video and audio signals or low voltage current in a variety of wire products used in motor controls, local area networks, security systems, television or telephone connections inside homes and buildings, and water sprinkler systems. Single end wire is capable of transmitting signals or electrical current only between two distinct end points (terminals) such as between an on-off switch and the starter to a motor. Single end wire is generally the least expensive form of wire to produce due to its simple configuration. o Stranded Wire. Stranded wire is comprised of a number of single end wires, twisted together in a specific geometric pattern, where each individual wire's relative position is preserved throughout the length of the strand. Like single end wire, stranded wire transmits digital, video and audio signals or low voltage current but is capable of connecting multiple terminals. This type of wire is the primary wire used in appliance and automotive wire harnesses. In addition, stranded wire is typically used in wire and cable products that (i) connect peripherals such as printers to a computer, (ii) connect the internal components of a PC, and (iii) control HVAC, security and other functions inside buildings. o Bunched Wire. Bunched wire is comprised of a number of single end wires that are twisted in a random pattern rather than a specific geometric pattern. Bunched wire is commonly used for transmission of electrical current in lighting fixture cords, extension cords and power cords for portable power hand tools. This type of wire provides improved flexibility (versus single end wire) while maintaining its ability to carry electrical currents. o Shielding Wire. Shielding wire is comprised of varying numbers of single end wire which are wound together in parallel construction around a bobbin. Shielding wire does not transmit signals or voltage but rather shields the signal traveling through the core conductor from outside interference. This type of wire is primarily used in data 3 5 communication applications. o Cabled Wire and Braided Wire. Cabled wire and braided wire are combinations of single, bunched or stranded wire twisted together in various patterns and thickness. These wires transmit electrical current and are typically used in mining, mass transportation, automotive and other industrial applications. Insulated Wire The Company's insulated wire products are primarily sold to companies that assemble wire harnesses for installation in automobiles or appliances. The Company manufactures a diverse array of insulated wire products including the following: o PVC Lead Wire and Cable. PVC lead wire and cable is copper wire that has been insulated with polyvinyl chloride ("PVC"). This product is used primarily in automotive wire harnesses located behind the instrument panel or in the vehicle body that control certain functions including turn signals and air bags. o JIS Wire. JIS wire is copper wire insulated with PVC that is produced according to Japanese Industrial Standards ("JIS"). The primary difference between domestic PVC wire and JIS wire is that JIS wire is manufactured to metric dimensions and generally has thinner insulation than products manufactured according to U.S. Society of Automotive Engineers Standards. JIS wire is used primarily in automotive wire harnesses located behind the instrument panel or in the vehicle body. o XLPE Insulated Wire. Cross-linked polyethylene ("XLPE") wire is copper wire insulated with polyethylene that is subjected to heat and steam pressure ("cross-linking") to make the wire resistant to high temperatures. This product's primary application includes use in high temperature environments such as the engine compartment of vehicles and in electric ranges. o PVC Insulated Cord. PVC insulated cord is insulated wire that is surrounded with fillers and then jacketed with PVC insulation. This product is used primarily for wall-plug applications (cord sets) in the appliance and power tool industries. o Appliance Wire. Appliance wire is copper wire primarily insulated with PVC and used in producing harnesses for a variety of appliances. The Company also manufactures high temperature wire, insulated with silicone, used primarily in electric ranges and niche applications such as resistance heaters, motor leads and lighting products. Wire Harnesses The Company supplies wire harnesses to all of the leading domestic appliance manufacturers, including General Electric ("GE"), Frigidaire, Maytag, Whirlpool, and Raytheon (Amana). A wire harness is comprised of an assembly of wires with connectors and terminals attached to their ends that transmit electricity between two or more points. For example, a wire harness used in a washing machine links the washing machine's control panel with its other electrical components, such as the motor. The Company also participates in several niche businesses oriented around its expertise and marketing presence in the appliance industry, including water inlet hoses for washing machines and resistance and appliance heaters. In addition, the Company produces truck trailer cable assemblies that transmit electrical current from the tractor to the trailer. 4 6 MARKETING AND DISTRIBUTION The Company sells its products through a combination of direct (Company-employed) sales people, manufacturer's representatives and distributors. The Company's sales organization is supported by an internal marketing staff and a customer service group. Collectively, these departments act as a bridge between the Company's customers and its production and engineering staff. The Company's engineers work directly with customers in designing the wire or wire harness product that best fits their needs. In addition, engineers work closely with the Company's production managers, quality supervisors and customer service representatives to ensure the timely delivery of quality products. KEY CUSTOMERS The Company sells its products primarily to major appliance manufacturers, automotive wire harness manufacturers and copper wire insulators who then sell to a diverse array of end users. A substantial percentage of the Company's total sales are to GE. Sales to GE accounted for approximately 18% and 19% of the Company's total sales in 1996 and 1995, respectively. In connection with the acquisition of ECM, the Company entered into a supply agreement with GE, which expires December 31, 2006 pursuant to which the Company supplies substantially all of GE's domestic wire harness requirements for major kitchen and laundry appliances. RAW MATERIALS The principal raw material used by the Company is copper, which is purchased in the form of 5/16 inch rod from the major copper producers in North America. Copper rod prices are based on market prices, which are generally established by reference to the New York Commodity Exchange, Inc. ("COMEX") prices, plus a premium charged to convert copper cathode to copper rod and deliver it to the required location. As a world traded commodity, copper prices have historically been subject to fluctuations, however, the Company generally passes the copper cost through to its customers. Management has no reason to believe that this practice will change. Other major raw materials consumed by the Company include: PVC resin, plasticizer, XLPE compound, and a wide variety of electro-mechanical components. The Company enters into long term supply agreements on a wide variety of materials consumed. Supplies on all critical materials are currently adequate to meet market needs. MANUFACTURING The Company is committed to the highest quality standards for its products, a standard maintained in part by continuous improvements to its production processes and upgrades and investments to its manufacturing equipment. The Company's equipment can be adapted to satisfy the changing needs of its customers. The Company maintains advanced quality assurance and testing equipment to ensure the products it manufactures will consistently meet customer quality requirements. The following is a description of the Company's manufacturing facilities and processes for its major product lines. Non-Insulated Wire. As of December 31, 1996, the Company has five facilities dedicated to the production of non-insulated wire. Four of these facilities are located in New York and one facility is located in Indiana. The manufacturing of non-insulated wire consists of three processes: wire drawing, plating and bunching and stranding. o Wire Drawing Process. Wire drawing involves a multi-step process in which 5/16 inch copper rod is drawn through a series of dies of decreasing diameters. 5 7 o Plating Process. After being drawn, the Company's wire products may be plated through an electro-plating process. The Company has the capability to plate copper wire with tin and other metals. Approximately 30% of the Company's non-insulated wire products are plated with tin. The plating process prevents the bare copper from oxidizing and also allows the wire to be soldered, which is an important quality in many electrical applications. o Bunching and Stranding Process. Bunching and stranding is the process of twisting together single strand wires to form a construction ranging from seven to over 200 strands. If the wire is bunched, the individual strands of wire are twisted together in a random pattern. Bunched wire is typically used in power cords for lights and appliances. Stranded wire is composed of a number of single end wires twisted together in a specific geometric pattern where each strand's relative position is maintained throughout the length of the wire. Stranded wire is typically used in security systems, audio systems and intercom systems. Insulated Wire. As of December 31, 1996, the Company has thirteen manufacturing facilities used to insulate wire. Six of these facilities are located in Indiana, four are located in Texas, two are located in Alabama and one is located in Mexico. The production of insulated wire starts with non-insulated wire (primarily manufactured internally) and involves the following two processes: o Compounding Process. The Company produces PVC, polyethylene, rubber and silicone insulation formulations from basic components utilizing its own computerized mixing and blending systems and utilizes purchased compounds. The Company is capable of producing polymeric insulation compounds that meet specific customer requirements. o Extrusion Process. The Company insulates wire products with a polymeric insulating compound through an extrusion process. Extrusion involves the feeding, melting and pumping of insulating compounds through a die to shape it into its final form on the wire. In order to enhance the insulation properties of certain products, certain polymeric compounds can be cross-linked chemically after the extrusion process. The Company has extensive chemical cross-linking capabilities. Wire Harnesses. As of December 31, 1996, the Company has five wire harness manufacturing facilities in the U.S., most of which are located in the Midwest region of the nation, and two facilities located in Mexico. The manufacturing of wire harnesses involves the following four-step process: o Cutting and Stripping. Insulated copper wire, obtained primarily from internal sources, is fed through cutting machines that are programmed to cut wire to a certain length, strip the end of the wire and attach terminals or connectors. o Splicing and Connecting. In the second process, the lengths of wire are spliced or joined together and additional connectors and/or terminals are attached. Splicing, like cutting and stripping, lends itself to automation. o Harness Assembly. Once these two preparatory stages have been completed, the cut and spliced wires are brought to the assembly area. Assembly boards are used to guide each employee on the assembly line in the placement of designated wires. o Quality Control. After assembly, each harness is tested for continuity and analyzed by a trained inspector. Every assembly board is equipped with 100% continuity testers that are designed into the assembly board. These testers will pinpoint any defective circuits for repair or rework. 6 8 COMPETITION The Company generally competes with various suppliers in each of its business segments. The number and size of these competitors varies depending on the product line. Within its targeted segments, the Company competes primarily on the basis of quality, reliability, price, reputation, customer service and delivery time. BACKLOG Due to the manner in which it processes its orders, the Company has no significant order backlog. The Company follows the industry practice of producing its products on an ongoing basis to meet customer demand without significant delay. Management believes the ability to supply orders in a timely fashion is a competitive factor in its market, and therefore, attempts to minimize order backlog to the extent practicable. PATENTS AND TRADEMARKS The Company has seven patents, nine registered trademarks and three trademark applications. The Company does not believe that its competitive position is dependent on patent protection or that its operations are dependent on any individual patent or trademark or group of related patents or trademarks. EMPLOYEES As of December 31, 1996, the Company employed approximately 6,200 full time employees, of which approximately 3,600 were located in Mexico and 186 (all located at the Company's plant in Rolling Prairie, Indiana) were represented by a labor union. The contract covering the Company's unionized work force expired in March 1997. The Company believes that it has a good relationship with its employees and fully expects the contract to be renewed on a timely basis. If the contract is not renewed on a timely basis, the Company believes that non-renewal or lengthy negotiations would not materially or adversely affect the operations of the Company. ENVIRONMENTAL MATTERS The Company is subject to a number of federal, state, local and foreign environmental laws and regulations relating to the storage, handling, use, emission, discharge, release or disposal of materials into the environment and the investigation and remediation of contamination associated with such materials. These laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, the Water Pollution Control Act, the Clean Air Act and the Resource Conservation and Recovery Act, the regulations promulgated thereunder, and any state analogs. The Company's operations also are governed by laws and regulations relating to employee health and safety. The Company believes that it is in material compliance with such applicable laws and regulations and that its existing environmental controls are adequate. Further, the Company has no current plans for substantial capital expenditures in this area. As is the case with most manufacturers, the Company could incur costs relating to environmental compliance, including remediation costs related to historical hazardous materials handling and disposal practices at certain facilities, although it does not believe that such costs would materially and adversely affect the Company. In the past the Company has undertaken remedial activities to address on-site soil contamination caused by historic operations. None of these cleanups have resulted in any material liability. Currently, the Company is involved with environmental monitoring or remediation activities at its Camden, New York and Jordan, New York facilities. 7 9 The Company currently does not anticipate that compliance with environmental laws or regulations or the costs to remediate the sites discussed above will have material adverse effect on the Company's operations, financial condition or competitive position. As mentioned above, however, the risk of environmental liability and remediation costs is inherent in the nature of the Company's business and, therefore, there can be no assurances that material environmental costs, including remediation costs, will not arise in the future. In addition, it is possible that future developments (e.g. new regulations or stricter regulatory requirements) could result in the Company incurring material costs to comply with applicable environmental laws and regulations. ITEM 2. PROPERTIES The Company uses owned or leased properties as manufacturing facilities, warehouses and offices throughout the United States and Mexico. The Company's principal executive offices are located in St. Louis, Missouri. The Company considers its plants and equipment to be modern and well-maintained and providing adequate production capacity to meet expected demand for its products. All of the Company's owned properties are pledged to secure the Company's indebtedness under the Amended and Restated Credit Agreement. Listed below are the principal manufacturing facilities operated by the Company as of December 31, 1996:
LOCATION SQUARE FEET OWNED/LEASED PRIMARY PRODUCTS/END USE -------- ----------- ------------ ------------------------ NON-INSULATED WIRE Williamstown, NY........................ 210,000 Owned Single End, Bunched, Stranded and Cabled Wire Bremen, IN.............................. 175,000 Owned Bunched Wire Camden, NY.............................. 150,000 Leased Single End, Bunched, Stranded and Cabled Wire Jordan, NY.............................. 120,000 Leased Single End, Bunched, Stranded, Shielding and Cabled Wire Cazenovia, NY........................... 60,000 Owned Braided Wire INSULATED WIRE Rolling Prairie, IN..................... 200,000 Owned Automotive and Appliance Avilla, IN.............................. 119,000 Owned Appliance Elkmont, AL............................. 115,000 Owned Automotive Corunna, IN............................. 72,000 Owned Appliance El Paso, TX............................. 72,000 Owned Automotive El Paso, TX............................. 70,000 Leased Automotive Kendallville, IN........................ 61,000 Leased Appliance and Automotive El Paso, TX............................. 60,000 Owned Automotive Corunna, IN............................. 58,000 Owned Appliance Ardmore, AL............................. 45,000 Owned Automotive Nogales, Mexico......................... 42,000 Leased Automotive Albion, IN.............................. 39,000 Owned Appliance and Automotive El Paso, TX............................. 28,000 Leased Automotive WIRE HARNESSES Chihuahua, Mexico....................... 195,000 Owned Dishwashers, Laundry and Ranges Juarez, Mexico.......................... 145,000 Leased Refrigerators, Dishwashers and Ranges Bucyrus, OH............................. 47,000 Leased Truck Trailers and Farm Machinery Mishawaka, IN........................... 38,000 Owned Water Inlet Hoses Manning, IA............................. 33,000 Owned Laundry Mishawaka, IN........................... 29,000 Owned Refrigerators, Dishwashers and Laundry Erin, TN................................ 25,000 Owned Laundry, Ranges and Microwave
8 10 The leases on the Company's Camden, New York and Jordan, New York facilities have remaining terms of approximately 15 years. The Company has an option to renew each of these leases for two terms of five years each or to purchase the facilities at their respective fair values or 90% of their respective fair values, depending on the time of exercise of the option to purchase. The lease on the Company's Nogales, Mexico facility has a remaining term of approximately three years. The lease on the Company's Juarez, Mexico facility has a remaining term of approximately six years. The leases on the Company's Kendallville, Indiana and El Paso, Texas facilities have remaining terms of approximately two years. The lease on the Company's Bucyrus, Ohio facility expires in 1997. The Company believes its facilities are suitable for their present and intended purposes and adequate for the Company's current level of operations. ITEM 3. LEGAL PROCEEDINGS The Company is a party to various legal proceedings and administrative actions, all of which are of an ordinary or routine nature incidental to the operations of the Company. In the opinion of the Company's management, such proceedings and actions should not, individually or in the aggregate, have a material adverse effect on the Company's results of operations or financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders in the fourth quarter of 1996. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS All of the Company's outstanding common stock is held by Holding, and there is no established public trading market for such. The Company has paid no dividends to common stockholders since inception and its ability to pay such dividends is limited by the terms of its Amended and Restated Credit Agreement and the Indenture relating to the Senior Notes and the Senior Preferred Stock (as defined in Note 10 to the Company's Consolidated Financial Statements). 9 11 ITEM 6. SELECTED FINANCIAL DATA THE COMPANY The selected financial information below presents the financial information for the year ended December 31, 1996 and for the seven months ended December 31, 1995, as derived from the audited consolidated financial statements of the Company. The selected financial data should be read in conjunction with the consolidated financial statements of the Company and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere herein.
RESULTS OF OPERATIONS: YEAR ENDED SEVEN MONTHS ENDED DECEMBER 31, 1996 DECEMBER 31, 1995 ----------------- ----------------- (IN THOUSANDS) Net sales ............................................... $ 546,981 $ 245,583 Cost of goods sold ...................................... 420,823 195,221 Selling, general and administrative ..................... 43,885 17,129 Depreciation and amortization ........................... 31,341 11,020 Impairment, unusual and plant closing charges ........... 84,250 1,750 Inventory valuation adjustment .......................... 8,500 -- --------- --------- Operating income (loss) ................................. (41,818) 20,463 Interest expense ........................................ (43,013) (19,931) Amortization ............................................ (3,701) (1,468) Other (expense) income .................................. 312 (158) --------- --------- Loss before income tax provision ........................ (88,220) (1,094) Income tax provision .................................... 1,262 2,197 --------- --------- Net loss ................................................ $ (89,482) $ (3,291) ========= ========= OTHER DATA: EBITDA (1) .............................................. $ 82,273 $ 33,233 Capital expenditures .................................... $ 15,849 $ 5,751 Total assets ............................................ $ 531,020 $ 427,920 Long-term obligations (including current maturities) .... $ 447,667 $ 338,677
- ----------------- (1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") includes operating income adjusted to exclude depreciation, amortization of intangible assets, impairment, unusual and plant closing charges, and other one-time charges. The Company believes that EBITDA provides additional information for determining its ability to meet future debt service requirements. However, EBITDA is not a defined term under GAAP and is not indicative of operating income or cash flow from operations as determined under GAAP. WIREKRAFT (A PREDECESSOR COMPANY) The selected financial information presented below represents the financial information of Wirekraft and its predecessor for the periods indicated. The data for the year ended November 30, 1992 and for the period December 1, 1992 through December 21, 1992 are derived from the audited financial statements of the Predecessor. The data for the period December 22, 1992 through November 30, 1993, the year ended November 30, 1994 and the six months ended May 31, 1995 are derived from the audited consolidated financial statements of Wirekraft. In connection with the December 2, 1994 acquisition of ECM and certain assets of GE (the "ECM Acquisition"), WB Holdings Inc. became a wholly-owned subsidiary of Wirekraft, and, accordingly, references to Wirekraft shall include WB Holdings Inc. The following information should be read in conjunction with the audited consolidated financial statements of Wirekraft and the Predecessor and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere herein. 10 12
PREDECESSOR WIREKRAFT ---------------------------- -------------------------------------------- DECEMBER 1, DECEMBER 22, 1992 THROUGH 1992 THROUGH YEAR ENDED SIX MONTHS NOVEMBER 30, DECEMBER 21, NOVEMBER 30, NOVEMBER 30, ENDED MAY 31, 1992 1992 1993(1) 1994 1995 ------------ ------------ ------------ ------------ ------------ (IN THOUSANDS) RESULTS OF OPERATIONS: Net sales ............................ $ 174,684 $ 9,714 $ 181,188 $ 240,972 $ 168,053 Cost of goods sold ................... 146,597 8,339 150,092 201,602 138,851 Selling, general and administrative expenses ............ 10,869 505 10,582 14,319 13,301 Depreciation and amortization ........ 5,141 218 4,496 6,435 6,474 Compensation expense ................. -- -- -- -- 895(2) Expenses related to sale ............. -- 6,929(3) -- -- 501(4) Expenses related to plant closings ... -- -- -- -- 2,000 ------------ ------------ ------------ ------------ ------------ Operating income (loss) .............. 12,077 (6,277) 16,018 18,616 6,031 Interest expense ..................... (4,761) (1,418)(5) (8,645) (10,565) (8,020) Amortization of deferred financing costs ............................ -- -- (1,677) (1,995) (1,657) ------------ ------------ ------------ ------------ ------------ Income (loss) before income taxes and extraordinary item ............ 7,316 (7,695) 5,696 6,056 (3,646) Income tax provision (benefit) (6) ... -- -- 3,155 3,023 (2,114) ------------ ------------ ------------ ------------ ------------ Income (loss) before extraordinary item .............................. -- -- 2,541 3,033 (1,532) Extraordinary item ................... -- -- -- -- (7,835)(7) Net income (loss) .................... $ 7,316 $ (7,695) $ 2,541 $ 3,033 $ (9,367) ============ ============ ============ ============ ============ OTHER DATA: EBITDA ............................... $ 17,218 $ 870 $ 20,514 $ 25,051 $ 15,901 Capital expenditures ................. 2,122 136 3,705 6,248 2,914 Total assets ......................... 81,074 80,421 146,671 178,488 241,277 Long-term obligations (including current maturities) ... 45,294 42,143 93,123 111,639 148,386
- --------------- (1) On December 21, 1992, WB Holdings Inc., through a series of acquisitions and mergers (the "Original Wirekraft Acquisition"), acquired all of the issued and outstanding common stock of Bristol and Burcliff, the parent companies of the general partners of the Predecessor. (2) Represents payments to senior management of Wirekraft for the redemption of employee stock options in connection with the Acquisitions. (3) Represents non-recurring expenses associated with the Original Wirekraft Acquisition, which included exit bonuses, severance arrangements and brokerage and legal fees. (4) Represents expenses of Wirekraft associated with the Acquisitions. (5) Includes write-off of deferred financing fees of $1,211 associated with the Original Wirekraft Acquisition. (6) The results of operations for the years ended November 30, 1991 and 1992 and the period from December 1, 1992 through December 21, 1992 did not include a provision for income taxes since the net income for the Predecessor is included in the income tax returns of its partners. (7) Extraordinary item in 1995 represents a $7,835 loss on early extinguishment of debt (net of income tax of $4,930). 11 13 OMEGA (A PREDECESSOR COMPANY) The selected financial information below presents the financial information of Omega and its predecessor for the periods indicated. The data for the years ended December 31, 1992, 1993 and 1994 and the three months ended March 31, 1995 are derived from the audited consolidated financial statements of THL-Omega. The data for the two months ended May 31, 1995, are derived from the audited consolidated financial statements of Omega. The following information should be read in conjunction with the audited consolidated financial statements of THL-Omega and Omega and the notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere herein.
THL-OMEGA OMEGA ---------------------------------------------------- ---------- THREE THREE MONTHS MONTHS YEAR ENDED DECEMBER 31, ENDED ENDED -------------------------------------- MARCH 31, MAY 31, 1992 1993 1994 1995 1995(1) ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS) RESULTS OF OPERATIONS: Net sales .......................... $ 108,312 $ 107,004 $ 134,457 $ 38,736 $ 23,295 Cost of goods sold ................. 82,008 80,276 98,012 29,401 17,512 Selling, general and administrative expenses ......... 8,925 12,061 10,839 2,651 1,639 Depreciation and amortization .................... 5,488 5,191 5,761 1,459 1,233 Compensation expense ............... -- -- -- 9,715(2) -- Expenses related to sale ........... -- -- -- 1,689(3) -- ---------- ---------- ---------- ---------- ---------- Operating income (loss) ........... 11,891 9,476 19,845 (6,179) 2,911 Interest expense ................... (6,526) (6,026) (5,932) (1,478) (1,797) Amortization of deferred financing costs ................. (285) (289) (262) (50) (238) Other income ....................... 1,015 772 296 32 -- ---------- ---------- ---------- ---------- ---------- Income (loss) before income taxes and extraordinary item ............. 6,095 3,933 13,947 (7,675) 876 Income tax provision (benefit) ...................... 2,550 1,892 5,787 484 171 ---------- ---------- ---------- ---------- ---------- Income (loss) before extraordinary item .............. 3,545 2,041 8,160 (8,159) 705 Extraordinary item ................. -- -- -- (1,148)(4) (4,044)(5) ---------- ---------- ---------- ---------- ---------- Net income (loss) .................. $ 3,545 $ 2,041 $ 8,160 $ (9,307) $ (3,339) ========== ========== ========== ========== ========== OTHER DATA: EBITDA ............................. $ 17,379 $ 14,667 $ 25,606 $ 6,684 $ 4,144 Capital expenditures ............... 1,947 3,683 8,667 1,597 581 Total assets ....................... 87,342 85,868 101,675 97,657 176,659 Long-term obligations (including current maturities) .... 64,554 58,174 56,093 54,615 128,116
- --------------- (1) On March 31, 1995, Omega acquired all of the issued and outstanding common stock of THL-Omega. (2) Represents payments to senior management for the redemption of stock options and stock that was issued immediately prior to the acquisition of THL-Omega for consideration less than the fair value. (3) Represents expenses of the sellers associated with the acquisition of THL-Omega. (4) Extraordinary item in March 1995, represents a $1,148 loss on early extinguishment of debt (net of income taxes of $765). (5) Extraordinary item in May 1995, represents a $4,044 loss on early extinguishment of debt (net of income taxes of $2,082). 12 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS To facilitate a meaningful comparison, the following discussion and analysis is based on the combined results of operations of the Company, Wirekraft, Omega and ECM. The results of operations reflect the elimination of inter-company sales and cost of goods sold between Wirekraft and Omega pertaining to purchases of non-insulated wire by Wirekraft from Omega in the amounts of $1.8 million and $4.2 million for the years ended December 31, 1994 and 1995, respectively. Included in the year ended 1994 is the year ended November 30, 1994 of Wirekraft, the year ended December 31, 1994 of THL-Omega and the eleven month period ended November 30, 1994 of ECM. Included in the year ended 1995 is the five months ended May 31, 1995 of Wirekraft, the three months ended March 31, 1995 of THL-Omega, the two months ended May 31, 1995 of Omega, and the seven months ended December 31, 1995 of the Company. Included in the year ended December 31, 1996 is the year ended December 31, 1996 of the Company, which includes the results of operations of Wire Technologies, Inc. from March 5, 1996, the date of the DWT Acquisition. The Company conducts its operations through two segments: wire products, which includes both non-insulated and insulated wire, and wire harness products. The following table sets forth the major components of the results of operations on a historical combined basis and should be used in reviewing the discussion and analysis of results of operations and liquidity and capital resources.
RESULTS OF OPERATIONS YEARS ENDED ---------------------------------- (IN THOUSANDS) 1994 1995(1) 1996 --------- --------- --------- Wire sales ...................................... $ 272,414 $ 293,572 $ 385,627 Harness sales ................................... 174,716 161,121 161,354 --------- --------- --------- Net sales .................................... 447,130 454,693 546,981 Cost of goods sold .............................. 348,633 362,677 420,823 Selling, general and administrative ............. 39,746 32,843 43,885 Depreciation and amortization ................... 13,310 19,333 31,341 Impairment, unusual and plant closing charges ... -- 3,750 84,250 Inventory valuation adjustment .................. -- -- 8,500 Compensation expense ............................ -- 10,610 -- Expenses related to sale ........................ -- 2,190 -- --------- --------- --------- Operating income (loss) ......................... $ 45,441 $ 23,290 $ (41,818) ========= ========= =========
- -------------- (1) The results of operations data related to Wirekraft for the five months ended May 31, 1995 excludes the one month period ended December 31, 1994. Loss from operations of Wirekraft for the one month period ended December 31, 1994 was $64. 13 15 YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995 Net sales for the year ended December 31, 1996 were $547.0 million, representing a $92.3 million or 20.3% increase over the year ended December 31, 1995. This increase occurred substantially within the wire segment, where sales increased $92.1 million or 31.3% over the year ended December 31, 1995. This increase reflected $139.7 million of net sales from Wire Technologies, as well as continued growth in the Company's automotive, cable and control signal market accounts. These increases were partially offset by a decline in copper prices. In general, the Company prices its products based upon a spread over the cost of copper, which results in a decreased dollar value of sales when copper prices decrease. The average price of copper based upon the COMEX declined to $1.06 per pound over the year ended December 31, 1996 from $1.35 per pound during the year ended December 31, 1995. Within the harness segment, sales remained constant at $161.4 million during the year ended December 31, 1996. This constant level of sales represented strong sales from most major harness customers other than Whirlpool. Sales to Whirlpool declined during the year due to the expiration of a transition supply agreement in October 1995. Cost of goods sold as a percent of sales decreased from 79.8% to 76.9% for the year ended December 31, 1996. This decrease was due to the result of negotiated price reductions for certain purchased materials and the elimination of the majority of outside purchases of non-insulated wire subsequent to the acquisition of Omega in 1995. Wirekraft's purchases of non-insulated wire from outside suppliers declined as Omega's non-insulated wire production for Wirekraft increased. In addition, the change in cost of goods sold as a percent of sales reflected cost reductions achieved within both the wire and harness segments resulting from plant consolidation actions taken in 1995 and 1996, as well as the impact of declining copper prices. Because the Company's products are typically priced at a spread over the cost of copper, a lower copper price leads to a higher gross margin percentage but generally has no impact on gross margin dollars. Selling, general and administrative expenses were $43.9 million for the year ended December 31, 1996 compared to $32.8 million during the year ended December 31, 1995, an increase of $11.1 million. Expressed as a percent of sales, selling, general and administrative expenses increased from 7.2% during the year ended December 31, 1995 to 8.0% during the year ended December 31, 1996. This increase, as a percent of sales, was partially attributable to the effect on net sales of higher copper costs during the year ended December 31, 1995, as compared to the year ended December 31, 1996. Other cost increases included operating expenses from Wire Technologies, volume related items and cost inflation. Commencing in the first quarter of 1996, the Company began a comprehensive review of the strategic position of its individual business units. In connection with this review the Company completed its assessment of the carrying value of goodwill, resulting in a one-time, non-cash charge to pre-tax earnings of $78.2 million. This write down of the carrying value of goodwill related to the loss of a major customer in 1995 and the effects of key changes in the appliance and automotive wire industries. These changes and the DWT Acquisition necessitated the closing of certain facilities in both the wire and harness segments. A $6.0 million pre-tax charge to operations was recorded during the year ended December 31, 1996, representing plant closing costs. The plant closing costs relate to shutting down and consolidating six facilities. See "Business-Background" and Note 10 to the Consolidated Financial Statements. An $8.5 million pre-tax inventory valuation charge was recorded during the year ended December 31, 1996. This charge was the result of an adjustment to the last-in, first-out ("LIFO") valuation of copper in inventory reflecting the decrease in the copper cost per pound during fiscal 1996. 14 16 YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994 Net sales for the year ended December 31, 1995 were $454.7 million, representing a $7.6 million or 1.7% increase over the year ended December 31, 1994. This increase in net sales was primarily attributable to an increase in sales of wire products which grew to $293.6 million in 1995 from $272.4 million in 1994, an increase of $21.2 million or 7.8%. The increase was largely due to rising copper prices. In general, the Company prices its products based upon a spread over the cost of copper, which results in an increased dollar volume of sales when copper prices increase. The average price of copper based on the COMEX rose to $1.35 per pound during the year ended December 31, 1995 from $1.07 per pound during the year ended December 31, 1994. The increase in wire sales was also bolstered by growth in specialty accounts which primarily occurred in the security, alarm, data communications and fine wire businesses. The increase in sales of wire products was offset somewhat by a slowdown in the automotive industry as well as by several model related changeovers at key automotive customers. Within the harness segment, sales decreased $13.6 million or 7.8% for the year ended December 31, 1995 as compared to the year ended December 31, 1994. This decrease reflects a decline in sales to Whirlpool. This decline was pursuant to an agreement effective October 1, 1994, whereby Whirlpool began transitioning certain wire harness purchases to its own captive operation in Mexico and other third party suppliers. The harness segment, however, retained Whirlpool's dishwasher harness business. Cost of goods sold as a percent of sales increased to 79.8% from 78.0% for the year ended December 31, 1995 compared to the year ended December 31, 1994. The change was primarily due to the increase in the average price of copper. Because the Company's products are typically priced at a spread over the cost of copper, a higher copper price leads to a lower gross margin percentage but generally has no impact on gross margin dollars. The increasing cost of materials used to insulate wire, which include resins and plasticizers, and the impact of producing to shorter average runs during the mid-year automotive slowdown and customer inventory adjustment period also had dampening effects on margins. A $3.8 million charge to operations was recorded in 1995 related to plant closing costs. The plant closing costs primarily related to shutting down and consolidating harness segment facilities. During 1995, six harness plants were closed. Selling, general and administrative expenses were $32.8 million for the year ended December 31, 1995 as compared to $39.7 million for the year ended December 31, 1994 -- a decrease of $6.9 million or 17.4%. Expressed as a percentage of sales, selling, general and administrative expenses decreased to 7.2% for the year ended December 31, 1995 from 8.9% for the comparable period ended December 31, 1994. The decrease in selling, general and administrative expenses was primarily attributable to cost containment efforts, movement away from commissioned sales representatives to a captive sales force and consolidation in administrative positions. The decrease in selling, general and administrative expense also reflected the devaluation of the peso relative to the U.S. dollar. LIQUIDITY AND CAPITAL RESOURCES Working Capital and Cash Flows For the year ended December 31, 1996, the Company generated $32.0 million in cash from operations and $13.0 million of net proceeds from the issuance of equity securities and long-term debt obligations related to the DWT Acquisition. During 1996, the Company made net repayments of $21.3 million under debt obligations, spent $15.8 million on capital projects and used $7.8 million to pay financing fees. For the year ended December 31, 1995, on a historical combined basis, the Company generated $25.2 million in cash from operations and $23.0 million of net proceeds from the issuance of equity securities and long-term debt obligations related to acquisitions. During 1995, the Company made net repayments of $17.6 million under debt obligations, spent 15 17 approximately $10.5 million on capital projects and used $21.0 million to pay financing fees. For the year ended December 31, 1994, on a historical combined basis, the Company generated $13.4 million in cash from operations and $3.8 million from the issuance of certain notes. Cash was used in 1994 primarily to fund capital expenditures of $14.9 million. Financing Arrangements In connection with the Camden Acquisition, Holding and the Company entered into an Amended and Restated Credit Agreement dated as of February 12, 1997 with certain financial institutions. The Amended and Restated Credit Agreement provides senior secured financing of up to $428.5 million, consisting of an $111.0 million, five year Term A loan, an $115.0 million, seven year Term B loan, an $127.5 million, eight year Term C loan (collectively the "Term Facility") and a $75.0 million revolving loan and letter of credit facility (the "Revolver"). The Company is obligated to make principal payments in respect of the Term Facility of $20.3 million in 1997, $23.1 million in 1998, $28.3 million in 1999, $42.6 million in 2000, $56.6 million in 2001, $73.2 million in 2002 and $92.4 million in 2003. The Revolver is available for working capital purposes including letters of credit. The commitments terminate and all amounts under the Revolver then outstanding mature in 2000. As of March 12, 1997, there was $336.2 million outstanding under the Term Facility and $67.4 million of unused borrowing capacity under the Revolver. The Company's obligations under the Amended and Restated Credit Agreement bear interest at floating rates and require interest payments on varying dates depending on the interest rate option selected by the Company. At March 12, 1997, weighted average interest rate on outstanding borrowings under the Amended and Restated Credit Agreement was 8.69%. Within 90 days of the date of the Amended and Restated Credit Agreement, the Company is required to enter into interest rate agreements to assure the net interest cost to the Company on at least 50% of the sums of the aggregate principal amount of the Term Facility, the aggregate principal amount of the Senior Notes, and the aggregate liquidation preference of the Senior Preferred Stock (or the aggregate principal amount of the Senior Notes issued in exchange for the Senior Preferred Stock pursuant to the terms thereof) for a period of at least two years. As of March 12, 1997, the Company had entered into two such agreements. These agreements provide ceilings of 7.0% on $55.5 million of indebtedness through May 1997, 8.0% on $63.5 million of indebtedness through May 1998, 7.0% on $32.5 million of indebtedness through March 1998 and 8.0% on $32.5 million of indebtedness through March 1999. In connection with the Acquisitions, Holding and the Company issued $150.0 million principal amount of Senior Notes due 2005 under an indenture (the "Indenture"), dated June 12, 1995. The Senior Notes bear interest at the rate of 11.75% per annum, requiring semi-annual interest payments of $8.8 million on each June 1 and December 1. The Senior Notes are not subject to any sinking fund requirements. Liquidity The principal raw material used in the Company's products is copper. The market price of copper is subject to significant fluctuations. Increased working capital needs occur whenever the Company experiences a significant rise in copper prices. A $0.10 per pound change in the price of copper changes the Company's working capital by approximately $2.8 million. The Company enters into contractual relationships with most of its customers to adjust it prices based upon the prevailing market prices on the COMEX. This approach is patterned after the Company's arrangement with its copper suppliers and is designed to remove the risk associated with fluctuating copper prices. The Company's primary source of liquidity are cash flows from operations and borrowings under the Revolver, which are 16 18 subject to a borrowing base calculation. The major uses of cash in 1997 are expected to be for debt service requirements and capital expenditures. In 1997, debt service requirements are estimated at $68 million while capital expenditures are estimated at $23 million. Management believes that cash from operating activities, together with available borrowings under the Revolver, if necessary, should be sufficient to permit the Company to meet these financial obligations. ITEM 8. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS
INTERNATIONAL WIRE GROUP, INC. PAGE ---- Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................ 19 Consolidated Balance Sheets as of December 31, 1996 and December 31, 1995 ..................... 20 Consolidated Statements of Operations for the year ended December 31, 1996 and and seven months ended December 31, 1995 ................................................... 21 Consolidated Statement of Stockholders' Equity for the year ended December 31, 1996 and and seven months ended December 31, 1995 ................................................... 22 Consolidated Statements of Cash Flows for the year ended December 31, 1996 and and seven months ended December 31, 1995 ................................................... 23 Notes to Consolidated Financial Statements .................................................... 24 Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................ 37 Consolidated Financial Statement Schedule for the year ended December 31, 1996 and the seven months ended December 31, 1995: Schedule II - Valuation and Qualifying Accounts .. 38 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................ 39 Consolidated Statements of Operations for the six months ended May 31, 1995 and the year ended November 30, 1994 .................................................................... 40 Consolidated Statements of Stockholders' Equity for the six months ended May 31, 1995 and the year ended November 30, 1994 ........................................................... 41 Consolidated Statements of Cash Flows for the six months ended May 31, 1995 and the year ended November 30, 1994 .................................................................... 42 Notes to Consolidated Financial Statements .................................................... 43 OMEGA WIRE CORP. Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................ 51 Consolidated Statement of Operations for the two months ended May 31, 1995 .................... 52 Consolidated Statement of Stockholders' Equity for the two months ended May 31, 1995 ......................................................................... 53 Consolidated Statement of Cash Flows for the two months ended May 31, 1995 .................... 54 Notes to Consolidated Financial Statements .................................................... 55
17 19 THL-OMEGA HOLDING CORPORATION Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................ 60 Consolidated Statement of Operations and Retained Earnings for the three months ended March 31, 1995 ....................................................................... 61 Consolidated Statement of Cash Flows for the three months ended March 31, 1995 ................ 62 Notes to Consolidated Financial Statements .................................................... 63 Report of Price Waterhouse L.L.P., Independent Public Accountants ............................. 66 Consolidated Statements of Operations and Retained Earnings for the year ended December 31, 1994 .......................................................................... 67 Consolidated Statements of Cash Flows for the year ended December 31, 1994 .................... 68 Notes to Consolidated Financial Statements .................................................... 69 ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................ 73 Statement of Direct Revenues and Expenses for the eleven months ended November 30, 1994 ....... 74 Notes to Financial Statements ................................................................. 75
18 20 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of International Wire Group, Inc.: We have audited the accompanying consolidated balance sheets of International Wire Group, Inc. and subsidiaries as of December 31, 1996 and December 31, 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year ended December 31, 1996 and seven months ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of International Wire Group, Inc. and subsidiaries as of December 31, 1996 and December 31, 1995, and the consolidated results of their operations and their cash flows for the year ended December 31, 1996 and the seven months ended December 31, 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. St. Louis, Missouri February 28, 1997 19 21 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) ASSETS
DECEMBER 31, DECEMBER 31, 1996 1995 ------------ ------------ Current assets: Accounts receivable, less allowance of $1,363 and $860 ........ $ 71,181 $ 47,180 Inventories ................................................... 60,362 57,777 Prepaid expenses and other .................................... 5,060 2,733 Deferred income taxes ......................................... 4,741 125 ------------ ------------ Total current assets ....................................... 141,344 107,815 Property, plant and equipment, net ................................. 118,551 82,259 Deferred financing costs, net ...................................... 21,222 16,688 Intangible assets, net ............................................. 244,655 215,400 Other assets ....................................................... 5,248 5,758 ------------ ------------ Total assets ............................................... $ 531,020 $ 427,920 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term obligations ................... $ 20,948 $ 12,662 Accounts payable .............................................. 45,832 37,627 Accrued and other liabilities ................................. 33,150 20,323 Customers' deposits ........................................... 8,033 5,688 Accrued interest .............................................. 4,648 2,516 ------------ ------------ Total current liabilities .................................. 112,611 78,816 Long-term obligations, less current maturities ..................... 426,719 326,015 Deferred income taxes .............................................. 14,719 8,194 Other long-term liabilities ........................................ 12,162 4,897 ------------ ------------ Total liabilities .......................................... 566,211 417,922 Stockholders' equity: Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding ..................................... 0 0 Series A senior cumulative exchangeable redeemable preferred stock, $.01 par value, $25 liquidation value, 400,000 shares authorized, issued and outstanding ... 4 -- Contributed capital ........................................... 125,340 81,051 Carryover of predecessor basis ................................ (67,762) (67,762) Accumulated deficit ........................................... (92,773) (3,291) ------------ ------------ Total stockholders' equity ................................. (35,191) 9,998 ------------ ------------ Total liabilities and stockholders' equity ................. $ 531,020 $ 427,920 ============ ============
See accompanying notes to the consolidated financial statements 20 22 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
YEAR ENDED SEVEN MONTHS ENDED DECEMBER 31, 1996 DECEMBER 31, 1995 ----------------- ----------------- Net sales .......................................... $ 546,981 $ 245,583 Operating expenses: Cost of goods sold .............................. 420,823 195,221 Selling, general and administrative ............. 43,885 17,129 Depreciation and amortization ................... 31,341 11,020 Impairment, unusual and plant closing charges ... 84,250 1,750 Inventory valuation adjustment .................. 8,500 -- ---------- ---------- Operating income (loss) ............................ (41,818) 20,463 Other income (expense): Interest expense ................................ (43,013) (19,931) Amortization of deferred financing costs ........ (3,701) (1,468) Other, net ...................................... 312 (158) ---------- ---------- Loss before income tax provision ................... (88,220) (1,094) Income tax provision ............................... 1,262 2,197 ---------- ---------- Net loss ........................................... $ (89,482) $ (3,291) ========== ==========
See accompanying notes to the consolidated financial statements 21 23 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE SEVEN MONTHS ENDED DECEMBER 31, 1995 (IN THOUSANDS)
CARRYOVER OF COMMON PREFERRED CONTRIBUTED PREDECESSOR ACCUMULATED STOCK STOCK CAPITAL BASIS DEFICIT TOTAL ------------ ------------ ------------ ------------ ------------ ------------ Capital contributed ........... $ 0 $ -- $ 81,951 $ -- $ -- $ 81,951 Issuance costs ................ -- -- (900) -- -- (900) Carryover of predecessor basis ...................... -- -- -- (67,762) -- (67,762) Net loss ...................... -- -- -- -- (3,291) (3,291) ------------ ------------ ------------ ------------ ------------ ------------ Balance December 31, 1995 ..... 0 -- 81,051 (67,762) (3,291) 9,998 Capital contributed ........... -- -- 35,493 -- -- 35,493 Issuance of preferred stock ... -- 4 9,996 -- -- 10,000 Issuance costs ................ -- -- (1,200) -- -- (1,200) Net loss ...................... -- -- -- -- (89,482) (89,482) ------------ ------------ ------------ ------------ ------------ ------------ Balance December 31, 1996 ..... $ 0 $ 4 $ 125,340 $ (67,762) $ (92,773) $ (35,191) ============ ============ ============ ============ ============ ============
See accompanying notes to the consolidated financial statements 22 24 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED SEVEN MONTHS ENDED DECEMBER 31, 1996 DECEMBER 31, 1995 ----------------- ------------------ Cash flows provided by (used in) operating activities: Net loss ................................................. $ (89,482) $ (3,291) Adjustment to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization ............................ 31,341 11,020 Impairment and unusual charge ............................ 78,250 -- Amortization of deferred financing costs ................. 3,701 1,468 Inventory valuation adjustment ........................... 8,500 -- Deferred income taxes .................................... 3,184 274 Change in assets and liabilities, net of acquisitions: Accounts receivable .................................... (1,878) 12,094 Inventories ............................................ (3,645) (9,590) Prepaid expenses and other ............................. (4,829) (846) Accounts payable ....................................... 1,216 1,232 Accrued and other liabilities .......................... 2,299 (2,084) Accrued interest ....................................... 2,132 2,516 Income taxes payable/refundable ........................ 1,914 778 Other long-term liabilities ............................ (723) (237) ---------- ---------- Net cash from operating activities .......................... 31,980 13,334 ---------- ---------- Cash flows provided by (used in) investing activities: Acquisitions, net of cash ................................ (160,259) (341,046) Capital expenditures, net ................................ (15,849) (5,751) ---------- ---------- Net cash used in investing activities ....................... (176,108) (346,797) ---------- ---------- Cash flows provided by (used in) financing activities: Equity proceeds .......................................... 45,039 15,048 Proceeds from issuance of long-term obligations .......... 128,200 337,500 Repayment of long-term obligations ....................... (21,311) (5,085) Financing fees and other ................................. (7,800) (14,000) ---------- ---------- Net cash from financing activities .......................... 144,128 333,463 ---------- ---------- Net change in cash and cash equivalents ..................... -- -- Cash and cash equivalents at beginning of the period ........ -- -- ---------- ---------- Cash and cash equivalents at end of the period .............. $ -- $ -- ========== ==========
See accompanying notes to the consolidated financial statements 23 25 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1996 AND SEVEN MONTHS ENDED DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PER SHARE DATA) 1. THE COMPANY International Wire Group, Inc. ("Group" or the "Company"), a Delaware corporation, was formed to participate in the transactions contemplated by the Acquisitions (as described below). On June 12, 1995, Wirekraft Holdings Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire Holding Company ("Holding"), the sole common stockholder of Group, Wirekraft Acquisition Company and certain shareholders of Wirekraft and Omega entered into a series of acquisitions and mergers (the "Acquisitions") pursuant to which Group acquired all of the common equity securities (and all securities convertible into such securities) of Wirekraft and all of the common equity securities of Omega. The Company has designated June 1, 1995, as the effective date of the Acquisitions for financial reporting purposes. The Company through its two segments, the Wire segment and the Harness segment, is engaged in the design, manufacture and marketing of non-insulated and insulated copper wire and wire harnesses. The Company's products are used by a wide variety of customers primarily in the appliance, computer and data communications, automotive and industrial equipment industries. The total purchase price of the Acquisitions was approximately $420,591, which included the redemption of certain equity securities, the retirement of existing indebtedness of Wirekraft and Omega and the payment of related fees and costs, is summarized as follows: Redemption of common stock, equity rights, warrants and options ..................................................... $104,810 Repayment of existing indebtedness ................................. 275,460 Redemption of preferred stock ...................................... 26,321 Fees and costs ..................................................... 14,000 -------- $420,591 ========
In accordance with EITF 88-16, "Basis in Leveraged Buy Out Transactions," the Acquisitions have been accounted for at "predecessor basis". The total acquisition costs have been allocated to the acquired net assets as follows: Current assets .................................................... $ 117,504 Property, plant and equipment ..................................... 83,253 Goodwill .......................................................... 209,818 Fees and costs .................................................... 19,000 Other assets ...................................................... 3,749 Current liabilities ............................................... (58,707) Other liabilities ................................................. (21,788) Carryover predecessor basis ....................................... 67,762 --------- $ 420,591 =========
24 26 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Unaudited pro forma data, which present condensed results of operations for the twelve months ended December 31, 1995 as though the Acquisitions and related financing had occurred at the beginning of the period, is as follows: Net sales ........................................................... $454,693 Net income (loss) ................................................... $ 3,406
2. DWT ACQUISITION On March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a wholly-owned subsidiary of the Company, acquired the businesses of Hoosier Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc., a group of affiliated companies operating together under the trade name Dekko Wire Technology Group (the "DWT Acquisition"). The total consideration of $173,239 paid in connection with the DWT Acquisition including fees, expenses and certain adjustments consisted of (i) cash and (ii) warrants for the purchase of 2,000,000 shares of Common Stock, par value $.01 per share, of Holding. The DWT Acquisition and the related transaction fees and expenses were funded with (i) $128,200 of senior debt under the Amended Credit Agreement, (ii) $35,000 from the issuance of 35,000,000 shares of Common Stock, par value $.01 per share, of Holding, (iii) $39 from the issuance of 3,888,889 shares of Class A Common Stock, par value $.01 per share, of Holding, and (iv) $10,000 from the issuance of 400,000 shares of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per share, of the Company (sold in units together with warrants for the purchase of shares of Common Stock, par value $.01 per share, of Holding). The DWT Acquisition was accounted for using the purchase method of accounting whereby the total acquisition cost has been allocated to the consolidated assets and liabilities based upon their estimated respective fair values. The total acquisition cost is allocated to the acquired net assets as follows: Current assets .................................................... $ 37,669 Property, plant and equipment ..................................... 36,020 Goodwill .......................................................... 105,041 Other, non-current ................................................ 3,515 Fees and costs .................................................... 7,800 Current liabilities ............................................... (15,306) Other liabilities ................................................. (1,500) --------- $ 173,239 =========
Unaudited pro forma results of operations of the Company for the years ended December 31, 1996 and December 31, 1995, are included below. Such pro forma presentation has been prepared assuming that the DWT Acquisition and related financing had occurred as of January 1, 1996 and January 1, 1995, respectively, and that the Acquisitions (as described in Note 1) had occurred as of January 1, 1995.
1996 1995 -------- -------- Net sales ............................................. $574,827 $601,709 Net income (loss) ..................................... $(85,394) $ 4,960
25 27 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Group and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Revenue Recognition Sales and related cost of goods sold are included in income when goods are shipped to customers. Inventories Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") method. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is calculated using the straight-line method. The average estimated lives utilized in calculating depreciation are as follows: building - 25 to 40 years; building improvements - 15 years; machinery and equipment - 3 to 11 years; and furniture and fixtures - 5 years. Leasehold improvements are amortized over the shorter of the term of the respective lease or the life of the respective improvement. In fiscal 1996, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires impairment losses to be recorded on long-lived assets used in operations when indications of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Intangible Assets Intangible assets consist principally of goodwill arising from the excess of cost over the value of net assets acquired which is amortized using the straight-line method over forty years and a supply agreement (the "Agreement") which was entered into on December 31, 1995. The Company estimates its obligation under this Agreement to be approximately $7,609 and $8,700 at December 31, 1996 and December 31, 1995, respectively. Accordingly the Company recorded a liability and corresponding intangible asset for $8,700 which will be amortized using the straight-line method over eleven years. In connection with this Agreement, Holding issued 50,000 shares of preferred stock having a liquidation value of $5,000, which is amortized as expense and contributed capital in the Company's financial statements over the period of the Agreement. Contributed capital recognized by the Company in connection with this agreement for the year ended December 31, 1996 was $454. In fiscal 1996, the Company completed a review of the carrying value of goodwill, which resulted in an impairment charge (see Note 10). Accumulated amortization aggregated $18,182 and $8,783 at December 31, 1996 and December 31, 1995, respectively. 26 28 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred Financing Costs Deferred financing costs, consisting of fees and other expenses associated with the debt financing are amortized over the term of the related debt using the effective interest method and the straight-line method which approximates the effective interest method. Accumulated amortization aggregated $5,169 and $1,468 at December 31, 1996 and December 31, 1995, respectively. Fair Value of Financial Instruments The Company's financial instruments, excluding the Senior Notes (as hereinafter defined) are carried at fair value or amounts that approximate fair value. The Company has estimated the fair value of the Senior Notes using current market data. At December 31, 1996, the estimated fair market value of the Senior Notes was $162,000. Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Statement of Cash Flows For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Interest paid for the year ended December 31, 1996 and seven months ended December 31, 1995 was $40,881 and $17,415, respectively. Taxes refunded, net of payments for the year ended December 31, 1996 and taxes paid for the seven months ended December 31, 1995 were $4,073 and $1,145, respectively. During the year ended December 31, 1996 and seven months ended December 31, 1995, the Company entered into certain non-cash investing and financing activities. In connection with the Acquisitions, certain shares of Omega and Wirekraft common stock and Class A common stock were exchanged for shares of Holding common stock. The total amount of shares exchanged was $66,903. In fiscal 1996 and 1995, the Company recorded capital lease obligations of $2,348 and $680 respectively, for property, plant and equipment. Significant Customer A significant portion of the Company's sales were to a major customer within the Harness segment. Sales to this customer represented 18% and 19% of net sales for the year ended December 31, 1996 and the seven months ended December 31, 1995, respectively. 27 29 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 4. INVENTORIES The composition of inventories is as follows:
December 31, December 31, 1996 1995 ------------ ------------ Raw materials .................................... $ 26,191 $ 19,451 Work-in-process .................................. 14,908 15,916 Finished goods ................................... 19,263 22,410 ------------ ------------ Total inventories ........................... $ 60,362 $ 57,777 ============ ============
The current cost of inventories is approximately $57,267 and $56,035 at December 31, 1996 and December 31, 1995. In connection with the decline in the average price of copper during fiscal 1996 the Company recorded an $8,500 pre-tax inventory valuation charge to reduce the LIFO valuation of copper in inventory. 5. PROPERTY, PLANT AND EQUIPMENT The composition of property, plant and equipment is as follows:
December 31, December 31, 1996 1995 ------------ ------------ Land ........................................... $ 2,797 $ 2,061 Buildings and improvements ..................... 31,546 20,848 Machinery and equipment ........................ 121,013 76,668 ------------ ------------ 155,356 99,577 Less: accumulated depreciation ................. (36,805) (17,318) ------------ ------------ $ 118,551 $ 82,259 ============ ============
6. FINANCING COSTS AND RELATED PARTY TRANSACTIONS In connection with the Acquisitions, the Company incurred aggregate fees and costs of $14,000. Costs of $13,100 related to the Senior Notes and Credit Agreement (see Note 7) are included in deferred financing costs and are being amortized over the terms of the related borrowings. Costs of $900 related to the issuance of Holding's common stock have been deducted from the proceeds to reduce the carrying value of the common stock. In connection with the DWT Acquisition, the Company incurred aggregate fees and costs of $7,800. Costs of $6,600 related to the Amended Credit Agreement (as hereinafter defined) are included in deferred financing costs and are being amortized over the terms of the related borrowings. Costs of $1,200 related to the issuance of Holding's common stock and the Preferred Stock (as defined in Note 8) have been deducted from the proceeds to reduce the carrying value of the common and preferred stock. In connection with the Acquisitions and the related financing, the Company entered into a Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse & Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the Company) pursuant to which the Company paid Hicks, Muse a cash fee of $3,725 as compensation for financial advisory services. Pursuant to the Agreement, the Company paid Hicks, Muse a cash fee of $2,500 as compensation for financial advisory services received in connection with the DWT Acquisition. The fees have been allocated based upon the issuance proceeds to the debt and equity securities issued in connection with the Acquisitions and the DWT 28 30 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Acquisition as deferred financing costs or as a deduction from the cash proceeds received from the sale of the common stock of Holding. The Agreement further provides that the Company shall pay Hicks, Muse an annual fee of $500, for ten years for monitoring and oversight services adjusted annually at the end of each fiscal year to an amount equal to .1% of the consolidated net sales of the Company, but in no event less than $500 annually. The obligation under the Agreement and the related deferred financing costs have been recorded in the consolidated balance sheets. 7. LONG-TERM OBLIGATIONS The composition of long-term obligations is as follows:
December 31, December 31, 1996 1995 ------------ ------------ Credit Agreement: Revolver .................................... $ 18,990 $ 19,000 Term Facility ............................... 271,404 163,813 Senior Subordinated Notes ...................... 150,000 150,000 Capital lease and other obligations ............ 7,273 5,864 ------------ ------------ 447,667 338,677 Less, current maturities ....................... (20,948) (12,662) ------------ ------------ $ 426,719 $ 326,015 ============ ============
The schedule of principal payments for long-term obligations at December 31, 1996 is as follows: 1997 ................................................................ $ 20,948 1998 ................................................................ 23,782 1999 ................................................................ 29,123 2000 ................................................................ 58,568 2001 ................................................................ 41,457 Thereafter .......................................................... 273,789 -------- Total ............................................................ $447,667 ========
Credit Agreement In connection with the DWT Acquisition, Group and Holding entered into an Amended Credit Agreement (the "Amended Credit Agreement") dated as of March 5,1996 with certain financial institutions. Borrowings under the Amended Credit Agreement are collateralized by first priority mortgages and liens on all of the assets of Group. In addition, borrowings under the Amended Credit Agreement are guaranteed by Holding. The Amended Credit Agreement consists of an $111,000 term loan (the "Term A Loan"), an $82,500 term loan (the "Term B Loan"), a $95,000 term loan (the "Term C Loan", collectively, the "Term Facility") and a $75,000 revolving credit facility (the "Revolver"). The Revolver provides that up to $10,000 of such facilities may be used for the issuance of letters of credit. At December 31, 1996, Group had $930 in outstanding letters of credit and $55,966 of unused borrowing capacity under the Amended Credit Agreement. A commitment fee on the unused portion of the Revolver of .5% is payable quarterly. The Amended Credit Agreement contains several financial covenants which, among other things, require Group to maintain certain financial ratios and restrict Group's ability to incur 29 31 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) indebtedness, make capital expenditures and pay dividends. Mandatory principal payments of the Term Facility are due in quarterly installments. The final installment on the Term A Loan is due on September 30, 2000 at which time the Revolver is also due. The final installment on the Term B Loan is due on September 30, 2002, and the final installment on the Term C Loan is due on September 30, 2003. The Amended Credit Agreement requires annual prepayments of the Term Facility based on "Excess Cash Flow" (as defined in the Amended Credit Agreement). Borrowings under the Term A Loan and Revolver bear interest, at the option of Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined in the Amended Credit Agreement) plus 1.5% or (b) the Eurodollar Rate (as defined in the Amended Credit Agreement) plus 2.5%. Borrowings under the Term B Loan bear interest, at the option of Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined in the Amended Credit Agreement) plus 2.0% or (b) the Eurodollar Rate (as defined in the Amended Credit Agreement) plus 3.0%. Borrowings under the Term C Loan bear interest, at the option of Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined in the Amended Credit Agreement plus 2.5% or (b) the Eurodollar Rate (as defined in the Amended Credit Agreement) plus 3.5%. The Alternate Base Rate and Eurodollar Rate margins are established quarterly based on a formula as defined in the Amended Credit Agreement. Interest payment dates vary depending on the interest rate option to which the Term Facility and the Revolver are tied, but generally interest is payable quarterly. The weighted average interest rate on outstanding borrowings was 8.75% and 8.59% at December 31, 1996 and December 31, 1995, respectively. The Company has entered into an interest rate hedging arrangement to hedge against interest rate fluctuations. This arrangement provides a ceiling of 7.0% on $55,500 of indebtedness through May 1997 and 8.0% on $63,500 of indebtedness thereafter, through May 1998. Senior Subordinated Notes The Senior Subordinated Notes due 2005 ("the Senior Notes") were issued under an indenture, dated June 12, 1995 (the "Indenture") in connection with the Acquisitions. The Senior Notes represent unsecured general obligations of Group and are subordinated to all Senior Debt (as defined in the Indenture) of Group. The Senior Notes, which were originally sold pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, were exchanged for identical notes registered under such Act in November, 1995. The Senior Notes are fully and unconditionally (as well as jointly and severally) guaranteed on an unsecured, senior subordinated basis by each subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico, S.A. de C.V. (The "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries is wholly owned by the Company. Separate financial statements for the respective Guarantor Subsidiaries are not contained herein because the aggregate net assets, liabilities, earnings and equity of the Guarantor Subsidiaries is substantially equivalent to the net assets, liabilities, earnings and equity of the Company on a consolidated basis. The Senior Notes mature on June 1, 2005. Interest on the Senior Notes is payable semi-annually on each June 1 and December 1. The Senior Notes bear interest at the rate of 11.75% per annum. The Senior Notes may not be redeemed prior to June 1, 2000, except in the event of a Change of Control (as defined) or Initial Public Offering (as defined) 30 32 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) and at such applicable premium (as defined). The Senior Notes are redeemable, at the Company's option, at the redemption prices of 105.875% at June 1, 2000, and at decreasing prices to 100% at June 1, 2003, and thereafter, with accrued interest. In addition, prior to June 1, 1998, the Company may redeem, within guidelines specified in the Indenture, up to $50,000 of the Senior Notes with the proceeds of one or more Equity Offerings (as defined) by the Company or Holding at a redemption price of 110%, with accrued interest. The Senior Notes restrict, among other things, the incurrence of additional indebtedness by the Company, the payment of dividends and other distributions in respect of the Company's capital stock, the payment of dividends and other distributions by the Company's subsidiaries, the creating of liens on the properties and the assets of the Company to secure certain subordinated debt and certain mergers, sales of assets and transactions with affiliates. 8. PREFERRED STOCK In connection with the DWT Acquisition, the Company issued 400,000 shares of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock (the "Preferred Stock"). In accordance with the Certificate of Designation of the Preferred Stock (the "Certificate of Designation"), cumulative dividends are payable quarterly at the rate of 14% per annum. Dividend rates could increase upon the occurrence of any Event of Non-Compliance (as defined in the Certificate of Designation). At December 31, 1996, dividends in arrears were $1,200 or $2.99 per share. The Preferred Stock has a liquidation preference of $25.00 per share and a par value of $.01 per share. The Preferred Stock is exchangeable, at the option of the Company, for 14.0% Senior Subordinated Exchange Notes due June 1, 2005 (the "Exchange Notes") (see Note 14). The Preferred Stock ranks with respect to the payment of dividends and the distribution of assets upon dissolution, liquidation, or winding up of the Company, prior to all other capital stock of the Company. The Company may redeem the Preferred Stock, in whole or in part, at any time. If such redemption occurs prior to December 31, 1997, the redemption price shall equal the Makewhole Price (as defined in the Certificate of Designation). If such redemption occurs on or after December 31, 1997, the redemption price shall equal the product of the liquidation preference plus all accrued and unpaid dividends, multiplied by the applicable Redemption Percentage (as defined in the Certificate of Designation). 31 33 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 9. INCOME TAXES The Company accounts for income taxes in accordance with the provisions of SFAS No. 109. The provision (benefit) for income taxes is as follows:
Year Seven Months Ended Ended December 31, December 31, 1996 1995 ------------ ------------ Current: State ........................................ $ 935 $ 1,262 Foreign ...................................... 264 661 ------------ ------------ 1,199 1,923 Deferred: Federal ...................................... (64) (530) State ........................................ 127 804 ------------ ------------ 63 274 ------------ ------------ Total ...................................... $ 1,262 $ 2,197 ============ ============
Reconciliation between the statutory income tax rate and effective tax rate is summarized below: U.S. Federal statutory rate .................... $ (30,877) $ (372) State taxes, net of federal effect ............. 690 1,364 Foreign taxes .................................. (430) 789 Nondeductible expenses ......................... 31,814 397 Other .......................................... 65 19 ------------ ------------ $ 1,262 $ 2,197 ============ ============
The tax effects of significant temporary differences representing deferred tax assets and liabilities are as follows: Deferred tax assets: Accounts receivable reserves ................... $ 477 $ 298 Accrued liabilities not yet deductible ......... 3,497 2,540 Inventories .................................... 3,381 -- Net operating loss carry forward ............... -- 3,544 Other .......................................... 227 87 ------------ ------------ 7,582 6,469 ------------ ------------ Deferred tax liabilities: Depreciation and amortization .................. 14,684 11,809 Inventories .................................... 2,176 2,523 Other .......................................... 700 206 ------------ ------------ 17,560 14,538 ------------ ------------ Net deferred tax liability ..................... $ 9,978 $ 8,069 ============ ============
32 34 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. IMPAIRMENT, UNUSUAL AND PLANT CLOSING CHARGES Commencing in the first quarter of 1996, the Company began a comprehensive review of the strategic position of its individual business units. The original goodwill related to the original Wirekraft acquisition recognized long-term customer relationships and plant locations that were strategically sized, located and customer focused. Due to intense competition in the appliance and automotive markets and the loss of a major appliance customer in 1995, the Company developed and executed new business strategies, including the DWT Acquisition, to maintain customer volume levels, meet competitive pressures and address key changes within the marketplace. As a result, the Company embarked on a major plant consolidation program including the utilization of facilities purchased in the DWT Acquisition and transitioning of business from the Midwest to the Southwest and Mexico. To this end, six plants were closed in 1995 and another six plants were closed in 1996. In connection with this review and impairment charge, the Company has provided for anticipated losses related to product liability claims associated with the period preceeding the original acquisition of Wirekraft in 1992. In December 1996, the Company completed this review, resulting in an impairment charge of $78,250, principally related to the acquisition of Wirekraft. In determining the goodwill impairment charge, the Company completed financial projections through the year 2000. These projections reflect the Company's business strategies and were based on current industry trends, forecasts and expected developments. A discounted cash flow analysis of the consolidated entity was used to calculate the fair market value of the Company and was based upon the Company's acquisition strategy which focuses on the identification and realization of certain synergies existing between the acquired businesses. The calculated fair market value was compared to net tangible assets (net working capital and net property, plant and equipment). The difference between net tangible assets and the fair market value was compared to net goodwill to determine the goodwill impairment charge. The Company recorded a pre-tax charge to operations of $6,000 in 1996 and $1,750 in 1995 to provide for plant closing costs. The plant closing costs include provisions for shut-down costs from the period of the plant closure to the date of disposal, commitment costs for leased property and key personnel and severance related costs. Plant closing costs accrued at December 31, 1996 and December 31, 1995 were $2,462 and $700, respectively. There have been no adjustments to amounts charged to expense. 11. RETIREMENT BENEFITS AND STOCK OPTION PLANS The Company sponsors a number of defined contribution retirement plans which provide retirement benefits for eligible employees. Company contribution expense related to these retirement plans for the year ended December 31, 1996 and seven months ended December 31, 1995 amounted to approximately $1,208 and $902, respectively. Holding's Qualified and Non-qualified Stock Option Plan (the "Option Plan") provides for the granting of up to 4,795,322 shares of common stock to officers and key employees of Holding and the Company. Under the plan, options granted approximate market value of the common stock at the date of grant. Such options vest ratably over 33 35 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) a five year period commencing on the first anniversary date after the date of grant, and vested options are exercisable at the discretion of the committee appointed to administer the Option Plan. Generally, an option may be exercised only if the holder is an officer or employee of Holding or the Company at the time of exercise. Options granted under the Option Plan are not transferable, except by will and the laws of descent and distribution. Holding and the Company have also granted Performance Options ("the Performance Options") to certain key executives. The Performance Options are excercisable only on the occurrence of certain events. The exercise price for the Performance Options is initially equal to $1.00 per share and, effective each anniversary of the grant date, the per share exercise price for the Performance Options is equal to the per share exercise price for the prior year multiplied by 1.09. The Performance Options terminate on the tenth anniversary date of the date of grant. In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation", the Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees", and related Interpretations in accounting for the Option Plan. Had compensation cost for the Option Plan and the Performance Options been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under SFAS No. 123, the effect on the Company's financial statements would have been immaterial. Changes in the status of the Option Plan are summarized below:
Weighted Average Exercise Price Options Options Per Share Granted Vested -------------- ---------- ---------- June 1, 1995 ........................ -- -- -- Granted ........................... $1.00 3,400,000 -- Vested ............................ -- -- -- ----- ---------- ---------- December 31, 1995 .................... $1.00 3,400,000 -- Granted ........................... $1.02 1,865,249 Vested ............................ $1.00 -- 495,249 Forfeiture ........................ $1.00 (1,250,000) -- ----- ---------- ---------- December 31, 1996 .................... $1.01 4,015,249 495,249 ===== ========== ==========
Changes in the status of the the Performance Options are summarized below: June 1, 1995 ......................... -- -- -- Granted ........................... $1.00 2,966,178 -- ----- ---------- ---------- December 31, 1995 .................... $1.00 2,966,178 -- Granted ........................... $1.00 1,236,566 -- ----- ---------- ---------- December 31, 1996 .................... $1.06 4,202,744 -- ===== ========== ==========
Of the options outstanding under the Option Plan at December 31, 1996, 4,350,000 and 65,249 have exercise prices of $1.00 and $1.625 respectively, and have weighted average remaining contractual lives of between 9 and 10 years. The weighted average exercise price of options vested at December 31, 1996 is $1.00 per share. 34 36 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Of the Performance Options outstanding at December 31, 1996, 2,966,178 and 1,235,566 have exercise prices of $1.09 and $1.00 respectively, and have weighted average remaining contractual lives of between 9 and 10 years. 12. COMMITMENTS AND CONTINGENCIES The Company leases certain property, transportation vehicles and other equipment. Total rental expense under operating leases was $2,237 and $1,420 for the year ended December 31, 1996 and seven months ended December 31, 1995. Future minimum lease payments under capital and operating leases for years ending are:
Capital Operating ------- --------- 1997 ...................................................... $ 1,416 $ 2,706 1998 ...................................................... 1,416 2,401 1999 ...................................................... 1,416 1,453 2000 ...................................................... 1,376 1,128 2001 ...................................................... 970 927 Thereafter ................................................ 3,010 437 ------- ------- Total minimum lease payments ............................ 9,604 $ 9,052 ======= Less amount representing interest ....................... (2,705) ------- Present value of net minimum lease payments ............. $ 6,899 =======
The Company is subject to legal proceedings and claims which arise in the normal course of business. In the opinion of management, the ultimate liabilities with respect to these actions will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. The Company has agreed in principal to participate in an international expansion project with one of the Wire segment's largest customers. The Company estimates its financial commitment for property, plant and equipment to be approximately $13,000. 13. BUSINESS SEGMENT INFORMATION Certain information concerning the Company's operating segments for the year ended December 31, 1996 and the seven months ended December 31, 1995 is presented below. Total revenue by segment includes both sales to customers and intersegment sales, which are accounted for at prices charged to customers and eliminated in consolidation.
Year Ended December 31, 1996 Wire Harness Consolidated - ---------------------------- --------- --------- ------------ Total revenue ........................... $ 406,026 $ 161,354 Intersegment sales ...................... 20,399 -- --------- --------- Sales to customers ...................... $ 385,627 $ 161,354 $ 546,981 Operating loss .......................... $ (29,443) $ (12,375) $ (41,818) Identifiable assets ..................... $ 437,524 $ 93,496 $ 531,020 Depreciation and amortization ........... $ 24,880 $ 6,461 $ 31,341 Capital expenditures, net ............... $ 13,060 $ 2,789 $ 15,849
35 37 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Seven Months Ended December 31, 1995 Wire Harness Consolidated - ------------------------------------ --------- --------- ------------ Total revenue .............................. $ 167,082 $ 84,288 Intersegment sales ......................... 5,341 446 --------- --------- Sales to customers ......................... $ 161,741 $ 83,842 $ 245,583 Operating income ........................... $ 10,937 $ 9,526 $ 20,463 Identifiable assets ........................ $ 295,671 $ 132,249 $ 427,920 Depreciation and amortization .............. $ 7,442 $ 3,578 $ 11,020 Capital expenditures, net .................. $ 4,991 $ 760 $ 5,751
14. SUBSEQUENT EVENTS FOOTNOTE On February 4, 1997, the Board of Directors approved the exchange of the Preferred Stock for Exchange Notes, and voted to pay all dividends in arrears related to the Preferred Stock. On February 12, 1997, the Company completed the purchase of the stock and business activities of Camden Wire Co. for approximately $65,000, including fees and expenses, subject to certain purchase price adjustments (the "Camden Acquisition"). The Camden Acquisition and related transaction fees and expenses were funded with $65,000 of senior debt under the Amended Credit Agreement pursuant to an amendment dated February 12, 1997 (the "Amended and Restated Credit Agreement"). 36 38 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of International Wire Group, Inc.: Our report on the consolidated financial statements of International Wire Group, Inc. and subsidiaries is included on page 19 of this Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on page 17 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. St. Louis, Missouri February 28, 1997 37 39 INTERNATIONAL WIRE GROUP, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
ALLOWANCE FOR DOUBTFUL COLLECTION OF ACCOUNTS - DEDUCTED FROM BALANCE AT PREVIOUSLY BALANCE AT FROM RECEIVABLES IN THE BEGINNING WRITTEN OFF END OF BALANCE SHEET OF PERIOD PROVISION WRITEOFFS ACCOUNTS ACQUISITIONS PERIOD - ------------------------ --------- --------- --------- -------- ------------ ------ Seven months ended December 31, 1995 ....... $845 $ 33 $(53) $35 $ -- $ 860 Year ended December 31, 1996 ....... $860 $337 $(71) $12 $225 $1,363
38 40 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Wirekraft Holdings Corp.: We have audited the accompanying consolidated statements of operations, stockholders' equity, and cash flows of Wirekraft Holdings Corp. and subsidiaries (formerly WB Holdings, Inc.) for the six months ended May 31, 1995 and the year ended November 30, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Wirekraft Holdings Corp. and subsidiaries for the six months ended May 31, 1995 and the year ended November 30, 1994, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. St. Louis, Missouri January 27, 1996 39 41 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
SIX MONTHS ENDED YEAR ENDED MAY 31, 1995 NOVEMBER 30, 1994 ------------ ----------------- Net sales............................................................ $168,053 $ 240,972 Operating expenses: Cost of goods sold................................................ 138,851 201,602 Selling, general and administrative............................... 13,301 14,319 Depreciation and amortization..................................... 6,474 6,435 Compensation expense.............................................. 895 -- Expenses related to sale.......................................... 501 -- Expenses related to plant closings................................ 2,000 -- -------- --------- Operating income..................................................... 6,031 18,616 Other income (expense): Interest expense.................................................. (8,020) (10,565) Amortization of deferred financing costs.......................... (1,657) (1,995) -------- --------- Income (loss) before income tax provision and extraordinary item............................................ (3,646) 6,056 Income tax provision (benefit)....................................... (2,114) 3,023 -------- --------- Income (loss) before extraordinary item.............................. (1,532) 3,033 Extraordinary item - loss due to early extinguishment of debt, net of income tax of $4,930..................................................... (7,835) -- -------- --------- Net income (loss)................................................. $ (9,367) $ 3,033 ======== =========
See accompanying notes to the consolidated financial statements 40 42 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED MAY 31, 1995 AND THE YEAR ENDED NOVEMBER 30, 1994 (IN THOUSANDS)
CLASS A ADDITIONAL RETAINED PREFERRED COMMON COMMON PAID-IN EARNINGS STOCK STOCK STOCK CAPITAL (DEFICIT) TOTAL --------- -------- -------- ---------- ---------- -------- Balance November 30, 1993 ..... $ -- $ 200 $ 24 $ 22,576 $ 2,541 $ 25,341 Net income .................... -- -- -- -- 3,033 3,033 -------- -------- -------- ---------- -------- -------- Balance November 30, 1994 ..... -- 200 24 22,576 5,574 28,374 Issuance of preferred stock ... 10 -- -- 24,990 -- 25,000 Issuance of common stock ...... -- 3 -- 747 -- 750 Issuance costs ................ -- -- -- (300) -- (300) Net loss ...................... -- -- -- -- (9,367) (9,367) -------- -------- -------- ---------- -------- -------- Balance May 31, 1995 .......... $ 10 $ 203 $ 24 $ 48,013 $ (3,793) $ 44,457 ======== ======== ======== ========== ======== ========
See accompanying notes to the consolidated financial statements 41 43 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
SIX MONTHS ENDED YEAR ENDED MAY 31, 1995 NOVEMBER 30, 1994 ------------ ----------------- Cash flows provided by (used in) operating activities: Net income (loss)................................................ $ (9,367) $ 3,033 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Extraordinary item................................................... 12,765 -- Depreciation and amortization........................................ 6,474 6,435 Amortization of deferred financing costs............................. 1,493 1,667 Accretion of debt discount........................................... 164 328 Deferred income taxes................................................ (4,282) (325) Change in assets and liabilities, net of acquisitions: Accounts receivable.............................................. (9,863) (7,928) Inventories...................................................... (824) (6,622) Prepaid expenses and other....................................... (166) (2,951) Accounts payable................................................. (617) 8,231 Accrued and other liabilities.................................... 2,628 (281) Accrued interest................................................. 1,276 (1,217) Income taxes payable/refundable.................................. (3,366) 2,443 Other long-term liabilities...................................... (236) (495) -------- ------- Net cash from operating activities................................... (3,921) 2,318 -------- ------- Cash flows provided by (used in) financing activities: Acquisitions, net of cash........................................ (44,973) (11,754) Capital expenditures, net........................................ (2,914) (6,248) -------- ------- Net cash from investing activities................................... (47,887) (18,002) Cash flows provided by (used in) financing activities: Proceeds from issuance of long-term obligations.................. 24,000 12,674 Equity proceeds.................................................. 25,750 -- Borrowings of long-term obligations.............................. 19,639 22,995 Repayment of long-term obligations............................... (14,226) (17,481) Financing fees and other......................................... (3,500) (691) -------- ------- Net cash from financing activities................................... 51,663 17,497 -------- ------- Net change in cash and cash equivalents.............................. (145) 1,813 Cash and cash equivalents at beginning of the period................. 2,053 240 -------- ------- Cash and cash equivalents at end of the period....................... $ 1,908 $ 2,053 ======== =======
See accompanying notes to the consolidated financial statements 42 44 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED MAY 31, 1995, AND THE YEAR ENDED NOVEMBER 30, 1994 (IN THOUSANDS, EXCEPT SHARE DATA) 1. THE COMPANY WB Holdings Inc. ("Holdings"), a Delaware corporation, was formed to participate in the December 21, 1992 Acquisition (defined below). Holdings had no operations prior to December 21, 1992. On December 2, 1994, Holdings, through a series of mergers, became a wholly-owned subsidiary of Wirekraft Holdings Corp. ("New Holdings" together with Holdings, the "Company"). Pursuant to the mergers, the existing stockholders of Holdings exchanged their Holdings securities for New Holdings securities that have terms identical to the exchanged Holdings securities. New Holdings, a Delaware corporation, was formed to participate in the acquisition of Electro Componentes de Mexico S.A. de C.V. ("ECM") as discussed in Note 2. New Holdings had no operations prior to December 2, 1994. Holdings and New Holdings have a fiscal year-end of November 30. On December 21, 1992, Holdings, through a series of acquisitions and mergers, acquired all of the issued and outstanding common stock of Bristol Holding Corporation and Burcliff Holdings Corporation, the parent companies of the general partners of Kirtland Indiana, Limited Partnership for a total consideration of $116,997 (the "Acquisition"). Through a related series of mergers after the Acquisition, Bristol Holding Corporation became the surviving entity. Bristol Holding Corporation was later renamed Wirekraft Industries, Inc. ("Wirekraft") (together with Holdings, the "Company"). Wirekraft through its two segments, the Wire segment and the Harness segment, is engaged in the manufacture, design and distribution of insulated wire and wire harnesses used primarily in the appliance and automobile markets. The Company markets and distributes its products through a combination of internal sales representatives and independent sales representatives, selling primarily to original equipment manufacturers. The total cost of the Acquisition consisted of $57,967 for issued and outstanding common stock, $42,877 for the retirement of existing indebtedness, $1,175 for outstanding warrants and $14,978 for fees and expenses. The Acquisition was accounted for using the purchase method of accounting whereby the total acquisition cost was allocated to the acquired net assets based on their respective fair values. The total acquisition cost was allocated to the acquired net assets as follows: Current assets .................................................... $ 29,461 Property, plant and equipment ..................................... 19,980 Goodwill .......................................................... 80,319 Fees and costs .................................................... 9,580 Other non-current assets .......................................... 386 Current liabilities ............................................... (16,365) Other liabilities ................................................. (6,364) --------- $ 116,997 =========
43 45 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 2. ECM ACQUISITION On December 2, 1994, through a series of acquisitions and transfers from New Holdings, Wirekraft acquired the stock of ECM and certain assets from General Electric Company. The purchase price, including fees and expenses, was approximately $49,550. The purchase price consisted of $20,000 in cash, 1,000,000 shares of Series A Senior Preferred Stock, par value $.01 per share, $25 liquidation preference and 275,758 shares of common stock on New Holdings. The acquisition of ECM was accounted for using the purchase method of accounting whereby the total acquisition cost was allocated to the acquired net assets based on their respective fair values. The total acquisition cost was allocated to the acquired net assets as follows: Current assets ..................................................... $ 8,211 Property, plant and equipment ...................................... 8,288 Intangibles ........................................................ 37,958 Fees and costs ..................................................... 3,500 Current liabilities and other reserves ............................. (8,407) -------- $ 49,550 ========
Unaudited pro forma data, which show condensed results of operations for the year ended November 30, 1994 as though the acquisition and related financing of ECM had occurred at the beginning of the period is as follows: Net sales ........................................................... $319,486 Net income .......................................................... $ 5,758
3. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements for the year ended November 30, 1994 include the accounts of Holdings and its wholly-owned subsidiary, Wirekraft. The consolidated financial statements for the six months ended May 31, 1995 include the accounts of New Holdings and its wholly-owned subsidiary, Holdings. All material intercompany balances and transactions have been eliminated in consolidation. Revenue Recognition Sales and related costs of goods sold are included in income when goods are shipped to customers. 44 46 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Inventories Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") method. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is calculated using the straight-line method. The average estimated lives utilized in calculating depreciation are as follows: building and improvements - 25 years; machinery and equipment - 7 years; and furniture and fixtures - 5 years. Leasehold improvements are amortized over the shorter of the term of the respective lease or life of the respective improvement. Intangible Assets Intangible assets, which consist principally of goodwill arising from the excess of cost over the value of net assets acquired, are amortized using the straight-line method over forty years. Accumulated amortization aggregated $4,040 at November 30, 1994. Deferred Financing Costs Deferred financing costs, which consists of fees and other expenses associated with the debt financing, are amortized over the term of the related debt using the effective interest method and the straight-line method which approximates the effective interest method. Income Taxes Deferred income taxes are determined using the liability method. Statement of Cash Flows For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Interest paid for the six months ended May 31, 1995 and the year ended November 30, 1994 was approximately $6,744 and $11,803, respectively. Taxes paid for the six months ended May 31, 1995 and the year ended November 30, 1994 were approximately $604 and $905, respectively. In connection with the Acquisition, the Company assumed liabilities aggregating $22,729, which is a non-cash investing activity. During the six months ended May 31, 1995, the Company entered into a capital lease obligation of $4,714 for new equipment. 45 47 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Fair Value of Financial Instruments The fair market values of the financial instruments included in the consolidated financial statements approximate the carrying values of the financial instruments. Concentration of Credit Risk Accounts receivable from companies located throughout the United States in the appliance and automotive industries amounted to approximately $12,397 and $15,684, respectively at November 30, 1994. Sales to the Company's five largest customers represented 61% of net sales for the six months ended May 31, 1995 and 51% and 56% of net sales in 1994 and 1993, respectively. A significant portion of the Company's sales are to three major customers within the Harness Segment. Sales to one of these customers represented 25% of net sales for the six months ended May 31, 1995. The Company has entered into a supply contract with this customer expiring in 2002. Sales to the Company's two other major customers represented 12% and 7% of net sales for the six months ended May 31, 1995, 17% and 11% of net sales in 1994. In 1995, a supply contract with one of the above mentioned customers expired. A supply contract was subsequently renegotiated through December, 1998. 4. FINANCING COSTS AND RELATED PARTY TRANSACTIONS In connection with the Acquisition and ECM acquisition, the Company incurred aggregate fees and costs of $11,900. Costs of $11,100 related to the 12% Senior Subordinated Notes due 2003 and Credit Agreement are included in deferred financing costs and are amortized over the term of the related borrowings. Costs of $800 related to the issuance of Holding's common stock have been deducted from the proceeds to reduce the carrying value of the common stock. In connection with the Acquisition and the related financing, Holdings and Wirekraft entered into a Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse & Co., Incorporated ("Hicks, Muse") (an affiliate of the Company) pursuant to which the Company paid Hicks, Muse a financial advisory fee of $1,725. The fees, which also include $200 paid in connection with the acquisition of Ristance and $750 paid in connection with the acquisition of ECM, have been allocated to the Company's debt and equity securities as deferred financing costs or as a deduction from the cash proceeds received from the sale of stock. The Agreement further provides that the Company shall pay Hicks, Muse an annual fee of $115 (subject to adjustment), for ten years, for monitoring and oversight services. Such Agreement was amended and restated in connection with the acquisition of ECM to increase the annual fee for financial advisory services to $200 (subject to adjustment). The obligation under the Agreement, as amended, and the related deferred financing costs have been recorded in the consolidated balance sheet. 5. STOCKHOLDERS' EQUITY The authorized capital stock of the Company at May 31, 1995 consists of 50,000,000 shares of common stock, 3,000,000 shares of Class A common stock, and 10,000,000 shares of preferred stock. In connection with the 46 48 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) financing of the Acquisition, the Company issued 20,000,000 shares of common stock, 2,402,402 shares of Class A common stock and 1,621,622 warrants to purchase common stock. Each warrant represents the right to purchase one share of the Company's common stock for $1.00 per warrant. The warrants expire on December 31, 2002. As of May 31, 1995, no warrants had been exercised. On December 2, 1994, in connection with the acquisition of ECM, the Company issued 1,000,000 shares of Series A Senior Preferred Stock and 275,758 shares of common stock. The Class A common stock may be converted into shares of common stock at the option of the holder at any time. In addition, shares of the Class A common stock (i) may be converted into common stock at the option of the Company effective immediately prior to the occurrence of a Triggering Event (as defined in the Company's Certificate of Incorporation) or (ii) shall automatically be converted on December 31, 2002. Such conversions are based on a formula set forth in the Company's Certificate of Incorporation. Dividends are payable to holders of the common stock and Class A common stock in amounts as and when declared by the Company's board of directors, subject to legally available funds and certain agreements governing the Company's indebtedness. In the event of any liquidation, dissolution or winding up of the Company, before any payment or distribution of the assets of the Company shall be made to the holders of the Class A common stock, each share of common stock shall be entitled to a liquidation preference based on a formula set forth in the Company's Certificate of Incorporation. The common stock and the Class A common stock are entitled to one vote per share on all matters submitted to a vote of stockholders. The Company has adopted a qualified and non-qualified incentive stock option plan (the "Option Plan") for officers and key employees of Holdings. A total of 1,471,000 shares of the Company's common stock has been reserved for issuance under the Option Plan. Under the Option Plan, eligible participants may receive qualified and non-qualified options to purchase shares of the Company's common stock. Options are exercisable at such time and on such terms as the committee appointed to administer the Option Plan (the "Committee") determines. The exercise price for the options granted under the Option Plan may not be less than the fair market value of the underlying share, as determined by the Committee on the date of grant. Generally, an option may be exercised only if the holder is an officer or employee of the Company at the time of exercise. Options granted under the Option Plan are not transferable, except by will and the laws of descent and distribution. During the year ended November 30, 1994, the Company granted options to purchase 75,000 shares of common stock at $2.74 per share and canceled 235,200 options. No options were exercised during the year. During the six months ended May 31, 1995, the Company granted options to purchase 100,000 shares of common stock at $2.74 per share, canceled 188,800 shares and 20,000 options were exercised. At May 31, 1995, there were 764,000 options available for issuance under the Option Plan. 47 49 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 6. INCOME TAXES The provision (benefit) for income taxes consists of the following:
Six Months Year Ended Ended May 31, November 30, 1995 1994 ------------ ------------ Current: Federal ...................................... $ 1,022 $ 2,741 State ........................................ 892 607 Foreign ...................................... 254 -- ------------ ------------ 2,168 3,348 ============ ============ Deferred: Federal ...................................... (3,159) (124) State ........................................ (1,123) (201) ------------ ------------ (4,282) (325) ------------ ------------ Total ...................................... $ (2,114) $ 3,023 ============ ============
Reconciliation between the Federal statutory income tax rate and the effective tax rate is summarized below:
Six Months Year Ended Ended May 31, November 30, 1995 1994 ------------ ------------ Federal taxes at statutory rate (34%) ........... $ (1,240) $ 2,059 State taxes, net of federal effect .............. 210 268 Foreign ......................................... (1,468) -- Nondeductible assets ............................ 340 680 Other ........................................... 44 16 ------------ ------------ Provision (benefit) for income taxes ............ $ (2,114) $ 3,023 ============ ============
7. PLANT CLOSING EXPENSE In May 1995, the Company recorded a pretax charge to operations of $2,000 to provide for plant closing costs. The Company's decision to shut-down certain harness segment plants was the result of a customer transitioning certain wire harness purchases to its own captive operations in Mexico and other third party suppliers. The plant closing costs include provisions for shut-down costs from the period of the plant closure to the date of disposal, commitment costs for leased equipment and severance related costs. 48 50 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 8. RETIREMENT BENEFITS Employees of Wire division, who are eligible under Section 414(q) of the Internal Revenue Code, may participate in the profit sharing plan sponsored by the Company. The plan qualifies under the Internal Revenue Code section 401(k), and the Company may at its discretion make contributions on a matching or non-matching basis. Employees of the Wire Division with approximately one year of service may also participate in a money purchase pension plan sponsored by the Company. The Company is required to make contributions to the money purchase pension plan equal to 3% of an employee's eligible compensation as defined in the plan document. Expense under these two plans amounted to approximately $363 and $451 for the six months ended May 31, 1995 and the year ended November 30, 1994, respectively. 9. LEASES The Company leases certain of its manufacturing facilities and equipment under long-term lease agreements with lease terms expiring through February 2004. Rent expense applicable to the noncancelable operating leases aggregated $505, $436 and $431 for the six months ended May 31, 1995 and for the year ended November 30, 1994. The schedule of future minimum lease payments by calendar year under operating leases at November 30, 1994 is as follows: 1995 .................................................................. $1,645 1996 .................................................................. 1,607 1997 .................................................................. 1,567 1998 .................................................................. 1,324 1999 .................................................................. 1,234 Thereafter ............................................................ 1,723
10. CONTINGENCIES The Company is subject to various lawsuits and claims with respect to such matters as patents, product liabilities, government regulations, and other actions arising in the normal course of business. In the opinion of management, the ultimate liabilities resulting from such lawsuits and claims will not have a material adverse effect on the Company's consolidated financial conditions and results of operations. 11. OTHER ACQUISITIONS On December 10, 1993, Wirekraft acquired certain assets and related liabilities of the wire business of the Ristance division of Echlin Corporation ("Ristance"). The purchase price, including fees and expenses, paid in cash, was approximately $11,800 which was funded through additional borrowings under the Credit Agreement. The acquisition of Ristance was accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to assets and liabilities acquired based upon their fair value at the date of the acquisition. 49 51 WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 12. BUSINESS SEGMENT INFORMATION Certain information concerning the Company's operating segments for the six months ended May 31, 1995 and the year ended November 30, 1994 is presented below. Total revenue by segment includes both sales to customers and intersegment sales, which are accounted for at prices charged to customers and eliminated in consolidation.
Six Months Ended May 31, 1995 Wire Harness Consolidated - ----------------------------- -------- -------- ------------ Total revenue .............................. $ 88,488 $ 88,620 Intersegment sales ......................... 7,807 1,248 -------- -------- Sales to customers ......................... $ 80,681 $ 87,372 $168,053 ======== ======== Operating income ........................... 1,320 4,711 6,031 Depreciation and amortization .............. 2,534 3,940 6,474 Capital expenditures, net .................. 1,636 1,278 2,914 Year Ended November 30, 1994 - ---------------------------- Total revenue .............................. $153,014 $101,167 Intersegment sales ......................... 13,209 -- -------- -------- Sales to customers ......................... $139,805 $101,167 $240,972 ======== ======== Operating income ........................... 9,433 9,183 18,616 Depreciation and amortization .............. 4,451 1,984 6,435 Capital expenditures, net .................. 5,819 429 6,248
13. SUBSEQUENT EVENT On June 12, 1995, International Wire Holding Company, through a series of mergers and acquisitions acquired all of the outstanding common stock of New Holdings (the "Transaction"). The Company has designated June 1, 1995, as the effective date of the Transaction for financial reporting purposes. In connection with the Transaction, the majority of the Company's long-term debt was repaid, the common stock of New Holdings was redeemed at $51,751, the Series A Senior Preferred Stock issued as part of the ECM acquisition (see Note 2) was redeemed at a liquidation value of $26,250 plus accrued dividends of $71 and the warrants and equity rights were retired at $10,133. As a result of the early repayment of certain long-term debt, $7,909 of deferred financing costs and $2,456 of OID were charged off and included as an extraordinary item in the accompanying Statements of Operations for the six months ended May 31, 1995. In addition, the Company paid a prepayment penalty of $2,400 to holders of subordinated notes. This amount has also been included in the accompanying statements of operations as an extraordinary item. The stock options granted pursuant to the Company's stock option plan were canceled for payment to the option holders who received cash. This amount totaled approximately $895 and has been included in the Statements of Operations as compensation expense for the six months ended May 31, 1995. In connection with the sale, the Company incurred expenses of $501 which has been recorded in the Statements of Operations as expenses related to sale. 50 52 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Omega Wire Corp.: We have audited the accompanying consolidated statements of operations, stockholders' equity, and cash flows of Omega Wire Corp. and subsidiaries for the two months ended May 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Omega Wire Corp. and subsidiaries for the two months ended May 31, 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. St. Louis, Missouri January 27, 1996 51 53 OMEGA WIRE CORP. CONSOLIDATED STATEMENT OF OPERATIONS TWO MONTHS ENDED MAY 31, 1995 (IN THOUSANDS) Net sales .......................................................... $ 23,295 Operating expenses: Cost of goods sold ............................................. 17,512 Selling, general and administrative ............................ 1,639 Depreciation and amortization .................................. 1,233 -------- Operating income ................................................... 2,911 Other income (expense): Interest expense ............................................... (1,797) Amortization of deferred financing costs ....................... (238) -------- Income before income tax provision and extraordinary item .......... 876 Income tax provision ............................................... 171 -------- Income before extraordinary item ................................... 705 Extraordinary item - loss due to early extinguishment of debt, net of income tax of $2,082 .................................... (4,044) -------- Net loss ........................................................... $ (3,339) ========
See accompanying notes to the consolidated financial statements 52 54 OMEGA WIRE CORP. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY TWO MONTHS ENDED MAY 31, 1995 (IN THOUSANDS)
CLASS A CARRYOVER OF COMMON COMMON PAID-IN PREDECESSOR ACCUMULATED STOCK STOCK CAPITAL BASIS DEFICIT TOTAL -------- -------- -------- ------------ ------------ -------- Issuance of common stock ........... $ 420 $ -- $ 41,580 $ -- $ -- $ 42,000 Issuance of Class A common stock ... -- 63 -- -- -- 63 Issuance costs ..................... -- -- (675) -- -- (675) Carryover of predecessor basis ..... -- -- -- (20,000) -- (20,000) Net loss ........................... -- -- -- -- (3,339) (3,339) -------- -------- -------- ------------ ------------ -------- Balance May 31, 1995 ............... $ 420 $ 63 $ 40,905 $ (20,000) $ 3,339) $ 18,049 ======== ======== ======== ============ ============ ========
See accompanying notes to the consolidated financial statements 53 55 OMEGA WIRE CORP. CONSOLIDATED STATEMENT OF CASH FLOWS TWO MONTHS ENDED MAY 31, 1995 (IN THOUSANDS) Cash flows provided by (used in) operating activities: Net loss ...................................................... $ (3,339) Adjustment to reconcile net loss to net cash provided by (used in) operating activities: Extraordinary item ............................................ 6,126 Depreciation and amortization ................................. 1,233 Amortization of deferred financing costs ...................... 238 Deferred income taxes ......................................... 120 Change in assets and liabilities, net of acquisitions: Accounts receivable ........................................ 1,528 Inventories ................................................ (510) Prepaid expenses and other ................................. (231) Accounts payable ........................................... 919 Accrued and other liabilities .............................. 10 Accrued interest ........................................... 952 Income taxes payable/refundable ............................ (2,033) Other long-term liabilities ................................ (26) --------- Net cash from operating activities ................................ 4,987 --------- Cash flows provided by (used in) investing activities: Acquisition, net of cash ...................................... (159,080) Capital expenditures, net ..................................... (581) --------- Net cash from investing activities ................................ (159,661) --------- Cash flows provided by (used in) financing activities: Proceeds from issuance of long-term obligations ............... 135,000 Contributed capital ........................................... 34,653 Repayment of long-term obligations ............................ (7,979) Financing fees and other ...................................... (7,000) --------- Net cash from financing activities ................................ 154,674 --------- Net change in cash ................................................ -- Cash at beginning of the period ................................... -- --------- Cash at end of the period ......................................... $ -- =========
See accompanying notes to the consolidated financial statements 54 56 OMEGA WIRE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TWO MONTHS ENDED MAY 31, 1995 (IN THOUSANDS, EXCEPT SHARE DATA) 1. THE COMPANY Omega Wire Corp. ("Omega" or the "Company"), a Delaware corporation, was formed to participate in the Acquisition (defined below). Omega had no operations prior to the Acquisition. On March 31, 1995, Omega acquired all of the issued and outstanding common stock of THL-Omega Holding Corporation ("THL-Omega") for a total consideration $167,300 (the "Acquisition"). Omega, through its subsidiaries, is engaged in the manufacturing and marketing of non-insulated copper wire and cable products. The Company's products are used by a wide variety of customers primarily in the automotive and computer and data communications industries. Omega has a fiscal year-end of December 31. The total purchase price of the Acquisition of approximately $174,300, which included the retirement of existing indebtedness and related fees and costs, is summarized as follows: Cash paid for all issued and outstanding common stock .............. $102,762 Cash paid to retire existing indebtedness .......................... 55,439 Common stock of Omega issued ....................................... 7,410 Fees and costs ..................................................... 8,689 -------- $174,300 ========
The Acquisition was accounted for using the purchase method of accounting whereby the total acquisition cost has been preliminarily allocated to the consolidated assets and liabilities based on their estimated respective fair values. In accordance with EITF 88-16, "Basis in Leveraged Buyout Transactions", a portion of the Acquisition has been accounted for at "predecessor basis". The application of predecessor basis reduced stockholders' equity and goodwill by $20,000. The purchase price allocations are still in process. It is not expected that the final allocation of the purchase cost will result in a materially different allocation than is presented herein. The total acquisition costs have been preliminarily allocated to the acquired net assets as follows: Current assets .................................................... $ 40,802 Property, plant and equipment ..................................... 38,974 Goodwill .......................................................... 96,701 Fees and costs .................................................... 9,000 Other assets ...................................................... 54 Current liabilities ............................................... (21,906) Other liabilities ................................................. (9,325) Carryover of predecessor basis .................................... 20,000 --------- $ 174,300 =========
55 57 OMEGA WIRE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Omega and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Revenue Recognition Sales and related cost of goods sold are included in income when goods are shipped to customers. Inventories Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") method. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is calculated using the straight-line method. The average estimated lives utilized in calculating depreciation are as follows: buildings - 25 to 40 years; building improvements 15 years; machinery and equipment - 3 to 11 years; and furniture and fixtures - 5 years. Leasehold improvements are amortized over the shorter of the term of the respective lease or the life of the respective improvement. Intangible Assets Intangible assets consist principally of goodwill arising from the excess of cost over the value of net assets acquired, which is being amortized using the straight-line method over forty years. Amortization of intangible assets amounted to $384 for the two months ended May 31, 1995. Deferred Financing Costs Deferred financing costs, consisting of fees and other expenses associated with the debt financing are amortized over the term of the related debt using the effective interest method and the straight-line method which approximates the effective interest method. Statement of Cash Flows For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Interest and taxes paid for the two months ended May 31, 1995 were $845 and $2, respectively. 56 58 OMEGA WIRE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In connection with the Acquisition, certain shares of common stock of THL-Omega were exchanged for common stock of Omega. The total amount of shares exchanged were $7,410, which was a non-cash investing and financing activity. 3. FINANCING COSTS AND RELATED PARTY TRANSACTIONS In connection with the Acquisition, the Company incurred aggregate fees and costs of $7,000. Costs of $6,325 related to the debt financing are being amortized over the terms of the related borrowings. Costs of $675 related to the issuance of Omega's common stock have been deducted from the proceeds to reduce the carrying value of the common stock. In connection with the Acquisition and obtaining the related financing, Omega entered into a Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse & Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the Company) pursuant to which the Company paid Hicks, Muse a cash fee of $2,525 as compensation for financial advisory services. The fees have been allocated to the debt and equity securities issued in connection with the Acquisition as deferred financing costs or as a deduction from the cash proceeds received from the sale of the common stock of Omega. The agreement further provides that the Company shall pay Hicks, Muse an annual fee of $200, for ten years for monitoring and oversight services adjusted annually at the end of each fiscal year to an amount equal to .1% of the consolidated net sales of the Company, but in no event less than $200 annually. 4. STOCKHOLDERS' EQUITY The authorized capital stock of the Company consists of 100,000,000 shares of common stock, 6,333,333 shares of Class A common stock, and 10,000,000 shares of preferred stock. In connection with the financing of the Acquisition, the Company issued 42,000,000 shares of common stock and 6,333,333 shares of Class A common stock The Class A common stock may be converted into shares of common stock at the option of the holder at any time. In addition, shares of the Class A common stock (i) may be converted into common stock at the option of the Company effective immediately prior to the occurrence of a Triggering Event (as defined in the Company's Certificate of Incorporation) or (ii) shall automatically be converted on March 31, 2005. Such conversions are based on a formula set forth in the Company's Certificate of Incorporation. Dividends are payable to holders of the common stock and Class A common stock in amounts as and when declared by the Company's board of directors, subject to legally available funds and certain agreements governing the Company's indebtedness. In the event of any liquidation, dissolution or winding up of the Company, before any payment or distribution of the assets of the Company shall be made to the holders of the Class A common stock, each share of common stock shall be entitled to a liquidation preference based on a formula set forth in the Company's Certificate of Incorporation. The common stock and the Class A common stock are entitled to one vote per share on all matters submitted to a vote of stockholders. 57 59 OMEGA WIRE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. INCOME TAXES The Company accounts for income taxes in accordance with provisions of SFAS No. 109. The provision for income taxes for the two months ended May 31, 1995 is as follows: Current: Federal .............................................................. $ 51 ---- Deferred: Federal .............................................................. 55 State ................................................................ 65 ---- 120 ---- $171 ====
Reconciliation between the federal statutory income tax rate and the effective tax rate is summarized below: Federal taxes at statutory rate (34%) ............................... $ 297 State taxes, net of federal effect .................................. 43 Other ............................................................... (169) ----- Provision for income taxes .......................................... $ 171 =====
6. RETIREMENT PLANS The Company has a profit sharing plan covering substantially all employees of Omega Wire Corp. Contributions are made to a trusteed fund to accumulate as a retirement benefit for employees. The profit sharing expense amounted to $113 for the two months ended May 31, 1995. Effective January 1, 1995, the Company implemented a savings plan permitting substantially all employees to contribute up to 15% of their salary on a pre-tax basis to any of the six investment options available. There are no required Company contributions to the plan. 7. COMMITMENTS The Company leases certain property, transportation vehicles and other equipment under operating leases. Total lease expense for the two months ended May 31, 1995 was approximately $290. 58 60 OMEGA WIRE CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Under the terms of the agreements in effect at May 31, 1995, the Company has future minimum lease commitments as follows: 1995 ................................................................. $ 979 1996 ................................................................. 1,262 1997 ................................................................. 1,202 1998 ................................................................. 1,159 1999 ................................................................. 1,108 Later years .......................................................... 9,198 ------- Total minimum lease commitments ...................................... $14,908 =======
8. CONTINGENCIES The Company is subject to various lawsuits and claims with respect to such matters as patents, product liabilities, government regulations, and other actions arising in the normal course of business. In the opinion of management, the ultimate liabilities resulting from such lawsuits and claims will not have a material adverse effect on the Company's consolidated financial conditions and results of operations. 9. SUBSEQUENT EVENT On June 12,1995, International Wire Holding Company ("Holdings"), through a series of mergers and acquisitions acquired all of the outstanding common stock of the Company in exchange for certain of its common equity securities (the "Transaction"). In connection with the Transaction the Company has been renamed "International Wire Group, Inc." The Company has designated June 1, 1995, as the effective date of the Transaction for financial reporting purposes. In connection with the Transaction the Company's long-term debt was repaid. As a result of the early repayment of long-term debt, approximately $6,126 of deferred financing costs were charged off and included as an extraordinary item in the accompanying Statement of Operations. 59 61 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders of THL-Omega Holding Corporation: We have audited the accompanying consolidated statements of operations and retained earnings and cash flows of THL-Omega Holding Corporation and its subsidiaries for the three months ended March 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of THL-Omega Holding Corporation and subsidiaries for the three months ended March 31, 1995, in conformity with generally accepted accounting principles. COOPERS & LYBRAND, L.L.P. St. Louis, Missouri January 27, 1996 60 62 THL-OMEGA HOLDING CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS THREE MONTHS ENDED MARCH 31, 1995 (IN THOUSANDS) Net sales .......................................................... $ 38,736 Costs and expenses: Cost of products sold ............................................ 30,638 Selling expenses ................................................. 1,430 General and administrative expenses .............................. 1,493 Compensation expense ............................................. 9,715 Expenses related to sale of Company .............................. 1,689 -------- Loss from operations ............................................... (6,229) Interest expense ................................................... (1,478) Other income ....................................................... 32 -------- Loss before income taxes and extraordinary item .................... (7,675) Provision for income taxes ......................................... 484 -------- Loss before extraordinary item ..................................... (8,159) Extraordinary item - loss due to early extinguishment of debt net of income tax of $765 ................. (1,148) -------- Net loss ........................................................... (9,307) Retained earnings - beginning of the year .......................... 13,284 -------- Retained earnings - March 31, 1995 ................................. $ 3,977 ========
See accompanying notes to the consolidated financial statements 61 63 THL-OMEGA HOLDING CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1995 (IN THOUSANDS) Cash flows provided by (used in) operating activities: Net loss .......................................................... $(9,307) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Extraordinary item ................................................ 1,913 Compensation expense .............................................. 9,715 Depreciation and amortization ..................................... 1,509 Change in assets and liabilities: Accounts receivable ............................................. 1,222 Inventories ..................................................... 2,826 Prepaid and other current assets ................................ (485) Accounts payable ................................................ (3,714) Accrued expenses ................................................ (90) Income taxes payable ............................................ (5) Deferred compensation ........................................... 20 Net cash from operating activities .................................. 3,604 ------- Cash flows provided by (used) investing activities: Capital expenditures, net ......................................... (1,597) ------- Net cash from investing activities .................................. (1,597) ------- Cash flows provided by (used in) financing activities: Repayment of long-term debt ....................................... (1,500) Net borrowing (repayment) under revolving credit facility ......... (656) Issuance of notes payable, net .................................... 678 Redemption of common stock ........................................ (58) ------- Net cash from financing activities .................................. (1,536) ------- Net increase in cash ................................................ 471 Cash at beginning of period ......................................... 339 ------- Cash at end of period ............................................... $ 810 =======
See accompanying notes to the consolidated financial statements 62 64 THL-OMEGA HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1995 (IN THOUSANDS) 1. THE COMPANY THL-Omega Holding Corporation and its subsidiaries ("THL-Omega" or the "Company") are engaged in the manufacturing and marketing of non-insulated copper wire and cable products. The Company's products are used by a wide variety of customers primarily in the automotive and computer and data communications industries. THL-Omega has a fiscal year-end of December 31. 2. SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation The consolidated financial statements include the accounts of THL-Omega and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Revenue Recognition Sales and related cost of goods sold are included in income when goods are shipped to customers. Inventories Inventories are valued at the lower of cost or market. Cost is determined primarily using the last-in, first-out ("LIFO") method. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is calculated using the straight-line method. The average estimated lives utilized in calculating depreciation are as follows: buildings - 25 to 40 years; building improvements - 15 years; machinery and equipment - 3 to 11 years; and furniture and fixtures - 5 years. Leasehold improvements are amortized over the shorter of the term of the respective lease or the life of the respective improvement. Intangible Assets Intangible assets consist principally of goodwill arising from the excess of cost over the value of net assets acquired, which is being amortized using the straight-line method over forty years. 63 65 THL-OMEGA HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred Financing Costs Deferred financing costs, consisting of fees and other expenses associated with the debt financing are amortized over the term of the related debt using the effective interest method and the straight-line method which approximates the effective interest method. Statement of Cash Flows For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Interest and taxes paid for the three months ended March 31, 1995 were $1,548 and $33, respectively. 3. INCOME TAXES The Company accounts for income taxes in accordance with the provisions of SFAS No. 109. The provision for income taxes for the three months ended March 31, 1995 is as follows: Current: Federal .............................................................. $384 State ................................................................ 100 ---- $484 ====
Reconciliation between the statutory income tax rate and effective tax rate for the three months ended March 31, 1995 is summarized below: Statutory U.S. federal tax rate ..................................... $(2,610) State taxes, net of federal benefit ................................. 66 Amortization on non-deductible goodwill and non-deductible expenses . 3,028 ------- $ 484 =======
4. RETIREMENT PLANS The Company has a profit sharing plan covering substantially all employees of THL-Omega. Contributions are made to a trusteed fund to accumulate as a retirement benefit for employees. The profit sharing expense amounted to $249 for the three months ended March 31, 1995. 5. COMMITMENTS AND CONTINGENCIES The Company leases certain property, transportation vehicles and other equipment under operating leases. Rent expense for these operating leases for the three months ended March 31, 1995 was approximately $433. 64 66 THL-OMEGA HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Under the terms of the agreements in effect at March 31, 1995, the Company has future minimum lease commitments as follows: 1995 ................................................................. $ 979 1996 ................................................................. 1,262 1997 ................................................................. 1,202 1998 ................................................................. 1,159 1999 ................................................................. 1,108 Later years .......................................................... 9,198 ------- Total minimum lease commitments ................................... $14,908 =======
The Company is subject to legal proceedings and claims which arise in the normal course of business. In the opinion of management, the ultimate liabilities with respect to these actions will not have a material adverse effect on the Company's financial condition or results of operations. 6. ACQUISITION On March 31, 1995, ownership of the Company transferred pursuant to the terms of a Stock Purchase Agreement. Substantially all of the Company's long-term debt has been repaid. As a result of the early repayment of certain long-term debt, $1,013 of deferred financing costs was charged off and included as an extraordinary item in the accompanying Statement of Operations and Retained Earnings for the three months ended March 31, 1995. In addition, the Company paid a prepayment penalty of $900 to holders of the subordinated notes. This amount also has been included in the accompanying Statement of Operations and Retained Earnings as an extraordinary item. Immediately prior to the sale of the Company, the Company sold common stock and granted stock options to certain officers and shareholders for consideration less than the fair value of the common stock. The difference between the fair value and the amount paid by the officers and shareholders has been included in the Statement of Operations and Retained Earnings as compensation expense for the three months ended March 31, 1995. In connection with the sale, the Company incurred expenses of $1,689 which has been included in the Statement of Operations and Retained Earnings as expenses related to the sale of the Company. 65 67 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders of THL-Omega Holding Corporation: In our opinion, the accompanying consolidated statements of operations and retained earnings and of cash flows for the year ended December 31, 1994 present fairly, in all material respects, the results of operations and cash flows of THL-Omega Holding Corporation and its subsidiaries for the year ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. We have not audited the financial statements of THL-Omega Holding Corporation for any period subsequent to December 31, 1994. PRICE WATERHOUSE LLP Syracuse, New York February 10, 1995 66 68 THL-OMEGA HOLDING CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1994 (IN THOUSANDS) Net sales ......................................................... $ 134,457 Costs and expenses: Cost of products sold ........................................... 103,100 Selling expenses ................................................ 5,938 General and administrative expenses ............................. 5,836 --------- Income from operations ............................................ 19,583 Interest expense .................................................. (5,932) Other income (expense) ............................................ 296 --------- Income before income taxes ........................................ 13,947 Provision for income taxes ........................................ (5,787) --------- Net income ........................................................ 8,160 Retained earnings -- beginning of year ............................ 5,124 --------- Retained earnings -- end of year .................................. $ 13,284 =========
See accompanying notes to the consolidated financial statements 67 69 THL-OMEGA HOLDING CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1994 (IN THOUSANDS) Cash flows from operating activities: Net income ...................................................... $ 8,160 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization ................................... 6,023 Deferred income taxes ........................................... 2,258 Deferred compensation ........................................... 81 Effect of changes in current assets and liabilities (Note 1) .... (5,458) -------- Net cash provided by (used in) operating activities ................ 11,064 -------- Cash flows from investing activities: Additions to property, plant and equipment, net ................. (8,667) -------- Net cash provided by (used in) investing activities ................ (8,667) -------- Cash flows from financing activities: Repayment of long-term debt ..................................... (6,042) Net borrowing (repayment) under revolving credit facility ....... 206 Issuance of notes payable, net .................................. 3,755 -------- Net cash provided by (used in) financing activities ................ (2,081) -------- Net increase in cash ............................................... 316 Cash at beginning of period ........................................ 23 -------- Cash at end of period .............................................. $ 339 ========
See accompanying notes to the consolidated financial statements 68 70 THL-OMEGA HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1994 (IN THOUSANDS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: THL-Omega Holding Corporation and its subsidiaries (the "Company") are engaged in the manufacturing and marketing on non-insulated copper wire and cable products. Consolidation The consolidated financial statements of THL-Omega Holding Corporation include the accounts of Omega Wire, Inc. and its wholly-owned subsidiaries, Auburn Wire Division, Inc., Auburn Wire, Inc., Continental Cordage Corporation and OWI Corporation. All significant intercompany transactions have been eliminated. Inventories Inventories are carried at the lower of cost or market, cost being determined using the last-in, first-out method, except for Continental Cordage Corporation which uses the first-in, first-out method. Continental Cordage Corporation's cost of products sold represents less than 10% of the Company's aggregate cost of products sold. In 1994, OWI Corporation changed its method of accounting for inventory from the first-in, first-out method of inventory valuation to the last-in, first-out method of inventory valuation. The Company believes the last-in, first-out method will produce a better matching of current costs and current revenues due to the volatility of copper prices. The effect of this change in 1994 was to decrease inventories and to increase cost of products sold by $349. The retroactive adjustment of prior year statements is insignificant for restatement. During 1994, the Company entered into a futures contract providing for the sale of 10,000 pounds of copper in March 1995 at a fixed price. This future contract is accounted for as a hedge of the Company's current inventories. At December 31, 1994, the Company had incurred an approximate $1,052 unrealized loss on this contract, which served to increase inventory. Property, Plant and Equipment Property, plant and equipment are carried at cost, net of accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Depreciation expense is computed using the straight-line method for financial reporting and accelerated methods for tax purposes. Property, plant and equipment is depreciated over the following estimated useful lives for financial reporting purposes. Buildings .................................... 25 to 40 years Building improvements ........................ 15 years Machinery and equipment ...................... 3 to 11 years
69 71 THL-OMEGA HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Goodwill and Debt Issue Costs Goodwill is being amortized on a straight-line basis over 40 years. Amortization expense was $673 for the year ended December 31, 1994. Cost related to the issuance of debt amounting to $2,257 at December 31, 1994 has been deferred and amortized on a straight-line basis over the term of the debt. Amortization expense was $262 for the year ended December 31, 1994. Income Tax Accounting The Company accounts for income taxes in accordance with provision of Statement of Financial Accounting Standards No. 109 (FAS 109), Accounting for Income Taxes. Cash Flow Information For purposes of reporting cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The effect on cash flow of changes in current assets and liabilities is as follows for the year ended December 31, 1994:
1994 -------- Accounts receivable ................................................ $ (7,183) Inventories ........................................................ (6,450) Prepaid and other current assets ................................... 454 Accounts payable ................................................... 5,577 Accrued expenses ................................................... 1,639 Income taxes payable ............................................... (281) Customers' deposits on spools and reels ............................ 786 -------- $ (5,458) ========
Cash payments for income taxes were $3,808 for the year ended December 31, 1994. Interest paid was $5,873 for the year ended December 31, 1994. 2. INCOME TAXES The components of the provision for income taxes are as follows for the year ended December 31, 1994. Current: Federal ............................................................. $2,979 State ............................................................... 550 ------ 3,529 Deferred ............................................................ 2,258 ------ Total ............................................................. $5,787 ======
70 72 THL-OMEGA HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The total income tax provision differed from total tax expense as computed by applying the statutory federal income tax rate to income before taxes. The reasons were: Statutory U.S. federal tax rate ........................................ 34.0% State taxes, net of federal benefit .................................... 2.7 Amortization of non-deductible goodwill ................................ 1.5 Other .................................................................. 3.3 ---- 41.5% ====
3. RETIREMENT PLANS The Company has a profit sharing plan covering substantially all employees of THL-Omega Holding Corporation. Contributions are made to a trusteed fund to accumulate as a retirement benefit for employees. The profit sharing expense amounted to $996 for the year ended December 31, 1994. Effective January 1, 1995, the Company implemented a savings plan permitting substantially all employees to contribute up to 15% of their salary on a pretax basis to any of the six investment options available. There are no required Company contributions to the plan. 4. STOCKHOLDERS' EQUITY A leveraged buy out transaction occurred effective January 1, 1989 that resulted in the application of "predecessor basis" accounting as prescribed by the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board. The application of predecessor basis reduced stockholders' equity and goodwill by $5,850. 5. COMMITMENTS AND CONTINGENCIES Operating Lease Agreements The Company leases certain property, transportation vehicles and other equipment under operating leases. Total lease expense for the year ended December 31, 1994 was approximately $1,481. Under the terms of the agreements in effect at December 31, 1994, the Company has future minimum lease commitments as follows: 1995 ................................................................. $ 1,305 1996 ................................................................. 1,262 1997 ................................................................. 1,202 1998 ................................................................. 1,159 1999 ................................................................. 1,108 Later years .......................................................... 9,198 ------- Total minimum lease commitments ...................................... $15,234 =======
71 73 THL-OMEGA HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Employment Agreements The Company has consulting and non-competition agreements with two of its former employees which expire in 1995 and 1997, respectively. Compensation under the agreements is payable at annual rates of $65 and $95, respectively. Management Fee Management fees not exceeding $200 are payable to Thomas H. Lee Company annually. Payments were $120 for the year ended December 31, 1994. Joint Venture During 1992, the Company acquired a 20% interest in Changzhou Omega Copper Wire Co., Ltd. (the joint venture), a newly-formed joint venture based in the People's Republic of China, in exchange for certain equipment and technology. Given the uncertainties surrounding the recoverability of this investment, the Company's investment in the joint venture was recorded at no value. During the initial fifteen-year term of the joint venture, the Company has the exclusive authority to sell the products manufactured by the joint venture within its sales territory and has agreed to purchase a specified quantity of product from the joint venture each year. The Company has the option of renewing these purchase provisions for an additional fifteen-year term upon the expiration of the initial term. The Company's purchases from the joint venture amounted to $3,300 in 1994. There were no such purchases in 1993. 6. SUBSEQUENT EVENT In March 1995, ownership of the Company transferred pursuant to the terms of a Stock Purchase Agreement. The majority of the Company's long-term debt, consisting of the Credit Agreement, Subordinated Notes and Term Loans have subsequently been repaid. 72 74 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholder of Electro Componentes de Mexico S.A. de C.V.: We have audited the accompanying statement of direct revenues and expenses of Electro Componentes de Mexico S.A. de C.V. (collectively, "ECM") for the eleven months ended November 30, 1994. This statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. The accompanying financial statement was prepared to present the results of the direct revenues and expenses of ECM pursuant to the acquisition agreement described in Note 1, and are not intended to be a complete presentation of ECM's results of operations or cash flows. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the statement of direct revenues and expenses for the eleven months ended November 30, 1994, pursuant to the acquisition agreement referred to in Note 1, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. El Paso, Texas April 24, 1995 73 75 ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY STATEMENT OF DIRECT REVENUES AND EXPENSES FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1994 (IN THOUSANDS) Direct revenues ............................................................ $73,549 Direct expenses: Cost of goods sold ....................................................... 51,981 Selling, general and administrative ...................................... 14,588 ------- Direct revenues in excess of direct expenses ............................... 6,980 Other income ............................................................... 242 ------- Direct revenues in excess of direct expenses before income tax provision ... 7,222 Income tax provision at statutory rate ..................................... 2,787 ------- Net direct revenues in excess of direct expenses ........................... $ 4,435 =======
See accompanying notes to the consolidated financial statements 74 76 ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 1. BACKGROUND AND BASIS OF PRESENTATION Pursuant to an Acquisition Agreement (the "Agreement") dated December 2, 1994, between General Electric Company ("GE"), Wirekraft Industries, Inc. ("Wirekraft") and certain affiliates of GE and Wirekraft, Wirekraft acquired the stock of Electro Componentes de Mexico S.A., de C.V. ("Electro Componentes de Mexico") and certain related assets from GE (collectively, "ECM.") Electro Componentes de Mexico, a "maquiladora," operates under Mexico's in-bond manufacturing program. ECM manufactures wire harnesses used in the appliance industry solely for GE. The accompanying Statement of Direct Revenue and Expenses for the eleven months ended November 30, 1994, has been derived from the historical books and records of Electro Componentes de Mexico and GE. This statement has been prepared to reflect certain historical information relating to the direct revenues and expenses of ECM for the purpose of meeting certain reporting requirements of the Securities and Exchange Commission. Separate records of ECM's assets and liabilities and revenues and expenses have not been maintained by GE. As such, it is impracticable to prepare full financial statements for ECM. The accompanying financial statement has been prepared on a basis which includes certain costs which have been charged or allocated by GE, and excludes certain other costs which have not been charged or allocated by GE, such as corporate overhead, employee benefits, interest and financing costs. The financial statement does not purport to present the results of operations of ECM as if it had been operated as a separate, unaffiliated entity, rather than as a wholly-owned subsidiary of GE during the period presented. 2. SIGNIFICANT ACCOUNTING POLICIES Inventories Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out ("FIFO") method. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is calculated using a modified sum of the years digits method. The average estimated lives utilized in calculating depreciation are as follows: buildings and improvements -- 25 years; machinery and equipment -- 10 years; and furniture and fixtures -- 10 years. Leasehold improvements are amortized on the straight-line method over the shorter of the term of the respective lease or the life of the respective improvement. Foreign Currency Translation The "functional" currency of ECM is U.S. dollars. The historical books and records of Electro Componentes de Mexico are maintained in Mexican pesos and have been translated into U.S. dollars in accordance with the Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation." Monetary assets and liabilities are converted at the rate of exchange in effect at the date of acquisition of the asset, and revenue and expense accounts are converted 75 77 ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) using a weighted average exchange rate for the period. Translation gains and losses are included in income currently. Income Taxes ECM is not a separate taxable entity for federal, state or local income tax purposes. Mexican income taxes, amounting to $649, are included in the provision for income taxes based upon the separate tax return calculation of Electro Componentes de Mexico for the period presented. ECM's U.S. operations are included in the consolidated GE tax returns and GE has not historically allocated U.S. income taxes to ECM. For purposes of the income tax computation, the provision for income taxes for ECM's U.S. operations, amounting to $2,138, is based on an assumed combined statutory federal and state tax rate of 40% for the period presented. Current and deferred portions of the provision for income taxes have not been determined. 3. TRANSACTIONS WITH AFFILIATES ECM, through the normal course of business, conducts transactions with GE and its affiliates. All of ECM's sales and cost of goods sold relate to sales to GE and its affiliates. Receipts and disbursements of ECM have been managed by GE through a centralized treasury system. Accordingly, cash generated by ECM flow directly to GE and cash requirements are disbursed directly by GE. There is no direct interest cost allocation to ECM with respect to borrowings, if any, and, accordingly, the Statement of Direct Revenues and Expenses do not include any financing costs. 4. RETIREMENT BENEFITS Seniority premiums to which Mexican employees are entitled upon retirement after fifteen years or more of service, in accordance with the Mexican Federal Labor Law, are recognized as cost over the years in which services are rendered, based on actuarial computations. To this effect, Electro Componentes de Mexico has established an irrevocable trust fund. Payments to this fund, charged to operations, were $46 for the eleven months ended November 30, 1994. 5. LEASES ECM leases certain of its manufacturing facilities and equipment under long-term lease agreements with lease terms expiring through 2002. Rent expense applicable to these noncancelable leases aggregated $657 for the eleven months ended November 30, 1994. 76 78 ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Future minimum lease payments under operating leases for the years ended November 30 are: 1995 .................................................................. $ 671 1996 .................................................................. 582 1997 .................................................................. 536 1998 .................................................................. 486 1999 .................................................................. 468 Thereafter ............................................................ 1,279 ------ $4,022 ======
Total lease expense under operating leases, including amounts previously noted as well as month-to-month leases, aggregated $1,276 for the eleven months ended November 30, 1994. 6. CONTINGENCIES ECM is subject to various lawsuits and claims with respect to such matters as patents, product liabilities, government regulations, and other actions arising in the normal course of business. In the opinion of management, the ultimate liabilities resulting from such lawsuits and claims will not have a material adverse effect on ECM's financial condition or results of operations. 77 79 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS Set forth below are the names and positions of the directors and executive officers of Holding and the Company. All directors hold office until the next annual meeting of stockholders of Holding and the Company, and until their successors are duly elected and qualified. All officers serve at the pleasure of the Board of Directors.
NAME AGE POSITION(S) ---- --- ----------- James N. Mills......... 59 Chairman of the Board and Chief Executive Officer of Holding and the Company Thomas P. Danis........ 50 Director of Holding and the Company Jack D. Furst.......... 39 Director of Holding and the Company John A. Gavin.......... 65 Director of Holding and the Company Charles W. Tate........ 52 Director of Holding and the Company Richard W. Vieser...... 69 Director of Holding and the Company Joseph M. Fiamingo..... 47 Director, President and Chief Operating Officer of Holding and the Company Rodney D. Kent......... 49 Director of Holding and the Company, President and Chief Executive Officer of Omega Robert C. Kozlowski 49 President - Wire Technologies, Inc. James J. Mills......... 34 President - Wire Harness Industries, Inc. David M. Sindelar...... 39 Senior Vice President and Chief Financial Officer of Holding, Senior Vice President of the Company Larry S. Bacon........ 50 Senior Vice President - Human Resources of Holding and the Company W. Thomas McGhee 60 Secretary and General Counsel of Holding and the Company Glenn J. Holler....... 49 Vice President - Finance of the Company Thomas B. Falcofsky 52 Vice President - Purchasing and Logistics of the Company
James N. Mills is Chairman of the Board and Chief Executive Officer of Holding and the Company and has held such positions since April 1995. Mr. Mills serves as Chairman of the Board, President and Chief Executive Officer of Mills & Partners, Inc., a St. Louis-based investment and management services firm. Mr. Mills is also Chairman of the Board and Chief Executive Officer of Berg Electronics Corp., Chairman of the Board of Berg Electronics Group, Inc., Chairman of the Board and Chief Executive Officer of Crain Holdings Corp., Crain Industries, Inc., Viasystems Group, Inc. and Copy USA Holdings Corp. Mr. Mills was Chairman of the Board and Chief Executive Officer of Jackson Holding Company and Jackson Products, Inc. from February 1993 through August 1995. Mr. Mills was Chairman of the Board and Chief Executive Officer of Thermadyne Holdings Corporation from February 1989 through February 1995 and Chairman of the Board and Chief Executive Officer of Thermadyne Industries, Inc. from 1987 to 1995. Mr. Mills was Executive Vice President of McGraw-Edison Company, a company engaged in the electronic, industrial, commercial and automotive industries, from 1978 to 1985, and served as Industrial Group President and President of the Bussmann Division of the McGraw-Edison Company from 1980 to 1984. Mr. Mills also serves as a director of Hat Brands Holding Corporation. 78 80 Thomas P. Danis is a director of Holding and the Company and has held such positions since June 1995. Mr. Danis has been Chairman of the Board of AON Risk services of Missouri, Inc., a company engaged in the insurance brokerage business, since 1993. In 1979, Mr. Danis co-founded an insurance brokerage firm, a joint venture with Corroon & Black, which was ultimately purchased by Corroon & Black in 1984. Mr. Danis also serves as a director of Commerce Bank, N.A. Jack D. Furst is a director of Holding and the Company and has held such positions since April 1995. Mr. Furst is a Managing Director and Principal of Hicks, Muse and has held such position since 1989. Mr. Furst has approximately 15 years of experience in merchant and investment banking. At Hicks, Muse, Mr. Furst is involved in all aspects of its business and has been actively involved in originating, structuring and monitoring of investments. Mr. Furst is primarily responsible for managing the relationship with Mills & Partners, a St. Louis-based management alliance of Hicks, Muse. Prior to joining Hicks, Muse, Mr. Furst was a vice president and subsequently a partner of Hicks & Haas Incorporated from 1987 to May 1989. From 1984 to 1986, Mr. Furst was a merger and acquisition/corporate finance specialist for The First Boston Corporation in New York. Before joining First Boston, Mr. Furst was a financial consultant at Price Waterhouse. Mr. Furst serves on the board of directors of Neodata Corporation, Desa International, Crain Industries and Cooperative Computing, Inc. John A. Gavin is a director of Holding and the Company and has held such positions since June 1995. Mr. Gavin is the founder and Chairman of the Board of Gamma Services, an international venture capital and consulting firm established in 1968. From 1987 to 1990, Mr. Gavin was President of Univisa Satellite Communications, a part of a Spanish-speaking broadcast network. Prior thereto, Mr. Gavin served as a Vice President of Atlantic Richfield Company from 1986. From 1981 to 1986, Mr. Gavin served as the United States Ambassador to Mexico. Mr. Gavin also serves as a director of Atlantic Richfield Company, Dresser Industries, Inc., Pinkerton's Inc., and the Hotchkis and Wiley Funds. Charles W. Tate is a director of Holding and the Company and has held such positions since April 1995. Mr. Tate is a Managing Director and Principal of Hicks, Muse. Before joining Hicks, Muse in 1991, Mr. Tate had over 19 years of experience in investment and merchant banking with Morgan Stanley & Co. Incorporated, including ten years in the mergers and acquisitions department and the last two and one-half years as a managing director in Morgan Stanley's merchant banking group. Mr. Tate serves as a director of The Morningstar Group Inc., DESA Holdings Corporation, Hat Brands Holding Corporation, Berg Electronics Corp., International Home Foods, Inc., Seguros Comercial America F.A. de C.V. and Vidrio Formas S.A. de C.V. He also served as a director of Berg Electronics Group, Inc. until August 1996 and Jackson Holding Company until August 1995. Richard W. Vieser is a director of Holding and the Company and has held such positions since September 1995. Mr. Vieser is the retired Chairman of the Board, Chief Executive Officer and President of Lear Siegler, Inc. (a diversified manufacturing company), the former Chairman of the Board and Chief Executive Officer of FL Industries, Inc. and FL Aerospace (formerly Midland-Ross Corporation), also diversified manufacturing companies, and the former President and Chief Operating Officer of McGraw-Edison Co. He is also a director of Berg Electronics Corp., Ceridian Corporation (formerly Control Data Corporation), Dresser Industries, Inc., INDRESCO Inc., Sybron International Corporation and Varian Associates, Inc. He also served as a director of Berg Electronics Group, Inc. until August, 1996. Rodney D. Kent is a director of Holding and the Company and has held such positions since April 1995. Mr. Kent also serves as President and Chief Executive Officer of Omega and has held such position since 1983. Mr. Kent served as Assistant to the President of Omega from 1974 to 1983. Prior to joining Omega, Mr. Kent was employed with Flexo Wire from 1973 to 1974 and Camden Wire Company from 1970 to 1973. Mr. Kent also serves as a director of Oneida Savings Bank. 79 81 Joseph M. Fiamingo is a director of Holding and the Company and has held such positions since October 1996. Mr. Fiamingo also serves as President and Chief Operating Officer of Holding and the Company and has held such positions since September 1996. Previously, Mr. Fiamingo held the position of Vice President of Operations and Technology of the Company from June 1996 and President and Chief Operating Officer of Wirekraft from October 1995. Prior thereto, Mr. Fiamingo was employed by General Cable Corporation from 1972 to 1995 where he held various senior management level positions including President and Vice President and General Manager of several divisions of General Cable and most recently, Executive Vice President of Operations. Robert Kozlowski is President of Wire Technologies, Inc. and has held such position since March 1996. Prior thereto, Mr. Kozlowski held various senior management level positions with the Group Dekko companies from 1990. Previously, Mr. Kozlowski spent ten years in the wire industry serving in various positions with Wyre Wynd and Laribee Wire. James J. Mills is president of Wire Harness Industries, Inc., a wholly owned subsidiary of the Company and has held such position since December 1996. Prior thereto, Mr. Mills served in various capacities at Clarke Holding Corporation, including Vice President of Sales and Marketing. David M. Sindelar is Senior Vice President and Chief Financial Officer of Holding and Senior Vice President of the Company and has held such positions since April 1995. Mr. Sindelar is also Senior Vice President and Chief Financial Officer of Mills & Partners, Inc., Berg Electronics Corp., Crain Industries, Inc. and Crain Holdings Corp., Viasystems Group, Inc., Copy USA Holding Corp. and Senior Vice President of Berg Electronics Group, Inc. Mr. Sindelar was Senior Vice President and Chief Financial Officer of Jackson Holding Company from February 1993 through August 1995. From 1987 to February 1995, Mr. Sindelar held various other positions at Thermadyne Holdings Corporation including Senior Vice President and Chief Financial Officer, Vice President -- Corporate Controller and Controller. Larry S. Bacon is Senior Vice President - Human Resources of Holding and the Company and has held such positions since April 1995. Mr. Bacon is also Senior Vice President -- Human Resources of Mills & Partners, Inc., Berg Electronics Corp., Berg Electronics Group, Inc., Crain Industries, Inc., Crain Holdings Corp., Viasystems Group, Inc., and Copy USA Holding Corp. Mr. Bacon was Senior Vice President -- Human Resources of Jackson Holding Company from February 1993 through August 1995. Previously, Mr. Bacon was Senior Vice President -- Human Resources of Thermadyne Holdings Corporation from September 1987 until February 1995. W. Thomas McGhee is Secretary and General Counsel of Holding and the Company and has held such positions since April 1995. Mr. McGhee is also a partner in the law firm of Herzog, Crebs and McGhee and has held that position since 1987. In addition, Mr. McGhee serves as Secretary and General Counsel of Berg Electronics Corp., Berg Electronics Group, Inc., Crain Industries, Inc., Crain Holdings Corp., Viasystems Group, Inc. and Copy USA Holding Corp. Glenn J. Holler is Vice President-Finance of the Company and has held such position since August 1996. Prior to joining the Company, Mr. Holler was employed by Vigoro Industries, Inc. as Vice President, Finance from 1994 to 1996 and Moog Automotive, Inc. as Senior Vice President, Finance from 1983 to 1994. Thomas B. Falcofsky is Vice President-Purchasing and Logistics of the Company and has held such position since November 1995. Previously, Mr. Falcofsky was employed by General Cable Corporation as Corporate Vice President, Purchasing and Transportation from 1992 to November 1995. Prior thereto, Mr. Falcofsky was employed by Carol Cable Corporation as Vice President-Purchasing from 1989 to 1992. 80 82 ITEM 11. EXECUTIVE COMPENSATION The following table sets forth the cash and noncash compensation earned by the Chief Executive Officer, the four other most highly compensated executive officers of Holding and the Company and a former executive officer of the Company. Such compensation was paid by or on behalf of Wirekraft and Omega during the year ended December 31, 1994 and the first five months of 1995 and was paid by or on behalf of the Company during the remaining seven months of 1995, and during the year ended December 31, 1996. As of the date hereof, the Company has not granted any stock appreciation rights. SUMMARY COMPENSATION TABLE
Long-Term Compensation ------------ Awards ------------ Annual Compensation(1) Securities --------------------------- Underlying All Other Year Salary($) Bonus($) Options(#) Compensation($) ---- --------- -------- ------------ --------------- James N. Mills ..................... 1996 485,281 548,000 412,188(2) -- Chairman of the Board and 1995 250,000 97,500 988,725(2) -- Chief Executive Officer of 1994 186,425 150,000 -- -- Holding Joseph M. Fiamingo ................. 1996 202,166 123,337 600,000(3) -- President and Chief Operating 1995 32,685 8,500 400,000(3) -- Officer of Holding and the 1994 -- -- -- -- Company Rodney D. Kent ..................... 1996 323,911 193,714 -- 142,289(4) President and Chief Executive 1995 285,479 70,000 400,000(3) 129,766(4) Officer of Omega 1994 240,419 2,340 -- 124,072(4) Robert C. Kozlowski ................ 1996 194,609 98,066 400,000(3) -- President - Wire Technologies 1995 -- -- -- -- 1994 -- -- -- -- David M. Sindelar .................. 1996 201,422 121,000 309,143(2) -- Senior Vice President and Chief 1995 108,833 48,000 741,547(2) -- Financial Officer of Holding, 1994 26,234 25,000 -- -- Senior Vice President of the Company William J. Kriss (5) ............... 1996 368,956 -- -- -- President and Chief Operating 1995 312,330 100,000 1,000,000(3) -- Officer of Holding and the 1994 -- -- -- -- Company
- ---------------- (1) Holding and the Company provide to certain executive officers, a car allowance, reimbursement for club memberships, insurance policies and certain other benefits. The aggregate incremental cost of these benefits to Holding and the Company for each officer do not exceed the 81 83 lesser of $50,000 or 10% of the total annual salary and bonus reported for each officer. (2) Reflects Performance Options (as hereinafter defined) granted by Holding. For a description of the material terms of such options, See " - Benefit Plans - Performance Options." (3) Reflects options to purchase Holding Common Stock granted under the Option Plan (as hereinafter defined). The options vest in five equal annual installments commencing on the first anniversary date of the grant, subject to acceleration under certain circumstances, including a Change of Control (as defined in the Option Plan). (4) Represents (i) $45,792, $43,347 and $43,347 in premiums paid on life insurance policies for the benefit of Mr. Kent in 1996, 1995 and 1994 respectively and (ii) $51,797, $41,536 and $42,300 in annual deferred compensation and $44,700, $44,883 and $38,425 in annual interest accruals thereon earned by Mr. Kent in 1996 and 1995 respectively, pursuant to his employment agreement. (5) As of September 25, 1996, Mr. Kriss resigned as President and Chief Operating Officer of Holding and the Company. OPTION GRANTS IN LAST FISCAL YEAR The following table summarizes option grants made during fiscal 1996 to the executive officers named above.
Potential Realizable % of Total Value at Assumed Options Annual Rates of Stock Number of Granted to Price Appreciation Securities Employees For Option Term (1) Underlying in Fiscal Exercise Expiration --------------------- Name Options(#) Year Price($/Share) Date 5%($) 10%($) ---- ---------- ---------- -------------- ---------- ------- -------- James N. Mills 412,188(2) 11.8% $1.00(3) 03/05/06 0(4) 0(4) David M. Sindelar 309,143(2) 8.8% $1.00(3) 03/05/06 0(4) 0(4) Joseph M. Fiamingo 600,000(5) 17.1% $1.00 11/08/06 378,000 954,000 Robert C. Kozlowski 400,000(5) 11.4% $1.00 03/05/06 252,000 636,000
- ---------------- (1) The potential realizable value portion of the foregoing table illustrates the value that might be realized upon exercise of the option immediately prior to the expiration of its term, assuming the specified compound rates of appreciation of Holding Common Stock over the term of the options. These amounts represent certain assumed rates of appreciation only. Actual gains on the exercise of options are dependent on the future performance of Holding Common Stock. There can be no assurance that the potential values reflected in this table will be achieved. All amounts have been rounded to the nearest whole dollar amount. (2) Reflects Performance Options (as hereinafter defined) granted by Holding. For a description of the material terms of such options, see "- Benefit Plans - Performance Options." (3) The exercise price for the Performance Options is initially equal to $1.00 per share and, effective each anniversary date of the grant date, the per share exercise price for the Performance Options is equal to the per share exercise price for the prior year multiplied by 1.09. (4) The Performance Options are exercisable only in the event that Hicks, Muse, Tate & Furst Equity Fund II, L.P. ("HM Fund II") realizes a 35% overall rate of return, compounded annually, on its equity funds invested in Holding. Accordingly, there is no potential realizable value to the Performance Options at compound appreciation rates of 5% and 10%. (5) Reflects options to purchase Holding Common Stock granted under the Option Plan (as hereinafter defined). The options vest in five equal annual installments commencing on the first anniversary date of the grant, subject to acceleration under certain circumstances, including a Change of Control (as defined in the Option Plan). AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table summarizes the number of options exercised during fiscal 1996 and the value of unexercised options as of December 31, 1996. The per share fair market value of the Holding Common Stock used to make the calculations in the following table is $1.00, which is the per share price at which Holding Common Stock was sold in connection with the Acquisitions and the DWT Acquisition. Accordingly, the table indicates that the options had no value at the end of 1996 because the exercise price was equal to such fair market value. 82 84
Number of Value of Securities Unexercised Underlying In-the-Money Unexercised Options Options At Fiscal Year End At Fiscal Year End Shares Acquired ------------------------------------------------------------ On Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable Name (#) $ (#) (#) ($) ($) - ------------------------------------------------------------------------------------------------------------------- James N. Mills 0 0 0 1,400,913 0 0 Joseph M. Fiamingo 0 0 80,000 920,000 0 0 Rodney D. Kent 0 0 80,000 320,000 0 0 Robert C. Kozlowski 0 0 0 400,000 0 0 David M. Sindelar 0 0 0 1,050,690 0 0
EMPLOYMENT AGREEMENTS James N. Mills Employment Agreement. Mr. James N. Mills entered into an employment agreement with Holding and the Company on June 12, 1995. Pursuant to such employment agreement, Mr. Mills will serve as the Chairman of the Board and Chief Executive Officer of Holding and the Company through June 11, 2000. Mr. Mills is required to devote such business time and attention to the transaction of the Company's business as is reasonably necessary to discharge his duties under the employment agreement. Subject to the foregoing limitation on his activities, Mr. Mills is free to participate in other business endeavors. The compensation provided to Mr. Mills under his employment agreement includes an annual base salary of not less than $300,000, subject to adjustment at the sole discretion of the Board of Directors of Holding, and such benefits as are customarily accorded the executives of Holding and the Company for as long as the employment agreement is in force. In addition, Mr. Mills is entitled to an annual bonus in an amount to be determined at the sole discretion of the Board of Directors of Holding. Mr. Mills' employment agreement also provides that if Mr. Mills' employment is terminated without cause, Mr. Mills will continue to receive his then current salary for the longer of the remainder of the employment period or 18 months following such termination. In addition, Mr. Mills' employment agreement provides that if Mr. Mills is terminated due to death or disability, Mr. Mills' estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan, his then current salary for a period of 18 months from the date of termination. Joseph M. Fiamingo Employment Agreement. Mr. Joseph M. Fiamingo entered into an employment agreement with Holding and the Company on September 25, 1996. Pursuant to such employment agreement, Mr. Fiamingo will serve as President and Chief Operating Officer of Holding and the Company through September 24, 1999. The compensation provided to Mr. Fiamingo under his employment agreement includes an annual base salary of not less than $260,000, subject to adjustment at the sole direction of the Board of Directors of Holding, and such benefits as are customarily accorded the executives of Holding and the Company for as long as the employment agreement is in force. In addition, Mr. Fiamingo is entitled to an annual bonus in an amount to be determined by the Chairman of the Board of Holding of up to sixty-five percent of his base compensation. 83 85 Mr. Fiamingo's employment agreement also provides that if Mr. Fiamingo's employment is terminated without cause, Mr. Fiamingo will continue to receive his then current salary for the remainder of such employment agreement. In addition, Mr. Fiamingo's employment agreement provides that if Mr. Fiamingo is terminated due to death or disability, Mr. Fiamingo's estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan, his then current salary for a period of 12 months from the date of termination. Rodney D. Kent Employment Agreement. Mr. Kent entered into an employment agreement with Omega on March 14, 1995. Pursuant to such employment agreement, Mr. Kent will serve as President and Chief Executive Officer of Omega through March 28, 1998. Mr. Kent is required to devote substantially all of his business time and attention to the performance of his duties under the employment agreement. The compensation provided to Mr. Kent under his employment agreement includes an annual base salary of not less than $286,000 for the period ended March 31, 1996, not less than $302,000 for the period ended March 31, 1997, and not less than $325,000 thereafter, subject to increase at the sole discretion of the Board of Directors of Omega, and certain other benefits for as long as the employment agreement is in force. In addition, during each year of employment, an additional 15% of the annual base salary is credited to a deferred compensation account for the benefit of Mr. Kent, which deferred compensation account is annually credited with an interest accrual of 8% on the balance of the account for the prior year. Further, Mr. Kent is entitled to an annual bonus in an amount to be determined at the sole discretion of the Chairman of the Board of Holding of up to sixty-five percent of his annual base salary. Mr. Kent's employment agreement also provides that if Mr. Kent's employment is terminated by Omega without cause or due to disability or death, Mr. Kent or his estate, heirs or beneficiaries, as applicable, will receive, in addition to any other benefits provided him or them under any benefit plan, Mr. Kent's then current salary for a period of 24 months from Mr. Kent's termination without cause or his disability or death. In the event that Mr. Kent terminates his employment and receives a bona fide offer of employment from a competitor of the Company, Mr. Kent will receive, in addition to any other benefits provided under any benefit plan, Mr. Kent's then current salary for a period of 24 months from such termination, but only in the event that Omega elects to enforce certain non-competition provisions of the employment agreement. Robert C. Kozlowski Employment Agreement. Mr. Robert C. Kozlowski entered into an employment agreement with Holding and the Company on March 5, 1996. Pursuant to such employment agreement, Mr. Kozlowski will serve as President of Wire Technologies through March 4, 1999. The compensation provided to Mr. Kozlowski under his employment agreement includes an annual base salary of not less than $190,000, subject to adjustment at the discretion of the CEO of Holding and the Company, and such benefits as are customarily accorded the executives of Holding and the Company for as long as the employment agreement is in force. In addition, Mr. Kozlowski is entitled to an annual bonus in an amount to be determined by the CEO. Mr. Kozloski's employment agreement also provides that if Mr. Kozlowski's employment is terminated without cause, Mr. Kozlowski will continue to receive his then current salary for the remainder of such employment agreement or 12 months, which ever is shorter. In addition, Mr. Kozlowski's employment agreement provides that if Mr. Kozlowski is terminated due to death or disability, Mr. Kozlowski's estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan his then current salary for a period of 12 months from the date of termination. David M. Sindelar Employment Agreement. Mr. David M. Sindelar entered into an employment agreement with Holding and the Company on June 12, 1995. Pursuant to such employment agreement, Mr. Sindelar will serve as the 84 86 Senior Vice President and Chief Financial Officer of Holding and Senior Vice President of the Company through June 11, 2000. Mr. Sindelar is required to devote such business time and attention to the transaction of the Company's business as is reasonably necessary to discharge his duties under the employment agreement. Subject to the foregoing limitation on his activities, Mr. Sindelar is free to participate in other business endeavors. The compensation provided to Mr. Sindelar under his employment agreement includes an annual base salary of not less than $150,000, subject to adjustment at the sole discretion of the Board of Directors of Holding, and such benefits as are customarily accorded the executives of Holding and Senior Vice President of the Company for as long as the employment agreement is in force. In addition, Mr. Sindelar is entitled to an annual bonus in an amount to be determined by the Chairman of the Board of Holding of up to sixty-five percent of his base compensation. Mr. Sindelar's employment agreement also provides that if Mr. Sindelar's employment is terminated without cause, Mr. Sindelar will continue to receive his then current salary for the longer of the remainder of the employment period or 18 months following such termination. In addition, Mr. Sindelar's employment agreement provides that if Mr. Sindelar is terminated due to death or disability, Mr. Sindelar's estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan, his then current salary for a period of 18 months from the date of termination. William J. Kriss Employment Agreement. Mr. William J. Kriss entered into an employment agreement with Wirekraft on February 6, 1995. Mr. Kriss resigned as of September 25, 1996, but will continue to receive an annual base salary of $300,00 pursuant to the terms of such agreement, until February 6, 1998. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Compensation decisions are made by the Board of Directors. James N. Mills served as both an executive officer and director during 1996 and is expected to serve in such capacity in 1997. COMPENSATION OF DIRECTORS The directors of Holding and the Company did not receive compensation from either Holding or the Company for services rendered in that capacity during the period prior to the effective time of the Acquisitions. Directors who are officers, employees or otherwise an affiliate of Holding or the Company receive no compensation for their services as directors. Each director of Holding and the Company who is not also an officer, employee or an affiliate of Holding or the Company (an "Outside Director") will receive an annual retainer of $12,000 and a fee of $1,000 for each meeting of the board of directors at which the director is present. Directors of Holding and the Company are entitled to reimbursement of their reasonable out-of-pocket expenses in connection with their travel to and attendance at meetings of the board of directors or committees thereof. BENEFIT PLANS Stock Option Plan Holding's qualified and non-qualified stock option plan (the "Option Plan") provides for the granting of up to 4,795,322 shares of common stock to officers and key employees of Holding and the Company. Under the Option Plan, Holding has granted options to purchase 4,015,249 shares of Holding common stock, 3,950,000 at $1.00 per share and 65,249 at $1.625 per share, the fair market value of Holding Common Stock at the date of grant as determined by the Board of Directors of Holding. Such options vest ratably over a five year period commencing on the first anniversary date after 85 87 the date of grant, subject to acceleration in the discretion of the committee appointed to administer the Option Plan in the event of a Change of Control (as defined in the Option Plan). Generally, an option may be exercised only if the holder is an officer or employee of Holding or the Company at the time of exercise. Options granted under the Option Plan are not transferable, except by will and the laws of descent and distribution. Except as expressly provided otherwise in any optionee's agreement relating to the grant of options under the Option Plan, in the event an optionee's employment with Holding, the Company or a related entity terminates at any time, Holding or its designees shall have the right to repurchase from the optionee (or optionee's representatives) (i) the number of shares of Holding Common Stock acquired upon exercise of an option and (ii) the optionee's right to acquire that number of shares of Holding Common Stock which an optionee can acquire upon exercise immediately prior to such repurchase. The purchase price to be paid is calculated on the basis of the fair market value (as defined in the Option Plan) of Holding Common Stock multiplied by the number of shares of Holding Common Stock to be acquired (less the aggregate exercise price in the event such repurchase option is exercised by Holding with respect to the optionee's right to acquire Holding Common Stock). Performance Options On March 31, 1995, Omega granted options (the "Performance Options") to purchase 1,958,762 shares of common stock of Omega ("Omega Common Stock"). Mr. Mills was granted Performance Options to purchase 652,921 shares of Omega Common Stock, and Performance Options to purchase the remaining 1,305,841 shares of Omega Common Stock were granted to certain officers of Omega who are also affiliated with Mills & Partners. In connection with the Acquisitions and pursuant to the terms of the option agreements (the "Performance Option Agreements") related to the Performance Options, the Performance Options became options to purchase an identical number of shares of common stock of Holding ("Holding Common Stock"). On June 12, 1995, the Company granted Performance Options to purchase 1,007,416 shares of Holding Common Stock. Mr. Mills was granted Performance Options to purchase 335,804 shares of Holding Common Stock, and Performance Options to purchase the remaining 671,612 shares of Holding Common Stock were granted to certain officers of the Company who are also affiliated with Mills & Partners. On March 5, 1996, the Company granted Performance Options to purchase 1,236,566 shares of Holding Common Stock, Mr. Mills was granted Performance Options to purchase 412,188 shares of Holding Common Stock, and Performance Options to purchase the remaining 824,378 shares of Holding Common Stock were granted to certain officers of the Company who are also affiliated with Mills & Partners. The Performance Options are exercisable only in the event that HM Fund II has realized an overall rate of return of at least 35% per annum, compounded annually, on all equity funds invested by it in Holding. Subject to the foregoing, the Performance Options are exercisable (i) immediately prior to a Liquidity Event (as hereinafter defined), (ii) concurrently with the consummation of a Qualified IPO (as hereinafter defined), or (iii) on December 31, 2004 (with respect to the Performance Options granted on March 31, 1995 and June 12, 1995) or on December 31, 2005 (with respect to the Performance Options granted on March 5, 1996). Notwithstanding the preceding sentence, the Performance Option Agreements provide that the Performance Options will not be exercisable as a result of the consummation of the Acquisitions. A "Liquidity Event" generally means (i) one or more sales or other dispositions of Holding Common Stock if, thereafter, the amount of Holding Common Stock owned by HM Fund II is reduced by 50%, (ii) any merger, consolidation or other business combination of Holding pursuant to which any person or group acquires a majority of the common stock of the resulting entity, or (iii) any sale of all or substantially all of the assets of Holding. A "Qualified IPO" means a firm commitment underwritten public offering of Holding Common Stock for gross proceeds of at least $25.0 million. 86 88 The exercise price for the Performance Options is initially equal to $1.00 per share and, effective each anniversary of the grant date, the per share exercise price for the Performance Options is equal to the per share exercise price for the prior year multiplied by 1.09. The exercise price of the Performance Options and the number of shares of Holding Common Stock for which the Performance Options are exercisable is subject to adjustment in the event of certain fundamental changes in the capital structure of Holding. The Performance Options terminate on the tenth anniversary of the date of grant. ITEM 12. SECURITIES OWNERSHIP SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT All of the issued and outstanding shares of common stock of the Company are held by Holding. The following table sets forth as of March 12, 1997 certain information regarding the beneficial ownership of the voting securities of Holding by each person who beneficially owns more than 5% of any class of Holding voting securities and by the directors and certain executive officers of Holding, individually, and by the directors and executive officers of Holding as a group. The Holding Class A Common Stock votes together with the Holding Common Stock as a single class and is entitled to one vote for each share.
SHARES BENEFICIALLY OWNED (1) ------------------------------------------------------------------------ HOLDING CLASS A HOLDING COMMON STOCK COMMON STOCK ---------------------------- --------------------------- NUMBER OF PERCENT OF NUMBER OF PERCENT OF PERCENT OF SHARES CLASS SHARES CLASS TOTAL --------- ---------- --------- ---------- ---------- 5% STOCKHOLDERS: HM Parties (2) ..................... 117,050,000 100.0% 13,000,000 100.0% 100.0% c/o Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, Texas 75201 OFFICERS AND DIRECTORS: James N. Mills (3) ................. 1,702,034 1.5% 13,000,000 100.0% 11.3% Thomas P. Danis .................... 100,000 * -- -- * Jack D. Furst (2) .................. 117,050,000 100.0% 13,000,000 100.0% 90.0% John A. Gavin ...................... 135,957 * -- -- * Charles W. Tate (2) ................ 117,050,000 100.0% 13,000,000 100.0% 90.0% Rodney D. Kent (4) ................. 5,780,000 4.9% -- -- 4.4% Richard W. Vieser .................. 135,957 * -- -- * Joseph Fiamingo(5) ................. 80,000 * -- -- * David M. Sindelar(6) ............... -- -- 3,648,482 28.1% 2.8% Larry S. Bacon (7) ................. -- -- 875,507 6.7% * W. Thomas McGhee (8) ............... -- -- 875,505 6.7% * All executive officers and directors as a group (10 persons) (9) ................. 117,050,000 100.0% 13,000,000 100.0% 100.0%
- ------------ * Less than one percent. 87 89 (1) Holding Class A Common Stock is convertible into Holding Common Stock (i) at the option of any holder thereof at any time, (ii) at the option of Holding upon the occurrence of a Triggering Event (as defined below), and (iii) mandatorily at March 31, 2005. A "Triggering Event" means any sale of substantially all of the assets of Holding or any merger, consolidation or other business combination of Holding in which Hicks Muse and its affiliates cease to own at least 50% of the resulting entity. Each share of Holding Class A Common Stock is convertible into a fraction of a share of Holding Common Stock equal to the quotient of (i) the fair market value of a share of Holding Common Stock at the time of conversion less the sum of $.99 plus imputed interest thereon at a rate of 9% per annum, compounded annually, at the time of conversion, divided by (ii) the fair market value of a share of Holding Common Stock at the time of conversion. Because the fraction of a share of Holding Common Stock into which Holding Class A Common Stock is convertible is determinable only at the time of a conversion, shares of Holding Common Stock are not included in the shares of Holding Common Stock beneficially owned in the foregoing table. (2) Includes (i) shares owned of record by HM Fund II, a limited partnership of which the sole general partner is HM2/GP Partners, L.P., a limited partnership of which the sole general partner is Hicks, Muse GP Partners, L.P., a limited partnership of which the sole general partner is Hicks, Muse, Tate & Furst Fund II Incorporated, a corporation affiliated with Hicks Muse; (ii) shares owned of record by HM2/Wire/Hunt Partners, L.P., HM2/Wire/Sunwestern Partners, L.P. and HM2/Wire/Hubbard Partners, L.P., limited partnerships of which the sole general partner is HM2/GP Partners, L.P.; (iii) shares owned of record by certain individuals that Hicks, Muse has the power to direct the voting of with respect to the election of directors; and (iv) shares owned of record by certain individuals subject to an irrevocable proxy in favor of Hicks, Muse. Thomas O. Hicks is a controlling stockholder of Hicks, Muse and serves as Chairman of the Board, President, Chief Executive Officer, Chief Operating Officer and Secretary of Hicks, Muse. Accordingly, Mr. Hicks may be deemed to be the beneficial owner of Holding Common Stock held by HM Fund II. John R. Muse, Charles W. Tate, Jack D. Furst, Lawrence D. Stuart, Michael J. Levitt and Alan B. Menkes are officers, directors and minority stockholders of Hicks, Muse and as such may be deemed to share with Mr. Hicks the power to vote or dispose of Holding Common Stock held by HM Fund II. Each of Messrs. Hicks, Muse, Tate, Furst, Stuart, Levitt and Menkes disclaims the existence of a group and disclaims beneficial ownership of Holding Common Stock not respectively owned of record by him. (3) Includes shares of Holding Class A Common Stock held by James N. Mills and shares of Holding Class A Common Stock that Mr. Mills has the power to vote by proxy. Does not include 1,400,913 shares of Holding Common stock issuable to Mr. Mills upon the exercise of Performance Options that are not currently exercisable. See "Executive Compensation - Benefit Plans - Performance Options." (4) Includes 80,000 shares of Holding Common Stock issuable to Mr. Kent upon exercise of options granted under the Option Plan that are currently exercisable. Does not include 320,000 shares of Holding Common Stock issuable to Mr. Kent upon exercise of options granted under the Option Plan that are not currently exercisable. See "Executive Compensation - Benefit Plans - Option Plan." (5) Includes 80,000 shares of Holding Common Stock issuable to Mr. Fiamingo upon exercise of options granted under the Option Plan that are currently exercisable. Does not include 920,000 shares of holding Common Stock issuable to Mr. Fiamingo upon exercise of options granted under the option plan that are not currently exercisable. See "Executive Compensation - Benefit Plans - Option Plan." (6) Does not include 1,050,690 shares of Holding Common Stock issuable to Mr. Sindelar upon exercise of Performance Options that are not currently exercisable. See "Executive Compensation - Benefit Plans - Performance Options." (7) Does not include 700,457 shares of Holding Common Stock issuable to Mr. Bacon upon exercise of Performance Options that are not currently exercisable. See "Executive Compensation - Benefit Plans - Performance Options." (8) Does not include 700,456 shares of Holding Common Stock issuable to Mr. McGhee upon exercise of Performance Options that are not currently exercisable. See "Executive Compensation - Benefit Plans - Performance Options." (9) Includes shares of Holding Class A Common Stock held by executive officers and directors and shares of Holding Class A Common Stock as to which Hicks, Muse has the power to direct the voting of with respect to the election of directors and which Mr. Mills has the power to vote by proxy. Does not include 5,652,516 shares of Holding Common Stock issuable to executive officers of Holding upon the exercise of Performance Options and options under the Option Plan that are not currently exercisable. See "Executive Compensation - Benefit Plans - Performance Options." 88 90 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS RELATIONSHIPS WITH HICKS MUSE Monitoring and Oversight Agreement On June 12, 1995, Holding and the Company entered into a ten-year agreement (the "Monitoring and Oversight Agreement") with Hicks, Muse & Co. Partners, L.P. ("Hicks Muse Partners"), a limited partnership of which the sole general partner is HM Partners Inc., a corporation affiliated with Hicks, Muse, pursuant to which they paid Hicks, Muse Partners a cash financial advisory fee of approximately $3.7 million upon the closing of the Acquisitions as compensation for its services as financial advisor for the Acquisitions, pursuant to which they pay an annual fee of $500,000 for oversight and monitoring services to Holding and the Company. The annual fee is adjustable at the end of each fiscal year to an amount equal to 0.1% of the consolidated net sales of the Company, but in no event less than $500,000. Hicks Muse Partners also will be entitled to receive a fee equal to 1.5% of the transaction value (as defined) for each add-on transaction (as defined) in which the Company is involved. The term "transaction value" means the total value of any add-on transaction, including, without limitation, the aggregate amount of the funds required to complete the add-on transaction (excluding any fees payable pursuant to the Monitoring and Oversight Agreement and any fees, if any, paid to any other person or entity for financial advisory, investment banking, brokerage, or any other similar services rendered in connection with such add-on transaction) including the amount of any indebtedness, preferred stock or similar items assumed (or remaining outstanding). The term "add-on transaction" means any future proposal for a tender offer, acquisition, sale, merger, exchange offer, recapitalization, restructuring, or other similar transaction directly or indirectly involving Holding, the Company, or any of their respective subsidiaries and any other person or entity. On March 5, 1996, in connection with the DWT Acquisition, Holding and the company paid Hicks Muse Partners a cash financial advisory fee of approximately $2.5 million as compensation for its services as financial advisor. On February 12, 1997, in connection with the Camden Acquisition, Holding and the Company paid Hicks Muse Partners a cash financial advisory fee of approximately $900,000 as compensation for its services as financial advisor. Messrs. Tate and Furst, directors of Holding and the Company, are each principals of Hicks Muse Partners. In addition, Holding and the Company have agreed to indemnify Hicks Muse Partners, its affiliates and shareholders, and their respective directors, officers, agents, employees and affiliates from and against all claims, actions, proceedings, demands, liabilities, damages, judgments, assessments, losses and costs, including fees and expenses, arising out of or in connection with the services rendered by Hicks Muse Partners in connection with the Monitoring and Oversight Agreement. The Monitoring and Oversight Agreement makes available the resources of Hicks Muse Partners concerning a variety of financial and operational matters. The services that have been and will continue to be provided by Hicks Muse Partners could not otherwise be obtained by Holding and the Company without the addition of personnel or the engagement of outside professional advisors. In management's opinion, the fees provided for under this agreement reasonably reflect the benefits received and to be received by Holding and the Company. Stockholders Agreement Each investor in any class of common stock of Holding has entered into a stockholders agreement (the "Stockholders Agreement"). The Stockholders Agreement, among other things, grants preemptive rights and certain registration rights to the parties thereto and contains provisions requiring the parties thereto to sell their shares of common stock in connection with certain sales of Holding's common stock by Hicks, Muse ("drag-along right") and granting the parties thereto the right to include a portion of their shares of common stock in certain sales in which Hicks, Muse does not 89 91 exercise its drag-along rights ("tag-along rights"). In addition, the Stockholders agreement contains an irrevocable proxy pursuant to which all parties to the Stockholders Agreement grant to Hicks, Muse the power to vote all shares of Holding Common Stock held by such parties. The Stockholders Agreement terminates on its tenth anniversary date, although the preemptive rights, drag-along rights and tag-along rights contained therein terminate earlier upon the consummation of a firm commitment underwritten public offering of Holding Common Stock. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K. See Index to Financial Statements and Financial Schedules on page 17 of this report. EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 2.1 Agreement and Plan of Merger dated as of June 2, 1995, among Omega Wire Corp., Wirekraft Holdings Corp., International Wire Holding Company, International Wire Group, Inc. and Wirekraft Acquisition Company. (1) 2.2 Agreement and Plan of Merger, dated as of March 5, 1996, among Hoosier Wire, Inc., International Wire Group, Inc., and Wire Technologies, Inc. (2) 2.3 Asset Purchase Agreement, dated as of March 5, 1996, among Dekko Automotive Wire, Inc., International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc. (2) 2.4 Asset Purchase Agreement, dated as of March 5, 1996, among International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc. (2) 2.5 Asset Purchase Agreement, dated as of March 5, 1996, among Silicones, International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc. (2) 3.1 Restated Certificate of Incorporation of International Wire Group, Inc. (4) 3.2 By-Laws of International Wire Group, Inc. (1) 4.1 Indenture, dated as of June 12, 1995, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank & Trust Company, as Trustee.(1) 4.2 Form of Old Note (included in Exhibit 4.1, Exhibit A). 4.3 Form of New Note (included in Exhibit 4.1, Exhibit B). 4.4 Exchange and Registration Rights Agreement, dated as of June 12, 1995, among International Wire Group, Inc., the Subsidiary Guarantors (as therein defined), Chemical Securities Inc. and BT Securities Corporation. (1) 4.5 First Supplemental Indenture, dated as of March 5, 1996, by and among International Wire Group, Inc. , Wire Technologies, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank & Trust Company, as Trustee. (2) 4.6 Certificate of Designation of Series A Senior Cumulative Exchangeable Redemable Preferred Stock of International Wire Group, Inc.(2) 4.7 Second Supplemental Indenture, dated as of December 20, 1996, by International Wire Group, Inc. the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.* 10.1 Parts Sourcing Contract, dated as of December 2, 1994, among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit).(1)
90 92 10.2 [Item intentionally omitted.] 10.3 Domestic Subsidiaries' Guarantee, dated as of June 12, 1995, made by the subsidiaries of International Wire Group, Inc. set forth on the signature pages thereof for the benefit of Chemical Bank, as administrative agent. (1) 10.4 Holdings Pledge Agreement, dated as of June 12, 1995, made by International Wire Holding Company for the benefit of Chemical Bank, as administrative agent. (1) 10.5 Borrower Pledge Agreement, dated as of June 12, 1995, made by International Wire Group, Inc. for the benefit of Chemical Bank, as administrative agent. (1) 10.6 Domestic Subsidiary Pledge Agreement, dated as of June 12, 1995, made by the domestic subsidiaries listed on the signature pages thereof for the benefit of Chemical Bank, as administrative agent; Acknowledgment and Consent made by the domestic subsidiaries listed on the signature pages thereof in connection with the Domestic Subsidiary Pledge Agreement. (1) 10.7 Pledge Contract, dated as of June 12, 1995, between ECM Holding Company and Chemical Bank, as administrative agent. (1) 10.8 Wirekraft Note Pledge Agreement, dated as of June 12, 1995, made by Wirekraft Industries, Inc. for the benefit of Chemical Bank, as administrative agent.(1) 10.9 Borrower Security Agreement, dated as of June 12, 1995, made by International Wire Group, Inc. for the benefit of Chemical Bank, as administrative agent. (1) 10.10 Domestic Subsidiary Security Agreement, dated as of June 12, 1995, made by International Wire Group, Inc. for the benefit of Chemical Bank, as administrative agent. (1) 10.11 Schedule of Substantially Industrial Domestic Subsidiary Security Agreements. (1) 10.12 Agreement of Sublease, dated as of December 31, 1991, between Oneida County Industrial Development Agency and OWI Corporation. (1) 10.13 Agreement of Sublease, dated as of December 31, 1991, between Onondaga County Industrial Development Agency and OWI Corporation. (1) 10.14 Sublease Agreement, dated as of March 31, 1994, between Productos de Control, S.A. de C.V. and Wirekraft Industries, Inc. (1) 10.15 Lease Contract, dated as of August 1, 1994, between Parques Industriales Mexicanos, S.A. de C.V. and Electro Componentes de Mexico, S.A. de C.V. (1) 10.16+ Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and James N. Mills. (4) 10.17+ Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and David M. Sindelar. (4) 10.18+ Employment Agreement, dated as of March 14, 1995, between Omega Wire, Inc. and Rodney D. Kent. (1) 10.19 [Item intentionally omitted.] 10.20+ Employment Agreement, dated as of February 6, 1995, between Wirekraft Holdings Corp. and William J. Kriss. (1) 10.21+ Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and James N. Mills. (1) 10.22+ Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and David M. Sindelar. (1) 10.23+ Intentionally omitted. 10.24+ Option Agreement dated as of June 12, 1995, between Omega Wire Corp. and David M. Sindelar. (1) 10.25+ Option Agreement dated as of June 12, 1995, between International Wire Group, Inc. and David M. Sindelar. (1) 10.26+ Option Agreement dated as of August 28, 1995, between International Wire Group, Inc. and Larry S. Bacon. (3) 10.27 Stockholders Agreement dated as of June 12, 1995, among International Wire Holding Company and the Stockholders signatories thereto. (1)
91 93 10.28 Monitoring and Oversight Agreement dated as of June 12, 1995, among International Wire Holding Company, International Wire Group, Inc. and Hicks, Muse & Co. Partners, L.P. (1) 10.29+ Option Agreement dated as of August 28, 1995 between International Wire Group, Inc. and W. Thomas McGhee.(3) 10.30+ 1995 Stock Option Plan of International Wire Holding Company.(4) 10.31+ Form of Option Agreement of International Wire Holding Company under 1995 Stock Option Plan. (4) 10.32 Agreement dated as of December 29, 1995 among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit). (4) 10.33 Amended and Restated Credit Agreement, dated as of February 12, 1997, among International Wire Group, Inc. , International Wire Holding Company, the several lenders from time to time parties thereto, Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.* 10.34+ Employment Agreement, dated as of September 25, 1996, among International Wire Holding Company and International Wire Group, Inc. and Joseph M. Fiamingo.* 10.35+ Employment Agreement, dated as of March 5, 1996, among International Wire Holding Company and International Wire Group, Inc. and Robert C. Kozlowski.* 10.36+ Option Agreement, dated as of November 5, 1995, between International Wire Holding Company and Joseph M. Fiamingo.* 10.37+ Option Agreement, dated as of March 5, 1996, between International Wire Holding Company and Robert C. Kozlowski.* 10.38+ Option Agreement, dated as of November 6, 1996, between International Wire Holding Company and Joseph M. Fiamingo.* 21.1 Subsidiaries of International Wire Group, Inc.* 27.0 Financial Data Schedule*
- -------------- (1) Incorporated by reference to the Registration Statement on Form S-1 (33-93970) of International Wire Group, Inc. as declared effective by the Securities and Exchange Commission on September 29, 1995. (2) Incorporated by reference to the Current Report on Form 8-K of International Wire Group, Inc. as filed with the Securities Exchange Commission on March 20, 1996. (3) Incorporated by reference to the Quarterly Report on Form 10-Q of International Wire Group, Inc. for the fiscal quarter ended September 30, 1995. (4) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1995. * Filed herewith. + Indicates compensatory plan or arrangement. (B) REPORT ON FORM 8-K Neither Holding nor the Company filed any report on Form 8-K with the Securities and Exchange Commission during the quarter ended December 31, 1996. 92 94 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. INTERNATIONAL WIRE GROUP, INC. Date: March 27, 1997 By /s/ DAVID M. SINDELAR ---------------------------------------- David M. Sindelar, Senior Vice President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ JAMES N. MILLS Chairman of the Board of Directors - ----------------------------- and Chief Executive Officer (James N. Mills) (Principal Executive Officer of International Wire Group, Inc.) /s/ DAVID M. SINDELAR Senior Vice President - ----------------------------- (Principal Financial and (David M. Sindelar) Accounting Officer of International Wire Group, Inc.) /s/ THOMAS P. DANIS Director - ----------------------------- (Thomas P. Danis) /s/ JACK D. FURST Director - ----------------------------- (Jack D. Furst) /s/ JOHN A. GAVIN Director - ----------------------------- (John A. Gavin) /s/ CHARLES W. TATE Director - ----------------------------- (Charles W. Tate) /s/ RICHARD W. VIESER Director - ----------------------------- (Richard W. Vieser) /s/ RODNEY D. KENT Director - ----------------------------- (Rodney D. Kent) /s/ JOSEPH M. FIAMINGO Director, President and Chief - ----------------------------- Operating Officer of Holding (Joseph M. Fiamingo) and the Company
93 95 SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT The registrant has not sent to its security holders any annual report to security holders covering the registrant's last fiscal year or sent any proxy statement, form of proxy or other proxy soliciting material with respect to any annual or special meeting of security holders to more than ten of the registrant's security holders. 94 96 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 2.1 Agreement and Plan of Merger dated as of June 2, 1995, among Omega Wire Corp., Wirekraft Holdings Corp., International Wire Holding Company, International Wire Group, Inc. and Wirekraft Acquisition Company. (1) 2.2 Agreement and Plan of Merger, dated as of March 5, 1996, among Hoosier Wire, Inc., International Wire Group, Inc., and Wire Technologies, Inc. (2) 2.3 Asset Purchase Agreement, dated as of March 5, 1996, among Dekko Automotive Wire, Inc., International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc. (2) 2.4 Asset Purchase Agreement, dated as of March 5, 1996, among International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc. (2) 2.5 Asset Purchase Agreement, dated as of March 5, 1996, among Silicones, International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc. (2) 3.1 Restated Certificate of Incorporation of International Wire Group, Inc. (4) 3.2 By-Laws of International Wire Group, Inc. (1) 4.1 Indenture, dated as of June 12, 1995, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank & Trust Company, as Trustee.(1) 4.2 Form of Old Note (included in Exhibit 4.1, Exhibit A). 4.3 Form of New Note (included in Exhibit 4.1, Exhibit B). 4.4 Exchange and Registration Rights Agreement, dated as of June 12, 1995, among International Wire Group, Inc., the Subsidiary Guarantors (as therein defined), Chemical Securities Inc. and BT Securities Corporation. (1) 4.5 First Supplemental Indenture, dated as of March 5, 1996, by and among International Wire Group, Inc. , Wire Technologies, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank & Trust Company, as Trustee. (2) 4.6 Certificate of Designation of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock of International Wire Group, Inc.(2) 4.7 Second Supplemental Indenture, dated as of December 20, 1996, by International Wire Group, Inc. the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.* 10.1 Parts Sourcing Contract, dated as of December 2, 1994, among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit).(1)
97 10.2 [Item intentionally omitted.] 10.3 Domestic Subsidiaries' Guarantee, dated as of June 12, 1995, made by the subsidiaries of International Wire Group, Inc. set forth on the signature pages thereof for the benefit of Chemical Bank, as administrative agent. (1) 10.4 Holdings Pledge Agreement, dated as of June 12, 1995, made by International Wire Holding Company for the benefit of Chemical Bank, as administrative agent. (1) 10.5 Borrower Pledge Agreement, dated as of June 12, 1995, made by International Wire Group, Inc. for the benefit of Chemical Bank, as administrative agent. (1) 10.6 Domestic Subsidiary Pledge Agreement, dated as of June 12, 1995, made by the domestic subsidiaries listed on the signature pages thereof for the benefit of Chemical Bank, as administrative agent; Acknowledgment and Consent made by the domestic subsidiaries listed on the signature pages thereof in connection with the Domestic Subsidiary Pledge Agreement. (1) 10.7 Pledge Contract, dated as of June 12, 1995, between ECM Holding Company and Chemical Bank, as administrative agent. (1) 10.8 Wirekraft Note Pledge Agreement, dated as of June 12, 1995, made by Wirekraft Industries, Inc. for the benefit of Chemical Bank, as administrative agent.(1) 10.9 Borrower Security Agreement, dated as of June 12, 1995, made by International Wire Group, Inc. for the benefit of Chemical Bank, as administrative agent. (1) 10.10 Domestic Subsidiary Security Agreement, dated as of June 12, 1995, made by International Wire Group, Inc. for the benefit of Chemical Bank, as administrative agent. (1) 10.11 Schedule of Substantially Industrial Domestic Subsidiary Security Agreements. (1) 10.12 Agreement of Sublease, dated as of December 31, 1991, between Oneida County Industrial Development Agency and OWI Corporation. (1) 10.13 Agreement of Sublease, dated as of December 31, 1991, between Onondaga County Industrial Development Agency and OWI Corporation. (1) 10.14 Sublease Agreement, dated as of March 31, 1994, between Productos de Control, S.A. de C.V. and Wirekraft Industries, Inc. (1) 10.15 Lease Contract, dated as of August 1, 1994, between Parques Industriales Mexicanos, S.A. de C.V. and Electro Componentes de Mexico, S.A. de C.V. (1) 10.16+ Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and James N. Mills. (4) 10.17+ Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and David M. Sindelar. (4) 10.18+ Employment Agreement, dated as of March 14, 1995, between Omega Wire, Inc. and Rodney D. Kent. (1) 10.19 [Item intentionally omitted.] 10.20+ Employment Agreement, dated as of February 6, 1995, between Wirekraft Holdings Corp. and William J. Kriss. (1) 10.21+ Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and James N. Mills. (1) 10.22+ Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and David M. Sindelar. (1) 10.23+ Intentionally omitted. 10.24+ Option Agreement dated as of June 12, 1995, between Omega Wire Corp. and David M. Sindelar. (1) 10.25+ Option Agreement dated as of June 12, 1995, between International Wire Group, Inc. and David M. Sindelar. (1) 10.26+ Option Agreement dated as of August 28, 1995, between International Wire Group, Inc. and Larry S. Bacon. (3) 10.27 Stockholders Agreement dated as of June 12, 1995, among International Wire Holding Company and the Stockholders signatories thereto. (1)
98 10.28 Monitoring and Oversight Agreement dated as of June 12, 1995, among International Wire Holding Company, International Wire Group, Inc. and Hicks, Muse & Co. Partners, L.P. (1) 10.29+ Option Agreement dated as of August 28, 1995 between International Wire Group, Inc. and W. Thomas McGhee.(3) 10.30+ 1995 Stock Option Plan of International Wire Holding Company.(4) 10.31+ Form of Option Agreement of International Wire Holding Company under 1995 Stock Option Plan. (4) 10.32 Agreement dated as of December 29, 1995 among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit). (4) 10.33 Amended and Restated Credit Agreement, dated as of February 12, 1997, among International Wire Group, Inc. , International Wire Holding Company, the several lenders from time to time parties thereto, Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.* 10.34+ Employment Agreement, dated as of September 25, 1996, among International Wire Holding Company and International Wire Group, Inc. and Joseph M. Fiamingo.* 10.35+ Employment Agreement, dated as of March 5, 1996, among International Wire Holding Company and International Wire Group, Inc. and Robert C. Kozlowski.* 10.36+ Option Agreement, dated as of November 5, 1995, between International Wire Holding Company and Joseph M. Fiamingo.* 10.37+ Option Agreement, dated as of March 5, 1996, between International Wire Holding Company and Robert C. Kozlowski.* 10.38+ Option Agreement, dated as of November 6, 1996, between International Wire Holding Company and Joseph M. Fiamingo.* 21.1 Subsidiaries of International Wire Group, Inc.* 27.0 Financial Data Schedule
- -------------- (1) Incorporated by reference to the Registration Statement on Form S-1 (33-93970) of International Wire Group, Inc. as declared effective by the Securities and Exchange Commission on September 29, 1995. (2) Incorporated by reference to the Current Report on Form 8-K of International Wire Group, Inc. as filed with the Securities Exchange Commission on March 20, 1996. (3) Incorporated by reference to the Quarterly Report on Form 10-Q of International Wire Group, Inc. for the fiscal quarter ended September 30, 1995. (4) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1995. * Filed herewith. + Indicates compensatory plan or arrangement. EX-4.7 2 SECOND SUPPLEMENTAL INDENTURE 1 EXHIBIT 4.7 ________________________________________________________________________________ INTERNATIONAL WIRE GROUP, INC. WIRE HARNESS INDUSTRIES, INC. THE SUBSIDIARY GUARANTORS AND IBJ SCHRODER BANK & TRUST COMPANY, AS TRUSTEE __________________________ SECOND SUPPLEMENTAL INDENTURE DATED AS OF DECEMBER 20, 1996 TO INDENTURE DATED AS OF JUNE 12, 1995 AMONG INTERNATIONAL WIRE GROUP, INC., AS ISSUER, THE SUBSIDIARY GUARANTORS AND IBJ SCHRODER BANK & TRUST COMPANY, AS TRUSTEE __________________________ $150,000,000 11 3/4% SENIOR SUBORDINATED NOTES DUE 2005 ________________________________________________________________________________ 2 SECOND SUPPLEMENTAL INDENTURE dated as of December 20, 1996, among INTERNATIONAL WIRE GROUP, INC., a Delaware corporation (the "Company"), WIRE HARNESS INDUSTRIES, INC., a Delaware corporation ("WHI"), and IBJ SCHRODER BANK & TRUST COMPANY, as Trustee (the "Trustee"). WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of June 12, 1995, as supplemented by that certain First Supplemental Indenture, dated as of March 5, 1996 (as supplemented, the "Indenture"), providing for the issuance of $150,000,000 aggregate principal amount of the Company's 11 3/4% Senior Subordinated Notes due 2005 (the "Securities"); WHEREAS, the Company and WHI desire by this Second Supplemental Indenture, pursuant to and as contemplated by Article XI of the Indenture, that WHI become a Subsidiary Guarantor (as defined in the Indenture) under the Indenture; WHEREAS, the execution and delivery of this Second Supplemental Indenture has been authorized by a resolution of the Board of Directors of each of the Company and WHI; and WHEREAS, all conditions and requirements necessary to make this Second Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto and the execution and delivery thereof have been in all respects duly authorized by the parties hereto. NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other and for the equal and ratable benefit of the Holders (as defined in the Indenture) of the Securities, as follows: ARTICLE I ASSUMPTION OF OBLIGATIONS AS SUBSIDIARY GUARANTOR Section 1.1. Assumption. WHI hereby expressly and unconditionally assumes each and every covenant, agreement and undertaking of a Subsidiary Guarantor in the Indenture as of the date of this Second Supplemental Indenture, and also hereby expressly and unconditionally assumes each and every covenant, agreement and undertaking of a Subsidiary Guarantor in each Security outstanding on the date of this Second Supplemental Indenture. 2 3 ARTICLE II MISCELLANEOUS PROVISIONS Section 2.1. Terms Defined. For all purposes of this Second Supplemental Indenture, except as otherwise defined or unless the context otherwise requires, terms used in capitalized form in this Second Supplemental Indenture and defined in the Indenture have the meanings specified in the Indenture. Section 2.2. Indenture. Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all the terms thereof shall remain in full force and effect. Section 2.3. Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. Section 2.4. Successors. All agreements of the Company and WHI in this Second Supplemental Indenture and the Securities shall bind each of their successors. All agreements of the Trustee in this Second Supplemental Indenture and in the Indenture shall bind its successors. Section 2.5. Multiple Counterparts. The parties may sign multiple counterparts of this Second Supplemental Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement. Section 2.6. Trustee Disclaimer. The Trustee accepts the amendment of the Indenture effected by this Second Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture as hereby amended, and without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, or for or with respect to (i) the validity or sufficiency of this Second Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Company by corporate action or otherwise, (iii) the due execution hereof by the Company or 3 4 (iv) the consequences (direct or indirect and whether deliberate or inadvertent) of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters. Section 2.7. Indemnification. The indemnification provisions of Section 7.7 of the Indenture shall include any and all loss, liability or expense (including reasonable attorneys' fees) incurred by the Trustee in connection with the execution and delivery of this Second Supplemental Indenture and the performance of its duties hereunder. [The remainder of this page is intentionally left blank.] 4 5 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first written above. INTERNATIONAL WIRE GROUP, INC. By: /s/ David M. Sindelar ------------------------------------- David M. Sindelar Senior Vice President WIRE HARNESS INDUSTRIES, INC. By: /s/ David M. Sindelar ------------------------------------- David M. Sindelar Senior Vice President IBJ SCHRODER BANK & TRUST COMPANY By: /s/ Barbara McCluskey ------------------------------------- Barbara McCluskey Vice President 5 EX-10.33 3 AMENDED & RESTATED CREDIT AGREEMENT 1 EXHIBIT 10.33 EXECUTION COPY =============================================================================== AMENDED AND RESTATED CREDIT AGREEMENT among INTERNATIONAL WIRE GROUP, INC., as Borrower, INTERNATIONAL WIRE HOLDING COMPANY, as Guarantor, The Several Lenders from Time to Time Parties Hereto, THE CHASE MANHATTAN BANK, as Administrative Agent, and BANKERS TRUST COMPANY, as Documentation Agent _____________________________________ CHASE SECURITIES INC. and BT SECURITIES CORPORATION, as Arrangers _____________________________________ Dated as of February 12, 1997 =============================================================================== 2 TABLE OF CONTENTS
Page ---- SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . 34 SECTION 2. AMOUNT AND TERMS OF COMMITMENTS . . . . . . . . . . . . . . . . 35 2.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . 35 2.2 Revolving Credit Notes . . . . . . . . . . . . . . . . . . . 35 2.3 Procedure for Revolving Credit Borrowing . . . . . . . . . . 36 2.4 Commitment Fee; Administrative Agent Fees . . . . . . . . . . 36 2.5 Termination or Reduction of Revolving Credit Commitments . . 36 2.6 Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . 37 2.7 Tranche A Term Notes . . . . . . . . . . . . . . . . . . . . 38 2.8 Tranche B Term Notes . . . . . . . . . . . . . . . . . . . . 39 2.9 Tranche C Term Notes . . . . . . . . . . . . . . . . . . . . 40 2.10 Procedure for Additional Term Loan Borrowing; Repayment of Loan . . . . . . . . . . . . . . . . . . . . . 42 2.11 Optional Prepayments . . . . . . . . . . . . . . . . . . . . 43 2.12 Mandatory Prepayments and Revolving Credit Commitment Reduction . . . . . . . . . . . . . . . . . . . . . . . . 44 2.13 Conversion and Continuation Options . . . . . . . . . . . . 47 2.14 Minimum Amounts of Tranches . . . . . . . . . . . . . . . . 48 2.15 Swing Line Commitment . . . . . . . . . . . . . . . . . . . 48 SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . 50 3.1 The L/C Commitment . . . . . . . . . . . . . . . . . . . . . 50 3.2 Procedure for Issuance of Letters of Credit . . . . . . . . . 52 3.3 Fees, Commissions and Other Charges . . . . . . . . . . . . . 53 3.4 L/C Participations . . . . . . . . . . . . . . . . . . . . . 53 3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . 54 3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . 55 3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . . . 55 3.8 Letter of Credit Applications . . . . . . . . . . . . . . . . 55 SECTION 4. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 55 4.1 Interest Rates and Payment Dates . . . . . . . . . . . . . . 55 4.2 Computation of Interest and Fees . . . . . . . . . . . . . . 56 4.3 Inability to Determine Interest Rate . . . . . . . . . . . . 56 4.4 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . 57 4.5 Borrowing Base Compliance . . . . . . . . . . . . . . . . . . 59 4.6 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . 59 4.7 Requirements of Law . . . . . . . . . . . . . . . . . . . . . 60 4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.9 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3
Page ---- 4.10 Replacement of Lender . . . . . . . . . . . . . . . . . . . 64 SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 64 5.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . 65 5.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . 66 5.3 Corporate Existence; Compliance with Law . . . . . . . . . . 66 5.4 Corporate Power; Authorization; Enforceable Obligations . . . 66 5.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . 67 5.6 No Material Litigation . . . . . . . . . . . . . . . . . . . 67 5.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . 67 5.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . 67 5.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . 68 5.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 5.11 Federal Regulations . . . . . . . . . . . . . . . . . . . . 68 5.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 5.13 Investment Company Act; Other Regulations . . . . . . . . . 69 5.14 Subsidiaries, Etc . . . . . . . . . . . . . . . . . . . . . 69 5.15 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . 69 5.16 Environmental Matters . . . . . . . . . . . . . . . . . . . 70 5.17 Delivery of the Camden Acquisition Documents . . . . . . . . 71 5.18 Representations and Warranties Contained in the Camden Acquisition Documents . . . . . . . . . . . . . . . . . . 71 5.19 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 71 5.20 Security Documents . . . . . . . . . . . . . . . . . . . . . 71 5.21 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . 72 5.22 No Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 72 5.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 72 5.24 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . 72 5.25 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 73 6.1 Conditions to Effectiveness of Amendment and Restatement . . 73 6.2 Conditions to Each Loan . . . . . . . . . . . . . . . . . . . 78 SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 79 7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . 79 7.2 Certificates; Other Information . . . . . . . . . . . . . . . 80 7.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . 81 7.4 Conduct of Business and Maintenance of Existence . . . . . . 81 7.5 Maintenance of Property; Insurance . . . . . . . . . . . . . 81 7.6 Inspection of Property; Books and Records; Discussions . . . 82 7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 7.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . 83 7.9 Pledge of After Acquired Property . . . . . . . . . . . . . . 84
- ii - 4
Page ---- 7.10 Pledge During Event of Default . . . . . . . . . . . . . . . 84 7.11 Interest Rate Agreements . . . . . . . . . . . . . . . . . . 84 7.12 Additional Subsidiaries . . . . . . . . . . . . . . . . . . 84 7.13 Mortgages; Mortgage Amendments; Surveys . . . . . . . . . . 85 7.14 Title Insurance Policy . . . . . . . . . . . . . . . . . . . 86 7.15 Substantive Consolidation . . . . . . . . . . . . . . . . . 86 SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 86 8.1 Financial Condition Covenants . . . . . . . . . . . . . . . . 86 8.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . 90 8.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . 92 8.4 Limitation on Guarantee Obligations . . . . . . . . . . . . . 94 8.5 Limitation on Fundamental Changes . . . . . . . . . . . . . . 95 8.6 Limitation on Sale of Assets . . . . . . . . . . . . . . . . 95 8.7 Limitation on Dividends . . . . . . . . . . . . . . . . . . . 96 8.8 Limitation on Capital Expenditures . . . . . . . . . . . . . 97 8.9 Limitation on Investments, Loans and Advances . . . . . . . . 98 8.10 Limitation on Optional Payments and Modifications of Debt Instruments . . . . . . . . . . . . . . . . . . . . . . . 100 8.11 Limitation on Transactions with Affiliates . . . . . . . . . 101 8.12 Limitation on Sales and Leasebacks . . . . . . . . . . . . . 101 8.13 Limitation on Changes in Fiscal Year . . . . . . . . . . . . 101 8.14 Restrictions Affecting Subsidiaries . . . . . . . . . . . . 101 8.15 Limitation on Lines of Business . . . . . . . . . . . . . . 101 8.16 Amendments to Corporate Documents; Transaction Documents; Acquisition Documents; Camden Acquisition Documents; License . . . . . . . . . . . . . . . . . . . . . . . . . 102 8.17 Limitations on Commodity Hedging Transactions . . . . . . . 102 SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 102 SECTION 10. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . 105 10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 105 10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . 105 10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . 105 10.4 Reliance by Administrative Agent . . . . . . . . . . . . . . 106 10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . 106 10.6 Non-Reliance on Administrative Agent and Other Lenders . . . 107 10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . 107 10.8 Administrative Agent and the Documentation Agent in Their Individual Capacity . . . . . . . . . . . . . . . . . . . 108 10.9 Successor Administrative Agent . . . . . . . . . . . . . . . 108 10.10 Additional Ministerial Powers of Administrative Agent . . . 108 SECTION 11. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 108 11.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 108
- iii - 5
Page ---- 11.2 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . 109 11.3 Modification of Obligations . . . . . . . . . . . . . . . . 109 11.4 Waiver by Holdings . . . . . . . . . . . . . . . . . . . . . 109 11.5 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . 110 11.6 Negative Covenants . . . . . . . . . . . . . . . . . . . . . 110 SECTION 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 111 12.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . 111 12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 113 12.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . 114 12.4 Survival of Representations and Warranties . . . . . . . . . 114 12.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . 115 12.6 Successors and Assigns; Participations and Assignments . . . 115 12.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . 118 12.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 118 12.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . 119 12.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . 119 12.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 119 12.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . 119 12.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . 120 12.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 120 12.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 120 12.16 Indiana Property Transfer Laws . . . . . . . . . . . . . . 121 12.17 Consent to Camden Acquisition . . . . . . . . . . . . . . . 121
- iv - 6 AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 12, 1997, among INTERNATIONAL WIRE GROUP, INC., a Delaware corporation (the "Borrower"), INTERNATIONAL WIRE HOLDING COMPANY, a Delaware corporation ("Holdings"), CAMDEN WIRE CO., INC., a New York corporation ("Camden"), the several banks and other financial institutions from time to time parties to this Agreement (the "Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders hereunder (in such capacity, the "Administrative Agent"), and BANKERS TRUST COMPANY, as documentation agent for the Lenders hereunder (in such capacity, the "Documentation Agent"). W I T N E S S E T H: WHEREAS, the Borrower, Holdings, certain of the Lenders, the Administrative Agent and the Documentation Agent are parties to the Amended Credit Agreement, dated as of March 5, 1996 (as amended, supplemented or otherwise modified prior to the date hereof, the "Existing Credit Agreement"); and WHEREAS, the Borrower desires to acquire (the "Camden Acquisition") all of the capital stock of Camden from Oneida Ltd., a New York corporation ("Oneida"), pursuant to the Stock Purchase Agreement (the "Camden Stock Purchase Agreement"), dated as of January 2, 1997, among the Borrower, Camden and Oneida; and WHEREAS, the Borrower has requested that the Lenders consent to the Camden Acquisition; and WHEREAS, the Borrower has requested (i) the Tranche B Term Loan Lenders to increase their Tranche B Term Loan Commitments under the Existing Credit Agreement by an aggregate amount of $32,500,000 pursuant to which additional Tranche B Term Loans (the "Additional Tranche B Term Loans") in an aggregate amount of $32,500,000 may be made to the Borrower on the Second Amendment Closing Date, (ii) the Tranche C Term Loan Lenders to increase their Tranche C Term Loan Commitments under the Existing Credit Agreement by an aggregate amount of $32,500,000 pursuant to which additional Tranche C Term Loans (the "Additional Tranche C Term Loans"; collectively with the Additional Tranche B Term Loans, the "Second Additional Term Loans) in an aggregate amount of $32,500,000 may be made to the Borrower on the Second Amendment Closing Date and (iii) the Revolving Credit Lenders to increase the letter of credit sublimit under the Revolving Credit Commitments by $15,500,000; and WHEREAS, the proceeds of the Second Additional Term Loans will be used to finance the cash purchase price of the Camden Acquisition and the transaction costs associated with the Camden Acquisition, to reduce the amount of outstanding Revolving Credit Loans (without reducing the Revolving Credit Commitments) in order to allow the issuance of Letters of Credit to support the obligations with respect to the IRBs (as defined below) assumed by the Borrower in connection with the Camden Acquisition and to provide working capital to the Borrower; and 7 2 WHEREAS, (i) certain Tranche B Term Loan Lenders and certain Tranche C Term Loan Lenders are willing to provide the Second Additional Term Loans, (ii) the Revolving Credit Lenders are willing to increase the letter of credit sublimit under the Revolving Credit Commitments by $15,500,000 and (iii) the Lenders are willing to consent to the Camden Acquisition, but in each case only on the terms and conditions hereof; and WHEREAS, all of the Obligations of the Borrower hereunder will be secured by certain collateral described in the Security Documents; and NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Acknowledgment and Confirmation of Domestic Subsidiaries' Guarantee": the Acknowledgment and Confirmation of Domestic Subsidiaries' Guarantee made by the Domestic Subsidiaries in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-18, as the same may be amended, supplemented or otherwise modified from time to time. "Acknowledgment and Confirmation of Borrower Pledge Agreement and Borrower Security Agreement": the Acknowledgment and Confirmation of Borrower Pledge Agreement and Borrower Security Agreement made by the Borrower in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-19, as the same may be amended, supplemented or otherwise modified from time to time. "Acquisition": the collective reference to the Silicones Acquisition, the DAW Acquisition, the Albion Acquisition and the Hoosier Merger. "Acquisition Documents": the collective reference to the DAW Asset Purchase Agreement, Albion Asset Purchase Agreement, Hoosier Merger Agreement, Silicones Asset Purchase Agreement, Dekko Escrow Agreement and all other agreements, instruments or certificates executed in connection with the Acquisition, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.16. "Additional Term Loans": the collective reference to the Additional Tranche A Term Loans and the Tranche C Term Loans. "Additional Tranche A Term Loan": as defined in subsection 2.6. "Additional Tranche A Term Loan Commitment": as to any Tranche A Term Loan Lender, its obligation to make an Additional Tranche A Term Loan to the 8 3 Borrower pursuant to subsection 2.6 of this Agreement in an aggregate amount not to exceed the amount set forth opposite such Tranche A Term Loan Lender's name in Schedule 1.1 under the heading "Additional Tranche A Term Loan Commitment." ""Additional Tranche B Term Loan": as defined in subsection 2.6. "Additional Tranche B Term Loan Commitment": as to any Tranche B Term Loan Lender, its obligation to make an Additional Tranche B Term Loan to the Borrower pursuant to subsection 2.6 of this Agreement in an aggregate amount not to exceed the amount set forth opposite such Tranche B Term Loan Lender's name in Schedule 1.1 under the heading "Additional Tranche B Term Loan Commitment." "Additional Tranche C Term Loan": as defined in subsection 2.6. "Additional Tranche C Term Loan Commitment": as to any Tranche C Term Loan Lender, its obligation to make an Additional Tranche C Term Loan to the Borrower pursuant to subsection 2.6 of this Agreement in an aggregate amount not to exceed the amount set forth opposite such Tranche C Term Loan Lender's name in Schedule 1.1 under the heading "Additional Tranche C Term Loan Commitment." "Administrative Agent": as defined in the preamble to this Agreement. "Affected Eurodollar Loans": as defined in subsection 2.12(j). "Affiliate": as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (i) vote 51% or more of the securities having ordinary voting power for the election of directors of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agreement": this Amended and Restated Credit Agreement, as amended, amended and restated, supplemented or otherwise modified from time to time. "Albion": Albion Wire, Inc., an Indiana corporation. "Albion Acquisition": the purchase by Wire Technologies of certain assets of Albion pursuant to the Albion Asset Purchase Agreement. "Albion Asset Purchase Agreement": the Asset Purchase Agreement dated as of March 5, 1996, among Albion, Holdings, the Borrower and Wire Technologies. "Alternate Base Rate": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: 9 4 "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; "Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board of Governors of the Federal Reserve System (the "Board") through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Administrative Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it; and "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate, or both, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (b) or (c), or both, of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Three- Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively. "Alternate Base Rate Loans": Loans at such time as they are made and/or being maintained at a rate of interest based upon the Alternate Base Rate. "Amendment Closing Date": the date on which the Lenders made their Additional Term Loans (March 5, 1996). 10 5 "Applicable Margin": for each Type of Loan, the rate per annum set forth under the relevant column heading below:
Alternate Base Rate Loans - ------------------------- Type Applicable Margin - ---- ----------------- Tranche A Term Loans 1-1/2% Tranche B Term Loans 2% Tranche C Term Loans 2-1/2% Revolving Credit Loans 1-1/2% (including Swing Line Loans) Eurodollar Rate Loans - --------------------- Type Applicable Margin - ---- ----------------- Tranche A Term Loans 2-1/2% Tranche B Term Loans 3% Tranche C Term Loans 3-1/2% Revolving Credit Loans 2-1/2%
; provided that in the event that the ratio of Consolidated Total Debt of the Borrower and its Subsidiaries to Consolidated EBITDA of the Borrower and its Subsidiaries, as most recently determined in accordance with subsection 8.1(c), is as set forth in the relevant column heading below for any quarterly period, any such Applicable Margin with respect to Tranche A Term Loans and Revolving Credit Loans (including in the case of Alternate Base Rate Loans, Swing Line Loans) shall be as provided in the relevant column heading below, but in no event shall any such reductions be effective prior to the first anniversary of the Amendment Closing Date:
Relevant Ratio of Consolidated Applicable Margin Total Debt to Consolidated Applicable Margin For for Alternate Base EBITDA Eurodollar Loans Rate Loans - ------------------------------- -------------------- ------------------ 4.00x and above 2-1/2% 1-1/2% 3.75x to but excluding 4.00x 2-1/4% 1-1/4% 3.50x to but excluding 3.75x 2% 1% 3.00x to but excluding 3.50x 1-3/4% 3/4% Below 3.00x 1-1/2% 1/2%
if the financial statements required to be delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the related compliance certificate required to be delivered pursuant to subsection 7.2(b), are delivered on or prior to the date when due (or, in the case of the fourth quarterly period of each fiscal year of the Borrower, if financial statements which satisfy the requirements of, and are delivered within the time period specified in, subsection 7.l(b) and a related compliance certificate which satisfies the requirements of, and is delivered within the time period 11 6 specified in, subsection 7.2(b), with respect to any such quarterly period are so delivered within such time periods), then the Applicable Margin in respect of the Revolving Credit Loans and the Tranche A Term Loans from the date upon which such financial statements were delivered shall be the Applicable Margin as set forth in the relevant column heading above; provided, however, that in the event that the financial statements delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the related compliance certificate required to be delivered pursuant to subsection 7.2(b), are not delivered when due, then: (a) if such financial statements and certificate are delivered after the date such financial statements and certificate were required to be delivered (without giving effect to any applicable cure period) and the Applicable Margin increases from that previously in effect as a result of the delivery of such financial statements and certificate, then the Applicable Margin in respect of Revolving Credit Loans (including in the case of Alternate Base Rate Loans, Swing Line Loans) and Tranche A Term Loans during the period from the date upon which such financial statements and certificate were required to be delivered (without giving effect to any applicable cure period) until the date upon which they actually are delivered shall, except as otherwise provided in clause (c) below, be the Applicable Margin as so increased; (b) if such financial statements and certificate are delivered after the date such financial statements and certificate were required to be delivered (without giving effect to any applicable cure period) and the Applicable Margin decreases from that previously in effect as a result of the delivery of such financial statements and certificate, then such decrease in the Applicable Margin shall not become applicable until the date upon which such financial statements and certificate actually are delivered; and (c) if such financial statements and certificate are not delivered prior to the expiration of the applicable cure period, then, effective upon such expiration, for the period from the date upon which such financial statements and certificate were required to be delivered (after the expiration of the applicable cure period) until two Business Days following the date upon which they actually are delivered, the Applicable Margin in respect of Revolving Credit Loans (including in the case of Alternate Base Rate Loans, Swing Line Loans) and Tranche A Term Loans shall be 2-1/2%, in the case of Eurodollar Loans, and 1- 1/2%, in the case of Alternate Base Rate Loans (it being understood that the foregoing shall not limit the rights of the Administrative Agent and the Lenders set forth in Section 9). "Asset Sale": any sale, transfer or other disposition (including any sale and leaseback of assets and any sale of accounts receivable in connection with a receivable financing transaction) by the Borrower or any of its Subsidiaries of any property of the Borrower or any such Subsidiary (including property subject to any Lien under 12 7 any Security Document), other than as permitted pursuant to subsection 8.6(a), (b), (c) (provided that, except with respect to the loss or condemnation of all or substantially all of the assets of the Borrower and its Subsidiaries, the proceeds from such casualty or condemnation (including insurance) are used to replace or rebuild the lost or condemned assets within the time period specified in subsection 2.12(f)) or (d) through (h). "Assignee": as defined in subsection 12.6(c). "Assignment (Acquisition)": the Assignment made by the Borrower in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-12, as the same may be amended, supplemented or otherwise modified from time to time. "Assignment (Chinese Joint Venture)": the Assignment made by OWI in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-13, as the same may be amended, supplemented or otherwise modified from time to time. "Assignment (GE Contract)": the Assignment made by Wirekraft Industries in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-14, as the same may be amended, supplemented or otherwise modified from time to time. "Assignments": the collective reference to the Assignment (Acquisition), the Assignment (Chinese Joint Venture) and the Assignment (GE Contract). "Assignment and Acceptance": an assignment and acceptance entered into by a Lender or an assignee, substantially in the form of Exhibit E. "Available Revolving Credit Commitment": as to any Revolving Credit Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Revolving Credit Lender's Revolving Credit Commitment over (b) the aggregate of (i) the aggregate unpaid principal amount at such time of all Revolving Credit Loans made by such Revolving Credit Lender, (ii) an amount equal to such Revolving Credit Lender's Revolving Credit Commitment Percentage of the aggregate unpaid principal amount at such time of all Swing Line Loans, provided that for purposes of calculating Available Revolving Credit Commitments pursuant to subsection 2.4 such amount shall be zero, and (iii) an amount equal to such Revolving Credit Lender's Revolving Credit Commitment Percentage of the Letter of Credit Outstandings at such time; collectively, as to all the Lenders, the "Available Revolving Credit Commitments." "Borrower": as defined in the preamble to this Agreement. "Borrower Guarantee": the Guarantee by the Borrower in favor of the Administrative Agent for the ratable benefit of the Lenders of Camden's obligations 13 8 and liabilities under any Letters of Credit issued for the account of Camden, substantially in the form of Exhibit B-23, as the same may be amended, supplemented or otherwise modified from time to time. "Borrower Pledge Agreement": the Pledge Agreement made by the Borrower in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-3, as the same may be amended, supplemented or otherwise modified from time to time. "Borrower Security Agreement": the Security Agreement made by the Borrower in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-7, as the same may be amended, supplemented or otherwise modified from time to time. "Borrowing Base": an amount equal to the sum of (a) 75% of "accounts receivable" plus (b) 50% of "inventory" plus (c) $10,000,000 minus any accounts receivable and/or inventory securing any amounts borrowed pursuant to subsection 8.2(i)(iii). For purposes of determining the amount of the Borrowing Base, the terms "accounts receivable" and "inventory" are used herein as such terms are used and/or defined in the consolidated balance sheet of the Borrower and its Subsidiaries at the end of the prior month for which the Borrowing Base is being calculated. "Borrowing Date": any Business Day specified in a notice pursuant to subsection 2.3 or 2.15 as a date on which the Borrower requests Lenders to make Loans hereunder. "Business": the collective reference to the Dekko Business, the Omega Business, the Wirekraft Business and the Camden Business. "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which commercial banks are not open for dealing in Dollar deposits in the London interbank market. "Camden": as defined in the preamble hereto. "Camden Acquisition": as defined in the recitals hereto. "Camden Acquisition Documents": the collective reference to the Camden Stock Purchase Agreement and all other agreements, instruments or certificates executed in connection with the Camden Acquisition, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.16. 14 9 "Camden Business": Camden's business of designing, manufacturing and marketing non-insulated copper wire acquired by the Borrower pursuant to the Camden Acquisition. "Camden Guarantee": the Guarantee by Camden in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-20, as the same may be amended, supplemented or otherwise modified from time to time. "Camden Patent Security Agreement": the Patent Security Agreement made by Camden in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B- 21, as the same may be amended, supplemented or otherwise modified from time to time. "Camden Security Agreement": the Domestic Subsidiary Security Agreement made by Camden in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B- 8, as the same may be amended, supplemented or otherwise modified from time to time. "Camden Stock Purchase Agreement": as defined in the recitals hereto. "Camden Trademark Security Agreement": the Trademark Security Agreement made by Camden in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B- 22, as the same may be amended, supplemented or otherwise modified from time to time. "Capital Expenditures": expenditures (including, without limitation, obligations created under Financing Leases and purchase money Indebtedness in the year in which created but excluding payments made thereon) of the Borrower and its Subsidiaries in respect of the purchase or other acquisition of fixed or capital assets (excluding any such asset acquired in connection with normal replacement and maintenance programs properly expensed in accordance with GAAP and excluding the Acquisition and the Camden Acquisition). "Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "C/D Assessment Rate": for any day as applied to the Base CD Rate, the net annual assessment rate (rounded upward to the nearest 1/100th of 1%) determined by Chase to be payable on such day to the Federal Deposit Insurance Corporation or any successor ("FDIC") for FDIC's insuring time deposits made in Dollars at offices of Chase in the United States. "C/D Reserve Percentage": for any day as applied to the Base CD Rate, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by 15 10 the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding one billion Dollars in respect of new non-personal time deposits in Dollars in New York City having a three month maturity and in an amount of $100,000 or more. "Cash Equivalents": (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit, time deposits, overnight bank deposits, bankers acceptances and repurchase agreements of any commercial bank which has capital and surplus in excess of $100,000,000 having maturities of one year or less from the date of acquisition, (c) commercial paper of an issuer rated at least A-2 by Standard & Poor's Corporation or P-2 by Moody's Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments, (d) money market accounts or funds with or issued by Qualified Issuers, (e) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above and (f) demand deposit accounts maintained in the ordinary course of business with any Lender or with any bank that is not a Lender not in excess of $100,000 in the aggregate on deposit with any such bank. "Change of Control": Hicks, Muse, Tate & Furst Incorporated, Mills & Partners, Inc. and/or their respective Affiliates ("HMTFI") shall cease to have the power, directly or indirectly, to vote or direct the voting of securities having a majority of the ordinary voting power for the election of directors of Holdings, provided that the occurrence of the foregoing event shall not be deemed a Change of Control if (a) at any time prior to the consummation of an Initial Public Offering, and for any reason whatever, (i) HMTFI otherwise has the right to designate (and does so designate) a majority of the board of directors of Holdings or (ii) HMTFI and its employees, directors and officers (the "HMTFI Group") own of record and beneficially an amount of common stock of Holdings equal to at least 50% of the amount of common stock of Holdings owned by the HMTFI Group of record and beneficially as of the Closing Date and such ownership by the HMTFI Group represents the largest single block of voting securities of Holdings held by any Person or related group for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (b) at any time after the consummation of an Initial Public Offering, and for any reason whatever, (i) HMTFI shall own greater than 10% of the outstanding common stock of Holdings, (ii) any "Person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding HMTFI, is not or shall not become the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of a greater percentage of voting stock of Holdings than is owned by HMTFI and (iii) the board of directors of Holdings shall consist of a majority of Continuing Directors. "Chase": The Chase Manhattan Bank (formerly known as Chemical Bank). 16 11 "Closing Date": the date on which the Lenders made their initial Loans (June 12, 1995). "Code": the Internal Revenue Code of 1986, as amended from time to time. "Commitment Letter": the commitment letter relating to this Agreement and the Camden Acquisition dated December 26, 1996 addressed to the Borrower from Chase, CSI, Bankers Trust Company and BT Securities Corporation and all exhibits thereto, as the same may be amended, supplemented or otherwise modified from time to time. "Commitment Percentage": as to any Lender, at any time, the percentage of the aggregate Revolving Credit Commitments and Term Loan Commitments constituted by such Lender's Revolving Credit Commitment and Term Loan Commitment. "Commitments": the collective reference to the Revolving Credit Commitments, the Swing Line Commitment, the Term Loan Commitments and the L/C Commitment; individually, a "Commitment." "Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 of the Code. "Consolidated Current Assets": at any date, the amount which, in conformity with GAAP, would be set forth opposite the caption "Total Current Assets" (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, except that there shall be excluded therefrom cash and Cash Equivalents and equipment and other fixed assets held for sale. "Consolidated Current Liabilities": at any date, the amount which, in conformity with GAAP, would be set forth opposite the caption "Total Current Liabilities" (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, except that there shall be excluded therefrom the current portion of (a) all Loans and, (b) all long-term Indebtedness for borrowed money (including Financing Leases) in each case, to the extent included therein. "Consolidated EBITDA": for any period, with respect to any Person, Consolidated Net Income of such Person for such period (A) plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (i) total income and franchise tax expense, (ii) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions and discounts and other fees and charges associated with Indebtedness, (iii) depreciation and amortization expense, (iv) amortization of intangibles (including, but not limited to, goodwill and organization costs (including, with respect to the Borrower, costs associated with the Camden Acquisition, the Acquisition, the Omega 17 12 Acquisition, the Mergers and the Wirekraft Acquisition)), (v) other noncash charges (including non-cash currency exchange losses), (vi) any extraordinary and unusual losses (including losses on sales of assets other than inventory sold in the ordinary course of business) other than any loss from any discontinued operation and (vii) restructuring costs expensed in fiscal years 1996 and 1997 as contemplated in connection with the Acquisition in an aggregate amount not exceeding $8,000,000, which shall include, but not be limited to costs associated with plant shutdowns, severance and relocations, and (B) minus, without duplication and to the extent reflected as a credit or gain in the statement of such Consolidated Net Income for such period, the sum of (i) any extraordinary and unusual gains (including gains on the sales of assets, other than inventory sold in the ordinary course of business) other than any income from discontinued operations and (ii) other noncash credits or gains (including non-cash currency exchange gains). "Consolidated Net Income": for any period, with respect to any Person, the amount which, in conformity with GAAP, would be set forth opposite the caption "Net Income/(Loss)" (or any like caption) on a consolidated statement of operations of such Person and its Subsidiaries for such period. "Consolidated Total Debt": at a particular date, with respect to the Borrower, the aggregate principal amount of Indebtedness outstanding under this Agreement, the Senior Subordinated Notes, Financing Leases, purchase money Indebtedness and any other Indebtedness for borrowed money of the Borrower and its Subsidiaries at such date. "Consolidated Working Capital": at any date, the excess of Consolidated Current Assets at such date over Consolidated Current Liabilities at such date. "Continuing Directors": the directors of Holdings on the Closing Date and each other director, if, in each case, such other director's nomination for election to the board of directors of Holdings is recommended by a majority of the then Continuing Directors or such other director receives the vote of HMTFI in his or her election by the shareholders. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Credit Parties": the collective reference to Holdings, the Borrower and (after giving effect to the Camden Acquisition) each of their respective Subsidiaries which from time to time is a party to any Loan Document. "CSI": Chase Securities Inc. (formerly known as Chemical Securities Inc.) "DAW": Dekko Automotive Wire, Inc., an Indiana corporation. 18 13 "DAW Acquisition": the purchase by Wire Technologies of certain assets of DAW pursuant to the DAW Asset Purchase Agreement. "DAW Asset Purchase Agreement": the Asset Purchase Agreement dated as of March 5, 1996, among DAW, Holdings, the Borrower and Wire Technologies. "Default": any of the events specified in Section 9, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Dekko": the collective reference to DAW, Albion, Hoosier and Silicones. "Dekko Business": Albion's, DAW's, Hoosier's and Silicones' business of designing, manufacturing and marketing noninsulated and insulated wire and wire products acquired by the Borrower pursuant to the Acquisition. "Dekko Escrow Agreement": the Escrow Agreement among Wire Technologies, Albion, DAW, Silicones, Dekko Group Services LLC (individually and as representative and agent for the shareholders of Hoosier) and Fort Wayne National Bank, as escrow agent. "Documentation Agent": as defined in the preamble to this Agreement. "Dollars" and "$": dollars in lawful currency of the United States of America. "Domestic Subsidiaries' Guarantee": the Guarantee by the Domestic Subsidiaries party thereto in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-1, as the same may be amended, supplemented or otherwise modified from time to time. "Domestic Subsidiary": any Subsidiary of the Borrower or Holdings other than a Foreign Subsidiary. "Domestic Subsidiaries Pledge Agreement": the Pledge Agreement made by each of Omega, OWI, Wirekraft, WB Holdings and Wirekraft Industries in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-4, as the same may be amended, supplemented or otherwise modified from time to time. "Domestic Subsidiary Security Agreements": the collective reference to the Security Agreements made by each Domestic Subsidiary in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-8, as the same may be amended, supplemented or otherwise modified from time to time. 19 14 "ECM": Electro Componentes de Mexico, S.A. de C.V., a Mexican corporation. "ECM Acquisition Note": the promissory note dated January 1, 1995, in the original principal amount of $4,687,000, executed by ECM, originally payable to GE and successively endorsed by (a) GE to Wirekraft, (b) Wirekraft to WB Holdings, and (c) WB Holdings to Wirekraft Industries, as the same may be amended, supplemented or otherwise modified from time to time. "ECM Holdings": ECM Holding Company, a Delaware corporation. "ECM Notes": the collective reference to the ECM VAT Note, the ECM Acquisition Note, the ECM Revolving Note and all other promissory notes or similar instruments from time to time evidencing Indebtedness of ECM to Wirekraft, and all promissory notes and similar instruments issued in substitution, replacement or exchange therefor. "ECM Revolving Note": the promissory note dated January 1, 1995, in the original principal amount of $10,000,000, executed by ECM and payable to Wirekraft, as the same may be amended, supplemented or otherwise modified from time to time. "ECM VAT Note": the promissory note dated January 1, 1995, in the original principal amount of $1,973,500, executed by ECM and payable to Wirekraft, as the same may be amended, supplemented or otherwise modified from time to time. "Environmental Laws": any applicable foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, legally binding requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. 20 15 "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member bank of such System. "Eurodollar Base Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the rate at which Chase is offered Dollar deposits at or about 10:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of its Eurodollar Loan to be outstanding during such Interest Period. "Eurodollar Loans": Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%): Eurodollar Base Rate 1.00 - Eurocurrency Reserve Requirements "Event of Default": any of the events specified in Section 9, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Excess Cash Flow": for any fiscal year of the Borrower, the excess of (a) the sum, without duplication, of (i) Consolidated EBITDA for such fiscal year (calculated for purposes of this definition without giving effect to clause (vii) of the definition of Consolidated EBITDA), (ii) the amount of returned surplus assets of any Plan during such fiscal year to the extent not included in Consolidated Net Income to determine Consolidated EBITDA for such fiscal year, (iii) decreases in Consolidated Working Capital of the Borrower and its Subsidiaries for such fiscal year, (iv) the amount of any refund received by the Borrower and its Subsidiaries on taxes paid by the Borrower and its Subsidiaries (other than the Sellers Tax Escrow Amount), (v) cash dividends, cash interest and other similar cash payments received by the Borrower in respect of investments to the extent not included in Consolidated Net Income to determine Consolidated EBITDA for such fiscal year and (vi) extraordinary cash gains to the extent subtracted or otherwise not included in Consolidated Net Income to determine Consolidated EBITDA for such fiscal year over (b) the sum, without duplication, of (i) the aggregate amount of cash Capital Expenditures made by the Borrower and its Subsidiaries during such fiscal year and permitted hereunder (other than Capital Expenditures permitted under subsection 8.8(b)), (ii) the aggregate amount of all reductions of the Revolving Credit Commitments (to the extent such reductions are accompanied by prepayment of Revolving Credit Loans, Swing Line Loans and/or L/C Obligations) or payments or prepayments of the Term Loans during such fiscal year other than pursuant to subsection 2.12(a), (b) or (c), (iii) the aggregate amount of payments of principal in respect of any Indebtedness (other than 21 16 revolving credit Indebtedness to the extent the related commitment is not permanently reduced) permitted hereunder during such fiscal year (other than under this Agreement), (iv) increases in Consolidated Working Capital of the Borrower and its Subsidiaries for such fiscal year, (v) cash interest expense of the Borrower and its Subsidiaries for such fiscal year, (vi) taxes actually paid in such fiscal year or to be paid in the subsequent fiscal year on account of such fiscal year to the extent added to Consolidated Net Income to determine Consolidated EBITDA for such fiscal year, (vii) extraordinary cash losses to the extent added to Consolidated Net Income to determine Consolidated EBITDA for such fiscal year, (viii) the amount of all Investments made in such fiscal year as permitted by clauses (d), (h) and (j) of subsection 8.9 and (ix) dividends or other direct payments paid by the Borrower to or for the benefit of Holdings to the extent permitted by subsection 8.7(a) to the extent not subtracted in the determination of Consolidated Net Income of the Borrower for such fiscal year. For purposes of determining changes in Consolidated Working Capital, the working capital acquired in connection with the Acquisition and the Camden Acquisition will be excluded. "Exchange": as defined in subsection 8.2(o). "Exchange Agreements": the collective reference to (a) the Omega Common Stock Exchange Agreement dated June 2, 1995 among Holdings and certain other parties named as exchanging shareholders therein, (b) the Omega Class A Common Stock Exchange Agreement dated June 2, 1995 among Holdings and certain other parties named as exchanging shareholders therein, (c) the Junior Note Exchange Agreement dated June 2, 1995 among Holdings and certain other parties named as exchanging noteholders therein, (d) the Wirekraft Common Stock Exchange Agreement dated June 2, 1995 among Holdings and certain other parties named as exchanging shareholders therein, (e) the Wirekraft Director Common Stock Exchange Agreement dated June 2, 1995 among Holdings and certain other parties named as exchanging shareholders therein and (f) the Wirekraft Class A Common Stock Exchange Agreement dated June 2, 1995 among Holdings and certain other parties named as exchanging shareholders therein, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.16; individually an "Exchange Agreement". "Exchange Notes": the $10,000,000 aggregate principal amount (as such amount may be increased due to accumulated dividends on the Preferred Stock at the time of exchange) of 14% Senior Subordinated Exchange Notes due June 1, 2005 of the Borrower to be issued to holders of the Preferred Stock in exchange for the Preferred Stock pursuant to the terms of the Preferred Stock. "Excluded Leased Properties": the collective reference to the real properties leased by the Borrower or any of its Subsidiaries described on Part III of Schedule 5.20, including all buildings, improvements, structures and fixtures now or subsequently located thereon. "Existing Credit Agreement": as defined in the recitals to this Agreement. 22 17 "Fee Properties": the collective reference to the real properties owned in fee by the Borrower and its Subsidiaries described on Part I of Schedule 5.20, including all buildings, improvements, structures and fixtures now or subsequently located thereon. "Financing Lease": any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Foreign Subsidiary": any Subsidiary of the Borrower or Holdings which is organized under the laws of any jurisdiction outside of the United States of America. "Foreign Subsidiary Pledge Agreement": the Pledge Agreement made by ECM Holdings in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-5, as the same may be amended, supplemented or otherwise modified from time to time. "GAAP": the generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board and the rules and regulations of the Securities and Exchange Commission, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances of the Borrower as of the date of determination except that for purposes of subsection 8.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the audited financial statements referred to in subsection 5.1. In the event that any "Accounting Change" (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the Borrower's financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. "Accounting Changes" means: changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the Securities and Exchange Commission (or successors thereto or agencies with similar functions). "GE": General Electric Company, a New York corporation. 23 18 "GE Contract": the Parts Sourcing Contract dated as of December 2, 1994, between Wirekraft Industries and GE, as amended. "Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the board of directors of such Person in good faith. "Guarantees": the collective reference to the Holdings Guarantee, the Borrower Guarantee, the Domestic Subsidiaries' Guarantee, the Wire Technologies Guarantee, the Camden Guarantee and each other guarantee executed and delivered by a Domestic Subsidiary pursuant to subsection 7.12. "HM Funds": as defined in the definition of Holdings Stock Purchase Agreement. "HMTFI": as defined in the definition of "Change of Control". "Holdings": as defined in the preamble to this Agreement. 24 19 "Holdings Deferred Obligation": the obligation of Holdings to issue to the HM Funds not less than $15,159,789 worth of its common stock pursuant to and in connection with the terms of the Merger Agreement within thirty days of the Closing Date. "Holdings Guarantee": the guarantee made by Holdings in favor of the Administrative Agent for the ratable benefit of the Lenders in Section 11 of this Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Holdings Pledge Agreement": the Pledge Agreement made by Holdings in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-2, as the same may be amended, supplemented or otherwise modified from time to time. "Holdings Stock Purchase Agreement": the Holdings Stock Purchase Agreement dated as of June 15, 1995 between Holdings, Hicks, Muse, Tate & Furst Equity Fund II, L.P. ("HM Fund II") and Hicks, Muse & Co. Partners, L.P. ("HM L.P." and together with HM Fund II the "HM Funds"), as the same may be amended, supplemented or otherwise modified from time to time. "Hoosier": Hoosier Wire Inc., an Indiana corporation. "Hoosier Merger": the merger of Wire Technologies into Hoosier pursuant to the Hoosier Merger Agreement. "Hoosier Merger Agreement": the Agreement and Plan of Merger dated as of March 5, 1996, among Hoosier, Group Dekko Services, LLC, the Borrower and Wire Technologies. "Indebtedness": of any Person at any date, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices, which are not more than 90 days past due, and accrued expenses incurred in the ordinary course of business) or which is evidenced by a note, bond, debenture or similar instrument, (b) all obligations under Interest Rate Agreements, (c) all obligations of such Person under Financing Leases, (d) all obligations of such Person in respect of bankers' acceptances or similar instruments issued or created for the account of such Person, and (e) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof; provided however, that the amount of such Indebtedness of any Person described in this clause (e) shall, for purposes of this Agreement, be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property or asset encumbered, as determined by such Person in good faith. 25 20 "Initial Public Offering": means an underwritten public offering of Capital Stock of the Borrower, Holdings or the corporate parent of Holdings pursuant to a registration statement filed with the Securities and Exchange Commission in accordance with the Securities Exchange Act of 1933, as amended. "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. "Intellectual Property": as defined in subsection 5.9. "Interest Coverage Ratio": for any period, with respect to the Borrower and its Subsidiaries, the ratio of (a) Consolidated EBITDA to (b) consolidated cash interest expense (including any such cash interest expense in respect of Indebtedness under Financing Leases and purchase money Indebtedness permitted under subsection 8.2(e)) of the Borrower and its Subsidiaries net of cash interest income (such consolidated cash interest expense to include fees payable on account of letters of credit but to exclude amortization of debt discount (including discount of liabilities and reserves established under Accounting Principles Board Opinion No. 16 as in effect on the date hereof) and costs of debt issuance) of the Borrower and its Subsidiaries. "Interest Payment Date": (a) as to any Alternate Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding and, if such Alternate Base Rate Loan is a Term Loan, the date of each payment of principal thereof, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period and (c) as to any Eurodollar Loan having an Interest Period longer than three months, each day which is three months or a whole multiple thereof, after the first day of such Interest Period as well as the last day of such Interest Period. "Interest Period": (a) with respect to any Eurodollar Loan: (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months, thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; 26 21 provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (1) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (2) no Interest Period shall extend beyond the Revolving Credit Commitment Termination Date in the case of Revolving Credit Loans or the date final payment is due on the Term Loans in the case of Term Loans; (3) no Interest Period with respect to the Term Loans shall extend beyond any date upon which repayment of principal thereof is required to be made pursuant to subsection 2.7, 2.8 or 2.9 if, after giving effect to the selection of such Interest Period, the aggregate principal amount of Term Loans with Interest Periods ending after such date would exceed the aggregate principal amount of Term Loans permitted to be outstanding after such scheduled repayment; and (4) any Interest Period pertaining to a Eurodollar Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month. "Interest Rate Agreement": any interest rate protection agreement, interest rate future, interest rate option, interest rate cap or other interest rate hedge arrangement, to or under which the Borrower is a party or a beneficiary on the date hereof or becomes a party or a beneficiary after the date hereof. "Investments": as defined in subsection 8.9. "IRBs": the collective reference to (i) the $6,500,000 City of El Paso Industrial Development Authority, Incorporated Industrial Revenue Bonds (Camden Wire Co., Inc. Project) Series 1996 and (ii) the $9,000,000 City of Pine Bluff, Arkansas Variable Rate Demand Industrial Development Refunding and Construction Revenue Bonds (Camden Wire Project), Series 1985 dated August 1, 1985. "Issuing Lender": Chase or any of its Affiliates or, with the approval of Chase, any of the other Lenders which chooses to be an Issuing Lender, in its capacity as issuer of each Letter of Credit. "Junior Subordinated Debt": the unsecured junior subordinated debt securities of OWC in an aggregate principal not in excess of $15,000,000 issued as of March 31, 1995, as the same may have been amended, supplemented or otherwise 27 22 modified from time to time prior to the Closing Date in accordance with the terms of the Omega Credit Agreement. "L/C Commitment": the Issuing Lender's obligation to open Letters of Credit pursuant to Section 3 of this Agreement. "L/C Obligation": the obligation of the Borrower or Camden, as the case may be, to reimburse the Issuing Lender in accordance with the terms of this Agreement and the related Letter of Credit Application for any payment made by the Issuing Lender under any Letter of Credit. "L/C Participating Interest": with respect to any Letter of Credit (a) in the case of the Issuing Lender with respect thereto, its interest in such Letter of Credit and any Letter of Credit Application relating thereto after giving effect to the granting of participating interests therein, if any, pursuant hereto and (b) in the case of each Participating Lender, its undivided participating interest in such Letter of Credit and any Letter of Credit Application relating thereto. "L/C Participation Certificate": a certificate in substantially the form of Exhibit C. "Leased Properties": the collective reference to the real properties leased by the Borrower and its Subsidiaries described on Part II of Schedule 5.20 (other than the Excluded Leased Properties) including all buildings, improvements, structures and fixtures now or subsequently located thereon and owned or leased by the Borrower. "Lenders": as defined in the preamble to this Agreement. "Letter of Credit": any Standby L/C or Trade L/C, collectively, the "Letters of Credit." "Letter of Credit Application": with respect to (a) a Standby L/C, a Standby L/C Application and (b) a Trade L/C, a Trade L/C Application; collectively, the "Letter of Credit Applications." "Letter of Credit Outstandings": at any date, the sum of (a) the aggregate amount then available to be drawn under all outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to subsection 3.5. "Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). 28 23 "Loan": any loan made by any Lender pursuant to this Agreement. "Loan Documents": the collective reference to this Agreement, any Notes, the Letters of Credit, the Letter of Credit Applications, the Guarantees and the Security Documents. "Material Adverse Effect": a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or prospects of Holdings, the Borrower and their Subsidiaries, taken as a whole, or, prior to the consummation of the Camden Acquisition, the Camden Business taken as a whole, (b) the ability of Holdings, the Borrower and each of their Subsidiaries, taken as a whole, to perform their respective obligations under this Agreement or any of the other Loan Documents, the Acquisition Documents or the Camden Acquisition Documents or (c) the validity or enforceability of this Agreement or any of the other Loan Documents, the Acquisition Documents, the Camden Acquisition Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder. "Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, friable asbestos, polychlorinated biphenyls and urea- formaldehyde insulation. "Merger Agreements": the Agreement and Plan of Merger dated as of June 2, 1995 by and among Holdings, Omega Acquisition Company, WAC, Wirekraft and OWC as amended by First Amendment to Agreement and Plan of Merger dated June 12, 1995 and all other agreements, instruments or certificates executed in connection with the Mergers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.16. "Merger Documents": the collective reference to the Merger Agreements and the Exchange Agreements. "Mergers": the collective reference to the Wirekraft Merger and the Omega Merger. "Mortgaged Properties": the collective reference to each of the Fee Properties and the Leased Properties. "Mortgages": the collective reference to each of the mortgages and deeds of trust encumbering each of the Mortgaged Properties to be executed and delivered by the Borrower and its Subsidiaries, substantially in the form of Exhibit B-11, with such modifications as are determined by Administrative Agent as necessary or desirable to create a valid and enforceable first mortgage Lien securing the obligations and liabilities of the Borrower or any guarantor under the Loan Documents, as the same may be amended, supplemented, replaced, restated, or otherwise modified from time to time. 29 24 "Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Cash Proceeds": (a) in connection with any Asset Sale (including any sale and leaseback of assets and any sale of accounts receivable in connection with a receivables financing transaction) the cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Asset Sale net of all reasonable attorneys' fees, accountants' fees, investment banking fees, survey costs, title insurance premiums, required debt payments (other than pursuant hereto) and other customary fees actually incurred and satisfactorily documented in connection therewith and net of taxes paid or reasonably expected to be payable as a result thereof and net of purchase price adjustments reasonably expected to be payable in connection therewith and (b) in connection with any issuance by Holdings or any of its Subsidiaries of equity or debt securities or instruments or any Permitted Issuance or the incurrence of loans other than Indebtedness permitted by subsection 8.2 or subsection 11.6(i), the cash proceeds received from such issuance, net of all reasonable investment banking fees, legal fees, accountants fees, underwriting discounts and commissions and other customary fees and expenses, actually incurred and satisfactorily documented in connection therewith; provided however that, with respect to any issuance of debt instruments or securities as described in clause (b) above, only in the event that such net cash proceeds are used to refinance any Indebtedness permitted by this Agreement, then such net cash proceeds shall not constitute "Net Cash Proceeds" for the purpose of this Agreement. "Nonconsenting Lender": as defined in subsection 4.10. "Non-Excluded Taxes": as defined in subsection 4.8. "Non-Funding Lender": as defined in subsection 4.4(c). "Notes": the collective reference to the Revolving Credit Notes, the Swing Line Note and the Term Notes. "Obligations": the unpaid principal of and interest on (including, without limitation, interest accruing after the maturity of the Loans and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the Borrower to the Administrative Agent or to the Lenders, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any Notes or the other Loan Documents or any Interest Rate Agreement entered into with a Lender pursuant to subsection 7.11 and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the 30 25 Administrative Agent or to the Lenders that are required to be paid by the Borrower pursuant to the terms of this Agreement) or otherwise. "Omega": THL-Omega Holding Corporation, a Delaware corporation. "Omega Acquisition": the acquisition of all of the Capital Stock of Omega and its Subsidiaries by OWC pursuant to and in accordance with the Omega Acquisition Documents. "Omega Acquisition Agreement": the Stock Purchase Agreement dated as of March 14, 1995, between OWC and Omega and certain other parties set forth therein (collectively, the "Sellers"), together with all schedules and exhibits thereto, as the same may be amended, supplemented or otherwise modified in accordance with subsection 8.16. "Omega Acquisition Company": International Wire Group, Inc., a Delaware corporation, which was merged with and into OWC pursuant to and in accordance with the Merger Documents (the surviving entity of the Omega Merger changed its corporate name to International Wire Group, Inc. which is the Borrower). "Omega Acquisition Documents": the Omega Acquisition Agreement, the Omega Escrow Agreement and all other agreements, instruments or certificates delivered in connection with the Omega Acquisition, as the same may be amended, supplemented or otherwise modified in accordance with subsection 8.16; individually an "Omega Acquisition Document". "Omega Business": Omega's and its Subsidiaries' business of manufacturing non-insulated copper wire and cable products acquired by OWC pursuant to the Omega Acquisition Agreement. "Omega Credit Agreement": the Credit Agreement dated as of March 31, 1995 among OWC, Chemical Bank, as administrative agent, Bankers Trust Company, as documentation agent and the several lenders from time to time parties thereto. "Omega Escrow Agreement": as defined in the Omega Acquisition Agreement, as the same may be amended, supplemented or otherwise modified in accordance with subsection 8.16. "Omega Merger": the merger of Omega Acquisition Company with and into OWC pursuant to and in accordance with the Merger Documents. "Original Tranche A Term Loan": as defined in subsection 2.6. "Original Tranche B Term Loan": as defined in subsection 2.6. "Original Tranche C Term Loan": as defined in subsection 2.6. 31 26 "OWC": Omega Wire Corp., a Delaware corporation. "OWI": Omega Wire, Inc., a New York corporation. "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. "Participant": as defined in subsection 12.6(b). "Participating Lender": any Revolving Credit Lender (other than the Issuing Lender) with respect to its L/C Participating Interest in a Letter of Credit. "Patent Security Agreement": the Patent Security Agreement made by Wirekraft Industries in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B- 9, as the same may be amended, supplemented or otherwise modified from time to time. "Permitted Issuance": (a) the issuance by Holdings of shares of Capital Stock as dividends on issued and outstanding Capital Stock of the same class of Holdings or pursuant to any dividend reinvestment plan, (b) the issuance by Holdings of options or other equity securities of Holdings to outside directors, members of management or employees of Holdings, the Borrower or any Subsidiary of the Borrower, (c) the issuance of securities as interest or dividends on pay-in-kind debt or preferred equity securities permitted hereunder and under the Security Documents, (d) the issuance to Holdings by the Borrower of its Capital Stock or the issuance to the Borrower or any Subsidiary (or any director, with respect to directors' qualifying shares) by any Subsidiary of the Borrower of any of their respective Capital Stock, in each case with respect to this clause (d) to the extent such Capital Stock is pledged to the Administrative Agent pursuant to the relevant Pledge Agreement (provided that only 65% of the Capital Stock of a Foreign Subsidiary is required to be so pledged), (e) the issuance by Holdings of the Holdings common stock pursuant to the terms and conditions of the Holdings Stock Purchase Agreement as in effect on the Closing Date, (f) the issuance by the Borrower of the Preferred Stock, (g) the issuance by Holdings of the Warrants and any shares of Holdings common stock issued to holders of the Warrants upon exercise of such Warrants, (h) the issuance by Holdings of the Holdings class A common stock pursuant to the terms and conditions of the Securities Purchase Agreement dated as of March 5, 1996 by and among Holdings and the purchasers party thereto, (i) the issuance by Holdings of the Holdings common stock pursuant to the terms and conditions of the Securities Purchase Agreement dated as of March 5, 1996 by and among Holdings and the purchasers party thereto, (j) the issuance by Holdings of warrants to purchase an aggregate of 2,000,000 shares of Holdings common stock to Albion, DAW, Silicones and certain shareholders of Hoosier pursuant to the terms and conditions of the Acquisition Documents as in effect on the Amendment Closing Date and any shares of Holdings common stock issued to holders of such warrants upon exercise of such warrants and (k) cash payments made in lieu of issuing fractional shares of Holdings common stock or Holdings preferred stock, in an aggregate amount not to exceed $50,000.00. 32 27 "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreements": the collective reference to the Holdings Pledge Agreement, the Borrower Pledge Agreement, the Domestic Subsidiaries Pledge Agreement, the Foreign Subsidiaries Pledge Agreement and the Wirekraft Note Pledge Agreement. "Pledged Notes": as defined in the Wirekraft Note Pledge Agreement. "Pledged Stock": as defined in each Pledge Agreement (other than the Wirekraft Note Pledge Agreement). "Preferred Stock": the Senior Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 per share, liquidation preference $25.00 per share of the Borrower. "Properties": as defined in subsection 5.16. "Qualified Issuer": any commercial bank (a) which has capital and surplus in excess of $100,000,000 and (b) the outstanding long-term debt securities of which are rated at least A-2 by Standard & Poor's Corporation or at least P-2 by Moody's Investors Service, Inc., or carry an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments. "Refunded Swing Line Loans": as defined in subsection 2.15(c). "Register": as defined in subsection 12.6(d). "Regulation U": Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(b) of ERISA and the regulations thereunder, other than those events as to which the thirty day notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 2615. 33 28 "Required Lenders": at any time, Lenders the Total Credit Percentages of which aggregate at least a majority. "Requirement of Law": as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer": as to any Person, the chief executive officer, the president, the chief financial officer, a vice president or the vice president-finance of such Person. "Restricted Payments": as defined in subsection 8.7. "Revolving Credit Commitment": as to any Revolving Credit Lender, its obligation to make Revolving Credit Loans to the Borrower pursuant to subsection 2.1 and to participate in Swing Line Loans and Letters of Credit in an aggregate amount not to exceed at any one time outstanding the amount set forth opposite such Revolving Credit Lender's name in Schedule 1.1 under the heading "Revolving Credit Commitment", as such amount may be reduced from time to time as provided herein; collectively, as to all the Revolving Credit Lenders, the "Revolving Credit Commitments." "Revolving Credit Commitment Percentage": as to any Revolving Credit Lender, the percentage of the aggregate Revolving Credit Commitments constituted by its Revolving Credit Commitment. "Revolving Credit Commitment Period": the period from and including the Closing Date to but not including the Revolving Credit Commitment Termination Date. "Revolving Credit Commitment Termination Date": the earliest of (a) September 30, 2000 or, if such date is not a Business Day, the Business Day next preceding such date, (b) the date upon which the Term Loans shall be paid in full and (c) the date upon which the Revolving Credit Commitments shall be terminated pursuant hereto. "Revolving Credit Lender": any Lender having a Revolving Credit Commitment or that holds outstanding Revolving Credit Loans or L/C Participating Interests hereunder. "Revolving Credit Loan" and "Revolving Credit Loans": as defined in subsection 2.1. "Revolving Credit Note" and "Revolving Credit Notes": as defined in subsection 2.2. 34 29 "Second Additional Term Loans": the collective reference to the Additional Tranche B Term Loans and the Additional Tranche C Term Loans. "Second Amendment Closing Date": the date on which the Lenders make their Second Additional Term Loans. "Security Agreements": the collective reference to the Borrower Security Agreement, the Domestic Subsidiaries Security Agreements (including the Wire Technologies Security Agreement and the Camden Security Agreement), the Wire Technologies Trademark Security Agreement, the Wire Technologies Patent Security Agreement, the Trademark Security Agreement, the Patent Security Agreement, the Camden Trademark Security Agreement and the Camden Patent Security Agreement. "Security Documents": the Pledge Agreements, the Security Agreements, the Mortgages, the Assignments and any other collateral security document delivered to the Administrative Agent pursuant to subsection 7.9, 7.10 or 7.12; individually a "Security Document." "Seller Leases": the five lease agreements between Group Dekko International, Inc., as landlord and Wire Technologies, as tenant, covering real property and equipment located in Kendalville, Indiana, Albion, Indiana and El Paso, Texas. "Sellers Tax Escrow Amount (Omega)": shall mean the portion of the Tax Escrow Funds (as defined in the Omega Escrow Agreement) which is payable to the Sellers (as defined in the Omega Acquisition Agreement) pursuant to the terms of the Omega Escrow Agreement. "Senior Subordinated Note Documents": the collective reference to the Senior Subordinated Notes, the Senior Subordinated Note Indenture, the Senior Subordinated Note Purchase Agreements and all other agreements or instruments executed in connection with the Senior Subordinated Notes, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.10; individually a "Senior Subordinated Note Document." "Senior Subordinated Note Indenture": the Indenture dated as of June 12, 1995 between the Borrower and IBJ Schroder Bank & Trust Company, as trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.10. "Senior Subordinated Note Purchase Agreements": the reference to the note purchase agreement dated June 12, 1995 between the Borrower, BT Securities Corp. and Chemical Securities Inc. and certain other parties thereto, pursuant to which the Borrower issues or sells Senior Subordinated Notes, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.10. 35 30 "Senior Subordinated Notes": the $150,000,000 aggregate principal amount of 11-3/4% Senior Subordinated Notes due 2005 of the Borrower, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.10. "Silicones": Silicones, Inc., an Indiana corporation "Silicones Acquisition": the purchase by Wire Technologies of certain assets of Silicones pursuant to the Silicones Asset Purchase Agreement. "Silicones Asset Purchase Agreement": the Asset Purchase Agreement dated as of March 5, 1996, among Silicones, Holdings, the Borrower and Wire Technologies. "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Solvent" and "Solvency": with respect to any Person on a particular date, that on such date, (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets 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 does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (d) 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 an unreasonably small capital. "Standby L/C": an irrevocable letter of credit issued by the Issuing Lender pursuant to this Agreement for the account of the Borrower in respect of obligations of the Borrower incurred pursuant to contracts made or performances undertaken or to be undertaken or like matters relating to contracts to which the Borrower is or proposes to become a party in the ordinary course of the Borrower's business, including, without limiting the foregoing, for insurance purposes, or, for the account of Camden, solely to support its obligations with respect to the IRBs. "Standby L/C Application": as defined in subsection 3.2. "Subsidiary": as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. 36 31 "Swing Line Commitment": the Swing Line Lender's obligation to make Swing Line Loans pursuant to subsection 2.15. "Swing Line Lender": Chase in its capacity as provider of the Swing Line Loans. "Swing Line Loan Participation Certificate": a certificate in substantially the form of Exhibit D. "Swing Line Loans": as defined in subsection 2.15(a). "Swing Line Note": as defined in subsection 2.15(b). "Term Loan" and "Term Loans": as defined in subsection 2.6. "Term Loan Commitments": the collective reference to the Tranche A Term Loan Commitments, the Tranche B Term Loan Commitments and the Tranche C Term Loan Commitments; collectively, as to all the Term Loan Lenders, the "Term Commitments." "Term Loan Lender": the collective reference to the Tranche A Term Loan Lenders, the Tranche B Term Loan Lenders and the Tranche C Term Loan Lenders. "Term Note" and "Term Notes": as defined in subsection 2.9(a). "Total Credit Percentage": as to any Lender at any time, the percentage of the aggregate Revolving Credit Commitments, outstanding Tranche A Term Loans, outstanding Tranche B Term Loans and outstanding Tranche C Term Loans then constituted by its Revolving Credit Commitment, outstanding Tranche A Term Loans, outstanding Tranche B Term Loans and outstanding Tranche C Term Loans (or, if the Revolving Credit Commitments have terminated or expired, the percentage of the aggregate outstanding Revolving Credit Loans, outstanding Tranche A Term Loans, outstanding Tranche B Term Loans, outstanding Tranche C Term Loans and risk interests in the Letter of Credit Outstandings and Swing Line Loans then constituted by its outstanding Revolving Credit Loans, outstanding Tranche A Term Loans, outstanding Tranche B Term Loans, outstanding Tranche C Term Loans and risk interest in Letter of Credit Outstandings and Swing Line Loans). "Trade L/C": a commercial documentary letter of credit issued by the Issuing Lender pursuant to subsection 3.1 for the account of the Borrower for the purchase of goods in the ordinary course of business. "Trade L/C Application": as defined in subsection 3.2. "Trademark Security Agreement": the Trademark Security Agreement made by Wirekraft Industries in favor of the Administrative Agent for the ratable benefit of 37 32 the Lenders, substantially in the form of Exhibit B-10, as the same may be amended, supplemented or otherwise modified from time to time. "Tranche": the reference to Eurodollar Loans the Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day); Tranches may be identified as "Eurodollar Tranches". "Tranche A Term Loan Commitment": as to any Tranche A Term Loan Lender, its obligation to make an Original Tranche A Term Loan to the Borrower pursuant to subsection 2.6 of this Agreement and/or an Additional Tranche A Term Loan to the Borrower pursuant to subsection 2.6 in an aggregate amount not to exceed the amount set forth opposite such Tranche A Term Loan Lender's name in Schedule 1.1 under the heading "Total Tranche A Term Loan Commitment." "Tranche A Term Loan Commitment Percentage": as to any Tranche A Term Loan Lender, the percentage of the aggregate Tranche A Term Loan Commitments constituted by its Tranche A Term Loan Commitment or, following the Second Amendment Closing Date, the percentage of the aggregate outstanding Tranche A Term Loans constituted by its Tranche A Term Loan. "Tranche A Term Loan Lender": any Lender having a Tranche A Term Loan Commitment hereunder or that holds outstanding Tranche A Term Loans. "Tranche A Term Loans": as defined in subsection 2.6. "Tranche A Term Note": as defined in subsection 2.7(a). "Tranche B Term Loan Commitment": as to any Tranche B Term Loan Lender, its obligation to make an Original Tranche B Term Loan to the Borrower pursuant to subsection 2.6 of this Agreement and/or an Additional Tranche B Term Loan to the Borrower pursuant to subsection 2.6 in an aggregate amount not to exceed the amount set forth opposite such Tranche B Term Loan Lender's name in Schedule 1.1 under the heading "Total Tranche B Term Loan Commitment." "Tranche B Term Loan Commitment Percentage": as to any Tranche B Term Loan Lender, the percentage of the aggregate Tranche B Term Loan Commitments constituted by its Tranche B Term Loan Commitment or, following the Second Amendment Closing Date, the percentage of the aggregate outstanding Tranche B Term Loans constituted by its Tranche B Term Loan. "Tranche B Term Loan Lender": any Lender having a Tranche B Term Loan Commitment hereunder or that holds outstanding Tranche B Term Loans. "Tranche B Term Loans": as defined in subsection 2.6. "Tranche B Term Note": as defined in subsection 2.8(a). 38 33 "Tranche C Term Loan Commitment": as to any Tranche C Term Loan Lender, its obligation to make an Original Tranche C Term Loan to the Borrower pursuant to subsection 2.6 of this Agreement and/or an Additional Tranche C Term Loan to the Borrower pursuant to subsection 2.6 in an aggregate amount not to exceed the amount set forth opposite such Tranche C Term Loan Lender's name in Schedule 1.1 under the heading "Total Tranche C Term Loan Commitment."" "Tranche C Term Loan Commitment Percentage": as to any Tranche C Term Loan Lender, the percentage of the aggregate Tranche C Term Loan Commitments constituted by its Tranche C Term Loan Commitment or, following the Second Amendment Closing Date, the percentage of the aggregate outstanding Tranche C Term Loans constituted by its Tranche C Term Loan. "Tranche C Term Loan Lender": any Lender having a Tranche C Term Loan Commitment hereunder or that holds outstanding Tranche C Term Loans. "Tranche C Term Loans": as defined in subsection 2.6. "Tranche C Term Note": as defined in subsection 2.9(a). "Transaction Documents": the collective reference to the Omega Acquisition Documents, the Merger Documents and the Holdings Stock Purchase Agreement and all other agreements, instruments or certificates executed in connection with the Transactions, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.16. "Transactions": the collective reference to each of the Omega Acquisition, the Mergers and the Wirekraft Acquisition. "Transferee": as defined in subsection 12.6(f). "Type": as to any Loan, its nature as an Alternate Base Rate Loan or a Eurodollar Loan. "Uniform Customs": the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, and any revisions thereof. "U.S. Tax Compliance Certificate": as defined in subsection 4.8(b)(ii). "WAC": Wirekraft Acquisition Company, a Delaware corporation. "Warrants": the Warrants to purchase shares of Holdings Common Stock at an exercise price of $.01 per share issued to holders of the Preferred Stock. "WB Holdings": WB Holdings Inc., a Delaware corporation. 39 34 "Wirekraft": Wirekraft Holdings Corp., a Delaware corporation. "Wirekraft Acquisition": the acquisition by the Borrower of the capital stock of Wirekraft. "Wirekraft Business": Wirekraft's and its Subsidiaries' business of manufacturing insulated copper wire and wire harnesses acquired by WAC pursuant to the Wirekraft Acquisition. "Wirekraft Industries": Wirekraft Industries, Inc., a Delaware corporation. "Wirekraft Merger": the merger of WAC with and into Wirekraft pursuant to and in accordance with the Merger Documents. "Wirekraft Note Pledge Agreement": the Note Pledge Agreement made by Wirekraft Industries in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-6, as the same may be amended, supplemented or otherwise modified from time to time. "Wirekraft Preferred Stock": the 1,049,992 shares of Series A Senior Preferred Stock, par value $0.01 per share plus accrued and unpaid dividends of Wirekraft issued to GE and converted into cash pursuant to the Merger Documents on the Closing Date. "Wire Technologies": Wire Technologies, Inc., an Indiana corporation. "Wire Technologies Guarantee": the Guarantee by Wire Technologies in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-15, as the same may be amended, supplemented or otherwise modified from time to time. "Wire Technologies Patent Security Agreement": the Patent Security Agreement made by Wire Technologies in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-16, as the same may be amended, supplemented or otherwise modified from time to time. "Wire Technologies Security Agreement": the Domestic Subsidiary Security Agreement made by Wire Technologies in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-8, as the same may be amended, supplemented or otherwise modified from time to time. "Wire Technologies Trademark Security Agreement": the Trademark Security Agreement made by Wirekraft Industries in favor of the Administrative Agent for the ratable benefit of the Lenders, substantially in the form of Exhibit B-17, as the same may be amended, supplemented or otherwise modified from time to time. 40 35 "Wholly Owned Subsidiary": as to any Person, any Subsidiary of which such Person owns, directly or indirectly, all of the Capital Stock of such Subsidiary other than directors' qualifying shares or any shares held by nominees. 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any Note or any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any Note, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions hereof, each Revolving Credit Lender severally agrees to make revolving credit loans (each, a "Revolving Credit Loan", collectively, "Revolving Credit Loans") to the Borrower from time to time during the Revolving Credit Commitment Period in an aggregate principal amount at any one time outstanding, when added to such Revolving Credit Lender's Revolving Credit Commitment Percentage of all Letter of Credit Outstandings and outstanding Swing Line Loans, not to exceed the lesser of (i) the amount of such Revolving Credit Lender's Revolving Credit Commitment less such Revolving Credit Lender's Revolving Credit Commitment Percentage of any commitment in respect of any working capital facility described in subsection 8.2(i)(iii) and (ii) such Lender's Revolving Credit Commitment Percentage of the Borrowing Base then in effect. During the Revolving Credit Commitment Period the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. (b) The Revolving Credit Loans may from time to time be (i) Eurodollar Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsections 2.3 and 2.13. 2.2 Revolving Credit Notes. The Borrower agrees that, upon the request to the Administrative Agent by any Revolving Credit Lender, in order to evidence such Lender's Revolving Credit Loans the Borrower will execute and deliver to such Lender a promissory note substantially in the form of Exhibit A-1, with appropriate insertions as to payee, date 41 36 and principal amount (each, as amended, supplemented, replaced or otherwise modified from time to time, a "Revolving Credit Note"), payable to the order of such Revolving Credit Lender and in a principal amount equal to the lesser of (a) the amount of the initial Revolving Credit Commitment of such Revolving Credit Lender and (b) the aggregate unpaid principal amount of all Revolving Credit Loans made by such Revolving Credit Lender. Each Revolving Credit Lender is hereby authorized to record the date, Type and amount of each Revolving Credit Loan made by such Revolving Credit Lender, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal thereof and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto, on the schedules annexed to and constituting a part of its Revolving Credit Note, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by any Revolving Credit Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Revolving Credit Note or this Agreement. Any Revolving Credit Note shall (x) be dated the Closing Date, (y) be stated to mature on the Revolving Credit Commitment Termination Date and (z) provide for the payment of interest in accordance with subsection 4.1. 2.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow under the Revolving Credit Commitments during the Revolving Credit Commitment Period on any Business Day, provided that the Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be initially Eurodollar Loans, or (b) one Business Day prior to the requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, Alternate Base Rate Loans or a combination thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the respective amounts of each such Type of Loan and the respective lengths of the initial Interest Periods therefor. Each borrowing under the Revolving Credit Commitments shall be in an amount equal to (A) in the case of Alternate Base Rate Loans, $500,000 or a whole multiple of $100,000 in excess thereof (or, if the then Available Revolving Credit Commitments are less than $500,000, such lesser amount) and (B) in the case of Eurodollar Loans, $1,000,000 or a whole multiple of $250,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in subsection 12.2 prior to 11:00 A.M., New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Credit Lenders and in like funds as received by the Administrative Agent. 2.4 Commitment Fee; Administrative Agent Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Credit Lender a commitment fee for the period from and including the first day of the Revolving Credit Commitment 42 37 Period to the Revolving Credit Commitment Termination Date, computed at the rate of 1/2 of 1% per annum on the average daily Available Revolving Credit Commitment of such Revolving Credit Lender during the period for which payment is made, payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Credit Commitment Termination Date. (b) The Borrower shall pay to Chase the amounts set forth in the Fee Letter dated December 26, 1996 among Chase, CSI, Bankers Trust Company, BT Securities Corporation and the Borrower in the amounts and on the dates set forth therein. 2.5 Termination or Reduction of Revolving Credit Commitments. (a) The Borrower shall have the right, upon not less than five Business Days' notice to the Administrative Agent, to terminate the Revolving Credit Commitments or, from time to time, reduce the unutilized portion of the amount of the Revolving Credit Commitments, provided that (i) the Revolving Credit Commitments shall not be terminated if any Letters of Credit or Swing Line Loans are outstanding and (ii) any such termination of the Revolving Credit Commitments shall be accompanied by prepayment in full of the Revolving Credit Loans, Swing Line Loans and L/C Obligations then outstanding, together with accrued interest thereon to the date of such prepayment, cancellation of all Letters of Credit (unless cash collateralized in accordance with the last sentence of this paragraph) and the payment of any unpaid commitment fee then accrued hereunder. Any such reduction shall be in an amount of $500,000, or a whole multiple of $100,000 in excess thereof, and shall reduce permanently the amount of the Revolving Credit Commitments then in effect and shall further include any amounts due in respect thereof under subsection 4.9. Upon termination of the Revolving Credit Commitments, any Letter of Credit then outstanding which has been fully cash collateralized upon terms reasonably satisfactory to the Administrative Agent and the Issuing Lender shall no longer be considered a "Letter of Credit" as defined in subsection 1.1, and any L/C Participating Interest heretofore granted by the Issuing Lender to the Revolving Credit Lenders in such Letter of Credit shall be deemed terminated but the letter of credit fees payable under subsection 3.3 shall continue to accrue to the Issuing Lender with respect to such Letter of Credit until the expiry thereof. (b) In the case of any reduction of the Revolving Credit Commitments hereunder, to the extent, if any, that the sum of the Revolving Credit Loans, Swing Line Loans and the Letter of Credit Outstandings exceeds the Revolving Credit Commitments as so reduced, the Borrower shall make a prepayment equal to such excess amount, the proceeds of which shall be applied first, to payment of the Swing Line Loans then outstanding, second, to payment of the Revolving Credit Loans then outstanding, third, to payment of any L/C Obligations then outstanding and last, to cash collateralize any outstanding Letter of Credit on terms satisfactory to the Required Lenders. (c) The Revolving Credit Commitments once terminated or reduced may not be reinstated. 2.6 Term Loans. (a) Each Tranche A Term Loan Lender identified on Schedule 1.1 hereto as having an Original Tranche A Term Loan Commitment severally has made a term loan (an "Original Tranche A Term Loan") on the Closing Date in an aggregate principal 43 38 amount set forth opposite such Lender's name in Schedule 1.1 under the heading "Original Tranche A Term Loan Commitment". Each Tranche A Term Loan Lender identified on Schedule 1.1 hereto as having an Additional Tranche A Term Loan Commitment severally has made an additional term loan (an "Additional Tranche A Term Loan"; together with the Original Tranche A Term Loans, the "Tranche A Term Loans") on the Amendment Closing Date in an aggregate principal amount set forth opposite such Lender's name in Schedule 1.1 under the heading "Additional Tranche A Term Loan Commitment". (b) Each Tranche B Term Loan Lender identified on Schedule 1.1 hereto as having an Original Tranche B Term Loan Commitment severally has made a term loan (an "Original Tranche B Term Loan") on the Closing Date in an aggregate principal amount set forth opposite such Lender's name in Schedule 1.1 under the heading "Original Tranche B Term Loan Commitment". Subject to the terms and conditions hereof, each Tranche B Term Loan Lender identified on Schedule 1.1 hereto as having an Additional Tranche B Term Loan Commitment severally agrees to make an additional term loan (an "Additional Tranche B Term Loan"; together with the Original Tranche B Term Loans, the "Tranche B Term Loans") on the Second Amendment Closing Date in an aggregate principal amount set forth opposite such Lender's name in Schedule 1.1 under the heading "Additional Tranche B Term Loan Commitment". (c) Each Tranche C Term Loan Lender identified on Schedule 1.1 hereto as having an Original Tranche C Term Loan Commitment severally has made a term loan (an "Original Tranche C Term Loan") on the Amendment Closing Date in an aggregate principal amount set forth opposite such Lender's name in Schedule 1.1 under the heading "Original Tranche C Term Loan Commitment". Subject to the terms and conditions hereof, each Tranche C Term Loan Lender identified on Schedule 1.1 hereto as having an Additional Tranche C Term Loan Commitment severally agrees to make an additional term loan (an "Additional Tranche C Term Loan"; together with the Original Tranche C Term Loans, the "Tranche C Term Loans"; the Tranche C Term Loans together with the Tranche A Term Loans and the Tranche B Term Loans, the "Term Loans") on the Second Amendment Closing Date in an aggregate principal amount set forth opposite such Lender's name in Schedule 1.1 under the heading "Additional Tranche C Term Loan Commitment". (d) The Term Loans may from time to time be (i) Eurodollar Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsection 2.10. 2.7 Tranche A Term Notes. (a) The Borrower agrees that, upon the request to the Administrative Agent by any Tranche A Term Loan Lender, in order to evidence such Lender's Tranche A Term Loan the Borrower will execute and deliver to such Lender a promissory note substantially in the form of Exhibit A-2 (each, as amended, supplemented, replaced or otherwise modified from time to time, a "Tranche A Term Note") (and will execute and deliver a replacement Tranche A Term Note to any Tranche A Term Lender which has an outstanding Original Tranche A Term Loan and which makes an Additional Tranche A Term Loan), with appropriate insertions therein as to payee, date and principal amount, payable to the order of such Tranche A Term Loan Lender and in a principal amount equal to the amount set forth opposite such Tranche A Term Loan Lender's name on 44 39 Schedule 1.1 under the heading "Total Tranche A Term Loan Commitment". Each Tranche A Term Loan Lender is hereby authorized to record the date, Type and amount of its Tranche A Term Loan, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal of its Tranche A Term Loan and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto, on the schedules annexed to and constituting a part of its Tranche A Term Note, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by any Tranche A Term Loan Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Tranche A Term Note or this Agreement. Any Tranche A Term Note shall (i) be dated the Closing Date, (ii) be payable as provided in subsection 2.7(b) and (iii) provide for the payment of interest in accordance with subsection 4.1. (b) The aggregate Tranche A Term Loans of all the Tranche A Term Loan Lenders shall be payable in 15 consecutive quarterly installments on the dates and in a principal amount equal to the amount set forth below (together with all accrued interest thereon) opposite the applicable installment date (or, if less, the aggregate amount of the Tranche A Term Loans then outstanding):
Installment Amount ----------- ------ March 31, 1997 $4,573,598.13 June 30, 1997 $4,573,598.13 September 30, 1997 $4,573,598.13 December 31, 1997 $5,251,168.22 March 31, 1998 $5,251,168.22 June 30, 1998 $5,251,168.22 September 30, 1998 $5,251,168.22 December 31, 1998 $5,928,738.32 March 31, 1999 $5,928,738.32 June 30, 1999 $5,928,738.32 September 30, 1999 $5,928,738.32 December 31, 1999 $9,147,196.26 March 31, 2000 $9,147,196.26 June 30, 2000 $9,147,196.26 September 30, 2000 $9,147,196.28
2.8 Tranche B Term Notes. (a) The Borrower agrees that, upon the request to the Administrative Agent by any Tranche B Term Loan Lender, in order to evidence such Lender's Tranche B Term Loan the Borrower will execute and deliver to such Lender a promissory note substantially in the form of Exhibit A-3 (each, as amended, supplemented, replaced or otherwise modified from time to time, a "Tranche B Term Note") (and will execute and deliver a replacement Tranche B Term Note to any Tranche B Term Lender 45 40 which has an outstanding Original Tranche B Term Loan and which makes an Additional Tranche B Term Loan), with appropriate insertions therein as to payee, date and principal amount, payable to the order of such Tranche B Term Loan Lender and in a principal amount equal to the amount set forth opposite such Tranche B Term Loan Lender's name on Schedule 1.1 under the heading "Tranche B Term Loan Commitment." Each Tranche B Term Loan Lender is hereby authorized to record the date, Type and amount of its Tranche B Term Loan, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal of its Tranche B Term Loan and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto, on the schedules annexed to and constituting a part of its Tranche B Term Note, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by any Tranche B Term Loan Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Tranche B Term Note or this Agreement. Any Tranche B Term Note shall (i) be dated the Closing Date, (ii) be payable as provided in subsection 2.8(b) and (iii) provide for the payment of interest in accordance with subsection 4.1. (b) The aggregate Tranche B Term Loans of all the Tranche B Term Loan Lenders shall be payable in 23 consecutive quarterly installments on the dates and in a principal amount equal to the amount set forth below (together with all accrued interest thereon) opposite the applicable installment date (or, if less, the aggregate amount of the Tranche B Term Loans then outstanding):
Installment Amount ----------- ------ March 31, 1997 $174,618.32 June 30, 1997 $174,618.32 September 30, 1997 $174,618.32 December 31, 1997 $174,618.32 March 31, 1998 $174,618.32 June 30, 1998 $174,618.32 September 30, 1998 $174,618.32 December 31, 1998 $174,618.32 March 31, 1999 $174,618.32 June 30, 1999 $174,618.32 September 30, 1999 $174,618.32 December 31, 1999 $174,618.32 March 31, 2000 $174,618.32 June 30, 2000 $174,618.32 September 30, 2000 $174,618.32 December 31, 2000 $13,969,465.65 March 31, 2001 $13,969,465.65 June 30, 2001 $13,969,465.65 September 30, 2001 $13,969,465.65 December 31, 2001 $13,969,465.65 March 31, 2002 $13,969,465.65
46 41 June 30, 2002 $13,969,465.65 September 30, 2002 $13,969,465.65
2.9 Tranche C Term Notes. (a) The Borrower agrees that, upon the request to the Administrative Agent by any Tranche C Term Loan Lender, in order to evidence such Lender's Tranche C Term Loan the Borrower will execute and deliver to such Lender a promissory note substantially in the form of Exhibit A-4 (each, as amended, supplemented, replaced or otherwise modified from time to time, a "Tranche C Term Note"; Tranche A Term Notes, Tranche B Term Notes and Tranche C Term Notes when hereinafter referred to collectively shall be referred to as "Term Notes") (and will execute and deliver a replacement Tranche C Term Note to any Tranche C Term Lender which has an outstanding Original Tranche C Term Loan and which makes an Additional Tranche C Term Loan), with appropriate insertions therein as to payee, date and principal amount, payable to the order of such Tranche C Term Loan Lender and in a principal amount equal to the amount set forth opposite such Tranche C Term Loan Lender's name on Schedule 1.1 under the heading "Tranche C Term Loan Commitment." Each Tranche C Term Loan Lender is hereby authorized to record the date, Type and amount of its Tranche C Term Loan, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal of its Tranche C Term Loan and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto, on the schedules annexed to and constituting a part of its Tranche C Term Note, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by any Tranche C Term Loan Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Tranche C Term Note or this Agreement. Any Tranche C Term Note shall (i) be dated the Amendment Closing Date, (ii) be payable as provided in subsection 2.9(b) and (iii) provide for the payment of interest in accordance with subsection 4.1. (b) The aggregate Tranche C Term Loans of all the Tranche C Term Loan Lenders shall be payable in 27 consecutive quarterly installments on the dates and in a principal amount equal to the amount set forth below (together with all accrued interest thereon) opposite the applicable installment date (or, if less, the aggregate amount of the Tranche C Term Loans then outstanding):
Installment Amount ----------- ------ March 31, 1997 $167,989.42 June 30, 1997 $167,989.42 September 30, 1997 $167,989.42 December 31, 1997 $167,989.42 March 31, 1998 $167,989.42 June 30, 1998 $167,989.42 September 30, 1998 $167,989.42 December 31, 1998 $167,989.42 March 31, 1999 $167,989.42 June 30, 1999 $167,989.42 September 30, 1999 $167,989.42
47 42 December 31, 1999 $167,989.42 March 31, 2000 $167,989.42 June 30, 2000 $167,989.42 September 30, 2000 $167,989.42 December 31, 2000 $167,989.42 March 31, 2001 $167,989.42 June 30, 2001 $167,989.42 September 30, 2001 $167,989.42 December 31, 2001 $167,989.42 March 31, 2002 $167,989.42 June 30, 2002 $167,989.42 September 30, 2002 $167,989.42 December 31, 2002 $30,784,060.85 March 31, 2003 $30,784,060.85 June 30, 2003 $30,784,060.85 September 30, 2003 $30,784,060.85"
2.10 Procedure for Additional Term Loan Borrowing; Repayment of Loans. (a) The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, one Business Day prior to the Second Amendment Closing Date) requesting that the Term Loan Lenders with an Additional Tranche B Term Loan Commitment or an Additional Tranche C Term Loan Commitment make the Second Additional Term Loans on the Second Amendment Closing Date and specifying the amount to be borrowed. Upon receipt of such notice the Administrative Agent shall promptly notify each such Term Loan Lender thereof. On the Second Amendment Closing Date each such Term Loan Lender shall make available to the Administrative Agent at its office specified in subsection 12.2 an amount in immediately available funds equal to the Second Additional Term Loan to be made by such Term Loan Lender. The Administrative Agent shall on such date credit the account of the Borrower on the books of such office of the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by such Term Loan Lenders. (b) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of: (i) each Revolving Credit Lender, the then unpaid principal amount of each Revolving Credit Loan of such Lender, on the Revolving Credit Commitment Termination Date (or such earlier date on which the Revolving Credit Loans become due and payable pursuant to Section 9); (ii) the Swing Line Lender, the then unpaid principal amount of the Swing Line Loans, on the Revolving Credit Commitment Termination Date (or such earlier date on which the Swing Line Loans become due and payable pursuant to Section 9); (iii) each Tranche A Term Loan Lender, such Tranche A Term Loan Lender's Tranche A Term Loan Commitment Percentage of the amounts specified in subsection 2.7(b) (or, if less, the aggregate amount of the Tranche A Term Loans of such Tranche A Term Loan Lender then 48 43 outstanding), on the dates specified in subsection 2.7(b) (or such earlier date on which the Tranche A Term Loans become due and payable pursuant to Section 9); (iv) each Tranche B Term Loan Lender, such Tranche B Term Loan Lender's Tranche B Term Loan Commitment Percentage of the amounts specified in subsection 2.8(b) (or, if less, the aggregate amount of the Tranche B Term Loans of such Tranche B Term Loan Lender then outstanding), on the dates specified in subsection 2.8(b) (or such earlier date on which the Tranche B Term Loans become due and payable pursuant to Section 9); and (v) each Tranche C Term Loan Lender, such Tranche C Term Loan Lender's Tranche C Term Loan Commitment Percentage of the amounts specified in subsection 2.9(b) (or, if less, the aggregate amount of the Tranche C Term Loans of such Tranche C Term Loan Lender then outstanding), on the dates specified in subsection 2.9(b) (or such earlier date on which the Tranche C Term Loans become due and payable pursuant to Section 9). The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 4.1. (c) Each Lender (including the Swing Line Lender) shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (d) The Administrative Agent shall maintain the Register pursuant to subsection 12.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of each Loan made hereunder, the Type thereof and each Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender's share thereof. (e) The entries made in the Register and the accounts of each Lender maintained pursuant to subsection 2.10(c) shall, in the absence of manifest error and to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. 2.11 Optional Prepayments. (a) The Borrower may, at any time and from time to time, prepay the Loans, in whole or in part, without premium or penalty, upon at least three Business Days' irrevocable notice to the Administrative Agent, specifying the date and amount of prepayment and whether the prepayment is of (i) Eurodollar Loans, Alternate Base Rate Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each and (ii) Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Revolving Credit Loans or a combination thereof, and if of a combination thereof, the amount allocable to each. Upon receipt of any such notice the Administrative Agent shall promptly notify each Term Loan Lender or Revolving Credit Lender, as the case may be, thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with, in the case of prepayments of the Term Loans only, accrued interest to such date on the amount prepaid. Optional prepayments of the Term Loans shall be applied, with respect to the first $10,000,000 of such prepayments, 49 44 to installments of the Term Loans as the Borrower may elect (other than scheduled installments of the Tranche B Term Loans prior to December 31, 2000 and scheduled installments of the Tranche C Term Loans prior to December 31, 2002) and, with respect to any amount of such prepayments in excess of $10,000,000, such prepayments shall be applied pro rata to the Term Loans based upon the then outstanding principal amounts of the Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans (with each Tranche A Term Loan, Tranche B Term Loan and Tranche C Term Loan to be allocated that percentage of the amount to be applied as is equal to a fraction (expressed as a percentage), the numerator of which is the then outstanding principal amount of such Tranche A Term Loan, Tranche B Term Loan or Tranche C Term Loan, as the case may be, and the denominator of which is equal to the then outstanding principal amount of all Term Loans). (b) With respect to optional prepayments of the Term Loans after $10,000,000 of optional prepayments shall have been made, the amount of each principal payment of Term Loans shall be applied to reduce the then remaining installments of the Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans, pro rata based upon the then remaining number of installments of such Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may be, after giving effect to all prior reductions thereto (i.e., each then remaining installment of the Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may be, shall be reduced by an amount equal to the aggregate amount to be applied to the Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may be, divided by the number of the then remaining installments for such Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans); provided, that if the amount to be applied to any installment as required by this Agreement would exceed the then remaining amount of such installment, then an amount equal to such excess shall be applied to the next succeeding installment after giving effect to all prior reductions thereto (including the amount of prepayments theretofore allocated pursuant to the preceding portion of this sentence). Amounts prepaid on account of the Term Loans may not be reborrowed. Partial prepayments shall be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof and shall include any amounts due in respect thereof under subsection 4.9. 2.12 Mandatory Prepayments and Revolving Credit Commitment Reductions. (a) If, subsequent to the Second Amendment Closing Date, unless the Required Lenders (and Tranche A Term Loan Lenders, Tranche B Term Loan Lenders and Tranche C Term Loan Lenders having in the aggregate at least a majority of the outstanding Term Loans) and the Borrower shall otherwise agree, Holdings or any of its Subsidiaries shall issue any class of Capital Stock other than a Permitted Issuance or incur any Indebtedness other than any Indebtedness permitted pursuant to subsection 8.2 or 11.6(i), 100% of the Net Cash Proceeds thereof shall on the first Business Day after receipt, be applied toward the prepayment of the Loans and reduction of Commitments as set forth in paragraph (d) of this subsection 2.12. (b) Unless the Required Lenders (and Tranche A Term Loan Lenders, Tranche B Term Loan Lenders and Tranche C Term Loan Lenders having in the aggregate at least a majority of the outstanding Term Loans) and the Borrower shall otherwise agree, if the Borrower or any of its Subsidiaries shall receive Net Cash Proceeds from any Asset Sale (including the sale and leaseback of assets and any sale of accounts receivable in connection 50 45 with a receivable financing transaction) such Net Cash Proceeds shall, on the first Business Day after receipt, be applied toward the prepayment of the Loans and reduction of Commitments as set forth in paragraph (d) of this subsection 2.12. (c) Unless the Required Lenders (and Tranche A Term Loan Lenders, Tranche B Term Loan Lenders and Tranche C Term Loan Lenders having in the aggregate at least a majority of the outstanding Term Loans) and the Borrower shall otherwise agree, if for any fiscal year, commencing with the fiscal year ending December 31, 1996 there shall be Excess Cash Flow for such fiscal year, 75% of such Excess Cash Flow shall be applied toward prepayment of the Loans and reduction of the Commitments as set forth in paragraph (d) of this subsection 2.12. Each such prepayment shall be made on or before the date which is seven Business Days after the earlier of (A) the date on which the financial statements referred to in subsection 7.1(a) are required to be delivered to the Lenders and (B) the date on which said financial statements are actually delivered. (d) All mandatory prepayments shall be applied first to the Term Loans and second to the permanent reduction of the Revolving Credit Commitments. The application of prepayments referred to in the preceding sentence shall be made first to Alternate Base Rate Loans and second to Eurodollar Loans. Each mandatory prepayment of the Term Loans shall be applied pro rata to the Term Loans based upon the then outstanding principal amounts of the Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans (with each Tranche A Term Loan, Tranche B Term Loan and Tranche C Term Loan to be allocated that percentage of the amount to be applied as is equal to a fraction (expressed as a percentage), the numerator of which is the then outstanding principal amount of such Tranche A Term Loan, Tranche B Term Loan or Tranche C Term Loan, as the case may be, and the denominator of which is equal to the then outstanding principal amount of all Term Loans). The amount of each principal prepayment of Term Loans shall be applied to reduce the then remaining installments of the Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans, pro rata based upon the then remaining number of installments of such Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may be, after giving effect to all prior reductions thereto (i.e., each then remaining installment of the Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may be, shall be reduced by an amount equal to the aggregate amount to be applied to the Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may be, divided by the number of the then remaining installments for such Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans); provided, that if the amount to be applied to any installment as required by this Agreement would exceed the then remaining amount of such installment, then an amount equal to such excess shall be applied to the next succeeding installment after giving effect to all prior reductions thereto (including the amount of prepayments theretofore allocated pursuant to the preceding portion of this sentence). Amounts prepaid on account of the Term Loans may not be reborrowed. (e) If at any time the sum of the Revolving Credit Loans, Swing Line Loans and the Letter of Credit Outstandings exceeds the lesser of (i) the Borrowing Base as then in effect and (ii) the Revolving Credit Commitments less the amount of any commitment in respect of any 51 46 working capital facility described in subsection 8.2(i)(iii) (including at any time after any reduction of the Revolving Credit Commitments pursuant to subsection 2.5 or this subsection 2.12), the Borrower shall make a payment in the amount of such excess which payment shall be applied in the order set forth in subsection 2.5(b). To the extent that after giving effect to any prepayment of the Loans required by the preceding sentence, the sum of the Revolving Credit Loans, Swing Line Loans and Letter of Credit Outstandings exceed the lesser of clauses (i) and (ii) above, the Borrower shall, without notice or demand, immediately cash collateralize the then outstanding L/C Obligations in an amount equal to such excess upon terms reasonably satisfactory to the Administrative Agent. (f) If at any time the Borrower or any Subsidiary shall receive any cash proceeds of any casualty or condemnation in excess of $2,000,000 permitted by subsection 8.6(c), such proceeds shall be deposited with the Administrative Agent who shall hold such proceeds in a cash collateral account satisfactory to it. From time to time upon request, the Administrative Agent will release such proceeds to the Borrower or such Subsidiary, as necessary, to pay for replacement or rebuilding of the assets lost or condemned. If such assets are not replaced or rebuilt within one year (subject to reasonable extension for force majeure or weather delays) following the condemnation or casualty or if the Borrower fails to notify the Administrative Agent in writing on or before 180 days after such casualty or condemnation that the Borrower shall commence the replacement or rebuilding of such asset, then, in either case, the Administrative Agent may apply any amounts in the cash collateral account to the repayment of the Loans in accordance with subsection 2.12(d). (g) If there shall be any reduction in the price under the Omega Acquisition Agreement, the Omega Escrow Agreement (other than (i) any reduction in the purchase price described in subsection 1.09(a)(ii) of the Omega Acquisition Agreement to the extent, and only to the extent that any such reduction does not exceed $500,000 in the aggregate and (ii) any reduction in the purchase price which is due to a breach of any covenant, representation or warranty in the Omega Acquisition Agreement by any party thereto other than the Borrower which, due to such party's refusal or other failure to cure, is cured with such reduction) pursuant to the terms thereof, then on the same Business Day as the Borrower receives any payment in respect thereof, the Borrower shall, unless the Required Lenders and the Borrower shall otherwise agree, repay the Loans in the amount of such reduction to be applied first to the Term Loans in accordance with subsection 2.12(d) and second to the permanent reduction of the Revolving Credit Commitments. The application of prepayments referred to in the preceding sentence shall be made first to Alternate Base Rate Loans and second to Eurodollar Loans. Each mandatory prepayment of the Term Loans pursuant to this subsection 2.12(g) shall be applied to the remaining installments thereof in accordance with subsection 2.12(d). To the extent that after giving effect to any prepayment of the Loans required by the preceding sentence, the sum of the Revolving Credit Loans, Swing Line Loans and Letter of Credit Outstandings exceed the lesser of (i) the Borrowing Base and (ii) the Revolving Credit Commitments as then reduced, the Borrower shall, without notice or demand, immediately cash collateralize the then outstanding L/C Obligations in an amount equal to such excess upon terms reasonably satisfactory to the Administrative Agent. (h) If there shall be any reduction in the price under any of the Acquisition Documents or the Camden Acquisition Documents (other than (i) an adjustment due to 52 47 working capital adjustments as contemplated by the Acquisition Documents or the Camden Acquisition Documents, as the case may be, or (ii) any reduction in the purchase price which is due to a breach of any covenant, representation or warranty in any Acquisition Agreement or Camden Acquisition Document, as the case may be, by any party thereto other than the Borrower which, due to such party's refusal or other failure to cure, is cured with such reduction) pursuant to the terms thereof, then on the same Business Day as the Borrower receives any payment in respect thereof, the Borrower shall, unless the Required Lenders and the Borrower shall otherwise agree, repay the Loans in the amount of such reduction to be applied first to the Term Loans in accordance with subsection 2.12(d) and second to the permanent reduction of the Revolving Credit Commitments. The application of prepayments referred to in the preceding sentence shall be made first to Alternate Base Rate Loans and second to Eurodollar Loans. Each mandatory prepayment of the Term Loans pursuant to this subsection 2.12(h) shall be applied to the remaining installments thereof in accordance with subsection 2.12(d). To the extent that after giving effect to any prepayment of the Loans required by the preceding sentence, the sum of the Revolving Credit Loans, Swing Line Loans and Letter of Credit Outstandings exceed the lesser of (i) the Borrowing Base and (ii) the Revolving Credit Commitments as then reduced, the Borrower shall, without notice or demand, immediately cash collateralize the then outstanding L/C Obligations in an amount equal to such excess upon terms reasonably satisfactory to the Administrative Agent. (i) The provisions of this subsection 2.12 shall not be in derogation of any other covenant or obligation of the Borrower and its Subsidiaries under the Loan Documents and shall not be construed as a waiver of, or a consent to departure from, any such covenant or obligation. (j) Notwithstanding the foregoing provisions of this subsection 2.12, if at any time the mandatory prepayment of the Term Loans pursuant to this Agreement would result, after giving effect to the procedures set forth in this Agreement, in the Borrower incurring breakage costs and other Eurodollar Loans related costs under subsection 4.6, 4.7 or 4.8 as a result of Eurodollar Loans being prepaid other than on the last day of an Interest Period applicable thereto ("Affected Eurodollar Loans") which breakage costs are required to be paid pursuant to subsection 4.9, then, the Borrower may so long as no Default or Event of Default shall have occurred and be continuing, in its sole discretion, initially deposit a portion (up to 100%) of the amounts that otherwise would have been paid in respect to the Affected Eurodollar Loans with the Administrative Agent (which deposit must be equal in amount to the amount of Affected Eurodollar Loans not immediately prepaid) to be held as security for the obligations of the Borrower to make such mandatory prepayment pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Administrative Agent, with such cash collateral to be directly applied upon the first occurrence (or occurrences) thereafter of the last day of an Interest Period applicable to the relevant Term Loan that is a Eurodollar Loan (or such earlier date or dates as shall be requested by the Borrower), to repay an aggregate principal amount of such Term Loan equal to the Affected Eurodollar Loans not initially repaid pursuant to this sentence. 2.13 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans to Alternate Base Rate Loans, by giving the Administrative Agent at least two Business Days' prior irrevocable notice of such election, 53 48 provided that, unless the Borrower elects to deposit with the Administrative Agent the amount of any breakage costs and other Eurodollar Loan related costs to be incurred by the Borrower under this Agreement with respect to the prepayment or conversion of such Eurodollar Loan prior to the end of an Interest Period, any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert Alternate Base Rate Loans to Eurodollar Loans by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Term Loan Lender or Revolving Credit Lender, as the case may be, thereof. All or any part of outstanding Eurodollar Loans and Alternate Base Rate Loans may be converted as provided herein, provided that (i) no Alternate Base Rate Loan may be converted into a Eurodollar Loan when any Default or Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined that such a conversion is not appropriate and (ii) any such conversion may only be made if, after giving effect thereto, subsection 2.14 shall not have been contravened. (b) Any Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving notice to the Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in subsection 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan may be continued as such (i) when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined that such a continuation is not appropriate or (ii) if, after giving effect thereto, subsection 2.14 would be contravened and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Eurodollar Loans shall be automatically converted to Alternate Base Rate Loans on the last day of such then expiring Interest Period. 2.14 Minimum Amounts of Tranches. All borrowings, conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole multiple of $250,000 in excess thereof and so that there shall not be more than 15 Eurodollar Tranches at any one time outstanding. 2.15 Swing Line Commitment. (a) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make swing line loans (individually, a "Swing Line Loan"; collectively, the "Swing Line Loans") to the Borrower from time to time during the Revolving Credit Commitment Period in an aggregate principal amount at any one time outstanding not to exceed $12,500,000, provided that at no time may the sum of the Swing Line Loans, the Revolving Credit Loans and Letter of Credit Outstandings exceed the lesser of (i) the Revolving Credit Commitments less the amount of any commitment in respect of any working capital facility described in subsection 8.2(i)(iii) and (ii) the Borrowing Base then in effect. During the Revolving Credit Commitment Period, the Borrower may use the 54 49 Swing Line Commitment by borrowing, prepaying the Swing Line Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. All Swing Line Loans shall be made as Alternate Base Rate Loans and shall not be entitled to be converted into Eurodollar Loans. The Borrower shall give the Swing Line Lender irrevocable notice (which notice must be received by the Swing Line Lender prior to 12:00 Noon, New York City time) on the requested Borrowing Date specifying the amount of the requested Swing Line Loan which shall be in an aggregate minimum amount of $150,000 or a whole multiple of $25,000 in excess thereof. The proceeds of the Swing Line Loan will be made available by the Swing Line Lender to the Borrower at the office of the Swing Line Lender by 3:00 p.m. on the Borrowing Date by crediting the account of the Borrower at such office with such proceeds. The Borrower may at any time and from time to time, prepay the Swing Line Loans, in whole or in part, without premium or penalty, by notifying the Swing Line Lender prior to 12:00 Noon on any Business Day of the date and amount of prepayment. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein. Partial prepayments shall be in an aggregate principal amount of $150,000 or a whole multiple of $25,000 in excess thereof. (b) The Borrower agrees that, upon the request to the Administrative Agent by the Swing Line Lender, in order to evidence the Swing Line Loans the Borrower will execute and deliver to the Swing Line Lender a promissory note substantially in the form of Exhibit A-5, with appropriate insertions (as the same may be amended, supplemented, replaced or otherwise modified from time to time, the "Swing Line Note"), payable to the order of the Swing Line Lender and representing the obligation of the Borrower to pay the amount of the Swing Line Commitment or, if less, the unpaid principal amount of the Swing Line Loans, with interest thereon as prescribed in subsection 4.1. The Swing Line Lender is hereby authorized to record the Borrowing Date, the amount of each Swing Line Loan and the date and amount of each payment or prepayment of principal thereof, on the schedule annexed to and constituting a part of the Swing Line Note and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by the Swing Line Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Swing Line Note or this Agreement. Any Swing Line Note shall (a) be dated the Closing Date, (b) be stated to mature on the Revolving Credit Commitment Termination Date and (c) bear interest for the period from the date thereof until paid in full on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum determined as provided in, and payable as specified in, subsection 4.1. (c) The Swing Line Lender, at any time in its sole and absolute discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swing Line Lender to act on its behalf) request each Revolving Credit Lender including the Swing Line Lender, to make a Revolving Credit Loan in an amount equal to such Lender's Revolving Credit Commitment Percentage of the amount of the Swing Line Loans outstanding on the date such notice is given (the "Refunded Swing Line Loans"). Unless any of the events described in paragraph (f) of Section 9 shall have occurred with respect to the Borrower (in which event the procedures of paragraph (e) of this subsection 2.15 shall apply) each Revolving Credit Lender shall make the proceeds of its Revolving Credit Loan available to the Administrative Agent for the account of the Swing Line Lender at the office of the Administrative Agent 55 50 specified in subsection 12.2 prior to 12:00 Noon (New York City time) in funds immediately available on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Credit Loans shall be immediately applied to repay the Refunded Swing Line Loans. Effective on the day such Revolving Credit Loans are made, the portion of the Swing Line Loans so paid shall no longer be outstanding as Swing Line Loans, shall no longer be due under any Swing Line Note and shall be due under the respective Revolving Credit Loans issued to the Revolving Credit Lenders in accordance with their respective Revolving Credit Commitment Percentages. The Borrower authorizes the Swing Line Lender to charge the Borrower's accounts with the Administrative Agent (up to the amount available in each such account) in order to immediately pay the amount of such Refunded Swing Line Loans to the extent amounts received from the Revolving Credit Lenders are not sufficient to repay in full such Refunded Swing Line Loans. (d) Notwithstanding anything herein to the contrary, the Swing Line Lender shall not be obligated to make any Swing Line Loans if the conditions set forth in subsection 6.2 have not been satisfied. (e) If prior to the making of a Revolving Credit Loan pursuant to paragraph (c) of subsection 2.15 one of the events described in paragraph (f) of Section 9 shall have occurred and be continuing with respect to the Borrower, each Revolving Credit Lender will, on the date such Revolving Credit Loan was to have been made pursuant to the notice in subsection 2.15(c), purchase an undivided participating interest in the Refunded Swing Line Loan in an amount equal to (i) its Revolving Credit Commitment Percentage times (ii) the Refunded Swing Line Loans. Each Revolving Credit Lender will immediately transfer to the Swing Line Lender, in immediately available funds, the amount of its participation, and upon receipt thereof the Swing Line Lender will deliver to such Revolving Credit Lender a Swing Line Loan Participation Certificate dated the date of receipt of such funds and in such amount. (f) Whenever, at any time after any Revolving Credit Lender has purchased a participating interest in a Swing Line Loan, the Swing Line Lender receives any payment on account thereof, the Swing Line Lender will distribute to such Revolving Credit Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Revolving Credit Lender's participating interest was outstanding and funded); provided, however, that in the event that such payment received by the Swing Line Lender is required to be returned, such Revolving Credit Lender will return to the Swing Line Lender any portion thereof previously distributed by the Swing Line Lender to it. (g) Each Revolving Credit Lender's obligation to make the Loans referred to in subsection 2.15(c) and to purchase participating interests pursuant to subsection 2.15(e) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any set-off, counterclaim, recoupment, defense or other right which such Revolving Credit Lender or the Borrower may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default; (iii) any adverse change in the condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement or any other Loan Document 56 51 by the Borrower, Holdings, any of their Subsidiaries or any other Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. SECTION 3. LETTERS OF CREDIT 3.1 The L/C Commitment. (a) Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the other Revolving Credit Lenders set forth in subsection 3.4(a), agrees to issue Letters of Credit for the account of the Borrower, and Standby L/Cs for the account of Camden solely to support its obligations with respect to the IRBs, on any Business Day during the Revolving Credit Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that no Issuing Lender shall issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed $35,000,000 or (ii) the sum of the Revolving Credit Loans, Swing Line Loans and Letter of Credit Outstandings of all the Revolving Credit Lenders would exceed the lesser of (x) the Revolving Credit Commitments less the amount of any commitment in respect of any working capital facility described in subsection 8.2(i) (iii) of all the Revolving Credit Lenders and (y) the Borrowing Base then in effect. Each Letter of Credit shall (i) be either (x) a Standby L/C issued to support obligations of the Borrower or any of its Subsidiaries, contingent or otherwise, which finance the working capital and business needs of the Borrower and its Subsidiaries incurred in the ordinary course of business, or (y) a Trade L/C in respect of the purchase of goods or services by the Borrower or any of its Subsidiaries in the ordinary course of business and (ii) expire no later than the Revolving Credit Commitment Termination Date. No Standby L/C shall have an expiry date more than 360 days after its date of issuance, provided that a Standby L/C may be renewed for additional 360 day periods, but may not be extended beyond the Revolving Credit Commitment Termination Date. No Trade L/C shall have an expiry date more than 120 days after its issuance or later than thirty days prior to the Revolving Credit Commitment Termination Date. Each Letter of Credit shall be denominated in Dollars. No Letter of Credit shall be issued for the account of Camden hereunder unless the Borrower shall have executed and delivered the Borrower Guarantee. (b) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York. (c) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any Participating Lender to exceed any limits imposed by, any applicable Requirement of Law. (d) Up to an aggregate face amount of $25,000,000 of Letters of Credit may be issued only to support the obligations of the Borrower and/or Camden with respect to the IRBs. (e) Notwithstanding anything set forth herein to the contrary: (i) Upon execution and delivery of the Borrower Guarantee, Chemical Bank Irrevocable Standby Letter of Credit No. C-281929, dated August 1, 1985, in favor 57 52 of Simmons First National Bank of Pine Bluff, as trustee (the "Arkansas Trustee") under the Indenture of Trust (the "Arkansas Indenture") dated as of August 1, 1985, by the City of Pine Bluff, Arkansas to the Arkansas Trustee (the "Arkansas IRB Letter of Credit") shall be deemed to have been issued hereunder and be deemed to be a Letter of Credit for all purposes hereof, provided that the Arkansas IRB Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits (1983 Revision), International Chamber of Commerce Publication No. 400. (ii) The Letter of Credit, Bond Purchase and Guaranty Agreement, dated as of August 1, 1985, among Camden, Oneida and Chemical Bank, as amended by the Amendment, dated as of February 12, 1997 (as so amended, the "Arkansas IRB Letter of Credit Agreement"), shall be deemed to be the Standby L/C Application (or a part thereof) for the Arkansas IRB Letter of Credit and the obligations of Camden under the Arkansas IRB Letter of Credit Agreement shall be deemed to be obligations of Camden in respect of the Arkansas IRB Letter of Credit for all purposes hereof. (iii) In the event that the Issuing Lender is required to purchase any Bonds (as defined in the Arkansas Letter of Credit Agreement) pursuant to 2.1(b) of the Arkansas IRB Letter of Credit Agreement, such purchase shall be deemed to be a drawing under the Arkansas IRB Letter of Credit for all purposes hereof in an amount equal to the aggregate price paid by the Issuing Lender for such Bonds (including accrued interest) and each Participating Lender shall participate in such drawing pursuant to subsection 3.4 hereof, provided that Camden shall not be required to reimburse the Issuing Lender on the date on which the Issuing Lender notifies Camden of such drawing as provided in subsection 3.5 hereof. The amount of any such drawing shall bear interest as provided in the Bonds and in paragraph (iv) below. Upon the resale of such Bonds by the Issuing Lender, the Issuing Lender shall distribute the proceeds of such resale as though such proceeds were a reimbursement of such drawing. The Issuing Lender shall hold all Bonds so purchased and all amounts received in respect of such Bonds for the ratable benefit of each Participating Lender. (iv) In the event that the Issuing Lender is required to purchase any Bonds, Camden and the Borrower agree, jointly and severally, to pay to the Issuing 58 53 Lender, for the ratable benefit of the Participating Lenders, the Make- up Premium (as defined below) for the period from date of the purchase of such Bonds by the Issuing Lender to, and including, the date such Bonds are resold by the Issuing Lender (the "Hold Period"). As used herein, the "Make-up Premium" shall mean an amount equal to the excess of (x) the interest, calculated at the interest rate applicable to Alternate Base Rate Loans during the Hold Period, which would be payable on the aggregate purchase price of such Bonds during the Hold Period over (y) the amount of interest actually received by the Issuing Lender with respect to such Bonds during the Hold Period (including any accrued interest received by the Issuing Lender upon resale of such Bonds). 3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender and the Administrative Agent at their respective addresses for notices specified herein a commercial letter of credit application in the Issuing Lender's then customary form (a "Trade L/C Application") or a standby letter of credit application in the Issuing Lender's then customary form (a "Standby L/C Application"), as the case may be, in each case completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as may be customary for letters of credit of the kind being requested and as the Issuing Lender may reasonably request. Upon receipt of any Letter of Credit Application, the Issuing Lender will process such Letter of Credit Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and, upon receipt by the Issuing Lender of confirmation from the Administrative Agent that issuance of such Letter of Credit will not contravene subsection 3.1, the Issuing Lender shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Letter of Credit Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower and the Administrative Agent promptly following the issuance thereof. 3.3 Fees, Commissions and Other Charges. (a) (i) The Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender and the Participating Lenders, a letter of credit commission with respect to each Letter of Credit, in an amount equal to the Applicable Margin applicable to Revolving Credit Loans bearing interest at the Eurodollar Rate of the average daily face amount of such Letter of Credit, payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Credit Commitment Termination Date. A portion of such commission equal to 1/4 of 1% of the average daily face amount of such Letter of Credit shall be payable to the Issuing Lender for its own account, and the remaining portion of such commission shall be payable to the Issuing Lender and the Revolving Credit Lenders to be shared ratably among them in accordance with their respective Revolving Credit Commitment Percentages. Such commissions shall be nonrefundable. (b) In addition to the foregoing fees and commissions, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. (c) The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the Participating Lenders all fees and commissions received by the Administrative Agent for their respective accounts pursuant to this subsection. 3.4 L/C Participations. (a) Effective on the date of issuance of each Letter of Credit, the Issuing Lender irrevocably agrees to grant and hereby grants to each Participating Lender, and each Participating Lender irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such Participating Lender's own account and risk an undivided interest equal to such Participating Lender's Revolving Credit Commitment Percentage in the Issuing Lender's obligations and rights under each Letter of Credit issued by the Issuing 59 54 Lender and the amount of each draft paid by the Issuing Lender thereunder. Each Participating Lender unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which such Issuing Lender is not reimbursed in full by the Borrower or Camden, as the case may be, in accordance with the terms of this Agreement, such Participating Lender shall pay to the Administrative Agent, for the account of the Issuing Lender, upon demand at the Administrative Agent's address specified in subsection 12.2, an amount equal to such Participating Lender's Revolving Credit Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed. On the date that any Assignee becomes a Revolving Credit Lender party to this Agreement in accordance with subsection 12.6, participating interests in any outstanding Letters of Credit held by the transferor Lender from which such Assignee acquired its interest hereunder shall be proportionately reallotted between such Assignee and such transferor Lender. Each Participating Lender hereby agrees that its obligation to participate in each Letter of Credit, and to pay or to reimburse the Issuing Lender for its participating share of the drafts drawn or amounts otherwise paid thereunder, is absolute, irrevocable and unconditional and shall not be affected by any circumstances whatsoever (including, without limitation, the occurrence or continuance of any Default or Event of Default), and that each such payment shall be made without offset, abatement, withholding or other reduction whatsoever. (b) If any amount required to be paid by any Participating Lender to the Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed portion of any draft paid by the Issuing Lender under any Letter of Credit is not paid to the Issuing Lender within three Business Days after the date such payment is due, such Participating Lender shall pay to the Administrative Agent, for the account of the Issuing Lender, on demand, an amount equal to the product of (i) such amount, times (ii) the daily average Federal Funds Effective Rate during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any Participating Lender pursuant to subsection 3.4(a) is not in fact made available to the Administrative Agent, for the account of the Issuing Lender, by such Participating Lender within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such Participating Lender, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Alternate Base Rate Loans hereunder. A certificate of the Issuing Lender submitted to any Participating Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. (c) Whenever, at any time after the Issuing Lender has paid a draft under any Letter of Credit and has received from any Participating Lender its pro rata share of such payment in accordance with subsection 3.4(a), the Issuing Lender receives any reimbursement on account of such unreimbursed portion, or any payment of interest on account thereof, the Issuing Lender will pay to the Administrative Agent, for the account of such Participating Lender, its pro rata share thereof; provided, however, that in the event that any such payment received by the Issuing Lender shall be required to be returned by the Issuing 60 55 Lender, such Participating Lender shall return to the Administrative Agent for the account of the Issuing Lender, the portion thereof previously distributed to it. 3.5 Reimbursement Obligation of the Borrower. Each of the Borrower and Camden, as the case may be, agrees to reimburse the Issuing Lender on each date on which the Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft so paid and (b) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment. Each such payment shall be made to the Issuing Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds. Interest shall be payable on any and all amounts remaining unpaid by the Borrower or Camden, as the case may be, under this subsection from the date such amounts become payable in accordance with the first sentence of this subsection 3.5 until payment in full, at the rate which would be payable on Alternate Base Rate Loans at such time. 3.6 Obligations Absolute. Each of the Borrower's and Camden's obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower, Camden or any other Person may have or have had against the Issuing Lender or any other Lender or any beneficiary of a Letter of Credit. Each of the Borrower and Camden also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower's and Camden's obligations under subsection 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower or Camden, as the case may be, and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower or Camden, as the case may be, against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. Each of the Borrower and Camden agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, including, without limitation, Article V thereof, shall be binding on the Borrower and Camden and shall not result in any liability of such Issuing Lender to the Borrower or Camden. 3.7 Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower and the Administrative Agent of the date and amount thereof. The responsibility of the Issuing Lender to the Borrower or Camden, as the case may be, in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. 61 56 3.8 Letter of Credit Applications. To the extent that any provision of any Letter of Credit Application, including any reimbursement provisions contained therein, related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall prevail. SECTION 4. GENERAL PROVISIONS 4.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin. (b) Each Alternate Base Rate Loan shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin. (c) Upon the occurrence and during the continuance of any Event of Default specified in subsection 9(a), the Loans and any overdue amounts hereunder shall bear interest at a rate per annum which is (x) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of overdue interest, commitment fee or other amount, the rate described in paragraph (b) of this subsection plus 2%. (d) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (c) of this subsection shall be payable from time to time on demand. 4.2 Computation of Interest and Fees. (a) Interest on Alternate Base Rate Loans, commitment fees, interest on overdue interest, commitment fees and other amounts payable hereunder and interest on Eurodollar Loans shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Revolving Credit Lenders or the Term Loan Lenders, as the case may be, of each determination of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a change in the Alternate Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Revolving Credit Lenders or the Term Loan Lenders, as the case may be, of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 4.1(a) or (c). 4.3 Inability to Determine Interest Rate. If prior to the first day of any Interest Period: 62 57 (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or (b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as Alternate Base Rate Loans, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be converted to or continued as Alternate Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on the first day of such Interest Period, to Alternate Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent (which the Administrative Agent agrees to do when the circumstances that prompted the delivery of such notice no longer exist), no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Loans to Eurodollar Loans. 4.4 Pro Rata Treatment and Payments. (a) Each borrowing, conversion or continuation pursuant to subsection 2.13, of Loans (other than Swing Line Loans) by the Borrower from the Lenders and any reduction of the Commitments of the Lenders hereunder shall be made pro rata according to the respective principal amounts of such Loans held by the Lenders or the respective Commitment Percentages of the Lenders, as the case may be. (b) Whenever (i) any payment received by the Administrative Agent under this Agreement or any Note or (ii) any other amounts received by the Administrative Agent for or on behalf of the Borrower (including, without limitation, proceeds of collateral or payments under any guarantee) is insufficient to pay in full all amounts then due and payable to the Administrative Agent and the Lenders under this Agreement and any Note, such payment shall be distributed by the Administrative Agent and applied by the Administrative Agent and the Lenders in the following order: First, to the payment of fees and expenses due and payable to the Administrative Agent under and in connection with this Agreement; Second, to the payment of all expenses due and payable under subsection 12.5, ratably among the Administrative Agent and the Lenders in accordance with the aggregate amount of such payments owed to the Administrative Agent and each such Lender; Third, to the payment of fees due and payable under subsections 2.4 and 3.3(a), ratably among the Revolving Credit Lenders in accordance with the Revolving Credit Commitment Percentage of each Revolving Credit Lender and, in the case of the Issuing Lender, the amount retained by the Issuing Lender for its own account pursuant to subsection 3.3(a); Fourth, to the payment of interest then due and payable under the Loans, ratably in accordance with the aggregate amount of interest owed to each such Lender; and Fifth, to the payment of the principal amount of the Loans and the L/C Obligations then due and payable and, in the case 63 58 of proceeds of collateral or payments under any guarantee, to the payment of any other obligations to any Lender not covered in First through Fourth above ratably secured by such collateral or ratably guaranteed under any such guarantee, ratably among the Lenders in accordance with the aggregate principal amount and, in the case of proceeds of collateral or payments under any guarantee, the obligations secured or guaranteed thereby owed to each such Lender. (c) If any Revolving Credit Lender (a "Non-Funding Lender") has (x) failed to make a Revolving Credit Loan required to be made by it hereunder, and the Administrative Agent has determined that such Revolving Credit Lender is not likely to make such Revolving Credit Loan or (y) given notice to the Borrower or the Administrative Agent that it will not make, or that it has disaffirmed or repudiated any obligation to make, any Revolving Credit Loans, in each case by reason of the provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, or otherwise, any payment made on account of the principal of the Revolving Credit Loans outstanding shall be made as follows: (i) in the case of any such payment made on any date when and to the extent that, in the determination of the Administrative Agent, the Borrower would be able, under the terms and conditions hereof, to reborrow the amount of such payment under the Revolving Credit Commitments and to satisfy any applicable conditions precedent set forth in subsection 6.2 to such reborrowing, such payment shall be made on account of the outstanding Revolving Credit Loans held by the Revolving Credit Lenders other than the Non-Funding Lender pro rata according to the respective outstanding principal amounts of the Revolving Credit Loans of such Revolving Credit Lenders; (ii) otherwise, such payment shall be made on account of the outstanding Revolving Credit Loans held by the Revolving Credit Lenders pro rata according to the respective outstanding principal amounts of such Revolving Credit Loans; and (iii) any payment made on account of interest on the Revolving Credit Loans shall be made pro rata according to the respective amounts of accrued and unpaid interest due and payable on the Revolving Credit Loans with respect to which such payment is being made. The Borrower agrees to give the Administrative Agent such assistance in making any determination pursuant to this paragraph as the Administrative Agent may reasonably request. Any such determination by the Administrative Agent shall be conclusive and binding on the Lenders. (d) All payments (including prepayments) to be made by the Borrower on account of principal, interest and fees shall be made without set-off or counterclaim and shall be made to the Administrative Agent, for the account of the Lenders at the Administrative Agent's office located at 270 Park Avenue, New York, New York 10017, in lawful money of the United States of America and in immediately available funds. The Administrative Agent shall promptly distribute such payments in accordance with the provisions of subsection 4.4(b) promptly upon receipt in like funds as received. If any payment hereunder (other 64 59 than payments on the Eurodollar Loans) would become due and payable on a day other than a Business Day, such payment shall become due and payable on the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day (and with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension), unless the result of such extension would be to extend such payment into another calendar month in which event such payment shall be made on the immediately preceding Business Day. (e) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a Borrowing Date that such Lender will not make the amount that would constitute its relevant Commitment Percentage of the borrowing on such date available to the Administrative Agent, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is made available to the Administrative Agent on a date after such Borrowing Date, such Lender shall pay to the Administrative Agent on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate during such period, times (ii) the amount of such Lender's relevant Commitment Percentage of such borrowing, times (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to the date on which such Lender's relevant Commitment Percentage of such borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Lender's relevant Commitment Percentage of such borrowing is not in fact made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall be entitled to recover such amount with interest thereon at the rate per annum applicable to Alternate Base Rate Loans hereunder, on demand, from the Borrower. The failure of any Lender to make any Loan to be made by it shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on such Borrowing Date, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on such Borrowing Date. 4.5 Borrowing Base Compliance. Throughout the Revolving Credit Commitment Period the Borrower will deliver to the Administrative Agent certificates of a Responsible Officer of the Borrower setting forth the amount of accounts receivable and inventory of the Borrower and its subsidiaries as shown on the consolidated balance sheet of the Borrower and its Subsidiaries within 15 Business Days after the end of each month. If the Borrower is not in compliance with the requirements in respect of the Borrowing Base, the Administrative Agent shall promptly notify the Borrower and the Lenders of such noncompliance and the Borrower shall immediately (and in any event within one Business Day of receipt of such notice) make all mandatory prepayments required pursuant to subsection 2.12(e). The Administrative Agent shall be obligated to rely on each certificate delivered hereunder in its determination of the Borrowing Base by the Administrative Agent and such certificate shall 65 60 remain in effect until notice of a redetermined Borrowing Base shall have been given by the Administrative Agent in accordance with the provisions of this subsection 4.5. 4.6 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Alternate Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law; provided that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, in its reasonable discretion, in any legal, economic or regulatory manner) to designate a different lending office if the making of such a designation would allow the Lender or its lending office to continue to perform its obligations to make Eurodollar Loans and avoid the need for, or materially reduce the amount of, such increased cost. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to subsection 4.9. If circumstances subsequently change so that any affected Lender shall determine that it is no longer so affected, such Lender will promptly notify the Borrower and the Administrative Agent, and upon receipt of such notice, the obligations of such Lender to make or continue Eurodollar Loans or to convert Alternate Base Rate Loans into Eurodollar Loans shall be reinstated. 4.7 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Loan, any Note, any Letter of Credit or any Letter of Credit Application or change the basis of taxation of payments to such Lender in respect thereof (except for taxes covered by subsection 4.8 and the establishment of a tax based on the overall net income of such Lender or changes in the rate of tax on the overall net income of such Lender); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit (including, without limitation, letters of credit) by, or any other acquisition of funds by, any office of such Lender; or (iii) shall impose on such Lender any other condition; 66 61 and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or to increase the cost to such Lender, by an amount which such Lender deems to be material, of issuing or maintaining any Letter of Credit or participation therein or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable, provided that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, in its reasonable discretion, in any legal, economic or regulatory manner) to designate a different Eurodollar lending office if the making of such designation would allow the Lender or its Eurodollar lending office to continue to perform its obligations to make Eurodollar Loans or to continue to fund or maintain Eurodollar Loans and avoid the need for, or materially reduce the amount of, such increased cost. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify (in any event no later than 90 days after such Lender becomes entitled to make such claim) the Borrower, through the Administrative Agent, of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subsection submitted by such Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. If the Borrower so notifies the Administrative Agent within five Business Days after any Lender notifies the Borrower of any increased cost pursuant to the foregoing provisions of this subsection 4.7, the Borrower may convert all Eurodollar Loans of such Lender then outstanding into Alternate Base Rate Loans in accordance with subsection 2.13 and, additionally, reimburse such Lender for any cost in accordance with subsection 4.9. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder for nine months following such termination and repayment. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder or under any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a prompt written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. This covenant shall survive the termination of this Agreement and the payment of any Notes and all other amounts payable hereunder for nine months following such termination and repayment. 4.8 Taxes. (a) Except as provided below in this subsection, all payments made by the Borrower under this Agreement and any Notes shall be made free and clear of, and 67 62 without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes imposed in lieu of net income taxes. If any such non- excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder or under any Notes, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and any Notes, provided, however, that the Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof if such Lender fails or is unable to comply with the requirements of paragraph (b) of this subsection. Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non- Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder for a period of nine months thereafter. (b) Each Lender that is not incorporated under the laws of the United States of America or a state thereof shall: (i) (x) on or before the date of any payment by the Borrower under this Agreement or any Notes to such Lender, deliver to the Borrower and the Administrative Agent (A) two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, or successor applicable form, as the case may be, certifying that it is entitled to receive payments under this Agreement and any Notes without any deduction or withholding of any United States federal income taxes and (B) a duly completed Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, certifying that it is entitled to an exemption from United States backup withholding tax; (y) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and 68 63 (z) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Administrative Agent; or (ii) in the case of any such Lender that is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and that does not comply with sub-paragraph (i) of this paragraph (b), (x) represent to the Borrower (for the benefit of the Borrower and the Administrative Agent) that it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (y) deliver to the Borrower on or before the date of any payment by the Borrower, with a copy to the Administrative Agent, (A) a certificate stating that such Lender (1) is not a "bank" under Section 881(c)(3)(A) of the Code, is not subject to regulatory or other legal requirements as a bank in any jurisdiction, and has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements, (2) is not a 10-percent shareholder within the meaning of Section 881(c)(3)(B) of the Code and (3) is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code (any such certificate a "U.S. Tax Compliance Certificate") and (B) two duly completed copies of Internal Revenue Service Form W-8, or successor applicable form, certifying to such Lender's legal entitlement at the date of such certificate to an exemption from U.S. withholding tax under the provisions of Section 881(c) of the Code with respect to payments to be made under this Agreement and any Notes (and to deliver to the Borrower and the Administrative Agent two further copies of Form W-8 on or before the date it expires or becomes obsolete and after the occurrence of any event requiring a change in the most recently provided form and, if necessary, obtain any extensions of time reasonably requested by the Borrower or the Administrative Agent for filing and completing such forms), and (z) agree, to the extent legally entitled to do so, upon reasonable request by the Borrower, to provide to the Borrower (for the benefit of the Borrower and the Administrative Agent) such other forms as may be reasonably required in order to establish the legal entitlement of such Lender to an exemption from withholding with respect to payments under this Agreement and any Notes; unless in any such case any change in treaty, law or regulation has occurred after the date such Person becomes a Lender hereunder which renders any such forms and certificates previously delivered by such Lender inapplicable or which would prevent such Lender from duly completing and delivering such form or certificate with respect to it and such Lender so advises the Borrower and the Administrative Agent. Each Person that shall become a Lender or a Participant pursuant to subsection 12.6 shall, upon the effectiveness of the related transfer, be required to provide all of the forms, certifications and statements required pursuant to this subsection; provided that in the case of a Participant the obligations of such Participant pursuant to this paragraph (b) shall be determined as if such Participant were a Lender except that such Participant shall furnish all such required forms, certifications and statements to the Lender from which the related participation shall have been purchased. 69 64 4.9 Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in payment when due of the principal amount of or interest on any Eurodollar Loan, (b) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (c) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (d) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto, including, without limitation, in each case, any such loss or expense (but excluding loss of margin) arising from the reemployment of funds obtained by it or from fees payable to terminate the deposits from which such funds were obtained. Calculation of all amounts payable to a Lender under this subsection 4.9 shall be made as though such Lender had actually funded its relevant Eurodollar Loan through the purchase of a deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of such Eurodollar Loan and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of its Eurodollar Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection 4.9. This covenant shall survive the termination of this Agreement and the payment of any Notes and all other amounts payable hereunder for a period of nine months thereafter. 4.10 Replacement of Lender. If at any time (a) the Borrower becomes obligated to pay additional amounts described in subsections 4.6, 4.7 or 4.8 as a result of any condition described in such subsections or any Lender ceases to make Eurodollar Loans pursuant to subsection 4.6, (b) any Lender becomes insolvent and its assets become subject to a receiver, liquidator, trustee, custodian or other Person having similar powers, (c) any Lender becomes a "Nonconsenting Lender" or (d) any Lender becomes a "Non-Funding Lender", then the Borrower may, on ten Business Days' prior written notice to the Administrative Agent and such Lender, replace such Lender by causing such Lender to (and such Lender shall) assign pursuant to subsection 12.6(c) all of its rights and obligations under this Agreement to a Lender or other entity selected by the Borrower and acceptable to the Administrative Agent for a purchase price equal to the outstanding principal amount of such Lender's Loans and all accrued interest and fees and other amounts payable hereunder (including amounts payable under subsection 4.9 as though such Loans were being paid instead of being purchased); provided that (i) the Borrower shall have no right to replace the Administrative Agent, (ii) neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender or other such entity, (iii) in the event of a replacement of a Nonconsenting Lender or a Lender to which the Borrower becomes 70 65 obligated to pay additional amounts pursuant to clause (a) of this subsection 4.10, in order for the Borrower to be entitled to replace such a Lender, such replacement must take place no later than 180 days after (A) the date the Nonconsenting Lender shall have notified the Borrower and the Administrative Agent of its failure to agree to any requested consent, waiver or amendment or (B) the Lender shall have demanded payment of additional amounts under one of the subsections described in clause (a) of this subsection 4.10, as the case may be, and (iv) in no event shall the Lender hereby replaced be required to pay or surrender to such replacement Lender or other entity any of the fees received by such Lender hereby replaced pursuant to this Agreement. In the case of a replacement of a Lender to which the Borrower becomes obligated to pay additional amounts pursuant to clause (a) of this subsection 4.10, the Borrower shall pay such additional amounts to such Lender prior to such Lender being replaced and the payment of such additional amounts shall be a condition to the replacement of such Lender. In the event that (x) the Borrower or the Administrative Agent has requested the Lenders to consent to a departure or waiver of any provisions of the Loan Documents or to agree to any amendment thereto, (y) the consent, waiver or amendment in question requires the agreement of all Lenders in accordance with the terms of subsection 12.1 and (z) Required Lenders have agreed to such consent, waiver or amendment, then any Lender who does not agree to such consent, waiver or amendment shall be deemed a "Nonconsenting Lender." The Borrower's right to replace a Non-Funding Lender pursuant to this subsection 4.10 is, and shall be, in addition to, and not in lieu of, all other rights and remedies available to the Borrower against such Non-Funding Lender under this Agreement, at law, in equity, or by statute. SECTION 5. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into this Agreement, to make the Loans and to issue and participate in Letters of Credit and to consent to the Camden Acquisition, the Credit Parties hereby represent and warrant to the Administrative Agent and each Lender that: 5.1 Financial Condition. (a) The audited consolidated financial statements of the Borrower and its Subsidiaries as of December 31, 1995, reported on by Coopers & Lybrand, copies of which have heretofore been furnished to each Lender, to the best knowledge of the Borrower, present fairly in all material respects the consolidated financial position of the Borrower and its Subsidiaries as at such dates, and the consolidated results of the Borrower's operations and the Borrower's cash flows for the seven months then ended. Such financial statements and the related schedules and notes thereto have been prepared, to the best knowledge of the Borrower, in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). Neither the Borrower nor any of its Subsidiaries had, to the best knowledge of the Borrower, as at the date of the most recent balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto and which, to the best knowledge of the Borrower, has any reasonable likelihood of resulting in a material cost or loss. During the period from December 31, 1995 to and including the date hereof there has been, to the best knowledge of the Borrower, no sale, transfer or other disposition by the Borrower or any of its Subsidiaries of any material part of its business, or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of the Borrower and its Subsidiaries at December 31, 1995. (b) The audited combined balance sheets of Albion, DAW, Hoosier and Silicones at December 28, 1995 and the related statements of income, cash flows and changes in 71 66 shareholders equity for the fiscal year ended December 28, 1995, certified by Coopers & Lybrand, copies of which have heretofore been furnished to each Lender, to the best knowledge of the Borrower, present fairly in all material respects the combined financial position of Dekko as at such date, and the consolidated results of Dekko's operations and Dekko's cash flows for the fiscal period then ended. All such financial statements and the related schedules and notes thereto have been prepared, to the best knowledge of the Borrower, in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants and as disclosed therein). Neither the Borrower nor any of its Subsidiaries nor Dekko had, to the best knowledge of the Borrower, as at the date of the most recent balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto and which, to the best knowledge of the Borrower, has any reasonable likelihood of resulting in a material cost or loss. During the period from December 28, 1995 to and including the Amendment Closing Date there has been, to the best knowledge of the Borrower, no sale, transfer or other disposition (other than the Acquisition) by Dekko of any material part of its business, except as disclosed in or contemplated by the Acquisition Documents, or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of Dekko at December 28, 1995. (c) The unaudited balance sheet of Camden for the fiscal years ended January 29, 1994, January 28, 1995 and January 27, 1996 and for the ten-month period ended November 23, 1996 and the related statements of income, cash flows and changes in shareholders equity for such periods, copies of which have heretofore been furnished to each Lender, to the best knowledge of the Borrower, present fairly in all material respects the financial position of Camden as at such dates, and the consolidated results of Camden's operations and Camden's cash flows for the fiscal periods then ended. All such financial statements have been prepared, to the best knowledge of the Borrower, in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants and as disclosed therein). Camden had, to the best knowledge of the Borrower, as at the date of the most recent balance sheet referred to above, no material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction or any commodity hedge, which is not reflected in the foregoing statements or in the notes thereto and which, to the best knowledge of the Borrower, has any reasonable likelihood of resulting in a material cost or loss. During the period from November 23, 1996 to and including the Second Amendment Closing Date there has been, to the best knowledge of the Borrower, no sale, transfer or other disposition by Camden (other than the Camden Acquisition) of any material part of its business, except as disclosed in or contemplated by the Camden Acquisition Documents, or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the financial condition of Camden at November 23, 1996. 5.2 No Change. Since December 31, 1995, (a) there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect and 72 67 (b) no dividends or other distributions have been declared, paid or made upon the Capital Stock of the Credit Parties except as permitted hereby nor has any of the Capital Stock of the Credit Parties been redeemed, retired, purchased or otherwise acquired for value by the Credit Parties or any of their Subsidiaries. 5.3 Corporate Existence; Compliance with Law. Holdings and each of its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Affect. 5.4 Corporate Power; Authorization; Enforceable Obligations. Each Credit Party has the corporate power and authority, and the legal right, to make, deliver and perform this Agreement, any of the Notes, the other Loan Documents to which it is a party and the Camden Acquisition Documents to which it is a party and, with respect to the Borrower, to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of, or the granting of any security interests under, this Agreement, any of the Notes and the other Loan Documents and to authorize the execution, delivery and performance of this Agreement, any of the Notes, the other Loan Documents to which it is a party and the Camden Acquisition Documents to which it is a party. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of, or the granting of any security interests under, this Agreement, any of the Notes or the other Loan Documents to which any Credit Party is a party or to the Camden Acquisition Documents to which it is a party, except for those set forth on Schedule 5.4, each of which have been made or taken and are in full force and effect. This Agreement, any Note, each of the other Loan Documents and each of the Camden Acquisition Documents has been duly executed and delivered on behalf of the Credit Party thereto. This Agreement, any Note, each of the other Loan Documents, each of the Transaction Documents, each of the Acquisition Documents and each of the Camden Acquisition Documents constitutes a legal, valid and binding obligation of the Credit Party thereto enforceable against such Credit Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 5.5 No Legal Bar. The execution, delivery and performance of this Agreement, any of the Notes, the other Loan Documents and the Camden Acquisition Documents, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or Contractual Obligation of any Credit Party or of any of their Subsidiaries. 73 68 5.6 No Material Litigation. Except as set forth in Schedule 5.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Credit Parties, threatened by or against any of the Credit Parties or any of their Subsidiaries or against any of its or their respective properties or revenues (a) with respect to this Agreement, any Notes, the other Loan Documents, any of the Transaction Documents, any of the Acquisition Documents, any of the Camden Acquisition Documents or any of the transactions contemplated hereby or thereby, or (b) which could reasonably be expected to have a Material Adverse Effect. 5.7 No Default. None of the Credit Parties or any of their Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 5.8 Ownership of Property; Liens. Each of the Credit Parties and their Subsidiaries has good record and indefeasible title in fee simple to, or a valid leasehold interest in, all its material real property, and good title to, or a valid leasehold interest in, all its other material property, and none of such property is subject to any Lien except as permitted by subsection 8.3. Such real and other properties comprise all of the properties the use of which is necessary for the conduct of the Borrower's or such Subsidiaries' business as presently conducted and as proposed to be conducted by it. As of the date hereof (and after giving effect to the Camden Acquisition), the Fee Properties listed on Part I of Schedule 5.20 constitute all the real properties owned in fee by the Borrower or its Subsidiaries and the Leased Properties listed on Part II of Schedule 5.20 together with the Excluded Leased Properties listed on Part III of Schedule 5.20 constitute all of the real properties leased by the Borrower or its Subsidiaries. Each of the leases with respect to the Leased Properties listed on Part II of Schedule 5.20 is in full force and effect. 5.9 Intellectual Property. Each of the Credit Parties and their Subsidiaries owns, or is validly licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure of which to own or license could not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property"). To the best knowledge of the Borrower, and except as set forth on Schedule 5.9, no claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor do the Credit Parties know of any valid basis for any such claim which could reasonably be expected to have a Material Adverse Effect. The use of such Intellectual Property by the Credit Parties and their Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 5.10 Taxes. Except as set forth on Schedule 5.10, each of the Credit Parties and their Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Credit Parties, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property (including without limitation the Mortgaged Properties) and all other material taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other 74 69 than (i) any such taxes, assessments, fees or other charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Credit Parties or their Subsidiaries, as the case may be, and (ii) taxes, assessments, fees or other charges imposed by any Governmental Authority, other than income taxes imposed by the United States of America, with respect to which the failure to make payments could not, by reason of the amount thereof or of remedies available to such Governmental Authorities, reasonably be expected to have a Material Adverse Effect); no tax Lien has been filed, and, to the knowledge of the Credit Parties, no claim is being asserted, with respect to any such tax, fee or other charge. 5.11 Federal Regulations. No part of the proceeds of any Loans will be used for "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect or for any purpose which violates the provisions of the Regulations of such Board of Governors. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in said Regulation U. 5.12 ERISA. Neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan. Each Plan (other than a Multiemployer Plan) has complied in all material respects with the applicable provisions of ERISA and the Code, except where the failure to comply could not reasonably be expected to have a Material Adverse Effect. No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by an amount which could reasonably be expected to have a Material Adverse Effect. None of the Credit Parties or any of their Subsidiaries nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan, and none of the Credit Parties nor any of their Subsidiaries nor any Commonly Controlled Entity would become subject to any liability under ERISA if the Credit Parties, any of their Subsidiaries or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. The present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the employees participating) of the liability of the Borrower and each Commonly Controlled Entity for post retirement benefits to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all such Plans allocable to such benefits by an amount which could reasonably be expected to have a Material Adverse Effect. 75 70 5.13 Investment Company Act; Other Regulations. Neither Holdings nor any of its Subsidiaries is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any Requirement of Law which limits its ability to incur Indebtedness. 5.14 Subsidiaries, Etc. As of the date hereof, the only Subsidiaries of the Borrower, and the only partnerships or joint ventures in which the Borrower or any of its Subsidiaries has an interest are those listed on Schedule 5.14. As of the date hereof, the Borrower owns the percentage of the Capital Stock or other evidences of the ownership of each Subsidiary, partnership or joint venture listed on Schedule 5.14 as set forth on such Schedule. As of the date hereof, no such Subsidiary, partnership or joint venture has issued any securities convertible into shares of its Capital Stock, and the outstanding stock and securities (or other evidence of ownership) of such Subsidiaries, partnerships or joint ventures owned by the Borrower and its Subsidiaries are so owned free and clear of all Liens, warrants, options or rights of others of any kind except as set forth in Schedule 5.14. 5.15 Purpose of Loans. The proceeds of the Term Loans (other than the Additional Term Loans and the Second Additional Term Loans) shall be used to finance a portion of the Mergers and the Wirekraft Acquisition and the transaction costs associated therewith and to refinance the credit facilities under the Omega Credit Agreement. The proceeds of the Revolving Credit Loans shall be used to finance a portion of Mergers, the Wirekraft Acquisition and the Acquisition and the transaction costs associated therewith and to refinance the credit facilities under the Omega Credit Agreement, as well as for general corporate purposes of the Borrower and the Subsidiaries. The proceeds of the Additional Term Loans shall be used to finance a portion of the Acquisition and the transaction costs associated therewith. The proceeds of the Second Additional Term Loans shall be used to finance the cash purchase price of the Camden Acquisition and the transaction costs associated with the Camden Acquisition, to prepay Revolving Credit Loans outstanding hereunder in order to allow the issuance of Letters of Credit hereunder to support the obligations of the Borrower and/or Camden with respect to the IRBs and to provide working capital to the Borrower. Up to an aggregate face amount of $15,500,000 of Letters of Credit shall be issued only to support the obligations of the Borrower and/or Camden with respect to the IRBs. 5.16 Environmental Matters. (a) The facilities and properties owned, leased or operated by the Borrower or any of its Subsidiaries (the "Properties") do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations or under such conditions which (i) constitute or constituted a violation of, or could reasonably be expected to give rise to liability under, any Environmental Law in effect at the time of the making of this representation, or (ii) could materially and adversely interfere with the continued operation of the Properties, or (iii) materially impair the fair saleable value thereof except in each case insofar as such violation, liability, interference, or reduction in fair market value, or any aggregation thereof, is not reasonably likely to result in a Material Adverse Effect. 76 71 (b) The Business, Properties and all operations at the Properties are, and to the knowledge of the Borrower have been, in compliance in all material respects with all applicable Environmental Laws except for noncompliance which is not reasonably likely to result in a Material Adverse Effect. (c) Neither the Borrower nor any of its Subsidiaries has received any written notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Business, nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened except insofar as such notice or threatened notice, or any aggregation thereof, does not involve a matter or matters that is or are reasonably likely to result in a Material Adverse Effect. (d) Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could reasonably be expected to give rise to liability under, any Environmental Law in effect at the time of the making of this representation, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could reasonably be expected to give rise to liability under, any applicable Environmental Law in effect at the time of the making of this representation except insofar as any such violation or liability referred to in this paragraph, or any aggregation thereof, is not reasonably likely to result in a Material Adverse Effect. (e) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower or any Subsidiary is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business except insofar as such proceeding, action, decree, order or other requirement, or any aggregation thereof, is not reasonably likely to result in a Material Adverse Effect. (f) There has been no release or, to the best knowledge of the Borrower, threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of the Borrower or any Subsidiary in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could reasonably give rise to liability under Environmental Laws in effect at the time of making this representation except insofar as any such violation or liability referred to in this paragraph, or any aggregation thereof, is not reasonably likely to result in a Material Adverse Effect. 5.17 Delivery of the Camden Acquisition Documents. The Administrative Agent has received for itself and for each Lender a complete copy of each of the Camden Acquisition Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof. 77 72 5.18 Representations and Warranties Contained in the Camden Acquisition Documents. Each of the Camden Acquisition Documents has been duly executed and delivered by the Credit Parties and, to the best knowledge of the Borrower, all other parties thereto and is in full force and effect. As of the date hereof, the representations and warranties of Holdings or the Borrower and, to the best knowledge of the Borrower, Camden and any of the other parties thereto, respectively, in the Camden Acquisition Documents are true and correct in all material respects. 5.19 Disclosure. No information, financial statement, report, certificate or other document prepared or furnished by or on behalf of any Credit Party to the Administrative Agent or any Lender in connection with this Agreement, any other Loan Document, any of the Transaction Documents, any of the Acquisition Documents or any of the Camden Acquisition Documents (but excluding all projections and pro forma financial statements which shall have been prepared in good faith and based upon reasonable assumptions) contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. As of the Second Amendment Closing Date, there is no fact known to any Credit Party (other than general economic conditions, which conditions are commonly known and affect businesses generally) which has, or which could reasonably be expected to have, in the reasonable judgment of such Credit Party, a Material Adverse Effect. 5.20 Security Documents. (a) The Pledge Agreements are each effective to create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable security interest in the Pledged Stock or the Pledged Notes, as the case may be, described therein and proceeds thereof and all actions have been taken to cause the Pledge Agreements to each constitute a fully perfected first Lien on, and security interest in, all right, title and interest of Holdings, the Borrower and their Subsidiaries in such Pledged Stock or Pledged Notes, as the case may be, described therein and in proceeds thereof superior in right to any other Person. (b) The Security Agreements and the Assignments are each effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the respective collateral described therein and proceeds thereof, and when financing statements in appropriate form are filed in the offices specified on Schedule 5.20 or in such Security Agreement, and the other actions required to be taken by all Security Agreements have been taken, the Security Agreements shall constitute fully perfected, first priority Liens on, and security interests in, all right, title and interest of Holdings, the Borrower and their Subsidiaries in such collateral and the proceeds thereof superior in right to any other Person other than Liens permitted hereby. (c) As of the date hereof the properties listed on Schedule 5.20 constitute all material real properties owned by Holdings or any of its Subsidiaries. The Mortgages are each effective to create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable Lien on the properties described therein and proceeds thereof, subject to obtaining necessary consents (which consents shall be obtained on or prior to the Second Amendment Closing Date) and when the Mortgages are filed in the offices specified on Schedule 5.20, the Mortgages shall constitute a fully perfected, first priority 78 73 Lien on, and security interest in, all right, title and interest of the Borrower in the Mortgaged Properties and the proceeds thereof, superior in right to any other Person other than Liens permitted hereby. 5.21 Solvency. Each of Holdings and the Borrower is, individually and together with its Subsidiaries, Solvent. 5.22 No Fees. None of the Credit Parties nor any of their Subsidiaries is under any obligation to pay any broker's fees, finder's fee, commission, transaction fee or expenses in connection with the transactions contemplated by this Agreement or the Camden Acquisition Documents other than fees and expenses listed on Schedule 5.22. 5.23 Insurance. The insurance maintained by or reserved against on the books of Holdings, the Borrower and their Subsidiaries is sufficient to protect the Borrower against such risks as are usually insured against in the same general area by companies engaged in the same or similar business. None of the Credit Parties or any of their Subsidiaries is in default under any provisions of any such policy of insurance or has received notice of cancellation of any such insurance (other than in connection with the replacement of any such policy). None of the Credit Parties or any of their Subsidiaries has made any material claims under any policy of insurance with respect to which the insurance carrier has denied liability. 5.24 Senior Debt. The Obligations of the Borrower constitute "Senior Indebtedness" for purposes of the Senior Subordinated Notes. 5.25 Labor Matters. There are no strikes pending or, to the best knowledge of the Borrower, threatened against Holdings or any of its Subsidiaries which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The hours worked and payments made to employees of Holdings and each of its Subsidiaries have not been in violation of any applicable United States and or Mexican labor laws, rules or regulations or any other applicable laws, rules or regulations, except where such violations could not reasonably be expected to have a Material Adverse Effect. The consummation of the Camden Acquisition will not give rise to a right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which Holdings or any of its Subsidiaries (or any predecessor) is a party or by which Holdings or any of its Subsidiaries (or any predecessor) is bound. SECTION 6. CONDITIONS PRECEDENT 6.1 Conditions to Effectiveness of Amendment and Restatement. The agreement of (i) the Tranche B Term Loan Lenders and the Tranche C Term Loan Lenders to provide the Second Additional Term Loans, (ii) the Revolving Credit Lenders to increase the letter of credit sublimit under the Revolving Credit Commitments by $15,500,000 and (iii) the Lenders to consent to the Camden Acquisition is subject to the satisfaction, immediately prior to or concurrently with the making of such Second Additional Term Loans on the Second Amendment Closing Date (which date shall not occur later than March 14, 1997), of the following conditions precedent: 79 74 (a) Camden Acquisition. The Camden Acquisition shall have been consummated for an aggregate purchase price (excluding fees and expenses) of approximately $60,500,000 (subject to purchase price adjustments as set forth in the Camden Acquisition Documents), comprised of approximately $45,000,000 in cash and approximately $15,500,000 of assumed obligations with respect to the IRBs and the Administrative Agent shall have received, with a copy for each Lender, (i) a certified copy of each of the Camden Acquisition Documents, (ii) a certificate of a Responsible Officer to the effect that all conditions precedent and other material transactions contemplated by the Camden Acquisition Documents have been satisfied or consummated, as the case may be, without amendment, waiver or modification of the terms thereof without the prior written consent of the Lenders and (iii) a certified copy of each of the documents and materials filed publicly by Camden and/or Oneida in connection with such transactions. (b) Capitalization. The corporate and capital structure of Holdings and the Borrower and each of their Subsidiaries after giving effect to the Camden Acquisition shall be satisfactory to the Lenders in all material respects. There shall exist no Indebtedness of Holdings, the Borrower or any of their subsidiaries on the Second Amendment Closing Date, except for, in the case of the Borrower, any Indebtedness hereunder and the Senior Subordinated Notes and certain other indebtedness permitted hereby. (c) Agreement; Notes. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Borrower and Holdings with a counterpart for each Lender, (ii) for the account of each of the Lenders which has requested a Note pursuant to subsections 2.8(a) and 2.9(a), a replacement Tranche B Term Note or a replacement Tranche C Term Note, as the case may be, conforming to the requirements hereof and executed and delivered by a duly authorized officer of the Borrower and (iii) the following Security Documents and Guarantees, each executed and delivered by a Responsible Officer of the appropriate Credit Party and by each other party thereto: (1) the Camden Guarantee; (2) the Camden Security Agreement; (3) the Camden Trademark Security Agreement; (4) the Camden Patent Security Agreement; (5) the Acknowledgment and Confirmation of Domestic Subsidiaries' Guarantee; (6) the Acknowledgment and Confirmation of Borrower Pledge Agreement and Borrower Security Agreement; and (7) the Borrower Guarantee. 80 75 (d) Pledged Stock. The Administrative Agent shall have received all of the capital stock of Camden and the acknowledgement and consent of Camden to such pledge, together with undated stock powers endorsed in blank for each stock certificate representing such Pledged Stock. (e) Corporate Proceedings of the Credit Parties. The Administrative Agent shall have received, with a copy for each Lender, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors or duly authorized committee of each of Holdings, the Borrower and Camden authorizing (i) the execution, delivery and performance of this Agreement, the other Loan Documents and the Camden Acquisition Documents to which it is a party, (ii) the borrowings contemplated hereby and (iii) the transactions contemplated by the Camden Acquisition (to the extent applicable to such Person), certified by the Secretary or an Assistant Secretary of each of Holdings, the Borrower and Camden as of the Second Amendment Closing Date, which certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and shall be in form and substance reasonably satisfactory to the Administrative Agent. (f) Incumbency Certificates. The Administrative Agent shall have received, with a copy for each Lender, a certificate of the Secretary or an Assistant Secretary (or comparable officer) of each of Holdings, the Borrower and Camden, dated the Second Amendment Closing Date, as to the incumbency and signature of the officers of such Person executing each Loan Document and Camden Acquisition Document to which it is a party and any certificate or other document to be delivered by it pursuant hereto and thereto, together with evidence of the incumbency of such Secretary or Assistant Secretary. (g) Corporate Documents. The Administrative Agent shall have received, with a counterpart for each Lender, true and complete copies of the certificate of incorporation and by-laws of each of Holdings, the Borrower and Camden, certified as of the Second Amendment Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of each of the Credit Parties. (h) Certificate Regarding Senior Subordinated Notes. The Lenders shall have received a certificate from a Responsible Officer of the Borrower, dated the Second Amendment Closing Date, that, after giving effect to the transactions contemplated by this Agreement and the Camden Acquisition, the Borrower will be in compliance with the debt incurrence covenants contained in the Senior Subordinated Notes Indenture, which certificate shall set forth the calculations used to make such representation. (i) Consents, Licenses and Approvals. (i) All governmental and material third party approvals (including material landlords' and other consents) necessary or advisable in connection with the execution, delivery and performance of the Loan Documents and the Camden Acquisition Documents and the continuing operation of the Business shall have been obtained and be in full force and effect, (ii) all applicable waiting periods shall have expired without any action being taken or threatened by 81 76 any competent Governmental Authority which would restrain, prevent or otherwise impose adverse conditions on Holdings, any of its Subsidiaries or the Camden Acquisition and (iii) the Administrative Agent shall have received, with a counterpart for each Lender, a certificate of a Responsible Officer of the Borrower (A) attaching copies of all consents, authorizations and filings in connection with this Agreement and the Camden Acquisition, and (B) stating that such consents, licenses and filings are in full force and effect, and each such consent, authorization and filing shall be in form and substance satisfactory to the Administrative Agent. (j) Fees. The Administrative Agent shall have received the fees to be received on the Second Amendment Closing Date referred to in subsection 2.4(b) and the Administrative Agent shall have received a certificate in a form acceptable to it from a Responsible Officer certifying that the total aggregate amount of all fees and expenses incurred or to be incurred in connection with the Camden Acquisition shall not exceed an amount customary for transactions of this type. (k) Borrowing Certificate. The Administrative Agent shall have received, with a copy for each Lender, a borrowing certificate substantially in the form of Exhibit G and dated the Second Amendment Closing Date, executed by a Responsible Officer of the Borrower. (l) No Defaults. There shall exist no breach of or default (or condition which would constitute a default with the giving of notice or the passage of time) under any capital stock, financing agreements, lease agreements or other Contractual Obligation of Holdings or any of its Subsidiaries (including Camden) which, in any case or in the aggregate, would have a Material Adverse Effect. (m) Legal Opinions. (i) The Administrative Agent shall have received, with a counterpart for each Lender, the executed legal opinion of Weil, Gotshal & Manges LLP, counsel to the Credit Parties, substantially in the form of Exhibit F, dated the Second Amendment Closing Date. (ii) The Administrative Agent shall have received, with a copy for each Lender, the opinions of counsel to the Seller (as defined in the Camden Acquisition Documents) and to the Borrower delivered in connection with the Camden Acquisition, and each of such opinions shall either be addressed to the Administrative Agent or the Administrative Agent shall be authorized to rely on such opinions as if addressed to it. (n) Solvency. The Administrative Agent shall have received, with a copy for each Lender, (i) an opinion satisfactory in form and substance to them from Brownstone Associates Incorporated, dated the Second Amendment Closing Date, which shall document the Solvency of the Borrower on a consolidated basis and Holdings on a consolidated basis after giving effect to the Camden Acquisition and the other transactions contemplated hereby and (ii) a certificate of a Responsible Officer of the Borrower, dated the Second Amendment Closing Date, in substantially the form of Exhibit H. 82 77 (o) Perfection; Lien Searches. All filings and other actions required to create and perfect a first priority security interest in all collateral granted to the Administrative Agent pursuant to the Security Documents shall have been duly made or taken, and all such collateral shall be free and clear of other Liens except as permitted hereby. The Administrative Agent shall have received, with a copy for each Lender, the results of a recent lien search in each of the jurisdictions in the United States where assets of Camden are located, and (i) such search shall reveal no Liens on any of the assets of such parties other than those permitted pursuant to subsection 8.3 or (ii) the Administrative Agent shall have received evidence satisfactory to it that UCC-3 termination statements and other Lien release documentation shall have been duly executed and properly filed, and all other necessary actions shall have been duly taken, to the extent necessary to effect the complete and irrevocable release of all Liens other than those permitted pursuant to subsection 8.3 on the assets of Camden. (p) Insurance. The Administrative Agent shall have received an insurance certificate from AON Services, dated as of a recent date, and other evidence satisfactory to it that reasonably satisfactory insurance relating to Camden will be in place after the Camden Acquisition. (q) Tax, ERISA, Labor and Environmental Matters. All (i) tax aspects of the transactions contemplated hereby, and (ii) labor, ERISA and environmental matters with respect to the Borrower and its Subsidiaries, shall be satisfactory to the Lenders. (r) Perfection Certificate. The Administrative Agent shall have received, with a copy for each Lender, a Perfection Certificate, dated the Second Amendment Closing Date, substantially in the form of Exhibit I, duly completed by the Borrower. (s) Environmental Audit. The Lenders shall have received an environmental audit in form and substance satisfactory to them from Lexicon Environmental Associates, Inc. with respect to any environmental hazards, conditions or liabilities (contingent or otherwise) to which Camden may be subject. (t) Financial Statements. The Administrative Agent shall have received, with a copy for each Lender, (i) a pro forma balance sheet of the Borrower and its Subsidiaries as of the Second Amendment Closing Date and after giving effect to the Camden Acquisition and the financings contemplated thereby, which shall be in form and substance satisfactory to the Lenders, (ii) unaudited financial statements of Camden for the fiscal years ended January 29, 1994, January 28, 1995 and January 27, 1996 and for the ten-month period ended November 23, 1996, which financial statements shall have been prepared in accordance with GAAP and shall be in form and substance satisfactory to the Lenders and (iii) unaudited interim consolidated financial statements of each of the Borrower, its Subsidiaries and Camden for each fiscal month and quarterly period ended since the date of the last statement referred to above, to the extent available, and such financial statements shall not, in the judgment of the Lenders, reflect any material adverse change in the consolidated financial 83 78 condition of the Borrower, its Subsidiaries or Camden as reflected in the financial statements or projections previously delivered to such Lenders. (u) Borrowing Base Certificate. The Administrative Agent shall have received, with a copy for each Lender, a certificate of a Responsible Officer of the Borrower setting forth information concerning the pro forma Borrowing Base as of the Second Amendment Closing Date after giving effect to the Camden Acquisition approved by the Administrative Agent. (v) Litigation. No litigation, inquiry, injunction or restraining order shall be pending, entered or threatened (including, without limitation, any proposed statute, rule or regulation) which, in the reasonable opinion of the Lenders, could have a Material Adverse Effect. (w) No Adverse Change. There shall not have occurred any change, or development or event involving a prospective change, which in either case in the reasonable opinion of the Lenders, could have a Material Adverse Effect. The Lenders shall not have become aware of any previously undisclosed materially adverse information with respect to (i) the Camden Acquisition or the business, assets, operations, condition (financial or otherwise) or prospects of Holdings, the Borrower, and their Subsidiaries, taken as a whole, (ii) their ability to perform their obligations under this Agreement, any Note or the other Loan Documents or (iii) the rights and remedies of the Lenders. (x) Revolving Credit Loans. On the Second Amendment Closing Date and after giving effect to this Agreement and the Camden Acquisition, the aggregate principal amount of all outstanding Revolving Credit Loans shall not exceed $27,500,000. (y) Other Documentation. All other documentation, including, without limitation, any tax sharing agreement, employment agreement, management compensation arrangement or other financing arrangement of Camden shall be reasonably satisfactory in form and substance to the Lenders. (z) Flood Insurance. If any Mortgage with respect to real property owned by Camden encumbers improved real property which is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968, as amended, the Administrative Agent shall have received from the Borrower (i) a policy of flood insurance which (A) covers any parcel of improved real property which is encumbered by any such Mortgage (B) is written in an amount not less than the outstanding principal amount of the indebtedness secured by such Mortgage which is reasonably allocable to such real property or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, as amended, whichever is less, and (C) has a term ending not later than the maturity of the indebtedness secured by such Mortgage and (ii) confirmation that the Borrower 84 79 has received the notice required pursuant to Section 208(e)(3) of Regulation H of the Board of Governors of the Federal Reserve System. 6.2 Conditions to Each Loan. The agreement of each Lender to make any Loan requested to be made by it on any date (including, without limitation, the Second Additional Loans) or of the Revolving Credit Lenders and the Issuing Lender to issue or participate in any Letter of Credit is subject to the satisfaction of the following conditions precedent: (a) Representations and Warranties. Each of the representations and warranties made by the Credit Parties and their Subsidiaries in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date, except for any representation and warranty which is expressly made as of an earlier date, which representation and warranty shall have been true and correct in all material respects as of such earlier date. (b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans requested to be made, or Letters of Credit requested to be issued, on such date. (c) Letter of Credit Application. With respect to the issuance of any Letter of Credit, the Issuing Bank shall have received a Letter of Credit Application, completed to its reasonable satisfaction and duly executed by a Responsible Officer of the Borrower; provided that if such Letter of Credit is being issued to support the repayment of any Indebtedness of any Subsidiary of the Borrower, such Subsidiary shall also execute such Letter of Credit Application and shall agree to be jointly and severally liable with the Borrower for any and all obligations arising under or in connection with such Letter of Credit or the Letter of Credit Application related thereto. Each borrowing by the Borrower hereunder and issuance of any Letter of Credit shall constitute a representation and warranty by the Credit Parties as of the date of such Loan or issuance, as the case may be, that the conditions contained in this subsection 6.2 have been satisfied. SECTION 7. AFFIRMATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect, any Note remains outstanding and unpaid, any Letter of Credit is outstanding or any other Obligations are owing to any Lender or the Administrative Agent hereunder, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to: 7.1 Financial Statements. Furnish to each Lender: (a) as soon as available, but in any event within 110 days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the 85 80 Borrower and its consolidated Subsidiaries as at the end of such year and the consolidated statements of income and retained earnings and consolidated statement of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by independent certified public accountants of nationally recognized standing; (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and consolidated statement of cash flows of the Borrower and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form (i) the figures for the previous year and (ii) the figures set forth in the relevant budgets required to be delivered in accordance with subsection 7.2(d), certified by a Responsible Officer as being fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and its consolidated Subsidiaries (subject to normal year-end audit adjustments); (c) as soon as available, but in any event not later than 45 days after the end of each month (other than a month the last day of which coincides with the last day of any fiscal quarter) of each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such month and the related unaudited consolidated statements of income and retained earnings and consolidated statement of cash flows of the Borrower and its consolidated Subsidiaries for such month and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form (i) the figures for the previous year and (ii) the figures set forth in the relevant budgets required to be delivered in accordance with subsection 7.2(d); all such financial statements shall fairly present in all material respects the consolidated financial position or the consolidating financial position, as the case may be, of the Borrower and its Subsidiaries as of such date and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 7.2 Certificates; Other Information. Furnish to each Lender: (a) concurrently with the delivery of the financial statements referred to in subsection 7.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default relating to the covenants contained in subsection 8.1, except as specified in such certificate; 86 81 (b) concurrently with the delivery of the financial statements referred to in subsections 7.1(a) and 7.1(b), a certificate of a Responsible Officer of the Borrower (i) stating that, to the best of such Responsible Officer's knowledge, the Borrower during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and in the Notes and the other Loan Documents to which it is a party to be observed, performed or satisfied by it, in all material respects, and that such Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate, (ii) stating that all such financial statements fairly present in all material respects (subject, in the case of interim statements, to normal year-end audit adjustments) and have been prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as disclosed therein) and (iii) showing in detail the calculations supporting such statement in respect of subsections 8.1, 8.8 and 8.9; (c) on or prior to (i) the fifteenth Business Day following the end of each month, an officers certificate substantially in the form of Exhibit J and made pursuant to subsection 4.5 hereof, certified by a Responsible Officer of the Borrower as true and correct, and setting forth the amount of accounts receivable and inventory of the Borrower and its Subsidiaries as set forth on the consolidated balance sheet of the Borrower and its Subsidiaries for the previous month delivered pursuant to subsection 7.1(c); (d) as soon as available but not later than 45 days subsequent to the end of each fiscal year of the Borrower (in the case of the projections for the 1997 fiscal year, however, not later than March 17, 1997), a copy of the projections by the Borrower of the operating budget and cash flow budget of the Borrower and its Subsidiaries for the succeeding fiscal year (showing the operating budget and cash flow budget for each month within such fiscal year), such projections to be accompanied by a certificate of a Responsible Officer of the Borrower to the effect that such projections have been prepared in good faith and based upon reasonable assumptions; (e) within five days after the same are filed, copies of all financial statements and reports which Holdings, the Borrower or any of their Subsidiaries may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; and (f) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be; provided that, notwithstanding the foregoing, the Borrower and each of its Subsidiaries 87 82 shall have the right to pay any such obligation and in good faith contest, by proper legal actions or proceedings, the validity or amount of such claims. 7.4 Conduct of Business and Maintenance of Existence. Except as provided in subsection 8.5, continue to engage in business of the same general type as now conducted by it and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except if (i) in the reasonable business judgment of the Borrower or such Subsidiary, as the case may be, it is in its best economic interest not to preserve and maintain such rights or franchises, and (ii) such failure to preserve and maintain such privileges, rights or franchises would not materially adversely affect the rights of the Lenders hereunder or the value of the collateral security for the Loans, and as otherwise permitted pursuant to subsection 8.5; comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, be reasonably expected to have a Material Adverse Effect. 7.5 Maintenance of Property; Insurance. Keep all property (including the Mortgaged Properties) useful and necessary in its business in good working order and condition; maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business or as otherwise reasonably requested by the Administrative Agent; and furnish to each Lender, upon written request, full information as to the insurance carried except to the extent that the failure to do any of the foregoing with respect to any such property could not reasonably be expected to materially adversely affect the value or usefulness of such property. 7.6 Inspection of Property; Books and Records; Discussions. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records upon reasonable advance notice at any reasonable time on any Business Day and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants; provided that the Administrative Agent or such Lender shall notify the Borrower prior to any contact with such accountants and give the Borrower the opportunity to participate in such discussions. 7.7 Notices. Promptly give notice to the Administrative Agent and each Lender of: (a) the occurrence of any Default or Event of Default; (b) (i) any (x) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (y) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any 88 83 Governmental Authority, which in either case, if not cured or if adversely determined, as the case may be, would have a Material Adverse Effect and (ii) any default or event of default under the Holdings Stock Purchase Agreement or the Senior Subordinated Notes; (c) any litigation or proceeding affecting any of the Credit Parties or any of their Subsidiaries in which the amount involved is $2,000,000 or more and not covered by insurance or in which injunctive or similar relief is sought; (d) the following events: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan (other than a Multiemployer Plan), a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan; (e) any development or event which has had, or could reasonably be expected to have, a Material Adverse Effect; and (f) the receipt by the Borrower or any Subsidiary of any complaint, order, citation, notice or other written communication from any Person with respect to the existence or alleged existence of a violation of any Environmental Laws or Materials of Environmental Concern or any other environmental, health or safety matter, including, without limitation, the occurrence of any spill, discharge or release in a quantity that is reportable under any Environmental Law on any Mortgaged Property or any other property owned, leased or utilized by the Borrower or any Subsidiary of the Borrower but only to the extent that such complaint, order, citation, notice or written communication individually or in the aggregate could reasonably be expected to result in material liability or a material obligation under any Environmental Law. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower, Holdings or the applicable Commonly Controlled Entity proposes to take with respect thereto. 7.8 Environmental Laws. (a) Comply in all material respects with, and will use reasonable best efforts to ensure compliance in all material respects by all tenants and subtenants, if any, with, all applicable Environmental Laws; (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and in a timely fashion comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except to the extent that 89 84 the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not be reasonably expected to have a Material Adverse Effect; and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective employees, agents, officers, directors and controlling persons, from and against any and all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries or the Properties, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing arise out of or relate to the gross negligence or willful misconduct of, or any post-foreclosure actions not taken in the ordinary course of business consistent with past practices of, the party seeking indemnification therefor. The agreements in this paragraph shall survive repayment of all Loans and all other amounts payable hereunder. 7.9 Pledge of After Acquired Property. If at any time following the Second Amendment Closing Date the aggregate monetary value (as determined by aggregating the monetary value of each item or items of property so acquired on the date of the acquisition thereof) of all property (to the extent not already secured) of any nature whatsoever acquired by the Borrower and/or any Domestic Subsidiary after the Second Amendment Closing Date is in excess of $1,000,000, the Borrower and any such Domestic Subsidiary shall grant to the Administrative Agent for the ratable benefit of the Lenders a first priority Lien on and security interest in any property acquired at any time thereafter, as collateral security for the Obligations, pursuant to documentation reasonably satisfactory to the Administrative Agent and take such actions as the Administrative Agent shall reasonably require to ensure the priority and perfection of such Lien, provided that if the grant of such Lien or Liens would be reasonably likely to result in the Borrower incurring income tax liability (as determined by the Borrower and agreed to by the Administrative Agent) pursuant to Subpart F of the Code, the property pledged pursuant hereto will be that property which can be pledged without incurring such liability. 90 85 7.10 Pledge During Event of Default. At any time during the continuance of an Event of Default, upon the request of the Administrative Agent, grant to the Administrative Agent for the ratable benefit of the Lenders a first priority Lien on and security interest in any unencumbered property of the Borrower and its Subsidiaries of any nature whatsoever, as collateral security for the Obligations, pursuant to documentation reasonably satisfactory to the Administrative Agent and take such actions as the Administrative Agent shall reasonably require to ensure the priority and perfection of such Lien, provided, however, that if the grant of such Lien would be reasonably likely to result in the Borrower incurring income tax liability (as determined by the Borrower and agreed to by the Administrative Agent) pursuant to Subpart F of the Code, the property pledged pursuant hereto will be that property which can be pledged without incurring such liability. 7.11 Interest Rate Agreements. Not later than 90 days after the Second Amendment Closing Date, enter into or purchase or otherwise acquire, with or from financially responsible parties, Interest Rate Agreements which assure the net interest cost to the Borrower on at least 50% of the aggregate principal amount of the Second Additional Term Loans for a period of at least two years from the date on which such Interest Rate Agreements are entered into, purchased or otherwise acquired and at a rate reasonably satisfactory to the Administrative Agent and otherwise upon terms and conditions reasonably satisfactory to the Administrative Agent. The Borrower shall use its best efforts to maintain in full force and effect Interest Rate Agreements reasonably satisfactory to the Administrative Agent in order to ensure compliance with the terms of this subsection 7.11 and subsection 7.11 as set forth in the Existing Credit Agreement and shall not default (beyond any applicable grace period) in the performance of any of its material obligations thereunder. A security interest in all right, title and interest of the Borrower in and to each Interest Rate Agreement shall be granted in favor of the Administrative Agent for the benefit of the Lenders. 7.12 Additional Subsidiaries. If, at any time, either the Borrower or any of its respective Subsidiaries shall form any new Subsidiary after the date of this Agreement (this subsection not constituting authority to form a new Subsidiary), the Borrower or such Subsidiary, as the case may be, shall (i) cause such new Subsidiary (other than a Foreign Subsidiary) to execute and deliver a Domestic Subsidiaries' Guarantee in favor of the Administrative Agent substantially in the form of Exhibit B-1, (ii) cause such new Subsidiary (other than a Foreign Subsidiary) to execute and deliver a Domestic Subsidiary Security Agreement in favor of the Administrative Agent substantially in the form of Exhibit B-8, and (iii) cause each holder of any Capital Stock of such Subsidiary to pledge 100% of such Capital Stock to the Administrative Agent pursuant to a Pledge Agreement substantially in the form of Exhibit B-4, provided that if the grant of such a pledge would be reasonably likely to result in the Borrower incurring income tax liability (as determined by the Borrower and agreed to by the Administrative Agent) pursuant to Subpart F of the Code, the property pledged pursuant hereto will be that property which can be pledged without incurring such liability, and provided, further each of such Subsidiaries' Guarantee, Domestic Subsidiary Security Agreements and Pledge Agreement shall be accompanied by such resolutions, incumbency certificates and legal opinions as are reasonably requested by the Administrative Agent. 7.13 Mortgages; Mortgage Amendments; Surveys. (a) Within forty-five days of the Second Amendment Closing Date, the Borrower shall deliver to the Administrative Agent the Mortgage relating to real property owned by Camden located in Camden, New York, executed and delivered by a Responsible Officer of Camden and by each other party thereto. (b) Within forty-five days of the Second Amendment Closing Date, the Borrower shall deliver to the Administrative Agent any amendments to the Mortgages and endorsements to the title insurance policies previously delivered in connection with this Agreement which are reasonably requested by Lenders, executed and delivered by a Responsible Officer of the appropriate Credit Party and by each other party thereto 91 86 (c) Within forty-five days of the Second Amendment Closing Date, the Borrower shall deliver to the Administrative Agent and the title insurance company issuing the policy referred to in subsection 7.14 (the "Title Insurance Company") maps or plats of an as-built survey of each Fee Property owned by Camden on which a Mortgage has been delivered in favor of the Administrative Agent certified by the survey company to the Administrative Agent and the Title Insurance Company in a manner satisfactory to them, dated a date reasonably satisfactory to the Administrative Agent and the Title Insurance Company and prepared by an independent professionally licensed land surveyor reasonably satisfactory to the Administrative Agent and the Title Insurance Company, which maps or plats and the surveys on which they are based shall be made in accordance with the Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1992, and, without limiting the generality of the foregoing, there shall be surveyed and shown on such maps, plats or surveys the following: (i) the locations on such sites of all the buildings, structures and other improvements and the established building setback lines; (ii) the lines of streets abutting the sites and width thereof; (iii) all access and other easements appurtenant to the sites or necessary or desirable to use the sites; (iv) all roadways, paths, driveways, easements, encroachments and overhanging projections and similar encumbrances affecting the site, whether recorded, apparent from a physical inspection of the sites or otherwise known to the surveyor; (v) any encroachments on any adjoining property by the building structures and improvements on the sites; and (vi) if the site is described as being on a filed map, a legend relating the survey to said map. 7.14 Title Insurance Policy. Within forty-five days of the Second Amendment Closing Date, the Borrower shall deliver to the Administrative Agent in respect of each Fee Property owned by Camden on which a Mortgage has been delivered in favor of the Administrative Agent a mortgagee's title policy (or policies) or marked up unconditional binder for such insurance dated no later than 45 days from the Second Amendment Closing Date. Each such policy shall (i) be in an amount reasonably satisfactory to the Administrative Agent; (ii) be issued at ordinary rates; (iii) insure that the Mortgage insured thereby creates a valid first Lien on the Fee Property free and clear of all defects and encumbrances, except as permitted under subsection 8.3 and such other matters as may be approved by the Administrative Agent; (iv) name the Administrative Agent for the benefit of the Lenders as the insured thereunder; (v) be in the form of ALTA Loan Policy - 1990, if available; (vi) contain such endorsements and affirmative coverage as the Administrative Agent may reasonably request and (vii) be issued by title companies reasonably satisfactory to the Administrative Agent (including any such title companies acting as co-insurers or reinsurers, at the option of the Administrative Agent). The Administrative Agent shall receive evidence satisfactory to it that all premiums in respect of each such policy, and all charges for mortgage recording tax, if any, have been paid. Furthermore, the Borrower shall deliver to the Administrative Agent on the date on which the title policy (or policies) referred to above are delivered pursuant to the terms hereof a copy of all recorded documents referred to, or listed as exceptions to title in, the title policy or policies referred to in this subsection 7.14 and a copy, certified by a title insurance company acceptable to the Administrative Agent, of all documents affecting the property covered by such Mortgage not otherwise delivered prior to or on the Second Amendment Closing Date pursuant to subsection 6.1. 92 87 7.15 Substantive Consolidation. The Borrower shall maintain a separate and distinct existence from Holdings and cause each of its Subsidiaries to maintain a separate and distinct existence from Holdings, the Borrower and each other Subsidiary of the Borrower in order to avoid substantive consolidation of the assets and liabilities of Holdings, the Borrower and each Subsidiary of the Borrower under title 11 of the United States Bankruptcy Code, as amended, through the honoring of all formalities which shall include, without limitation, no commingling of assets, sufficient and independent capitalization, and separate books and records. SECTION 8. NEGATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect, any Note remains outstanding and unpaid, any Letter of Credit remains outstanding or any other Obligations are owing to any Lender or the Administrative Agent hereunder, the Borrower shall not, and (except with respect to subsection 8.1) shall not permit any of its Subsidiaries to, directly or indirectly: 8.1 Financial Condition Covenants. (a) Interest Coverage. Permit the Interest Coverage Ratio of the Borrower and its Subsidiaries (i) for the period commencing on April 1, 1996 and ending at the end of the fourth calendar quarter for 1996 to be less than the ratio set forth below for such calendar quarter and (ii) thereafter (commencing with the four consecutive calendar quarters ending on March 31, 1997), for any period of four consecutive calendar quarters ending at the end of the calendar quarters set forth below to be less than the ratio set forth opposite such calendar quarter below:
Calendar Quarter Interest Coverage Ratio ---------------- ----------------------- 1996 4th 1.60 to 1.00 1997 1st 1.65 to 1.00 2nd 1.70 to 1.00 3rd 1.75 to 1.00 4th 1.80 to 1.00 1998 1st 1.85 to 1.00 2nd 1.90 to 1.00 3rd 1.95 to 1.00 4th 2.00 to 1.00 1999 1st 2.10 to 1.00 2nd 2.15 to 1.00 3rd 2.20 to 1.00 4th 2.30 to 1.00 2000 1st 2.35 to 1.00 2nd 2.40 to 1.00
93 88 3rd 2.45 to 1.00 4th 2.55 to 1.00 2001 1st 2.60 to 1.00 2nd 2.65 to 1.00 3rd 2.75 to 1.00 4th 2.85 to 1.00 2002 1st 2.95 to 1.00 2nd 3.10 to 1.00 3rd 3.20 to 1.00 4th 3.35 to 1.00 2003 1st 3.40 to 1.00 2nd 3.45 to 1.00 3rd 3.50 to 1.00 4th 3.50 to 1.00
(b) Maintenance of Consolidated EBITDA. Permit Consolidated EBITDA of the Borrower and its Subsidiaries (i) for the period commencing on April 1, 1996 and ending at the end of the fourth calendar quarter for 1996 to be less than the amount set forth below for such calendar quarter and (ii) thereafter (commencing with the four consecutive calendar quarters ending on March 31, 1997), for any period of four consecutive calendar quarters ending at the end of the calendar quarters set forth below to be less than the amount set forth opposite such calendar quarter below:
Calendar Quarter Amount ---------------- ------ 1996 4th 58,000,000 1997 1st 78,500,000 2nd 80,500,000 3rd 82,500,000 4th 84,000,000 1998 1st 86,000,000 2nd 87,500,000 3rd 90,000,000 4th 91,000,000 1999 1st 94,000,000 2nd 95,500,000 3rd 96,500,000 4th 98,500,000 2000 1st 99,500,000 2nd 100,500,000
94 89 3rd 102,000,000 4th 104,000,000 2001 1st 105,000,000 2nd 106,500,000 3rd 108,000,000 4th 109,500,000 2002 1st 111,000,000 2nd 112,500,000 3rd 114,000,000 4th 115,500,000 2003 1st 117,000,000 2nd 119,000,000 3rd 120,500,000 4th 122,000,000
(c) Maintenance of Consolidated Total Debt to Consolidated EBITDA. Permit the ratio of Consolidated Total Debt of the Borrower and its Subsidiaries to Consolidated EBITDA of the Borrower and its Subsidiaries for any period of four consecutive calendar quarters ending at the end of the calendar quarters set forth below to be greater than the ratio set forth opposite such calendar quarter below; provided that for the purposes of determining the ratio for the period of four consecutive calendar quarters ending at the end of the fourth calendar quarter for 1996, Consolidated EBITDA of the Borrower and its Subsidiaries for the first calendar quarter of 1996 shall be deemed to be $23,400,000; and provided further that for the purposes of determining the ratio for the period of four consecutive calendar quarters ending at the end of (i) the first calendar quarter for 1997, Consolidated EBITDA of the Borrower and its Subsidiaries for such period shall be deemed to be increased by an amount equal to the Consolidated EBITDA of Camden for the second, third and fourth calendar quarters for 1996 and for January 1997 (which amount shall equal $8,650,000), (ii) the second calendar quarter for 1997, Consolidated EBITDA of the Borrower and its Subsidiaries for such period shall be deemed to be increased by an amount equal to the Consolidated EBITDA of Camden for the third and fourth calendar quarters for 1996 and for January 1997 (which amount shall equal $6,100,000), (iii) the third calendar quarter for 1997, Consolidated EBITDA of the Borrower and its Subsidiaries for such period shall be deemed to be increased by an amount equal to the Consolidated EBITDA of Camden for the fourth calendar quarter for 1996 and for January 1997 (which amount shall equal $3,550,000) and (iv) the fourth calendar quarter for 1997, Consolidated EBITDA of the Borrower and its Subsidiaries for such period shall be deemed to be increased by an amount equal to the Consolidated EBITDA of Camden for January 1997 (which amount shall equal $1,000,000): 95 90
Fiscal Year Ratio ----------------- ----- 1996 4th 5.90 to 1.00 1997 1st 5.85 to 1.00 2nd 5.75 to 1.00 3rd 5.50 to 1.00 4th 5.40 to 1.00 1998 1st 5.15 to 1.00 2nd 4.95 to 1.00 3rd 4.80 to 1.00 4th 4.65 to 1.00 1999 1st 4.50 to 1.00 2nd 4.30 to 1.00 3rd 4.20 to 1.00 4th 4.00 to 1.00 2000 1st 3.90 to 1.00 2nd 3.70 to 1.00 3rd 3.60 to 1.00 4th 3.50 to 1.00 2001 1st 3.40 to 1.00 2nd 3.20 to 1.00 3rd 3.10 to 1.00 4th 3.00 to 1.00 2002 1st 3.00 to 1.00 2nd 2.80 to 1.00 3rd 2.60 to 1.00 4th 2.50 to 1.00 2003 1st 2.50 to 1.00 2nd 2.50 to 1.00 3rd 2.50 to 1.00 4th 2.50 to 1.00
8.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except: (a) Indebtedness of the Credit Parties under the Loan Documents; (b) Indebtedness of the Borrower or any Domestic Subsidiary, including any new Domestic Subsidiary, to the Borrower or any Domestic Subsidiary arising as a result of intercompany loans; 96 91 (c) Indebtedness outstanding on the Second Amendment Closing Date and listed on Schedule 8.2 and extensions, renewals or replacements thereof provided that no such extension, renewal or replacement shall (i) amend or modify any subordination provisions, if any, contained in the original Indebtedness, (ii) shorten the fixed maturity or increase the principal amount of, or increase the rate or shorten the time of payment of interest on, or increase the amount or shorten the time of payment of any principal or premium payable whether at maturity, at a date fixed for prepayment or by acceleration or otherwise of the original Indebtedness, or increase the amount of, or accelerate the time of payment of, any fees payable in connection therewith, (iii) make any modification relating to the affirmative or negative covenants, events of default or remedies under the documents or instruments evidencing the original Indebtedness the effect of which is to subject the Borrower or any Subsidiary to any more materially onerous or restrictive provisions, or (iv) materially adversely affect the interests of the Lenders under this Agreement or any other Loan Document in any respect; (d) Indebtedness resulting from the endorsement of negotiable instruments in the ordinary course of business; (e) Indebtedness in respect of obligations under Financing Leases and purchase money Indebtedness not to exceed $15,000,000 in the aggregate at any one time outstanding; (f) Indebtedness in respect of (i) the Interest Rate Agreements required pursuant to subsection 7.11 and (ii) copper hedging arrangements in the nature of margin deposits for any such copper hedging arrangements otherwise permitted under subsection 8.17 not exceeding $2,500,000 in the aggregate at any one time; (g) Indebtedness of any Domestic Subsidiary to the Borrower or another Domestic Subsidiary from intercompany transfers of assets made in the ordinary course of business or to the extent permitted under subsections 8.6 and 8.9; (h) Guarantee Obligations permitted by subsection 8.4; (i) Indebtedness (i) of ECM to Wirekraft Industries evidenced by the ECM Notes (provided that the ECM Notes are pledged by Wirekraft Industries to the Administrative Agent for the ratable benefit of the Lenders pursuant to the Wirekraft Note Pledge Agreement); (ii) of ECM and any other Foreign Subsidiary of the Borrower to the Borrower or any Domestic Subsidiary of the Borrower (other than Indebtedness evidenced by the ECM Notes) (provided that any such intercompany notes are pledged by the Borrower or any such Domestic Subsidiary of the Borrower, as the case may be, to the Administrative Agent for the ratable benefit of the Lenders pursuant to a pledge agreement in form and substance reasonably satisfactory to the Administrative Agent) and (iii) of ECM and any other Foreign Subsidiary of the Borrower to local financial institutions for working capital purposes; provided that the aggregate principal amount of Indebtedness described in clauses (i) and (ii) above plus 97 92 the aggregate commitments of all working capital facilities described in clause (iii) above shall in no event exceed $17,000,000 at any one time; (j) Indebtedness subject to Liens permitted under subsections 8.3(b), (c), (d), (e); (k) Indebtedness incurred in connection with the sale of the accounts receivable of the Borrower and its Subsidiaries in connection with a trade receivables financing transaction otherwise permitted under subsection 8.6(i); (l) additional Indebtedness not exceeding $8,000,000 in aggregate principal amount at any one time outstanding; (m) at any time following the Revolving Credit Commitment Termination Date, Indebtedness in respect of unsecured revolving lines of credit in an aggregate amount not exceeding $40,000,000 in aggregate principal amount at any one time; (n) Indebtedness under the Senior Subordinated Notes not to exceed $150,000,000 in aggregate principal amount at any one time; provided that such Indebtedness shall not be extended, renewed, replaced, refinanced or otherwise amended except for amendments otherwise permitted by subsection 8.10(b); and (o) Indebtedness under the Exchange Notes not to exceed $10,000,000 (as such amount may be increased due to accumulated dividends on the Preferred Stock at the time of exchange) in aggregate principal amount at any one time; provided that at the time the Preferred Stock is exchanged for the Exchange Notes (the "Exchange"), and after giving effect to the Exchange, there shall not exist a Default or an Event of Default hereunder and the Administrative Agent shall have received a certificate of a Responsible Officer of Holdings certifying that after giving effect to the Exchange, Holdings and its Subsidiaries will be in compliance with the terms and conditions of this Agreement and the Senior Subordinated Note Indenture; and provided further that such Indebtedness shall not be extended, renewed, replaced, refinanced or otherwise amended except for amendments otherwise permitted by subsection 8.10(b). 8.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for: (a) Liens created by the Security Documents in favor of the Administrative Agent for the benefit of the Lenders and the Administrative Agent; (b) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect to contested taxes are maintained on the books of Holdings or the Borrower or their respective Subsidiaries, as the case may be, in conformity with GAAP (or, in the case of Foreign Subsidiaries, generally accepted accounting principles in effect from time to time in their respective jurisdictions of incorporation); 98 93 (c) carriers', landlord's, warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings; (d) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, insurance contracts, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (f) easements, rights-of-way, zoning restrictions, restrictions and other similar encumbrances (i) previously or hereinafter incurred in the ordinary course of business which, in the aggregate, are not material in amount and which, in the case of such encumbrances on any of the Fee Properties or Leased Properties covered by a Mortgage, do not in the aggregate materially detract from the value of such Fee Properties or Leased Properties subject thereto or, in the case of such encumbrances on any property, materially interfere with the ordinary conduct of the business of the Borrower or such Subsidiary, (ii) which are set forth in the title insurance policies delivered to the Administrative Agent pursuant to the Existing Credit Agreement or (iii) which are set forth in the "marked up" commitments for title insurance delivered to the Administrative Agent on the Second Amendment Closing Date; (g) Liens in existence on the Second Amendment Closing Date listed on Schedule 8.3, securing Indebtedness permitted by subsection 8.2(c) (including extensions, renewals and replacements of such Indebtedness as permitted under subsection 8.2(c)), provided that no such Lien is spread to cover any additional property (other than after acquired title in or on such property and proceeds of the existing collateral in accordance with the instrument creating such Lien) after the Second Amendment Closing Date and that the amount of Indebtedness secured thereby is not increased except pursuant to the instrument creating such Lien (without any modification thereof); (h) purchase money Liens and Liens in respect of Financing Leases upon or in any property acquired or held by the Borrower or any of its Subsidiaries to secure Indebtedness permitted under subsection 8.2(e) incurred solely for the purpose of financing the acquisition of such property, and Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition); (i) Liens on the property of the Borrower or any of its Subsidiaries in favor of landlords securing licenses, subleases or leases permitted hereunder; 99 94 (j) Liens securing copper hedging arrangements in the nature of margin deposits for any such copper hedging arrangements otherwise permitted under subsection 8.17 not to exceed $2,500,000 in aggregate amount at any time; (k) licenses, leases or subleases permitted hereunder granted to others not interfering in any material respect in the business of the Borrower or any of its Subsidiaries; (l) attachment or judgment Liens (other than judgment Liens paid or fully covered by insurance which are not outstanding for more than sixty days) in an aggregate amount outstanding at any one time not in excess of $5,000,000; (m) Liens arising from precautionary Uniform Commercial Code financing statement filings with respect to operating leases or consignment arrangements entered into by the Borrower or any of its Subsidiaries in the ordinary course of business; (n) Liens in favor of a banking institution arising by operation of law encumbering deposits (including the right of set-off) held by such banking institutions incurred in the ordinary course of business and which are within the general parameters customary in the banking industry; (o) Liens arising from the sale of the accounts receivable of the Borrower and its Subsidiaries in connection with a trade receivables financing transaction otherwise permitted under subsection 8.6(i); (p) Liens on property of ECM or any other Foreign Subsidiary of the Borrower securing Indebtedness of ECM or such Foreign Subsidiary of the Borrower, as the case may be, permitted under subsections 8.2(i)(ii) and (iii) and Liens on property of ECM securing Indebtedness under the ECM Notes in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent; and (q) Liens (not otherwise permitted hereunder) which secure obligations not exceeding (as to the Borrower and all of its Subsidiaries) $2,000,000 in aggregate amount at any time outstanding. 8.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer to exist any Guarantee Obligation except: (a) the Guarantees; (b) guarantees of Indebtedness permitted pursuant to subsection 8.2(c) in existence on the Second Amendment Closing Date and set forth on Schedule 8.4 and extensions, renewals and replacements thereof, provided, however, that no such extension, renewal or replacement shall (i) amend or modify the subordination provisions, if any, contained in the original guarantee, (ii) shorten the fixed maturity or increase the principal amount of, or increase the rate or shorten the time of 100 95 payment of interest on, or increase the amount or shorten the time of payment of any principal or premium payable whether at maturity, at a date fixed for prepayment or by acceleration or otherwise of the Indebtedness guaranteed by the original guarantee, or increase the amount of, or accelerate the time of payment of, any fees payable in connection therewith, (iii) make any modification relating to the affirmative or negative covenants, events of default or remedies under the documents or instruments evidencing the original guarantee the effect of which is to subject the Borrower or any Subsidiary to any more onerous or restrictive provisions, or (iv) adversely affect the interests of the Lenders under this Agreement or any other Loan Document in any respect; (c) the L/C Obligations; (d) indemnities in favor of the companies issuing title insurance policies insuring the Mortgages to induce such issuance; (e) surety bonds issued in respect of the type of obligations described in subsection 8.3(e); (f) indemnities made in the Commitment Letter, the Loan Documents, the Acquisition Documents, the Camden Acquisition Documents and the Transaction Documents and in the monitoring and oversight agreement described in subsection 8.7(a)(iv) and in the corporate charter and/or bylaws of the Borrower and its Subsidiaries; (g) indemnities made in the ordinary course of business, provided that such indemnities could not individually or in the aggregate have a Material Adverse Effect; (h) the guarantees of the Domestic Subsidiaries of the Borrower set forth in the Senior Subordinated Notes and the Senior Subordinated Note Documents; and (i) obligations in the nature of indemnities of Wirekraft Industries and WB Holdings to GE in respect of GE's obligations on account of the Lease Contract entered into on or about August 1, 1994 between ECM, as lessee, and Parques Industriales Mexicanos, S.A. de C.D., as lessor, in respect of property located in Ciudad Juarez, State of Chihuahua, Mexico. 8.5 Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business, except (i) any Wholly Owned Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any one or more Wholly Owned Subsidiaries of the Borrower (provided that no Domestic Subsidiary may be merged or consolidated with or into any Foreign Subsidiary unless the Domestic Subsidiary shall be the surviving corporation) and (ii) any Subsidiary of the Borrower may liquidate or dissolve if in 101 96 connection therewith all of its assets are transferred to the Borrower or any Wholly Owned Subsidiary of the Borrower which is a Domestic Subsidiary of the Borrower. 8.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, except: (a) obsolete or worn out property disposed of in the ordinary course of business or property that is no longer useful in the conduct of the Borrower's business disposed of in the ordinary course of business; (b) the sale, transfer or exchange of inventory in the ordinary course of business; (c) transfers resulting from any casualty or condemnation of property or assets; (d) any sale or other transfer of any property or assets constituting fixed assets for cash, provided that the aggregate net cash proceeds of the sales and transfers made pursuant to this paragraph (d) in the aggregate do not exceed $2,000,000 in any fiscal year; (e) intercompany sales or transfers of assets made in the ordinary course of business; and (f) licenses or sublicenses of intellectual property and general intangibles and licenses, leases or subleases of other property in the ordinary course of business and which do not materially interfere with the Business. (g) any consignment arrangements or similar arrangements for the sale of assets in the ordinary course of business; (h) the sale or discount of overdue accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof; and (i) the sale of the accounts receivable of the Borrower and its Subsidiaries in connection with a trade receivable financing transaction reasonably acceptable to the Administrative Agent; provided that all of the Net Cash Proceeds of each such sale are applied to the prepayment of the Loans as required by subsection 2.12. 8.7 Limitation on Dividends. Declare or pay any dividend (other than dividends payable solely in common stock of the Borrower) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any class of Capital Stock of the Borrower or any Subsidiary or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or 102 97 indirectly, whether in cash or property, obligations of the Borrower or any Subsidiary or otherwise (such declarations, payments, setting apart, purchases, redemptions, defeasances, retirements, acquisitions and distributions being herein called "Restricted Payments"), except that: (a) the Borrower may make Restricted Payments to Holdings, so long as (except with respect to clause (iii) below) no Event of Default (or, in the case of clause (iv) below an Event of Default which relates to a payment default under subsection 9(a)) has occurred and is continuing or would occur and be continuing after giving effect to any such Restricted Payment: (i) the proceeds of which shall be applied by Holdings directly to pay out of pocket expenses for administrative, legal and accounting services provided by third parties which are reasonable and customary and incurred in the ordinary course of business, to pay franchise fees and similar costs or to pay filing fees in connection with the registration under the Securities Act of 1933, as amended of securities issued in exchange for the Senior Subordinated Notes; provided, however that any such administrative expenses shall not exceed an aggregate amount of $1,000,000 in fiscal year 1995 and $750,000 in each fiscal year thereafter; (ii) the proceeds of which shall be used to repurchase the Capital Stock or other securities of Holdings from outside directors, employees or members of the management of Holdings, the Borrower or any Subsidiary, at a price not in excess of fair market value, in an aggregate amount not in excess of $3,000,000, net of the proceeds received by the Borrower as a result of any resales of any such Capital Stock or other securities; (iii) the proceeds of which shall be used to pay taxes which are due and payable of Holdings and the Borrower as part of a consolidated group; and (iv) the proceeds of which shall be used to pay management fees to HMTFI in accordance with the terms of its monitoring and oversight agreement described in Schedule 5.22; (b) any Subsidiary of the Borrower may make Restricted Payments to the Borrower; (c) Permitted Issuances may be made; (d) the Borrower may declare dividends on the Preferred Stock as set forth in the terms of the Preferred Stock, provided that the borrower may not pay such 103 98 dividends in cash on or prior to March 31, 2000; and provided further that the Borrower may pay such dividends in cash after March 31, 2000 so long as no Default or Event of Default has occurred and is continuing or would occur as a result of such payment; and (e) the Borrower may exchange the Preferred Stock for the Exchange Notes (pursuant to the terms of the Preferred Stock) and pay accumulated dividends on the Preferred Stock at the time of the Exchange, so long as no Default or Event of Default has occurred or would occur as a result of the payment of such accumulated dividends. 8.8 Limitation on Capital Expenditures. (a) Make or commit to make any Capital Expenditure, except for expenditures in the ordinary course of business not exceeding, in the aggregate for the Borrower and its Subsidiaries during any of the fiscal years of the Borrower set forth below (or, with respect to the first such fiscal year only, the period from the Closing Date to the end of such fiscal year) the amount set forth opposite such fiscal year below:
Fiscal Year Amount ----------- ------ 1996 $ 14,000,000 1997 23,000,000 1998 and thereafter 20,000,000
; provided that 100% of any amount not used in any fiscal year set forth above may be carried forward into the next succeeding fiscal year (and any amount allowed in the Existing Credit Agreement for fiscal year 1995 which was not used in fiscal year 1995 may be carried forward into fiscal year 1996) and Capital Expenditures in such next succeeding fiscal year shall be applied first to the amount carried forward into such next succeeding fiscal year before being applied to the yearly limit for such next succeeding fiscal year. (b) In addition to the Capital Expenditures permitted pursuant to paragraph (a) of this subsection 8.8, to the extent such proceeds are not otherwise utilized pursuant to the last paragraph of subsection 8.9, the Borrower and its Subsidiaries may make additional Capital Expenditures (which shall not be counted in the limitations set forth in paragraph (a) of this subsection 8.8 but shall be counted in the limitation set forth in paragraph (c) of this subsection 8.8) as follows: (i) Capital Expenditures consisting of the investment of Net Cash Proceeds not required to be applied to prepay the Loans pursuant to subsection 2.12, including, (x) with respect to the investment of proceeds of the insurance and condemnation proceeds not required to prepay the Loans pursuant to subsection 2.12 and (y) with respect to the investment of proceeds of the sale of assets which are permitted pursuant to subsection 8.6 and (ii) Capital Expenditures consisting of the investment of Excess Cash Flow generated during prior fiscal years (beginning with Excess Cash Flow generated in the fiscal year ended in December 1995 but, in each case, including the retained portion of Excess Cash Flow for only those periods where the Excess Cash Flow payment has theretofore occurred) and not required to be applied to prepay the Loans pursuant to subsection 2.12. 104 99 (c) Notwithstanding the foregoing in no event shall Capital Expenditures (other than Capital Expenditures permitted pursuant to paragraph (d) below) for the Borrower and its Subsidiaries in the aggregate exceed $27,000,000 in any one fiscal year. (d) In addition to the Capital Expenditures permitted pursuant to paragraphs (a) and (b) of this subsection 8.8, Wire Technologies may purchase the real property which it is leasing under the Seller Leases pursuant to the terms of the purchase options contained in the Seller Leases (which purchases shall not be counted in the limitations set forth in paragraphs (a), (b) and (c)), provided that the aggregate consideration for each such purchase shall not exceed the fair market value of the respective property as determined in accordance with the applicable Seller Lease at the time of such purchase. 8.9 Limitation on Investments, Loans and Advances. Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person ("Investments"), except: (a) extensions of trade credit in the ordinary course of business; (b) Investments in Cash Equivalents; (c) (i) Investments by the Borrower in any Subsidiary, including any new Subsidiary, (ii) intercompany loans to the extent permitted by subsection 8.2(b) and (iii) loans to ECM and any other Foreign Subsidiary of the Borrower to the extent permitted by subsection 8.2(i); (d) loans and advances by the Borrower or its Subsidiaries to their respective directors, officers and employees in an aggregate principal amount not exceeding $500,000 at any one time outstanding; (e) loans, advances or Investments in existence on the Second Amendment Closing Date and listed on Schedule 8.9, and extensions, renewals, modifications or restatements or replacements thereof, provided that no such extension, renewal, modification or restatement shall (i) increase the amount of the original loan, advance or investment, or (ii) adversely affect the interests of the Lenders with respect to such original loan, advance or investment or the interests of the Lenders under this Agreement or any other Loan Document in any respect; (f) Investments (not including copper hedging transactions) permitted by subsection 8.8; (g) promissory notes and other similar non-cash consideration received by the Borrower and its Subsidiaries in connection with the dispositions permitted by subsection 8.6; 105 100 (h) Investments (i) required by subsection 7.11 and (ii) in the nature of margin deposits for any copper hedging arrangements otherwise permitted under subsection 8.17 in an aggregate amount not exceeding $2,500,000; (i) Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (j) in addition to the foregoing, Investments in an aggregate amount not exceeding $7,500,000 (at cost, without regard to any write down or write up thereof) at any one time outstanding; (k) in addition to the foregoing, Investments in an aggregate amount not exceeding $4,000,000 (plus purchase price adjustments and related adjustments) in connection with the acquisition of the capital stock of Electrol Company Inc; and (l) the Camden Acquisition in accordance with the terms of the Camden Acquisition Documents. In addition to the Investments permitted pursuant to this subsection 8.9, to the extent such proceeds are not otherwise utilized pursuant to subsection 8.8(b), the Borrower and its Subsidiaries may make additional Investments (which shall not be counted in the limitations set forth above) as follows: (i) Investments consisting of the investment of Net Cash Proceeds not required to be applied to prepay the Loans pursuant to subsection 2.12, including (x) with respect to the investment of proceeds of the insurance and condemnation proceeds not required to prepay the Loans pursuant to subsection 2.12 and (y) with respect to the investment of proceeds of the sale of assets which are permitted pursuant to subsection 8.6; and (ii) Investments consisting of the investment of Excess Cash Flow generated during prior fiscal years (beginning with Excess Cash Flow generated in the fiscal year ended in December 1995 but, in each case, including the retained portion of the Excess Cash Flow for only those periods where the Excess Cash Flow payment has theretofore occurred) and not required to be applied to prepay the Loans pursuant to subsection 2.12. 8.10 Limitation on Optional Payments and Modifications of Debt Instruments. (a) Make any optional payment or prepayment on or redemption of any Indebtedness (other than the Loans and the Letters of Credit or Indebtedness permitted by 106 101 subsection 8.2(i) or the Indebtedness referred to in items IV(1) and IV(2) on Schedule 8.2, but including, without limitation, the Senior Subordinated Notes and the Exchange Notes) including, without limitation, any payments on account of, or for a sinking or other analogous fund for, the redemption, repurchase, defeasance or other acquisition thereof, except mandatory payments of principal, interest, fees and expenses required by the terms of the agreement governing or instrument evidencing such Indebtedness but only to the extent permitted under the subordination provisions applicable thereto. (b) Amend, supplement or otherwise modify any of the provisions of any Indebtedness (other than the Loans and the Letters of Credit, Indebtedness permitted by subsections 8.2(d), 8.2(i), 8.2(l) or 8.2(m) but including, without limitation, the Senior Subordinated Notes, the Preferred Stock and the Exchange Notes): (i) which amends or modifies the subordination provisions contained therein; (ii) which shortens the fixed maturity or increases the principal amount of, or increases the rate or shortens the time of payment of interest on, or increases the amount or shortens the time of payment of any principal or premium payable whether at maturity, at a date fixed for prepayment or by acceleration or otherwise of such Indebtedness, or increases the amount of, or accelerates the time of payment of, any fees payable in connection therewith; (iii) which relates to the affirmative or negative covenants, events of default or remedies under the documents or instruments evidencing such Indebtedness and the effect of which is to subject the Borrower or any of its Subsidiaries, to any more onerous or more restrictive provisions; or (iv) which otherwise adversely affects the interests of the Lenders as senior creditors with respect to any subordinated or other Indebtedness (including, without limitation, the Senior Subordinated Notes) or the interests of the Lenders under this Agreement or any other Loan Document in any respect. (c) Make any payment in cash on any equity or debt security that may be made under the terms thereof by the issuance of any security of the same nature. 8.11 Limitation on Transactions with Affiliates. (a) Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate (other than a wholly owned Subsidiary) unless such transaction is (i) otherwise permitted under this Agreement, or (ii) (x) in the ordinary course of the Borrower's or such Subsidiary's business and (y) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm's length transaction with a Person which is not an Affiliate. (b) In addition, notwithstanding the foregoing, the Borrower and its Subsidiaries shall be entitled to make the following payments and/or to enter into the following transactions: (i) the payment of reasonable and customary fees and reimbursement of expenses payable to directors of the Borrower; (ii) the payment to HMTFI of fees and expenses pursuant to a monitoring and oversight agreement approved by the board of directors of the Borrower and as set forth on Schedule 5.22; and 107 102 (iii) the employment arrangements with respect to the procurement of services of directors, officers and employees in the ordinary course of business and the payment of reasonable fees in connection therewith. 8.12 Limitation on Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by the Borrower or any Subsidiary of real or personal property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or such Subsidiary. 8.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of the Borrower to end on a day other than the Thursday of the 52nd week of each year. 8.14 Restrictions Affecting Subsidiaries. Enter into with any Person, or suffer to exist any agreement which prohibits or limits the ability of the Borrower or any of its Subsidiaries to (a) create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than (i) this Agreement and (ii) any industrial revenue bonds, purchase money mortgages or Financing Leases or any other agreement or transaction permitted by this Agreement (in which cases, any prohibition or limitation shall only be effective against the assets financed thereby) or (b) pay dividends or make other distributions or pay any Indebtedness owed to the Borrower or any of its Subsidiaries except as permitted by this Agreement. 8.15 Limitation on Lines of Business. Enter into any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or which are directly related thereto. 8.16 Amendments to Corporate Documents; Transaction Documents; Acquisition Documents; Camden Acquisition Documents; Licenses. (a) Amend its certificate of incorporation or by-laws unless such amendment does not adversely affect the interests of any Lender in any material respect, (b) amend, supplement or otherwise modify the terms and conditions of the indemnities and licenses furnished to the Borrower or any of its Subsidiaries pursuant to any of the Transaction Documents, Acquisition Documents or Camden Acquisition Documents such that after giving effect thereto such indemnities or licenses shall be materially less favorable to the interests of the Credit Parties or the Lenders with respect thereto, (c) otherwise amend, supplement or otherwise modify the terms and conditions of any of the Transaction Documents, Acquisition Documents or Camden Acquisition Documents except to the extent that any such amendment, supplement or modification could not reasonably be expected to have a Material Adverse Effect. 8.17 Limitations on Commodity Hedging Transactions. Enter into, purchase or otherwise acquire agreements or arrangements relating to copper or other futures or copper or other commodities hedging except, to the extent and only to the extent that, such agreements or arrangements are entered into, purchased or otherwise acquired in the ordinary course of business of the Borrower or any of its Subsidiaries with reputable financial institutions and not for purposes of speculation. 108 103 SECTION 9. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Borrower or Camden shall fail to pay any principal of any Loan and/or Note or any L/C Obligation when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Loan and/or Note, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made or deemed made by the Borrower, Holdings or any of their Subsidiaries herein or in any other Loan Document or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Borrower, Holdings or any of their Subsidiaries shall default in the performance or observance of any agreement contained in Section 8 or Section 11; or (d) The Borrower shall default in the observance or performance of any other agreement contained in this Agreement or in any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days; or (e) The Borrower or any of its Subsidiaries shall (i) default (x) in any payment of principal of or interest on any Indebtedness (other than the Loans) or (y) in the payment of any Guarantee Obligation (other than the Guarantees), having an outstanding principal amount individually or in the aggregate for both of clauses (x) and (y) in excess of $2,000,000, beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness or Guarantee Obligation was created; or (ii) default in the payment of any margin or settlement payment, or in making or taking delivery, under a commodities hedging agreement or arrangement with respect to an amount in the aggregate of $2,000,000 or more; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable; or (f) (i) Holdings or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, 109 104 seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any of Holdings or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Holdings or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against Holdings or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) Holdings or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts (other than intercompany debts) as they become due; or (g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to result in a material liability; or (h) One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance) of $2,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or 110 105 (i) The Borrower or any of its Subsidiaries shall incur any liability (not paid or fully covered by insurance) under any Environmental Law in an amount which would result in a Material Adverse Effect; or (j) Any Loan Document shall, at any time, cease to be in full force and effect (unless released by the Administrative Agent at the direction of the Required Lenders or as otherwise permitted under this Agreement or the other Loan Documents) or shall be declared null and void (and, if such invalidity is such so as to be amenable to cure without materially disadvantaging the position of the Administrative Agent and the Lenders thereunder, the Credit Party shall have failed to cure such invalidity within 30 days after notice from the Administrative Agent or such shorter time period as is specified by the Administrative Agent in such notice and is reasonable in the circumstances), or the validity or enforceability thereof shall be contested by any Credit Party, or any of the Liens intended to be created by any Security Document shall cease to be or shall not be a valid and perfected Lien having the priority contemplated thereby (and, if such invalidity is such so as to be amenable to cure without materially disadvantaging the position of the Administrative Agent and the Lenders, or the Borrower, as the case may be, as secured parties thereunder, the Credit Party shall have failed to cure such invalidity within 30 days after notice from the Administrative Agent or such shorter time period as specified by the Administrative Agent in such notice and is reasonable in the circumstances); or (k) A Change of Control shall occur; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon), the maximum amount available to be drawn under all outstanding Letters of Credit and all other amounts owing under this Agreement and any Notes shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans hereunder (with accrued interest thereon), the maximum amount available to be drawn under all outstanding Letters of Credit and all other amounts owing under this Agreement and any Notes to be due and payable forthwith, whereupon the same shall immediately become due and payable. All payments under this Section 9 on account of undrawn Letters of Credit shall be made by the Borrower and Camden directly to a cash collateral account established for such purpose for application to the Borrower's and Camden's obligations with respect thereto as drafts are presented under the Letters of Credit. Any remaining amounts paid by the Borrower or Camden in respect of such undrawn Letters of Credit shall be returned to the Borrower or Camden, as the case may be, after the last expiry date of the Letters of Credit and after the Obligations have been paid in full. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. 111 106 SECTION 10. THE ADMINISTRATIVE AGENT 10.1 Appointment. Each Lender hereby irrevocably designates and appoints Chase as the Administrative Agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes Chase, as the Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Each Lender hereby irrevocably designates and appoints Bankers Trust Company as the Documentation Agent of such Lender under this Agreement and the other Loan Documents. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent and the Documentation Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. 10.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 10.3 Exculpatory Provisions. Neither the Administrative Agent, the Documentation Agent nor any of their officers, directors, controlling persons, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any Notes or any other Loan Document or for any failure of the Borrower to perform its obligations hereunder or thereunder. Neither the Administrative Agent nor the Documentation Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, any Notes or any other Loan Document, or to inspect the properties, books or records of the Borrower. 10.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been 112 107 signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and any Notes and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. 10.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 10.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent or the Documentation Agent nor any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent or the Documentation Agent hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Administrative Agent or the Documentation Agent to any Lender. Each Lender represents to the Administrative Agent and the Documentation Agent that it has, independently and without reliance upon the Administrative Agent or the Documentation Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, 113 108 property, financial and other condition and creditworthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or the Documentation Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 10.7 Indemnification. The Lenders agree to indemnify the Administrative Agent and the Documentation Agent in their capacities as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought under this subsection, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent or the Documentation Agent in any way relating to or arising out of this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent or the Documentation Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Administrative Agent's or the Documentation Agent's gross negligence or willful misconduct or, in the case of indemnified liabilities arising under this Agreement, any Notes and the other Loan Documents, from material breach by the Administrative Agent or the Documentation Agent of this Agreement, any Notes or the other Loan Documents, as the case may be. The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder. 10.8 Administrative Agent and the Documentation Agent in Their Individual Capacity. The Administrative Agent, the Documentation Agent and their Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Administrative Agent and the Documentation Agent were not the Administrative Agent and the Documentation Agent hereunder and under the other Loan Documents. With respect to their Loans made or renewed by them and any Note issued to them, the Administrative Agent and the Documentation Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent or the Documentation Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent and the Documentation Agent in its individual capacity. 10.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall be approved by the Borrower (which approval shall not be unreasonably withheld), whereupon such successor agent shall succeed to the rights, 114 109 powers and duties of the Administrative Agent, and the term "Administrative Agent" shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of this subsection shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents. 10.10 Additional Ministerial Powers of Administrative Agent. The Administrative Agent is hereby irrevocably authorized by each of the Lenders to release any Lien covering any asset of the Borrower or any of its Subsidiaries (including, without limitation, any Properties, accounts receivable or inventory) that is the subject of a disposition, sale or assignment which is permitted under this Agreement or, subject to subsection 12.1, which has been consented to by the Required Lenders. SECTION 11. GUARANTEE 11.1 Guarantee. To induce the Lenders to execute and deliver this Agreement to make Loans and to issue and participate in Letters of Credit for the account of the Borrower, and in consideration thereof, Holdings hereby unconditionally and irrevocably guarantees to the Administrative Agent, the Lenders and their successors, indorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, and Holdings further agrees to pay the expenses which may be paid or incurred by the Administrative Agent or the Lenders in collecting any or all of the Obligations and/or enforcing any rights under this Section 11 or under the Obligations in accordance with subsection 12.5. The guarantee contained in this Section 11 shall remain in full force and effect until the Obligations are paid in full and the Commitments are terminated, notwithstanding that from time to time prior thereto the Borrower may be free from any Obligations. 11.2 Waiver of Subrogation. Notwithstanding any payment or payments made by Holdings in respect of the Obligations or any setoff or application of funds of Holdings by the Administrative Agent or the Lenders, Holdings shall not be entitled to be subrogated to any of the rights of the Administrative Agent or the Lenders against the Borrower or any collateral security or guarantee or right of offset held by the Administrative Agent or the Lenders for the payment of the Obligations, nor shall Holdings seek any reimbursement from the Borrower in respect of payments made by Holdings hereunder until the Obligations are paid in full. 11.3 Modification of Obligations. Holdings hereby consents that, without the necessity of any reservation of rights against Holdings and without notice to or further assent by Holdings, any demand for payment of the Obligations made by the Administrative Agent, the Issuing Lender or the Lenders may be rescinded by the Administrative Agent, the Issuing Lender or the Lenders and the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor 115 110 or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent, the Issuing Lender or the Lenders and that this Agreement, any Notes and the other Loan Documents, including, without limitation, any Letter of Credit Application, any collateral security document or other guarantee or document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent, the Issuing Lender or the Lenders may deem advisable from time to time, and, to the extent permitted by applicable law, any collateral security or guarantee or right of offset at any time held by the Administrative Agent, the Issuing Lender or the Lenders for the payment of the Obligations may be sold, exchanged, waived, surrendered or released, all without the necessity of any reservation of rights against Holdings and without notice to or further assent by Holdings which will remain bound hereunder notwithstanding any such renewal, extension, modification, acceleration, compromise, amendment, supplement, termination, sale, exchange, waiver, surrender or release. The Administrative Agent, the Issuing Lender and the Lenders shall not have any obligation to protect, secure, perfect or insure any collateral security document or property subject thereto at any time held as security for the Obligations. When making any demand hereunder against Holdings, the Administrative Agent, the Issuing Lender or the Lenders may, but shall be under no obligation to, make a similar demand on any other party or any other guarantor, and any failure by the Administrative Agent, the Issuing Lender or the Lenders to make any such demand or to collect any payments from the Borrower or any such other guarantor shall not relieve Holdings of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Administrative Agent, the Issuing Lender or the Lenders against Holdings. For the purposes of this subsection "demand" shall include the commencement and continuance of any legal proceedings. 11.4 Waiver by Holdings. Holdings waives any and all notice of the creation, renewal, extension or accrual of the Obligations and notice of or proof of reliance by the Administrative Agent, the Issuing Lender and the Lenders upon the guarantee contained in this Section 11 or acceptance of the guarantee contained in this Section 11, and the Obligations, and any of them, shall conclusively be deemed to have been created, contracted, continued or incurred in reliance upon the guarantee contained in this Section 11, and all dealings between Holdings and the Administrative Agent, the Issuing Lender or the Lenders shall likewise be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 11. Holdings waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or Holdings with respect to any Obligations. This guarantee shall be construed as a continuing absolute and unconditional guarantee of payment without regard to the validity, regularity or enforceability of the Credit Agreement, any Note or any other Loan Document, including, without limitation, any Letter of Credit Application or any collateral security or guarantee therefor or right of offset with respect thereto at any time or from time to time held by the Administrative Agent, the Issuing Lender or the Lenders and without regard to any defense, setoff or counterclaim which may at any time be available to or be asserted by the Borrower against the Administrative Agent, the Issuing Lender, the Lenders or any other Person, or by any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or Holdings) which constitutes, or might be construed to constitute, an equitable or legal 116 111 discharge of the Borrower for any of its Obligations, or of Holdings under the guarantee contained in this Section 11 in bankruptcy or in any other instance, and the obligations and liabilities of Holdings hereunder shall not be conditioned or contingent upon the pursuit by the Administrative Agent, the Issuing Lender or the Lenders or any other Person at any time of any right or remedy against the Borrower or against any other Person which may be or become liable in respect of any Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. The guarantee contained in this Section 11 shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Holdings and the successors and assigns thereof, and shall inure to the benefit of the Lenders and their successors, indorsees, transferees and assigns, until the Obligations shall have been paid in full and the Commitments shall be terminated, notwithstanding that from time to time during the term of this Agreement the Borrower may be free from any Obligations. 11.5 Reinstatement. The guarantee contained in this Section 11 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent, the Issuing Lender or the Lenders upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Holdings or the Borrower or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Holdings, the Borrower or any substantial part of their respective property, or otherwise, all as though such payments had not been made. 11.6 Negative Covenants. From and after the Closing Date until the Obligations shall have been paid in full, the Letters of Credit shall have expired or been terminated and the Commitments shall have been terminated, Holdings hereby agrees that it shall not (i) assume or otherwise incur or suffer to exist any Indebtedness (other than the Holdings Deferred Obligation and other than Indebtedness in the nature of Indebtedness specified in subsection 8.2(d)) or Guarantee Obligation (other than (i) the Holdings Guarantee, (ii) Guarantee Obligations in the nature of the Guarantee Obligations specified in subsection 8.4(f), (iii) indemnities in favor of officers, directors and employees of Holdings in the ordinary course of business and in the connection with the ownership of the Borrower's capital stock or (iv) Guarantee Obligations by Holdings in respect of real property leases and/or personal property operating leases of the Borrower and/its Subsidiaries in the ordinary course of business but in any event not in excess of an aggregate amount of $10,000,000 at any one time outstanding), (ii) create, incur, assume or suffer to exist any Lien upon any of its assets (other than pursuant to the Security Documents and other than Liens in the nature of the Liens specified in subsection 8.3(b)), (iii) cease to own, directly or indirectly, 100% of the Capital Stock of the Borrower, (iv) amend its certificate of incorporation or by-laws, any of the Holdings Stock Purchase Agreement unless such amendment does not adversely affect the interests of any Lender in any material respect, (v) engage in any activities other than (A) owning the stock of the Borrower, (B) its activities incident to the performance of (x) the Loan Documents, (y) the issuance and/or sale of its common stock or options or warrants in respect of its Capital Stock, provided that the proceeds thereof are applied as set forth in subsection 2.12 and (z) the Holdings Stock Purchase Agreement, (C) transactions pursuant to or in connection with the Transactions, the Acquisition or the Camden 117 112 Acquisition and (D) activities contemplated by this Section 11 or (vi) make any Restricted Payment except as permitted by subsection 8.7(c). SECTION 12. MISCELLANEOUS 12.1 Amendments and Waivers. (a) Neither this Agreement, any Note, any other Loan Document, nor any terms hereof or thereof may be waived, amended, supplemented or otherwise modified except in accordance with the provisions of this subsection. The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (i) enter into with the Borrower written amendments, supplements or modifications hereto and to any Notes and the other Loan Documents for the purpose of adding any provisions to this Agreement or any Notes or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower or Holdings or any other Person hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or any Notes or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (1) reduce the aggregate amount or extend the scheduled date of maturity of any Loan or of any installment thereof, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof or increase the aggregate amount or extend the expiration date of any Lender's Commitment, in each case without the consent of each Lender affected thereby, or (2) amend, modify or waive any provision of this subsection 12.1 or reduce the percentage specified in the definition of Required Lenders or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents or release collateral having a value in excess of $20,000,000 or release the Holdings Guarantee, in each case, without the written consent of all the Lenders, (3) amend, modify or waive any provision of (x) subsection 2.6 (to the extent such subsection 2.6 relates to the Tranche A Term Loans), 4.4(a) or 2.7 without the written consent of Tranche A Term Loan Lenders the Tranche A Term Loan Percentages of which aggregate at least a majority, or (y) subsection 2.6 (to the extent such subsection 2.6 relates to the Tranche B Term Loans), 4.4(a) or 2.8 without the written consent of Tranche B Term Loan Lenders the Tranche B Term Loan Percentages of which aggregate at least a majority, (4) amend, modify or waive any provision of subsection 2.1, 2.2, 2.3, 2.4, 2.5, 2.12(e), the definition of "Borrowing Base" in subsection 1.1 or Section 3 without the written consent of the Revolving Credit Lenders the Revolving Credit Commitment Percentages of which aggregate at least a majority, (5) amend, modify or waive any provision of Section 10 without the written consent of the Administrative Agent, (6) amend, modify or waive any prepayment required by subsection 2.12(a), (b), (c), (d), (f) or (g) without the consent of the (x) the Revolving Credit Lenders and the Tranche A Term Loan Lenders the Total Credit Percentages (calculated for this purpose without 118 113 reference to outstanding Tranche B Term Loans) of which aggregate at least a majority and (y) Tranche B Term Loan Lenders the Tranche B Term Loan Percentages of which aggregate at least a majority, (7) amend, modify or waive the order of application of prepayments specified in subsection 4.4(b) without the consent of (x) the Revolving Credit Lenders and the Tranche A Term Loan Lenders the Total Credit Percentages (calculated for this purpose without reference to outstanding Tranche B Term Loans) of which aggregate at least a majority and (y) Tranche B Term Loan Lenders the Tranche B Term Loan Percentages of which aggregate at least a majority, (8) amend, modify or waive any provision of subsection 2.15 or the Swing Line Note (if any) without the written consent of the then Swing Line Lender and each other Lender, if any, which holds a participation in the Swing Line Loan pursuant to subsection 2.15(e), (9) amend, modify or waive the provisions of Section 3, any Letter of Credit or any L/C Obligation without the written consent of the applicable Issuing Lender and each affected L/C Participant, or (10) amend, modify or waive any provision of any Security Document that provides for the ratable sharing by the Lenders of the proceeds of any realization on the security for the Loans to provide for a non-ratable sharing thereof, without the consent of (x) the Revolving Credit Lenders and the Tranche A Term Loan Lenders the Total Credit Percentages (calculated for this purpose without reference to outstanding Tranche B Term Loans) of which aggregate at least a majority and (y) Tranche B Term Loan Lenders the Tranche B Term Loan Percentages of which aggregate at least a majority. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Administrative Agent and all future holders of the Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Loans and the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. (b) Each Tranche A Term Loan Lender and each Tranche B Term Loan Lender which executes this Agreement hereby notifies the Administrative Agent that such Lender's consent to any waiver, amendment, supplement or modification of the this Agreement, any Note, any other Loan Document, or any terms thereof with respect to the following matters will not be effective unless Tranche C Term Loan Lenders the Tranche C Term Loan Percentages of which aggregate at least a majority have also consented to such waiver, amendment, supplement or modification: (i) subsection 2.6 of this Agreement (to the extent such subsection 2.6 relates to the Tranche C Term Loans), (ii) subsection 4.4(a) of this Agreement (iii) subsection 2.9 of this Agreement, (iv) any prepayments required by subsection 2.12(a), (b), (c), (d), (f) or (g) of this Agreement, (v) the order of application of prepayments specified in subsection 4.4(b) of this Agreement and (vi) any provision of any Security Document that provides for the ratable sharing by the Lenders of the proceeds of any realization on the security for the Loans to provide for a non-ratable sharing thereof. 12.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or two days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower, Holdings and the Administrative Agent, the Issuing Lender and the Swing Line Lender, and as set forth in Schedule 1.1 in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Loans or any Notes: 119 114 The Borrower: International Wire Group, Inc. c/o Mills & Partners 101 South Hanley Suite 400 St. Louis, Missouri 63105 Attention: David M. Sindelar Telecopy: (314) 746-2299 with copies to: Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court Suite 1600 Dallas, Texas 75201 Attention: Thomas O. Hicks John R. Muse Jack D. Furst Lawrence D. Stuart, Jr. Telecopy: (214) 740-7313 Hicks, Muse, Tate & Furst Incorporated 1325 Avenue of the Americas 25th Floor New York, NY 10019 Attention: Charles W. Tate Telecopy: (212) 424-1450 Holdings: International Wire Holding Company c/o Mills & Partners 101 South Hanley Suite 400 St. Louis, Missouri 63105 Attention: David M. Sindelar Telecopy: (314) 746-2299 with copies to: Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court Suite 1600 Dallas, Texas 75201 Attention: Thomas O. Hicks John R. Muse Jack D. Furst Lawrence D. Stuart, Jr. Telecopy: (214) 740-7313 120 115 Hicks, Muse, Tate & Furst Incorporated 1325 Avenue of the Americas 25th Floor New York, NY 10019 Attention: Charles W. Tate Telecopy: (212) 424-1450 The Administrative The Chase Manhattan Bank Agent, the c/o Chase Securities Inc. Issuing Lender 10 South LaSalle Street or the Swing 23rd Floor Line Lender: Chicago, Illinois 60605 Attention: Jonathan Twichell Telecopy: (312) 807-4077 with copies to: The Chase Manhattan Bank Loan and Agency Services Group One Chase Manhattan Plaza 8th Floor New York, New York 10081 Attention: Janet Belden Telecopy: (212) 552-5658 provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to subsection 2.3, 2.5, 2.10, 2.11, 2.12, 2.13 or 4.4 shall not be effective until received. 12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 12.4 Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and any Notes and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, (b) to pay or reimburse each Lender and the Administrative Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, any Notes, the other Loan Documents and any such other documents, including, without limitation, the reasonable fees and disbursements of counsel to the 121 116 Administrative Agent and, at any time after and during the continuance of an Event of Default, of one counsel to each Lender, and (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, any Notes, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the Administrative Agent their respective officers, directors, employees, agents and controlling persons harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, any Notes, the other Loan Documents, the Transaction Documents, the Acquisition Documents, the Camden Acquisition Documents or the use of the proceeds of the Loans in connection with the Transactions, the Acquisition and/or the Camden Acquisition and any such other documents (all the foregoing in this clause (d), collectively, the "indemnified liabilities"), provided that the Borrower shall have no obligation hereunder to the Administrative Agent or any Lender or their respective officers, directors, employees, agents and controlling persons with respect to indemnified liabilities arising from the gross negligence or willful misconduct of the Administrative Agent or such Lender, as the case may be, or, in the case of indemnified liabilities arising under this Agreement, any Notes and the other Loan Documents, from material breach by the Administrative Agent or such Lender, as the case may be, or its respective officers, directors, employees, agents and controlling persons of this Agreement, any Notes or the other Loan Documents, as the case may be. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 12.6 Successors and Assigns; Participations and Assignments. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Administrative Agent, all future holders of the Loans and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (b) Any Lender may, in the ordinary course of its commercial lending or investing business and in accordance with applicable law, at any time sell to one or more banks, insurance companies or other financial institutions or other entities ("Participants") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes 122 117 under this Agreement and the other Loan Documents, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. No Lender shall permit any Participant to have the right to consent to any amendment or waiver in respect of this Agreement or any of the other Loan Documents, except that such Lender may grant such Participant the right to consent to any amendment or waiver in respect of this Agreement or the other Loan Documents that would, directly or indirectly, (i) reduce the aggregate amount or extend the final maturity of any Loan, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof or (ii) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement or any of the other Loan Documents. The Borrower agrees that if amounts outstanding under this Agreement and the Loans are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or any Note, provided that in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in subsection 12.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of subsections 4.6, 4.7 and 4.8 with respect to its participation in the Commitments and the Loans and Letters of Credit outstanding from time to time as if it was a Lender; provided that in the case of subsection 4.7 or 4.8, such Participant shall have complied with the requirements of such subsection and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such subsection than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. (c) Any Lender may, in the ordinary course of its commercial lending business or investing business and in accordance with applicable law, at any time and from time to time assign to any Lender or any affiliate thereof or, with the consent of the Administrative Agent (such consent not to be unreasonably withheld), to an additional bank or financial or lending institution or other entity (an "Assignee") all or any part of its rights and obligations under this Agreement and any Notes pursuant to an Assignment and Acceptance, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register; provided that (x) each such transfer (if such transfer relates to less than all of such Lenders' rights and obligations under this Agreement and any Notes) shall be in respect of a portion of its rights and obligations under this Agreement and any Notes not less than $5,000,000 if such assignment is to a bank or financial or lending institution or other entity that is not then a Lender or an affiliate thereof and (y) the Swing Line Lender may not transfer any portion of the Swing Line Commitment without the consent of the Borrower (such consent not to be unreasonably withheld). Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with Commitments as set forth therein, and (y) 123 118 the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto; provided that such assigning Lender shall continue to have the benefit of subsections 4.6, 4.7, 4.8 and 12.5(a), (b) and (c) (to the extent of rights accruing prior to the date of such assignment only) and 12.5(d). (d) The Administrative Agent, acting for this purpose as agent for the Borrower, shall maintain at its address referred to in subsection 12.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amount of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein for all purposes of this Agreement. No assignment or transfer of a Note and the obligation(s) evidenced thereby shall be effective unless it has been recorded in the Register as provided in this subsection 12.6(d). The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Administrative Agent) together with payment, by the Assignee, to the Administrative Agent of a registration and processing fee of $4,000 if the Assignee is not a Lender or affiliate of a Lender prior to the execution of the Assignment and Acceptance and $1,000 otherwise, the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower. On or prior to such effective date, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent (in exchange for any Revolving Credit Note, Swing Line Note or Term Note of the assigning Lender) a new Revolving Credit Note, Swing Line Note or Term Note, as the case may be, to the order of such Assignee in an amount equal to the Revolving Credit Commitment, Swing Line Commitment or portion of the Term Loan, as the case may be, assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Revolving Credit Commitment, Swing Line Commitment or portion of a Term Loan hereunder, a new Revolving Credit Note, Swing Line Note or Term Note, as the case may be, to the order of the assigning Lender in an amount equal to the Revolving Credit Commitment, Swing Line Commitment or Term Loan, as the case may be, retained by it hereunder. Such new Notes shall be dated the Closing Date and shall otherwise be in the form of the Note replaced thereby. (f) The Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the Borrower and its Affiliates which has been 124 119 delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement, under the condition such Transferee or prospective Transferee agrees to comply with the provisions of subsection 12.15. (g) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law. 12.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of the Obligations owing to it or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in subsection 9(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the Obligations owing to such other Lender, such benefitted Lender shall purchase for cash from the other Lenders an interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder or under any Notes (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. 12.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 12.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and 125 120 any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 12.10 Integration. This Agreement and the other Loan Documents represent the agreement of the Credit Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 12.11 GOVERNING LAW. THIS AGREEMENT AND ANY NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 12.12 Submission To Jurisdiction; Waivers. Each of Holdings and the Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Credit Parties at their respective addresses set forth in subsection 12.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 12.13 Acknowledgements. Each of Holdings and the Borrower hereby acknowledges that: 126 121 (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and any Notes and the other Loan Documents; (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Credit Parties arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Credit Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture exists among the Lenders or among the Credit Parties and the Lenders. 12.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 12.15 Confidentiality. Each Lender agrees to keep information obtained by it pursuant hereto and the other Loan Documents identified as confidential in writing at the time of delivery confidential in accordance with such Lender's customary practices and agrees that it will only use such information in connection with the transactions contemplated by this Agreement and not disclose any of such information other than (a) to such Lender's employees, representatives, directors, attorneys, auditors, agents, professional advisors or affiliates who are advised of the confidential nature of such information, (b) to the extent such information presently is or hereafter becomes available to such Lender on a non-confidential basis from any source or such information that is in the public domain at the time of disclosure, (c) to the extent disclosure is required by law (including applicable securities laws), regulation, subpoena or judicial order or process (provided that notice of such requirement or order shall be promptly furnished to the Borrower unless such notice is legally prohibited) or requested or required by bank, securities or investment company regulations or auditors or any administrative body or commission to whose jurisdiction such Lender may be subject, (d) to Transferees, or to prospective Transferees or direct or indirect contractual counterparties in swap agreements, who agree to be bound by the provisions of this subsection 12.15, (e) to the extent required in connection with any litigation between any Credit Party and any Lender with respect to the Loans or this Agreement and the other Loan Documents or (f) with the Borrower's prior written consent. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 12.16 Indiana Property Transfer Laws. The Administrative Agent and the Borrower acknowledge that in order to secure the obligations hereunder, the Lenders may take a mortgage or a deed of trust on one or more pieces of real property owned or operated by the Borrower or its Subsidiaries and that such action may be a "transfer" of real property within the meaning of the Indiana Responsible Transfer Property Law, triggering an obligation on the part of the Borrower to deliver to the Administrative Agent 30 days prior to the transfer a disclosure document revealing potential environmental defects. The Administrative Agent 127 122 is aware of the purpose and intent of the disclosure document and hereby knowingly waives on behalf of itself and all other Lenders this 30 day deadline. 12.17 Consent to Camden Acquisition. Each Lender executing this Agreement hereby consents to the Camden Acquisition in accordance with the terms of the Camden Acquisition Documents. 128 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. INTERNATIONAL WIRE GROUP, INC., as Borrower By: --------------------------------------- Name: Title: INTERNATIONAL WIRE HOLDING COMPANY, as Guarantor By: --------------------------------------- Name: Title: CAMDEN WIRE CO., INC. By: --------------------------------------- Name: Title: THE CHASE MANHATTAN BANK, as Administrative Agent and as a Lender, as Swing Line Lender and as Issuing Lender By: --------------------------------------- Name: Title: BANKERS TRUST COMPANY By: --------------------------------------- Name: Title: 129 AERIES FINANCE LTD. By: --------------------------------------- Name: Title: THE BANK OF NEW YORK By: --------------------------------------- Name: Title: BANK OF SCOTLAND By: --------------------------------------- Name: Title: BANQUE FRANCAISE DU COMMERCE EXTERIEUR By: --------------------------------------- Name: Title: By: --------------------------------------- Name: Title: BANQUE PARIBAS By: --------------------------------------- Name: Title: By: --------------------------------------- Name: Title: 130 CAISSE NATIONALE DE CREDIT AGRICOLE By: --------------------------------------- Name: Title: CERES FINANCE LTD. By: --------------------------------------- Name: Title: THE FIRST NATIONAL BANK OF CHICAGO By: --------------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION By: --------------------------------------- Name: Title: HELLER FINANCIAL, INC. By: --------------------------------------- Name: Title: THE INDUSTRIAL BANK OF JAPAN, LIMITED By: --------------------------------------- Name: Title: 131 KZH HOLDING CORPORATION By: --------------------------------------- Name: Title: THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH By: --------------------------------------- Name: Title: MEDICAL LIABILITY MUTUAL INSURANCE CO. By: --------------------------------------- Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By: --------------------------------------- Name: Title: MERRILL LYNCH SENIOR HIGH INCOME PORTFOLIO By: --------------------------------------- Name: Title: THE MITSUBISHI TRUST AND BANKING CORPORATION By: --------------------------------------- Name: Title: 132 BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: --------------------------------------- Name: Title: NATIONAL CITY BANK By: --------------------------------------- Name: Title: NATIONSBANK CAPITAL MARKETS INC., as Agent for NATIONSBANK OF TEXAS, N.A. By: --------------------------------------- Name: Title: THE NIPPON CREDIT BANK, LTD. By: --------------------------------------- Name: Title: PRIME INCOME TRUST By: --------------------------------------- Name: Title: ML CBO IV (CAYMAN) LTD. By: PROTECTIVE ASSET MANAGEMENT, L.L.C. as Collateral Manager By: --------------------------------------- Name: Title: 133 RESTRUCTURED OBLIGATION BACKED BY SENIOR ASSETS B.V. By: ABN TRUST COMPANY (NEDERLAND) B.V, its Managing Director By: --------------------------------------- Name: Title: By: --------------------------------------- Name: Title: SENIOR DEBT PORTFOLIO By: BOSTON MANAGEMENT & RESEARCH, as Investment Advisor By: --------------------------------------- Name: Title: SENIOR HIGH INCOME PORTFOLIO, INC. By: --------------------------------------- Name: Title: STRATA FUNDING LTD. By: --------------------------------------- Name: Title: TCW ASSET MANAGEMENT COMPANY, as Attorney-in-Fact for Integon Life Insurance Corporation By: --------------------------------------- Name: Title: 134 TCW ASSET MANAGEMENT COMPANY, as Attorney-in-Fact for Occidental Life Insurance Company of North Carolina By: --------------------------------------- Name: Title: TCW ASSET MANAGEMENT COMPANY, as Attorney-in-Fact for Pennsylvania Life Insurance Company By: --------------------------------------- Name: Title: TCW ASSET MANAGEMENT COMPANY, as Attorney-in-Fact for United Companies Life Insurance Company By: --------------------------------------- Name: Title: THOROUGHBRED LIMITED PARTNERSHIP I, by Appaloosa Management L.P., its General Partner, by Appaloosa Partners Inc., its General Partner By: --------------------------------------- Name: Title: VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By: --------------------------------------- Name: Title: EX-10.34 4 AMENDED & RESTATED EMPLOYMENT AGREEMENT 1 EXHIBIT 10.34 AMENDED AND RESTATED EMPLOYMENT AGREEMENT This agreement (the "Agreement") is made and entered into as of September 25, 1996 by and between International Wire Group, Inc. ("Employer") and Joseph M. Fiamingo ("Employee") and fully replaces that certain Employment Agreement (the "Prior Agreement") dated as of October 9, 1995 between Wirekraft Industries, Inc. and Employee. W I T N E S S E T H : WHEREAS, Employer is a direct wholly-owned subsidiary of International Wire Holding Company ("International"); WHEREAS, Employee has previously entered into the Prior Agreement, which Prior Agreement is to be fully restated and replaced by this Agreement. WHEREAS, Employer desires to engage the services of Employee upon the terms set forth herein and to replace the Prior Agreement; and WHEREAS, Employee desires to be employed by Employer, to appropriately memorialize the terms and conditions of such employment and to replace the Prior Agreement. NOW, THEREFORE, Employee and Employer, in consideration of the agreements, covenants and conditions herein, hereby agree as follows: 1. BASIC EMPLOYMENT PROVISIONS. (a) Employment and Term. Employer hereby agrees to employ Employee (hereinafter referred to as the "Employment") as President and Chief Operating Officer of Employer (the "Position") and Employee agrees to be employed by Employer in such Position for a period of thirty-six (36) months ending on the 24th day of September, 1999 (the "Termination Date"), unless terminated earlier as provided herein (the "Employment Period"). (b) Duties. Employee in the Position shall be subject to the direction and supervision of the Chief Executive Officer of Employer (the "CEO") or his designee and shall have those duties and responsibilities which are assigned to him during the Employment Period by the CEO consistent with the Position, provided that the CEO shall not assign any greater duties or responsibilities to the Employee than are necessary for the Employee's faithful and adequate performance of the duties and responsibilities assigned. The parties expressly acknowledge that the Employee shall devote all of Employee's business time and attention to the transaction of the Employer's businesses as is reasonably necessary to discharge Employee's responsibilities hereunder. Employee agrees to perform faithfully the duties assigned to the best of Employee's ability. 2 2. COMPENSATION. (a) Salary. During the employment period, Employer shall pay to Employee a salary as basic compensation for the services to be rendered by Employee hereunder. The initial amount of such basic compensation shall be Two Hundred Sixty Thousand Dollars ($260,000) per year. Such salary shall be reviewed from time to time by the CEO of the Employer and may be increased in the CEO's sole discretion. Such salary shall accrue and be payable in accordance with the payroll practices of Employer in effect from time to time. All such payments shall be subject to deductions and withholdings authorized or required by applicable law. (b) Bonus. During the Employment Period, Employee shall be eligible to receive an annual bonus (payable by the Employer) in an amount to be determined by the CEO of Employer, in the CEO's sole discretion, of up to sixty-five percent (65%) of Employee's annual basic compensation as set forth above in accordance with the Executive Incentive Compensation Plan. (c) Benefits. During the Employment Period, Employee shall be entitled to such other benefits as are determined by the CEO, including without limitation, group life, hospitalization and other insurance, paid vacations, executive medical supplement, annual executive physical, reimbursement for tax preparation costs and executive lunches. (d) Auto Allowance. Employer shall pay Employee an allowance to own and maintain an automobile in an amount sufficient so that, after the effect of federal and state income taxes, Employee shall net One Thousand Dollars ($1,000) per month. (e) Country Club & Dining Club Membership. Employer shall reimburse Employee for the initiation fee and monthly dues expense for Employee to belong to a country club in the St. Louis, Missouri area reasonably acceptable to Employer and for the initiation fee and monthly dues expense for the Saint Louis Club, but not for any charges made by Employee at either club, unless such qualify as reimbursable business entertainment expenses. (f) Stock Options. The CEO will request the Board of Directors of International Wire Holding Company to grant Employee options, in addition to the four hundred thousand (400,000) options previously granted, under the International Wire Holding Company 1995 Stock Option Plan. 3. TERMINATION. (a) Death or Disability. This Agreement shall terminate automatically upon the death or total disability of Employee. For the purpose of this Agreement, "total disability" shall be deemed to have occurred if Employee shall have been unable to perform the assigned duties due to mental or physical incapacity for a period of three (3) consecutive months or for any sixty (60) working days out of a six (6) month consecutive period. (b) Cause. Employer may terminate the employment of Employee under this Agreement for Cause. For the purpose of this Agreement, "Cause" shall be deemed to be fraud, dishonesty, competition with Employer, unauthorized use of any of Employer's trade secrets or confidential -2- 3 information, or failure to properly perform the duties assigned to Employee, in the reasonable judgment of Employer. (c) Without Cause. Employer may terminate the employment of Employee under this Agreement without Cause, subject to the continuing rights of Employee pursuant to Section 4(c) below. 4. COMPENSATION UPON TERMINATION. (a) Death or Disability. If the Employment Period is terminated pursuant to the provisions of Section 3(a) above, this Agreement shall terminate and no further compensation shall be payable to Employee, except that Employee or Employee's estate, heirs or beneficiaries, as applicable, shall be entitled, in addition to any other benefits specifically provided to them or Employee under any benefit plan, to receive Employee's then current salary for a period of twelve (12) months from the date the Employment Period terminates. (b) Termination for Cause or Voluntary Termination by Employee. If the employment of Employee under this Agreement is terminated for Cause pursuant to the provisions of Section 3(b) above or if Employee voluntarily terminates Employee's employment, no further compensation shall be paid to Employee after the date of termination. (c) Termination Without Cause. If the Employment of Employee under this Agreement is terminated pursuant to Section 3(c) above, Employee shall be entitled to continue to receive from Employer the then current basic compensation hereunder [which shall not be less than the amount specified in Section 2(a) above] until the Termination Date, such amount to be paid in accordance with the payroll practices of Employer, and shall further be entitled to continue to receive the benefits to which Employee would otherwise be entitled pursuant to Section 2(c) above. 5. EXPENSE REIMBURSEMENT. Upon submission of properly documented expense account reports, Employer shall reimburse Employee for all reasonable travel and entertainment expenses incurred by Employee in the course of his employment with Employer. 6. ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, except that this Agreement and all of the provisions hereof may be assigned by Employer to any successor to all or substantially all of its assets (by merger or otherwise) and may otherwise be assigned upon the prior written consent of Employee. 7. CONFIDENTIAL INFORMATION. (a) Non-Disclosure. During the Employment Period or at any time thereafter, irrespective of the time, manner or cause of the termination of this Agreement, Employee will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized -3- 4 officers, directors and employees of the Employer, in any manner whatsoever, any Confidential Information (as hereinafter defined) of Employer without the prior written consent of the CEO. (b) Definition. As used herein, "Confidential Information" means information disclosed to or known by Employee as a direct or indirect consequence of or through the Employment about Employer or its respective businesses, products and practices, which information is not generally known in the business in which Employer is or may be engaged. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters which is (i) available to the public from a source other than Employee, (ii) released in writing by Employer to the public or to persons who are not under a similar obligation of confidentiality to Employer and who are not parties to this Agreement, (iii) obtained by Employee from a third party not under a similar obligation of confidentiality to Employer, (iv) required to be disclosed by any court process or any government or agency or department of any government, or (v) the subject of a written waiver executed by Employer for the benefit of Employee. (c) Return of Property. Upon termination of the Employment, Employee will surrender to Employer all Confidential Information, including without limitation, all lists, charts, schedules, reports, financial statements, books and records of the Employer, and all copies thereof, and all other property belonging to the Employer shall be accorded reasonable access to such Confidential Information subsequent to the Employment Period for any proper purpose as determined in the reasonable judgment of Employer. 8. AGREEMENT NOT TO COMPETE. (a) Employee agrees: (i) To give the CEO thirty (30) days' written advance notice of voluntary termination of employment with Employer. Such notice shall include Employee's future employment or self-employment intentions, identification of the prospective employer and the general nature of the prospective employment or self-employment, if known. Employer shall continue to pay the then-current salary to Employee until the end of such notice period. (ii) To participate in an exit interview conducted by a member of the personnel department of Employer and/or by a representative of Employer, at the time of or prior to the termination of Employment with Employer. (iii) That for two (2) years following the termination of the Employment, Employee shall promptly notify Employer of any change in the identification of Employee's employer or the nature of such employment or of self-employment. (iv) Subject to the conditions hereinafter stated, Employee will not, within two (2) years after leaving the employ of Employer, engage or enter into employment by, or into self-employment or gainful occupation as, a Competing Business or act directly or indirectly as an advisor, consultant, sales agent or broker for a Competing Business. As used herein, "Competing Business" means a business which is engaged in the manufacture, sale or other -4- 5 disposition of a product or service or has under development a product or service which is in direct competition with a product or service, whether existing or under development, of the Employer. Employee acknowledges that Employer does not have an adequate remedy at law in the event Employee violates this provision and, therefor, Employee agrees that, in such an event, Employer shall be entitled to seek equitable relief, including but not limited to, injunctive relieve and to withhold all payments due to Employee hereunder pending a judicial determination of whether Employee has violated this Agreement. (v) The terms of 8(a)(i) - 8(a)(iv) shall apply whether the termination is voluntary or involuntary for whatever reason. (b) Employer agrees: (i) That within fifteen (15) business days after receiving identification of the prospective employer, the nature of the employment or self-employment pursuant to Paragraph 8(a)(i) above, or any change therein pursuant to Paragraph 8(a)(iii) above, Employer will advise Employee as to whether such employment constitutes a Competing Business as defined in Paragraph 8(a)(iv) above. (ii) In the event Employer advises Employee that such employment constitutes a Competing Business, to forward to Employee at the end of each of the twenty-four (24) successive calendar months following the month in which Employment by Employer terminates, a check in the amount equal to one-half (1/2) of the monthly salary of Employee (exclusive of extra compensation of any kind) as of the Termination Date. If notice is received pursuant to Paragraph 8(b) and the Employer advises Employee that such employment constitutes a Competing Business, the aforementioned monthly checks shall be forwarded for the remaining number of the aforesaid twenty-four (24) successive calendar months. Provided, however, that all payments due under this Paragraph 8(b)(ii) shall not be required during any periods that Employee is receiving payments under either Paragraphs 4(a) or 4(c). 9. WAIVER OF AGREEMENT NOT TO COMPETE. The Employer, based on the facts revealed to it by the Employee regarding the new employment and in its discretion upon written notification to Employee, may at any time waive or elect not to enforce the provisions of Paragraph 8(a)(iv), in which event the obligations of Paragraph 8(b)(ii) above shall thereafter not apply. 10. AGREEMENT NOT TO SOLICIT EMPLOYEES. Employee agrees that, for a period of two (2) years following the termination of the Employment Period, Employee shall not, on behalf of any business, engage in a business competitive with Employer, solicit or induce, or in any manner attempt to solicit or induce, either directly or indirectly, any person employed by, or any agent of, Employer to terminate such employment or agency, as the case may be, with Employer. In the event of violation hereof, Employer may terminate any payments due to Employee hereunder. 11. NO VIOLATION. Employee hereby represents and warrants to Employer that the execution, delivery and performance of this Agreement or the passage of time, or both, will not -5- 6 conflict with, result in a default, right to accelerate or loss of rights under any provision of any agreement or understanding to which the Employee or, to the best knowledge of Employee, any of Employee's affiliates are a party or by which Employee, or to the best knowledge of Employee, Employee's affiliates may be bound or affected. 12. CAPTIONS. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way affect, limit or amplify the provisions hereof. 13. NOTICES. All notices required or permitted to be given hereunder shall be in writing and shall be deemed delivered, whether or not actually received, two days after being deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the party to whom notice is being given at the specified address or at such other address as such party may designate by notice: Employer: International Wire Group, Inc. 101 South Hanley Road St. Louis, Missouri 63105 Attn: Chief Executive Officer Employee: Joseph M. Fiamingo 17724 Greystone Terrace Chesterfield, Missouri 63005 14. INVALID PROVISIONS. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provisions shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance of this Agreement. In lieu of each such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, including the Prior Agreement, which is fully replaced hereby. This Agreement may be amended, in whole or in part only, by an instrument in writing setting forth the particulars of such amendment and duly executed by an officer of Employer expressly authorized by the CEO to do so and by Employee. 16. WAIVER. No delay or omission by any party hereto to exercise any right or power hereunder shall impair such right or power to be construed as a waiver thereof. A waiver by any of the parties hereto of any of the covenants to be performed by any other party or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. Except as otherwise expressly set forth herein, all remedies provided for in this -6- 7 Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to any party at law, in equity or otherwise. 17. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement. 18. GOVERNING LAW. This Agreement shall be construed and enforced according to the laws of the state of Missouri. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. EMPLOYER: EMPLOYEE: INTERNATIONAL WIRE GROUP, INC. By /s/ JAMES N. MILLS /s/ Joseph M. Fiamingo ------------------------------ ----------------------------- James N. Mills, Chairman Joseph M. Fiamingo -7- EX-10.35 5 EMPLOYMENT AGREEMENT 1 EXHIBIT 10.35 EMPLOYMENT AGREEMENT This agreement (the "Agreement") is made and entered into as of March 5, 1996 by and between International Wire Group, Inc. ("Employer") and Robert C. Kozlowski ("Employee"). W I T N E S S E T H : WHEREAS, Employer is an indirect wholly-owned subsidiary of International Wire Holding Company ("International"). WHEREAS, Employer desires to engage the services of Employee upon the terms set forth herein; and WHEREAS, Employee desires to be employed by Employer and to appropriately memorialize the terms and conditions of such employment. NOW, THEREFORE, Employee and Employer, in consideration of the agreements, covenants and conditions herein, hereby agree as follows: 1. BASIC EMPLOYMENT PROVISIONS. (a) Employment and Term. Employer hereby agrees to employ Employee (hereinafter referred to as the "Employment") as Executive Vice President of the Wire Division of Employer (the "Position"), and Employee agrees to be employed by Employer in such Position, for a period of thirty-six (36) months ending on the 4th day of March, 1998 (the "Termination Date"), unless terminated earlier as provided herein (the "Employment Period"). (b) Duties. Employee in the Position shall be subject to the direction and supervision of the Chief Executive Officer of Employer or his designee (the "CEO") and shall have those duties and responsibilities which are assigned to him during the Employment Period by the CEO consistent with the Position, provided that the CEO shall not assign any greater duties or responsibilities to the Employee than are necessary for the Employee's faithful and adequate performance of the duties and responsibilities assigned. The parties expressly acknowledge that the Employee shall devote all of Employee's business time and attention to the transaction of the Employer's businesses as is reasonably necessary to discharge Employee's responsibilities hereunder. Employee agrees to perform faithfully the duties assigned to the best of Employee's ability. 2. COMPENSATION & BENEFITS. (a) Salary. Employer shall pay to Employee during the Employment Period a salary as basic compensation for the services to be rendered by Employee hereunder. The initial amount of such basic compensation shall be One Hundred Ninety Thousand Dollars 2 ($190,000) per year. Such salary shall be reviewed from time to time by the CEO of the Employer and may be increased in the CEO's sole discretion. Such salary shall accrue and be payable in accordance with the payroll practices of Employer in effect from time to time. All such payments shall be subject to deduction and withholding authorized or required by applicable law. (b) Bonus. During the Employment Period, Employee shall be eligible to receive an annual bonus (payable by the Employer) in an amount to be determined by the CEO of Employer, in the CEO's sole discretion, of up to thirty-fifty percent (35%) of Employee's annual basic compensation as set forth above in accordance with the Executive Incentive Compensation Plan. (c) Benefits. During the Employment Period, Employee shall be entitled to such other benefits as are determined by the CEO, including without limitation, group life, hospitalization and other insurance and paid vacations. (d) Auto Allowance. Employer shall pay Employee an auto allowance in an amount sufficient so that, after the effect of federal and state income taxes, Employee shall net Five Hundred Dollars ($500) per month. (e) Tax Preparation and Executive Physical. Employer will be responsible annually for the reasonable cost of income tax preparation and an executive physical examination. (f) Other. Employer shall provide Employee such other group insurance and retirement benefits similar to other employees at Vice President level. 3. TERMINATION. (a) Death or Disability. This Agreement shall terminate automatically upon the death or total disability of Employee. For the purpose of this Agreement "total disability" shall be deemed to have occurred if Employee shall have been unable to perform the assigned duties due to mental or physical incapacity for a period of three (3) consecutive months or for any sixty (60) working days out of a six (6) month consecutive period. (b) Cause. Employer may terminate the employment of Employee under this Agreement for Cause. For the purpose of this Agreement, "Cause" shall be deemed to be fraud, dishonesty, competition with Employer, unauthorized use of any of Employer's trade secrets or confidential information or failure to properly perform the duties assigned to Employee, in the reasonable judgment of Employer. (c) Without Cause. Employer may terminate the employment of Employee under this Agreement without Cause, subject to the continuing rights of Employee pursuant to Section 4(c) below. -2- 3 4. COMPENSATION UPON TERMINATION. (a) Death or Disability. If the Employment Period is terminated pursuant to the provisions of Section 3(a) above, this Agreement shall terminate, and no further compensation shall be payable to Employee except that Employee or Employee's estate, heirs or beneficiaries, as applicable, shall be entitled, in addition to any other benefits specifically provided to them or Employee under any benefit plan, to receive Employee's then current salary for a period of twelve (12) months from the date the Employment Period terminates. (b) Termination for Cause or Voluntary Termination by Employee. If the employment of Employee under this Agreement is terminated for Cause or if Employee voluntarily terminates Employee's employment, no further compensation shall be paid to Employee after the date of termination. (c) Termination Without Cause. If the employment of Employee under this Agreement is terminated pursuant to Section 3(c) above, Employee shall be entitled to continue to receive from Employer the then current basic compensation hereunder [which shall not be less than the amount specified in the second sentence of Section 2(a) above] for a period of three hundred sixty-five (365) days or until the Termination Date, whichever is a shorter period, such amount to continue to be paid in accordance with the payroll practices of Employer, and shall further be entitled to continue to receive the benefits to which Employee would otherwise be entitled pursuant to Section 2(c) above but to no other benefits. 5. EXPENSE REIMBURSEMENT. Upon submission of properly documented expense account reports, Employer shall reimburse Employee for all reasonable travel and entertainment expenses incurred by Employee in the course of his employment with Employer. 6. ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto except that this Agreement and all of the provisions hereof may be assigned by Employer to any successor to all or substantially all of its assets (by merger or otherwise) and may otherwise be assigned upon the prior written consent of Employee. 7. CONFIDENTIAL INFORMATION. (a) Non-Disclosure. During the Employment Period or at any time thereafter, irrespective of the time, manner or cause of the termination of this Agreement, Employee will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized officers, directors and employees of the Employer, in any manner whatsoever, any Confidential Information (as hereinafter defined) of Employer without the prior written consent of the CEO. -3- 4 (b) Definition. As used herein, "Confidential Information" means information disclosed to or known by Employee as a direct or indirect consequence of or through the Employment about Employer or its respective businesses, products and practices which information is not generally known in the business in which Employer is or may be engaged. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters which is (i) available to the public from a source other than Employee, (ii) released in writing by Employer to the public or to persons who are not under a similar obligation of confidentiality to Employer and who are not parties to this Agreement, (iii) obtained by Employee from a third party not under a similar obligation of confidentiality to Employer, (iv) required to be disclosed by any court process or any government or agency or department of any government, or (v) the subject of a written waiver executed by Employer for the benefit of Employee. (c) Return of Property. Upon termination of the Employment, Employee will surrender to Employer all Confidential Information, including without limitation, all lists, charts, schedules, reports, financial statements, books and records of the Employer, and all copies thereof, and all other property belonging to the Employer shall be accorded reasonable access to such Confidential Information subsequent to the Employment Period for any proper purpose as determined in the reasonable judgment of Employer. 8. AGREEMENT NOT TO COMPETE. (a) Employee agrees: (i) To give the Chief Executive Officer of Employer thirty (30) days' written advance notice of voluntary termination of employment with Employer. Such notice shall include Employee's future employment or self-employment intentions, and identification of the prospective employer and of the general nature of the prospective employment or self-employment, if known. Employer shall continue to pay the then-current salary to Employee until the end of such notice period. (ii) To participate in an exit interview conducted by a member of the personnel department of Employer and/or by a representative of Employer, at the time of or prior to the termination of employment with Employer. (iii) That for two (2) years following the termination of employment with Employer, Employee shall promptly notify Employer of any change in the identification of Employee's employer or the nature of such employment or of self-employment. (iv) That, subject to the conditions hereinafter stated, Employee will not, within two (2) years after leaving the employ of Employer, engage or enter into employment by, or into self-employment or gainful occupation as, a Competing Business, or act directly or indirectly as an advisor, consultant, sales agent or broker for a Competing Business. As used herein, "Competing Business" means a business which is engaged in the manufacture, sale or other disposition of a product or service or has under -4- 5 development a product or service which is in direct competition with a product or service, whether existing or under development, of the Employer. Employee acknowledges that Employer does not have an adequate remedy at law in the event Employee violates this provision and, therefor, Employee agrees that in such an event, Employer shall be entitled to seek equitable relief, including but not limited to injunctive relieve and to withhold all payments due to Employee hereunder pending a judicial determination of whether Employee has violated this Agreement. (v) The terms of 8(a)(i) - 8(a)(iv) shall apply whether the termination is voluntary or involuntary for whatever reason. (b) Employer agrees: (i) That within fifteen (15) business days after receiving identification of the prospective employer, the nature of the employment or self-employment pursuant to Paragraph 8(a)(i) above, or any change therein pursuant to Paragraph 8(a)(iii) above, Employer will advise Employee as to whether such employment constitutes a Competing Business as defined in Paragraph 8(a)(iv) above. (ii) In the event Employer advises Employee that such employment constitutes a Competing Business, to forward to Employee at the end of each of the twenty-four (24) successive calendar months following the month in which employment by Employer terminates, a check in the amount equal to the full monthly basic compensation of Employee (exclusive of extra compensation of any kind) as of the date of employment termination. If notice is received pursuant to Paragraph 8(a)(iii) and the Employer advises Employee that such employment constitutes a Competing Business, the aforementioned monthly checks shall be forwarded for the remaining number of the aforesaid twenty-four (24) successive calendar months. Provided, however, that all payments due under this Paragraph 8(b)(ii) shall not be required during any periods that Employee is receiving payments under either Paragraphs 4(a) or 4(c). 9. WAIVER OF AGREEMENT NOT TO COMPETE. The Employer, based on the facts revealed to it by the Employee regarding the new employment, and in its discretion, upon written notification to Employee, may at any time waive or elect not to enforce the provisions of Paragraph 8(a)(iv), in which event the obligations of Paragraph 3(b) above shall thereafter not apply. 10. AGREEMENT NOT TO SOLICIT EMPLOYEES. Employee agrees that, for a period of two (2) years following the termination of the Employment Period, Employee shall not, for himself or on behalf of any business engaged in a business competitive with Employer, solicit or induce, or in any manner attempt to solicit or induce, either directly or indirectly, any person employed by, or any agent of, Employer to terminate such employment or agency, as the case may be, with Employer. In the event of violation hereof, Employer may terminate any payments due to Employee hereunder. 11. NO VIOLATION. Employee hereby represents and warrants to Employer that neither the execution, delivery and performance of this Agreement nor the passage of time, or both, will conflict -5- 6 with, result in a default, right to accelerate or loss of rights under any provision of any agreement or understanding to which the Employee or, to the best knowledge of Employee, any of Employee's affiliates are a party or by which Employee, or to the best knowledge of Employee, Employee's affiliates may be bound or affected. 12. CAPTIONS. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way affect, limit or amplify the provisions hereof. 13. NOTICES. All notices required or permitted to be given hereunder shall be in writing and shall be deemed delivered, whether or not actually received, two days after being deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the party to whom notice is being given at the specified address or at such other address as such party may designate by notice: Employer: International Wire Group, Inc. 101 South Hanley Road St. Louis, Missouri 63105 Attn: Chief Executive Officer Employee: Robert C. Kozlowski 4555 South 890 East Wolcottville, Indiana 46795 14. INVALID PROVISIONS. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provisions shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance of this Agreement. In lieu of each such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof. This Agreement may be amended in whole or in part only by an instrument in writing setting forth the particulars of such amendment and duly executed by an officer of Employer expressly authorized by the CEO to do so and by Employee. 16. WAIVER. No delay or omission by any party hereto to exercise any right or power hereunder shall impair such right or power to be construed as a waiver thereof. A waiver by any of the parties hereto of any of the covenants to be performed by any other party or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. Except as otherwise expressly set forth herein, all remedies provided for in this -6- 7 Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to any party at law, in equity or otherwise. 17. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement. 18. GOVERNING LAW. This Agreement shall be construed and enforced according to the laws of the state of Missouri. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. EMPLOYER: EMPLOYEE: INTERNATIONAL WIRE GROUP, INC. By /s/ JAMES N. MILLS /s/ ROBERT C. KOZLOWSKI ------------------------------ ----------------------------- James N. Mills, Chairman Robert C. Kozlowski -7- 8 AMENDMENT TO EMPLOYMENT AGREEMENT This Amendment (the "Amendment") is made and entered into as of this 6th day of May, 1996 by and between International Wire Group, Inc. ("Employer") and Robert C. Kozlowski ("Employee") and amends that certain Employment Agreement made and entered into as of May 5, 1996 (the "Agreement"). W I T N E S S E T H : WHEREAS, Employer and Employee have previously entered into the Agreement which contained a typographical error; and WHEREAS, Employer and Employee desire to correct the typographical error in the Agreement by this Amendment. NOW THEREFORE, Employer and Employee in consideration of the need to correct the Agreement do hereby agree as follows: 1. That the reference in the last line of Section 9 found on Page 5 of the Agreement is hereby amended to refer to Paragraph 8(b) rather than to Paragraph 3(b). Other than the above correction, the Agreement shall remain in full force and effect without modification or change. IN WITNESS WHEREOF, the parties have hereunto executed this Amendment to the Agreement as of the date first above written. EMPLOYER: EMPLOYEE: INTERNATIONAL WIRE GROUP, INC. By /s/ JAMES N. MILLS /s/ ROBERT C. KOZLOWSKI ------------------------------ ----------------------------- James N. Mills, Chairman Robert C. Kozlowski EX-10.36 6 NONSTATUTORY STOCK OPTION AGREEMENT 1 EXHIBIT 10.36 INTERNATIONAL WIRE HOLDING COMPANY NONSTATUTORY STOCK OPTION AGREEMENT THIS AGREEMENT (the "Agreement") is made and entered into between International Wire Holding Company, a Delaware corporation ("Holdings"), and the undersigned (the "Holder") in connection with the grant of an Option (hereinafter defined) under the INTERNATIONAL WIRE HOLDING COMPANY 1995 STOCK OPTION PLAN (the "Plan"). W I T N E S S E T H: WHEREAS, the Holder is an employee of Holdings or a subsidiary corporation thereof (subsidiary corporations sometimes referred to herein as "Related Entities"; Holdings and the Related Entities are collectively referred to herein as the "Corporation") in a key position or is an officer and/or director of the Corporation and Holdings desires to grant the Holder an Option through the Plan to purchase shares of Stock (hereinafter defined) of Holdings and Holder desires to accept the Option based upon all of the terms, conditions and covenants, including but not limited to, Holder agreeing to confidentiality, non-competition and non-solicitation of employees of the Corporation. NOW, THEREFORE, in consideration of these premises, the parties agree that the following shall constitute the agreement between the Corporation and the Holder: 1. DEFINITIONS. For purpose of this Agreement, the following terms shall have the meanings specified below: 1.1 "Board of Directors" shall mean the board of directors of Holdings. 1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.3 "Committee" shall mean the committee appointed pursuant to Section 2 of the Plan or the Board of Directors, if no committee is appointed. 1.4 "Confidential Information" shall mean information disclosed to or known by the Holder as a direct or indirect consequence of or through the employment about the Corporation or its respective businesses, products, practices, customers and suppliers. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters which is (i) available to the public from a source other than Holder, (ii) released in writing by the Corporation to the public or intentionally to persons who are not under a similar obligation of confidentiality to the Corporation and who are not parties to this Agreement or a similar agreement, (iii) obtained by Holder from a third party not under a similar obligation of confidentiality to the Corporation, (iv) required to be disclosed by any court process or any government or agency or department of any government, or (v) the subject of a written waiver executed by the Corporation for the benefit of Holder. 2 1.5 "Disability" shall be construed under the appropriate provisions of the long-term disability plan maintained for the benefit of employees of the Corporation who are regularly employed on a salaried basis. The determination of a Holder's Disability, and the date of its commencement, shall be determined in good faith solely by the Committee. 1.6 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.7 "Fair Market Value" shall mean, if the Stock is traded on one or more established markets or exchanges, the average of the opening and closing prices of the Stock in the primary market or exchange on which the Stock is traded, and if the Stock is not so traded or the Stock does not trade on the relevant date, the value as determined in good faith by the Board of Directors. 1.8 "Securities Act" shall mean the Securities Act of 1933, as amended. 1.9 "Stock" shall mean Holdings' authorized par value $0.01 per share Common Stock together with any other securities with respect to which Options granted hereunder may become exercisable. 2. GRANT OF NONSTATUTORY OPTION. Subject to the terms and conditions set forth herein, Holdings grants to the Holder an Option (the "Option") to purchase from Holdings at a price per share (the "Exercise Price") the number of shares of Stock (the "Option Shares") as both are set out on the final page hereof subject to adjustments as provided in Paragraph 9 hereof. The Option is not intended to be an incentive option within the meaning of Section 422A of the Code. 3. NOTICE OF EXERCISE. This Option may be exercised in accordance with Paragraph 8, to purchase all or a portion of the applicable number of Option Shares exercisable by written notice to Holdings as provided in Paragraph 12, which notice shall: (a) specify the number of shares of Stock to be purchased at the Exercise Price; (b) if the person exercising this Nonstatutory Option is not the named Holder, contain or be accompanied by evidence satisfactory to the Committee of such person's right to exercise this Option; and (c) be accompanied by (i) payment in full of the Exercise Price in the form of a certified or cashier's check payable to the order of Holdings, (ii) with the Committee's approval, a promissory note for the full Exercise Price, (iii) with the Committee's approval, payment in the form of shares of Stock owned by the Holder which are of at least equal value to the aggregate exercise price payable in connection with such exercise, (iv) with the Committee's approval, a share or shares of Stock owned by the Holder and/or surrendered for actual or deemed multiple exchanges of shares of Option Shares, or (v) with the Committee's approval, a combination of any of (i) - (iv). The Committee may grant or withhold its approval under any or all of the foregoing in its sole and absolute discretion. -2- 3 4. INVESTMENT LETTER. Unless there is in effect a registration statement under the Securities Act, with respect to the issuance of the Option Shares (and, if required, there is available for delivery a prospectus meeting the requirements of Section 10(a)(3) of the Securities Act), the Holder (or, in the event of his death, the person exercising the Option) shall, as a condition to his right to exercise the Option, deliver to Holdings an agreement or certificate containing such representations, warranties, and covenants as Holdings may deem necessary or appropriate to ensure that the issuance of shares of Stock pursuant to such exercise is not required to be registered under the Securities Act or any applicable state securities law. It is understood and agreed that under no circumstance shall Holdings be obligated to file any registration statement under the Securities Act or any applicable state securities law to permit exercise of the Option or to issue any Stock in violation of the Securities Act or any applicable state securities law. 5. TRANSFER AND EXERCISE OF NONSTATUTORY OPTION. The Option is not transferable by the Holder otherwise than by will or the laws of descent and distribution, and is exercisable, during the Holder's lifetime, only by the Holder. The Option may not be assigned, transferred (except by will or the laws of descent and distribution), pledged, or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, or similar proceeding. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option, contrary to the provisions hereof, and the levy of any attachment or similar proceeding upon the Option, shall be null and void and without effect. 6. STATUS OF HOLDER. This Agreement is not a contract of employment and the terms of the Holder's employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein. Nothing herein shall be construed to impose any obligation on the Corporation to continue the Holder's employment. The Holder shall not be deemed a stockholder of Holdings with respect to any of the shares of Stock subject to this Option, except to the extent that such shares shall have been purchased and issued. Holdings shall not be required to issue or transfer any certificates for shares of Stock purchased upon exercise of this Option until there is compliance with all applicable requirements of law and this Agreement. 7. NO EFFECT ON CAPITAL STRUCTURE. This Option shall not affect the right of Holdings to reclassify, recapitalize or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, windup, or otherwise reorganize and, by acceptance of this Agreement, Holder agrees that Holder has no standing before any court to object to or contest any such action. 8. CONDITIONS AND SCHEDULE FOR EXERCISE. Except as otherwise provided herein, all options shall expire no later than ten (10) years from the date of this Agreement, which ten (10) year period is the term of this Agreement. Subject to the provisions of Paragraph 9, Holder shall be entitled to exercise the options granted herein as follows: (a) twenty percent (20%) of the Option Shares may be exercised on or after the first anniversary date of this Agreement, and (b) thereafter, an additional twenty percent (20%) of the Option Shares shall become exercisable upon or after each of the next four (4) anniversary dates of this Agreement. Notwithstanding the provisions of the immediately preceding sentence, (a) all Option Shares shall become exercisable immediately prior to a change of Control (as defined in the Plan) and (b) in the event of the death or determination of -3- 4 Disability of Holder, an additional twenty percent (20%) of the Option Shares (or such lesser number as to cause the total shares subject to exercise not to exceed the total Option Shares) shall become exercisable as of or after the date of death or date of Disability. There shall not be any pro-rata rating of exercisability between anniversary dates. All other provisions of this Agreement to the contrary notwithstanding, in the event of the termination of Holder's employment with the Corporation (other than as a result of Holder's death or Disability, or in the event of termination of Holder's employment without good cause (as defined in the Plan) or upon retirement (with the Corporation's prior written consent)), all rights under this Agreement and the Option shall terminate and shall thereupon be null and void effective upon such termination; provided however, any shares of Stock obtained through exercise prior to such effective date in accordance with the terms of this Agreement shall remain the sole and absolute property of the Holder subject to the Repurchase Right set forth in Section 19. In the event of the termination of Holder's employment with the Corporation as a result of Holder's death or Disability, or in the event of the termination of Holder's employment without good cause or upon retirement (with the Corporation's prior written consent), all rights under this Agreement and the Option shall terminate and shall be null and void effective thirty (30) days after such termination of employment (during such thirty (30) day period, Holder shall have the right to exercise Holder's Option with respect to all or any part of the shares of Stock which such Holder was entitled to purchase immediately prior to the date of such termination of employment); provided however any shares of Stock obtained through exercise prior to such effective date of termination of employment in accordance with the terms of this Agreement shall remain the sole and absolute property of the Holder. 9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER, ETC. AND ACCELERATION OF EXERCISABILITY. In the event that, by reason of any merger, consolidation, combination, liquidation, reorganization, recapitalization, stock divided, stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or other like change in capital structure of Holdings (collectively, a "Reorganization"), the Stock is substituted, combined, or changed into any cash, property, or other securities, or the shares of Stock are changed into a greater or lesser number of shares of Stock, the number and/or kind of shares and/or, interests subject to an Option and the Exercise Price or value thereof shall be appropriately adjusted by the Committee to give appropriate effect to such Reorganization. Any fractional shares or interests resulting from such adjustment shall be eliminated. All of the provisions of this Paragraph to the contrary not withstanding, Holdings shall have the right to grant stock appreciation right agreements, to issue additional stock options and/or to issue additional shares of stock. If any such stock appreciation right agreements are granted, additional stock options issued and/or additional shares of stock are issued to others out of authorized but unissued shares, even though the result of such stock appreciation right agreements granted, stock options issued and/or stock issues dilute either the percentage of ownership of the Holder or the value per share of any stock or Option herein granted and, in any such event, Holder's rights hereunder shall not be increased in any way. -4- 5 10. COMMITTEE AUTHORITY. Any question concerning the interpretation of this Agreement, any adjustments required to be made under Paragraph 9 of this Agreement, and any controversy which may arise under this Agreement and/or any paragraph thereof shall be finally determined by the Committee in its sole and absolute discretion. 11. PLAN CONTROLS. The terms of this Agreement are governed by the terms of the Plan, which is made a part hereof as if fully set forth herein, and in the case of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control. 12. NOTICE. Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered, sent by mail or sent by overnight courier. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid or next business day after it is sent by overnight courier in each case, addressed to the person who is to receive it. Holdings or Holder may change, at any time and from time to time, by written notice to the other, the address previously so specified. Until changed in accordance herewith, Holdings and the Holder specify their respective addresses as set forth below the signature lines on the last page hereof. 13. CERTIFICATE RETENTION. In the event that Holder gives notice of exercise in whole or in part in accordance with the provisions of this Agreement, Holdings shall have the right to demand that the Holder execute and deliver a Stock Power to Holdings and to then issue the certificate and to hold the certificate in Holdings' possession together with the Stock Power so to assure protection of Holdings' Repurchase Right. 14. AWARD INFORMATION CONFIDENTIAL. As partial consideration for the granting of this Option, the Holder agrees that Holder will keep confidential all information and knowledge that Holder has relating to the manner and amount of participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to the Holder's spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. 15. TAX WITHHOLDING. By acceptance hereof, Holder hereby (i) agrees to reimburse the Corporation by which Holder is employed for any federal, state, or local taxes required by any government to be withheld or otherwise deducted by such Corporation in respect of Holder's exercise of all or a portion of the Option; (ii) authorizes the Corporation by which the Holder is employed to withhold from any cash compensation paid to the Holder or in the Holder's behalf, an amount sufficient to discharge any federal, state, and local taxes imposed on the Corporation by which the Holder is employed, in respect of the Holder's exercise of all or a portion of the Option; and (iii) agrees that Holdings may, in its discretion, hold the stock certificate to which Holdings is entitled upon exercise of the Option as security for the payment of the aforementioned withholding tax liability, until cash sufficient to pay that liability has been accumulated, and may, in its discretion, effect such withholding by retaining shares issuable upon the exercise of the Option having a fair market value on the date of exercise which is equal (in the judgment of such corporation) to the amount to be withheld. -5- 6 16. CONFIDENTIAL INFORMATION. As partial consideration of the granting of this Option, the Holder agrees that during Holder's employment with the Corporation or at any time thereafter, irrespective of the time, manner or cause of the termination of this Agreement, Holder will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized officers, directors and employees of the Corporation, in any manner whatsoever, any Confidential Information of the Corporation or any direct or indirect subsidiary or parent of the Corporation without the prior written consent of the Chairman of the Board of Holdings. 17. AGREEMENT NOT TO COMPETE. As partial consideration of the granting of this Nonstatutory Option, Holder agrees: (A) TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the event that the Holder is terminated for Cause or voluntarily terminates employment with the Corporation prior to the expiration of the term of this Agreement, Holder hereby agrees that for a period of one (1) year following such termination, he shall not, either in Holder's own behalf or as a partner, officer, director, employee, agent or shareholder engage in, invest in or render services to any person or entity engaged in the businesses in which the Corporation or any subsidiary of the Corporation is then engaged and situated within the United States of America. Nothing contained in this Section 17(a) shall be construed as restricting the Holder's right to sell or otherwise dispose of any business or investments owned or operated by the Holder as of the date hereof. (B) TERMINATION WITHOUT CAUSE OR FOR DISABILITY. In the event that the employment of the Holder is terminated by the Corporation without Cause or as a result of the total disability of the Holder, Holder hereby agrees that only during the period that the Holder accepts continued disability and/or severance compensation payments from the Corporation, he shall not, either in Holder's own behalf or as a partner, officer, director, employee, agent or shareholder engage in, invest in or render services to any person or entity engaged in the businesses in which the Corporation is then engaged and situated within the United States of America. Nothing contained in this Section 17(b) shall be construed as restricting the Holder's right to sell or otherwise dispose of any business or investments owned or operated by the Holder as of the date hereof. 18. AGREEMENT NOT TO SOLICIT EMPLOYEES. Holder agrees that, for a period of two (2) years following the termination of Holder's employment by the Corporation, Holder shall not, for Holder or on behalf of any business engaged in a business competitive with the Corporation, solicit or induce, or in any manner attempt to solicit or induce, any person employed by, or any agent of the Corporation to terminate employment or agency, as the case may be, with the Corporation. 19. REPURCHASE RIGHT. If Holder's employment with the Corporation terminates for any reason at any time (other than as a result of Holder's death or Disability, or in the event of termination of Holder's employment without good cause (as defined in the Plan) or upon retirement (with the Corporation's prior written consent)), Holdings and/or its designee(s) shall have the option (the "Purchase Option") to purchase, and if an Option is exercised, Holder (or the Holder's executor or the administrator of Holder's estate, in the event of the Holder's death, or Holder's legal representative in the event of the Holder's incapacity (hereinafter, collectively with such Holder, the "Grantor")) shall sell to Holdings and/or its assignee(s), all or any portion (at Holding's Option) of -6- 7 the shares of Stock and/or exercised Options held by the Grantor (such shares of Stock and exercised Options collectively being referred to as the "Purchasable Shares"). Holdings shall give notice in writing to the Grantor of the exercise of the Purchase Option within one (1) year from the date of the termination of the Holder's employment. Such notice shall state the number of Purchasable Shares to be purchased and the determination of the Board of Directors of the Fair Market Value (as defined in the Plan) per share of such Purchasable Shares. If no notice is given within the time limit specified above, the Purchase Option shall terminate. The purchase price to be paid for the Purchasable Shares purchased pursuant to the Purchase Option shall be, in the case of any Stock, the Fair Market Value per share times the number of shares being purchased, and in the case of any Option, the Fair Market Value per share times the number of vested shares subject to such Options which are being purchased, less the applicable per share Option exercise price. The purchase price shall be paid in cash. The closing of such purchase shall take place at Holding's principal executive offices within ten (10) days after the purchase price has been determined. At such closing, the Grantor shall deliver to the purchaser(s) the certificates or instruments evidencing the Purchasable Shares being purchased, duly endorsed (or accompanied by duly executed stock powers) and otherwise in good form for delivery, against payment of the purchase price by check of the purchaser(s). In the event that, notwithstanding the foregoing, the Grantor shall have failed to obtain the release of any pledge or other encumbrance or any Purchasable Shares by the scheduled closing date, at the option of Holdings, the closing shall nevertheless occur on such scheduled closing date, with the cash purchase price being reduced to the extent of all unpaid indebtedness for which such Purchasable Shares are then pledged or encumbered. To assure the enforceability of Holding's rights under this Paragraph 19, each certificate or instrument representing Stock or an Option held by Holder and/or the certificate or instrument shall bear a conspicuous legend in substantially the following form: "THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE INTERNATIONAL WIRE HOLDING COMPANY 1995 STOCK OPTION PLAN AND A NONSTATUTORY STOCK OPTION AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND OPTION AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES." Holding's rights under this Section 19 shall terminate upon the consummation of an underwritten public offering of the Stock, registered and effective under the Securities Act of 1993, as amended, pursuant to which Holdings receives aggregate cash sales proceeds, before underwriting discount, of at least $25 million or such lesser amount as the Committee shall determine. 20. SUCCESSORS. Except as otherwise provided herein, this Agreement is binding on and enforceable by the heirs, successors, and assigns of the parties. -7- 8 21. GOVERNING LAW. This Agreement shall be governed by the laws of the State of Delaware, except to the extent that Delaware Law is preempted by Federal Law. IN WITNESS WHEREOF, Holdings has caused this Agreement to be executed and the Holder has hereunto set Holder's hand as of the 6th day of August, 1996. HOLDINGS: INTERNATIONAL WIRE HOLDING COMPANY By: /s/ JAMES N. MILLS ---------------------------------- James N. Mills Chairman and Chief Executive Officer 101 South Hanley St. Louis, Missouri 63105 HOLDER: /s/ ROBERT C. KOZLOWSKI ------------------------------------- Robert C. Kozlowski 4555 South 890 East Wolcottville, Indiana 46795 Number of Option Shares subject to the grant in Paragraph 2 hereof is four hundred thousand (400,000) and the Exercise Price is One Dollar ($1.00) per share. -8- EX-10.37 7 NONSTATUTORY STOCK OPTION AGREEMENT 1 EXHIBIT 10.37 INTERNATIONAL WIRE HOLDING COMPANY NONSTATUTORY STOCK OPTION AGREEMENT THIS AGREEMENT (the "Agreement") is made and entered into between International Wire Holding Company, a Delaware corporation ("Holdings"), and the undersigned (the "Holder") in connection with the grant of an Option (hereinafter defined) under the INTERNATIONAL WIRE HOLDING COMPANY 1995 STOCK OPTION PLAN (the "Plan"). W I T N E S S E T H: WHEREAS, the Holder is an employee of Holdings or a subsidiary corporation thereof (subsidiary corporations sometimes referred to herein as "Related Entities"; Holdings and the Related Entities are collectively referred to herein as the "Corporation") in a key position or is an officer and/or director of the Corporation and Holdings desires to grant the Holder an Option through the Plan to purchase shares of Stock (hereinafter defined) of Holdings and Holder desires to accept the Option based upon all of the terms, conditions and covenants, including but not limited to, Holder agreeing to confidentiality, non-competition and non-solicitation of employees of the Corporation. NOW, THEREFORE, in consideration of these premises, the parties agree that the following shall constitute the agreement between the Corporation and the Holder: 1. DEFINITIONS. For purpose of this Agreement, the following terms shall have the meanings specified below: 1.1 "Board of Directors" shall mean the board of directors of Holdings. 1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.3 "Committee" shall mean the committee appointed pursuant to Section 2 of the Plan or the Board of Directors, if no committee is appointed. 1.4 "Confidential Information" shall mean information disclosed to or known by the Holder as a direct or indirect consequence of or through the employment about the Corporation or its respective businesses, products, practices, customers and suppliers. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters which is (i) available to the public from a source other than Holder, (ii) released in writing by the Corporation to the public or intentionally to persons who are not under a similar obligation of confidentiality to the Corporation and who are not parties to this Agreement or a similar agreement, (iii) obtained by Holder from a third party not under a similar obligation of confidentiality to the Corporation, (iv) required to be disclosed by any court process or any government or agency or department of any government, or (v) the subject of a written waiver executed by the Corporation for the benefit of Holder. 2 1.5 "Disability" shall be construed under the appropriate provisions of the long-term disability plan maintained for the benefit of employees of the Corporation who are regularly employed on a salaried basis. The determination of a Holder's Disability, and the date of its commencement, shall be determined in good faith solely by the Committee. 1.6 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.7 "Fair Market Value" shall mean, if the Stock is traded on one or more established markets or exchanges, the average of the opening and closing prices of the Stock in the primary market or exchange on which the Stock is traded, and if the Stock is not so traded or the Stock does not trade on the relevant date, the value as determined in good faith by the Board of Directors. 1.8 "Securities Act" shall mean the Securities Act of 1933, as amended. 1.9 "Stock" shall mean Holdings' authorized par value $0.01 per share Common Stock together with any other securities with respect to which Options granted hereunder may become exercisable. 2. GRANT OF NONSTATUTORY OPTION. Subject to the terms and conditions set forth herein, Holdings grants to the Holder an Option (the "Option") to purchase from Holdings at a price per share (the "Exercise Price") the number of shares of Stock (the "Option Shares") as both are set out on the final page hereof subject to adjustments as provided in Paragraph 9 hereof. The Option is not intended to be an incentive option within the meaning of Section 422A of the Code. 3. NOTICE OF EXERCISE. This Option may be exercised in accordance with Paragraph 8, to purchase all or a portion of the applicable number of Option Shares exercisable by written notice to Holdings as provided in Paragraph 12, which notice shall: (a) specify the number of shares of Stock to be purchased at the Exercise Price; (b) if the person exercising this Nonstatutory Option is not the named Holder, contain or be accompanied by evidence satisfactory to the Committee of such person's right to exercise this Option; and (c) be accompanied by (i) payment in full of the Exercise Price in the form of a certified or cashier's check payable to the order of Holdings, (ii) with the Committee's approval, a promissory note for the full Exercise Price, (iii) with the Committee's approval, payment in the form of shares of Stock owned by the Holder which are of at least equal value to the aggregate exercise price payable in connection with such exercise, (iv) with the Committee's approval, a share or shares of Stock owned by the Holder and/or surrendered for actual or deemed multiple exchanges of shares of Option Shares, or (v) with the Committee's approval, a combination of any of (i) - (iv). The Committee may grant or withhold its approval under any or all of the foregoing in its sole and absolute discretion. -2- 3 4. INVESTMENT LETTER. Unless there is in effect a registration statement under the Securities Act, with respect to the issuance of the Option Shares (and, if required, there is available for delivery a prospectus meeting the requirements of Section 10(a)(3) of the Securities Act), the Holder (or, in the event of his death, the person exercising the Option) shall, as a condition to his right to exercise the Option, deliver to Holdings an agreement or certificate containing such representations, warranties, and covenants as Holdings may deem necessary or appropriate to ensure that the issuance of shares of Stock pursuant to such exercise is not required to be registered under the Securities Act or any applicable state securities law. It is understood and agreed that under no circumstance shall Holdings be obligated to file any registration statement under the Securities Act or any applicable state securities law to permit exercise of the Option or to issue any Stock in violation of the Securities Act or any applicable state securities law. 5. TRANSFER AND EXERCISE OF NONSTATUTORY OPTION. The Option is not transferable by the Holder otherwise than by will or the laws of descent and distribution, and is exercisable, during the Holder's lifetime, only by the Holder. The Option may not be assigned, transferred (except by will or the laws of descent and distribution), pledged, or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, or similar proceeding. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option, contrary to the provisions hereof, and the levy of any attachment or similar proceeding upon the Option, shall be null and void and without effect. 6. STATUS OF HOLDER. This Agreement is not a contract of employment and the terms of the Holder's employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein. Nothing herein shall be construed to impose any obligation on the Corporation to continue the Holder's employment. The Holder shall not be deemed a stockholder of Holdings with respect to any of the shares of Stock subject to this Option, except to the extent that such shares shall have been purchased and issued. Holdings shall not be required to issue or transfer any certificates for shares of Stock purchased upon exercise of this Option until there is compliance with all applicable requirements of law and this Agreement. 7. NO EFFECT ON CAPITAL STRUCTURE. This Option shall not affect the right of Holdings to reclassify, recapitalize or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, windup, or otherwise reorganize and, by acceptance of this Agreement, Holder agrees that Holder has no standing before any court to object to or contest any such action. 8. CONDITIONS AND SCHEDULE FOR EXERCISE. Except as otherwise provided herein, all options shall expire no later than ten (10) years from the date of this Agreement, which ten (10) year period is the term of this Agreement. Subject to the provisions of Paragraph 9, Holder shall be entitled to exercise the options granted herein as follows: (a) twenty percent (20%) of the Option Shares may be exercised on or after the first anniversary date of this Agreement, and (b) thereafter, an additional twenty percent (20%) of the Option Shares shall become exercisable upon or after each of the next four (4) anniversary dates of this Agreement. Notwithstanding the provisions of the immediately preceding sentence, (a) all Option Shares shall become exercisable immediately prior to a change of Control (as defined in the Plan) and (b) in the event of the death or determination of -3- 4 Disability of Holder, an additional twenty percent (20%) of the Option Shares (or such lesser number as to cause the total shares subject to exercise not to exceed the total Option Shares) shall become exercisable as of or after the date of death or date of Disability. There shall not be any pro-rata rating of exercisability between anniversary dates. All other provisions of this Agreement to the contrary notwithstanding, in the event of the termination of Holder's employment with the Corporation (other than as a result of Holder's death or Disability, or in the event of termination of Holder's employment without good cause (as defined in the Plan) or upon retirement (with the Corporation's prior written consent)), all rights under this Agreement and the Option shall terminate and shall thereupon be null and void effective upon such termination; provided however, any shares of Stock obtained through exercise prior to such effective date in accordance with the terms of this Agreement shall remain the sole and absolute property of the Holder subject to the Repurchase Right set forth in Section 19. In the event of the termination of Holder's employment with the Corporation as a result of Holder's death or Disability, or in the event of the termination of Holder's employment without good cause or upon retirement (with the Corporation's prior written consent), all rights under this Agreement and the Option shall terminate and shall be null and void effective thirty (30) days after such termination of employment (during such thirty (30) day period, Holder shall have the right to exercise Holder's Option with respect to all or any part of the shares of Stock which such Holder was entitled to purchase immediately prior to the date of such termination of employment); provided however any shares of Stock obtained through exercise prior to such effective date of termination of employment in accordance with the terms of this Agreement shall remain the sole and absolute property of the Holder. 9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER, ETC. AND ACCELERATION OF EXERCISABILITY. In the event that, by reason of any merger, consolidation, combination, liquidation, reorganization, recapitalization, stock divided, stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or other like change in capital structure of Holdings (collectively, a "Reorganization"), the Stock is substituted, combined, or changed into any cash, property, or other securities, or the shares of Stock are changed into a greater or lesser number of shares of Stock, the number and/or kind of shares and/or, interests subject to an Option and the Exercise Price or value thereof shall be appropriately adjusted by the Committee to give appropriate effect to such Reorganization. Any fractional shares or interests resulting from such adjustment shall be eliminated. All of the provisions of this Paragraph to the contrary not withstanding, Holdings shall have the right to grant stock appreciation right agreements, to issue additional stock options and/or to issue additional shares of stock. If any such stock appreciation right agreements are granted, additional stock options issued and/or additional shares of stock are issued to others out of authorized but unissued shares, even though the result of such stock appreciation right agreements granted, stock options issued and/or stock issues dilute either the percentage of ownership of the Holder or the value per share of any stock or Option herein granted and, in any such event, Holder's rights hereunder shall not be increased in any way. -4- 5 10. COMMITTEE AUTHORITY. Any question concerning the interpretation of this Agreement, any adjustments required to be made under Paragraph 9 of this Agreement, and any controversy which may arise under this Agreement and/or any paragraph thereof shall be finally determined by the Committee in its sole and absolute discretion. 11. PLAN CONTROLS. The terms of this Agreement are governed by the terms of the Plan, which is made a part hereof as if fully set forth herein, and in the case of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control. 12. NOTICE. Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered, sent by mail or sent by overnight courier. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid or next business day after it is sent by overnight courier in each case, addressed to the person who is to receive it. Holdings or Holder may change, at any time and from time to time, by written notice to the other, the address previously so specified. Until changed in accordance herewith, Holdings and the Holder specify their respective addresses as set forth below the signature lines on the last page hereof. 13. CERTIFICATE RETENTION. In the event that Holder gives notice of exercise in whole or in part in accordance with the provisions of this Agreement, Holdings shall have the right to demand that the Holder execute and deliver a Stock Power to Holdings and to then issue the certificate and to hold the certificate in Holdings' possession together with the Stock Power so to assure protection of Holdings' Repurchase Right. 14. AWARD INFORMATION CONFIDENTIAL. As partial consideration for the granting of this Option, the Holder agrees that Holder will keep confidential all information and knowledge that Holder has relating to the manner and amount of participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to the Holder's spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. 15. TAX WITHHOLDING. By acceptance hereof, Holder hereby (i) agrees to reimburse the Corporation by which Holder is employed for any federal, state, or local taxes required by any government to be withheld or otherwise deducted by such Corporation in respect of Holder's exercise of all or a portion of the Option; (ii) authorizes the Corporation by which the Holder is employed to withhold from any cash compensation paid to the Holder or in the Holder's behalf, an amount sufficient to discharge any federal, state, and local taxes imposed on the Corporation by which the Holder is employed, in respect of the Holder's exercise of all or a portion of the Option; and (iii) agrees that Holdings may, in its discretion, hold the stock certificate to which Holdings is entitled upon exercise of the Option as security for the payment of the aforementioned withholding tax liability, until cash sufficient to pay that liability has been accumulated, and may, in its discretion, effect such withholding by retaining shares issuable upon the exercise of the Option having a fair market value on the date of exercise which is equal (in the judgment of such corporation) to the amount to be withheld. -5- 6 16. CONFIDENTIAL INFORMATION. As partial consideration of the granting of this Option, the Holder agrees that during Holder's employment with the Corporation or at any time thereafter, irrespective of the time, manner or cause of the termination of this Agreement, Holder will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized officers, directors and employees of the Corporation, in any manner whatsoever, any Confidential Information of the Corporation or any direct or indirect subsidiary or parent of the Corporation without the prior written consent of the Chairman of the Board of Holdings. 17. AGREEMENT NOT TO COMPETE. As partial consideration of the granting of this Nonstatutory Option, Holder agrees: (A) TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the event that the Holder is terminated for Cause or voluntarily terminates employment with the Corporation prior to the expiration of the term of this Agreement, Holder hereby agrees that for a period of one (1) year following such termination, he shall not, either in Holder's own behalf or as a partner, officer, director, employee, agent or shareholder engage in, invest in or render services to any person or entity engaged in the businesses in which the Corporation or any subsidiary of the Corporation is then engaged and situated within the United States of America. Nothing contained in this Section 17(a) shall be construed as restricting the Holder's right to sell or otherwise dispose of any business or investments owned or operated by the Holder as of the date hereof. (B) TERMINATION WITHOUT CAUSE OR FOR DISABILITY. In the event that the employment of the Holder is terminated by the Corporation without Cause or as a result of the total disability of the Holder, Holder hereby agrees that only during the period that the Holder accepts continued disability and/or severance compensation payments from the Corporation, he shall not, either in Holder's own behalf or as a partner, officer, director, employee, agent or shareholder engage in, invest in or render services to any person or entity engaged in the businesses in which the Corporation is then engaged and situated within the United States of America. Nothing contained in this Section 17(b) shall be construed as restricting the Holder's right to sell or otherwise dispose of any business or investments owned or operated by the Holder as of the date hereof. 18. AGREEMENT NOT TO SOLICIT EMPLOYEES. Holder agrees that, for a period of two (2) years following the termination of Holder's employment by the Corporation, Holder shall not, for Holder or on behalf of any business engaged in a business competitive with the Corporation, solicit or induce, or in any manner attempt to solicit or induce, any person employed by, or any agent of the Corporation to terminate employment or agency, as the case may be, with the Corporation. 19. REPURCHASE RIGHT. If Holder's employment with the Corporation terminates for any reason at any time (other than as a result of Holder's death or Disability, or in the event of termination of Holder's employment without good cause (as defined in the Plan) or upon retirement (with the Corporation's prior written consent)), Holdings and/or its designee(s) shall have the option (the "Purchase Option") to purchase, and if an Option is exercised, Holder (or the Holder's executor or the administrator of Holder's estate, in the event of the Holder's death, or Holder's legal representative in the event of the Holder's incapacity (hereinafter, collectively with such Holder, the "Grantor")) shall sell to Holdings and/or its assignee(s), all or any portion (at Holding's Option) of -6- 7 the shares of Stock and/or exercised Options held by the Grantor (such shares of Stock and exercised Options collectively being referred to as the "Purchasable Shares"). Holdings shall give notice in writing to the Grantor of the exercise of the Purchase Option within one (1) year from the date of the termination of the Holder's employment. Such notice shall state the number of Purchasable Shares to be purchased and the determination of the Board of Directors of the Fair Market Value (as defined in the Plan) per share of such Purchasable Shares. If no notice is given within the time limit specified above, the Purchase Option shall terminate. The purchase price to be paid for the Purchasable Shares purchased pursuant to the Purchase Option shall be, in the case of any Stock, the Fair Market Value per share times the number of shares being purchased, and in the case of any Option, the Fair Market Value per share times the number of vested shares subject to such Options which are being purchased, less the applicable per share Option exercise price. The purchase price shall be paid in cash. The closing of such purchase shall take place at Holding's principal executive offices within ten (10) days after the purchase price has been determined. At such closing, the Grantor shall deliver to the purchaser(s) the certificates or instruments evidencing the Purchasable Shares being purchased, duly endorsed (or accompanied by duly executed stock powers) and otherwise in good form for delivery, against payment of the purchase price by check of the purchaser(s). In the event that, notwithstanding the foregoing, the Grantor shall have failed to obtain the release of any pledge or other encumbrance or any Purchasable Shares by the scheduled closing date, at the option of Holdings, the closing shall nevertheless occur on such scheduled closing date, with the cash purchase price being reduced to the extent of all unpaid indebtedness for which such Purchasable Shares are then pledged or encumbered. To assure the enforceability of Holding's rights under this Paragraph 19, each certificate or instrument representing Stock or an Option held by Holder and/or the certificate or instrument shall bear a conspicuous legend in substantially the following form: "THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE INTERNATIONAL WIRE HOLDING COMPANY 1995 STOCK OPTION PLAN AND A NONSTATUTORY STOCK OPTION AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND OPTION AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES." Holding's rights under this Section 19 shall terminate upon the consummation of an underwritten public offering of the Stock, registered and effective under the Securities Act of 1993, as amended, pursuant to which Holdings receives aggregate cash sales proceeds, before underwriting discount, of at least $25 million or such lesser amount as the Committee shall determine. 20. SUCCESSORS. Except as otherwise provided herein, this Agreement is binding on and enforceable by the heirs, successors, and assigns of the parties. -7- 8 21. GOVERNING LAW. This Agreement shall be governed by the laws of the State of Delaware, except to the extent that Delaware Law is preempted by Federal Law. IN WITNESS WHEREOF, Holdings has caused this Agreement to be executed and the Holder has hereunto set Holder's hand as of the 8th day of November, 1995. HOLDINGS: INTERNATIONAL WIRE HOLDING COMPANY By: /s/ JAMES N. MILLS ---------------------------------- James N. Mills Chairman and Chief Executive Officer 101 South Hanley St. Louis, Missouri 63105 HOLDER: /s/ JOSEPH M. FIAMINGO ------------------------------------- Joseph M. Fiamingo 8176 Glenmill Court Cincinnati, Ohio 45249 Number of Option Shares subject to the grant in Paragraph 2 hereof is four hundred thousand (400,000) and the Exercise Price is One and 00/100 Dollar ($1.00) per share. -8- EX-10.38 8 NONSTATUTORY STOCK OPTION AGREEMENT 1 EXHIBIT 10.38 INTERNATIONAL WIRE HOLDING COMPANY NONSTATUTORY STOCK OPTION AGREEMENT THIS AGREEMENT (the "Agreement") is made and entered into between International Wire Holding Company, a Delaware corporation ("Holdings"), and the undersigned (the "Holder") in connection with the grant of an Option (hereinafter defined) under the INTERNATIONAL WIRE HOLDING COMPANY 1995 STOCK OPTION PLAN (the "Plan"). W I T N E S S E T H: WHEREAS, the Holder is an employee of Holdings or a subsidiary corporation thereof (subsidiary corporations sometimes referred to herein as "Related Entities"; Holdings and the Related Entities are collectively referred to herein as the "Corporation") in a key position or is an officer and/or director of the Corporation and Holdings desires to grant the Holder an Option through the Plan to purchase shares of Stock (hereinafter defined) of Holdings and Holder desires to accept the Option based upon all of the terms, conditions and covenants, including but not limited to, Holder agreeing to confidentiality, non-competition and non-solicitation of employees of the Corporation. NOW, THEREFORE, in consideration of these premises, the parties agree that the following shall constitute the agreement between the Corporation and the Holder: 1. DEFINITIONS. For purpose of this Agreement, the following terms shall have the meanings specified below: 1.1 "Board of Directors" shall mean the board of directors of Holdings. 1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.3 "Committee" shall mean the committee appointed pursuant to Section 2 of the Plan or the Board of Directors, if no committee is appointed. 1.4 "Confidential Information" shall mean information disclosed to or known by the Holder as a direct or indirect consequence of or through the employment about the Corporation or its respective businesses, products, practices, customers and suppliers. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters which is (i) available to the public from a source other than Holder, (ii) released in writing by the Corporation to the public or intentionally to persons who are not under a similar obligation of confidentiality to the Corporation and who are not parties to this Agreement or a similar agreement, (iii) obtained by Holder from a third party not under a similar obligation of confidentiality to the Corporation, (iv) required to be disclosed by any court process or any government or agency or department of any government, or (v) the subject of a written waiver executed by the Corporation for the benefit of Holder. 2 1.5 "Disability" shall be construed under the appropriate provisions of the long-term disability plan maintained for the benefit of employees of the Corporation who are regularly employed on a salaried basis. The determination of a Holder's Disability, and the date of its commencement, shall be determined in good faith solely by the Committee. 1.6 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.7 "Fair Market Value" shall mean, if the Stock is traded on one or more established markets or exchanges, the average of the opening and closing prices of the Stock in the primary market or exchange on which the Stock is traded, and if the Stock is not so traded or the Stock does not trade on the relevant date, the value as determined in good faith by the Board of Directors. 1.8 "Securities Act" shall mean the Securities Act of 1933, as amended. 1.9 "Stock" shall mean Holdings' authorized par value $0.01 per share Common Stock together with any other securities with respect to which Options granted hereunder may become exercisable. 2. GRANT OF NONSTATUTORY OPTION. Subject to the terms and conditions set forth herein, Holdings grants to the Holder an Option (the "Option") to purchase from Holdings at a price per share (the "Exercise Price") the number of shares of Stock (the "Option Shares") as both are set out on the final page hereof subject to adjustments as provided in Paragraph 9 hereof. The Option is not intended to be an incentive option within the meaning of Section 422A of the Code. 3. NOTICE OF EXERCISE. This Option may be exercised in accordance with Paragraph 8, to purchase all or a portion of the applicable number of Option Shares exercisable by written notice to Holdings as provided in Paragraph 12, which notice shall: (a) specify the number of shares of Stock to be purchased at the Exercise Price; (b) if the person exercising this Nonstatutory Option is not the named Holder, contain or be accompanied by evidence satisfactory to the Committee of such person's right to exercise this Option; and (c) be accompanied by (i) payment in full of the Exercise Price in the form of a certified or cashier's check payable to the order of Holdings, (ii) with the Committee's approval, a promissory note for the full Exercise Price, (iii) with the Committee's approval, payment in the form of shares of Stock owned by the Holder which are of at least equal value to the aggregate exercise price payable in connection with such exercise, (iv) with the Committee's approval, a share or shares of Stock owned by the Holder and/or surrendered for actual or deemed multiple exchanges of shares of Option Shares, or (v) with the Committee's approval, a combination of any of (i) - (iv). The Committee may grant or withhold its approval under any or all of the foregoing in its sole and absolute discretion. -2- 3 4. INVESTMENT LETTER. Unless there is in effect a registration statement under the Securities Act, with respect to the issuance of the Option Shares (and, if required, there is available for delivery a prospectus meeting the requirements of Section 10(a)(3) of the Securities Act), the Holder (or, in the event of his death, the person exercising the Option) shall, as a condition to his right to exercise the Option, deliver to Holdings an agreement or certificate containing such representations, warranties, and covenants as Holdings may deem necessary or appropriate to ensure that the issuance of shares of Stock pursuant to such exercise is not required to be registered under the Securities Act or any applicable state securities law. It is understood and agreed that under no circumstance shall Holdings be obligated to file any registration statement under the Securities Act or any applicable state securities law to permit exercise of the Option or to issue any Stock in violation of the Securities Act or any applicable state securities law. 5. TRANSFER AND EXERCISE OF NONSTATUTORY OPTION. The Option is not transferable by the Holder otherwise than by will or the laws of descent and distribution, and is exercisable, during the Holder's lifetime, only by the Holder. The Option may not be assigned, transferred (except by will or the laws of descent and distribution), pledged, or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment, or similar proceeding. Any attempted assignment, transfer, pledge, hypothecation, or other disposition of the Option, contrary to the provisions hereof, and the levy of any attachment or similar proceeding upon the Option, shall be null and void and without effect. 6. STATUS OF HOLDER. This Agreement is not a contract of employment and the terms of the Holder's employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein. Nothing herein shall be construed to impose any obligation on the Corporation to continue the Holder's employment. The Holder shall not be deemed a stockholder of Holdings with respect to any of the shares of Stock subject to this Option, except to the extent that such shares shall have been purchased and issued. Holdings shall not be required to issue or transfer any certificates for shares of Stock purchased upon exercise of this Option until there is compliance with all applicable requirements of law and this Agreement. 7. NO EFFECT ON CAPITAL STRUCTURE. This Option shall not affect the right of Holdings to reclassify, recapitalize or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, windup, or otherwise reorganize and, by acceptance of this Agreement, Holder agrees that Holder has no standing before any court to object to or contest any such action. 8. CONDITIONS AND SCHEDULE FOR EXERCISE. Except as otherwise provided herein, all options shall expire no later than ten (10) years from the date of this Agreement, which ten (10) year period is the term of this Agreement. Subject to the provisions of Paragraph 9, Holder shall be entitled to exercise the options granted herein as follows: (a) twenty percent (20%) of the Option Shares may be exercised on or after the first anniversary date of this Agreement, and (b) thereafter, an additional twenty percent (20%) of the Option Shares shall become exercisable upon or after each of the next four (4) anniversary dates of this Agreement. Notwithstanding the provisions of the immediately preceding sentence, (a) all Option Shares shall become exercisable immediately prior to a change of Control (as defined in the Plan) and (b) in the event of the death or determination of -3- 4 Disability of Holder, an additional twenty percent (20%) of the Option Shares (or such lesser number as to cause the total shares subject to exercise not to exceed the total Option Shares) shall become exercisable as of or after the date of death or date of Disability. There shall not be any pro-rata rating of exercisability between anniversary dates. All other provisions of this Agreement to the contrary notwithstanding, in the event of the termination of Holder's employment with the Corporation (other than as a result of Holder's death or Disability, or in the event of termination of Holder's employment without good cause (as defined in the Plan) or upon retirement (with the Corporation's prior written consent)), all rights under this Agreement and the Option shall terminate and shall thereupon be null and void effective upon such termination; provided however, any shares of Stock obtained through exercise prior to such effective date in accordance with the terms of this Agreement shall remain the sole and absolute property of the Holder subject to the Repurchase Right set forth in Section 19. In the event of the termination of Holder's employment with the Corporation as a result of Holder's death or Disability, or in the event of the termination of Holder's employment without good cause or upon retirement (with the Corporation's prior written consent), all rights under this Agreement and the Option shall terminate and shall be null and void effective thirty (30) days after such termination of employment (during such thirty (30) day period, Holder shall have the right to exercise Holder's Option with respect to all or any part of the shares of Stock which such Holder was entitled to purchase immediately prior to the date of such termination of employment); provided however any shares of Stock obtained through exercise prior to such effective date of termination of employment in accordance with the terms of this Agreement shall remain the sole and absolute property of the Holder. 9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER, ETC. AND ACCELERATION OF EXERCISABILITY. In the event that, by reason of any merger, consolidation, combination, liquidation, reorganization, recapitalization, stock divided, stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or other like change in capital structure of Holdings (collectively, a "Reorganization"), the Stock is substituted, combined, or changed into any cash, property, or other securities, or the shares of Stock are changed into a greater or lesser number of shares of Stock, the number and/or kind of shares and/or, interests subject to an Option and the Exercise Price or value thereof shall be appropriately adjusted by the Committee to give appropriate effect to such Reorganization. Any fractional shares or interests resulting from such adjustment shall be eliminated. All of the provisions of this Paragraph to the contrary not withstanding, Holdings shall have the right to grant stock appreciation right agreements, to issue additional stock options and/or to issue additional shares of stock. If any such stock appreciation right agreements are granted, additional stock options issued and/or additional shares of stock are issued to others out of authorized but unissued shares, even though the result of such stock appreciation right agreements granted, stock options issued and/or stock issues dilute either the percentage of ownership of the Holder or the value per share of any stock or Option herein granted and, in any such event, Holder's rights hereunder shall not be increased in any way. -4- 5 10. COMMITTEE AUTHORITY. Any question concerning the interpretation of this Agreement, any adjustments required to be made under Paragraph 9 of this Agreement, and any controversy which may arise under this Agreement and/or any paragraph thereof shall be finally determined by the Committee in its sole and absolute discretion. 11. PLAN CONTROLS. The terms of this Agreement are governed by the terms of the Plan, which is made a part hereof as if fully set forth herein, and in the case of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control. 12. NOTICE. Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered, sent by mail or sent by overnight courier. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid or next business day after it is sent by overnight courier in each case, addressed to the person who is to receive it. Holdings or Holder may change, at any time and from time to time, by written notice to the other, the address previously so specified. Until changed in accordance herewith, Holdings and the Holder specify their respective addresses as set forth below the signature lines on the last page hereof. 13. CERTIFICATE RETENTION. In the event that Holder gives notice of exercise in whole or in part in accordance with the provisions of this Agreement, Holdings shall have the right to demand that the Holder execute and deliver a Stock Power to Holdings and to then issue the certificate and to hold the certificate in Holdings' possession together with the Stock Power so to assure protection of Holdings' Repurchase Right. 14. AWARD INFORMATION CONFIDENTIAL. As partial consideration for the granting of this Option, the Holder agrees that Holder will keep confidential all information and knowledge that Holder has relating to the manner and amount of participation in the Plan; provided, however, that such information may be disclosed as required by law and may be given in confidence to the Holder's spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. 15. TAX WITHHOLDING. By acceptance hereof, Holder hereby (i) agrees to reimburse the Corporation by which Holder is employed for any federal, state, or local taxes required by any government to be withheld or otherwise deducted by such Corporation in respect of Holder's exercise of all or a portion of the Option; (ii) authorizes the Corporation by which the Holder is employed to withhold from any cash compensation paid to the Holder or in the Holder's behalf, an amount sufficient to discharge any federal, state, and local taxes imposed on the Corporation by which the Holder is employed, in respect of the Holder's exercise of all or a portion of the Option; and (iii) agrees that Holdings may, in its discretion, hold the stock certificate to which Holdings is entitled upon exercise of the Option as security for the payment of the aforementioned withholding tax liability, until cash sufficient to pay that liability has been accumulated, and may, in its discretion, effect such withholding by retaining shares issuable upon the exercise of the Option having a fair market value on the date of exercise which is equal (in the judgment of such corporation) to the amount to be withheld. -5- 6 16. CONFIDENTIAL INFORMATION. As partial consideration of the granting of this Option, the Holder agrees that during Holder's employment with the Corporation or at any time thereafter, irrespective of the time, manner or cause of the termination of this Agreement, Holder will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized officers, directors and employees of the Corporation, in any manner whatsoever, any Confidential Information of the Corporation or any direct or indirect subsidiary or parent of the Corporation without the prior written consent of the Chairman of the Board of Holdings. 17. AGREEMENT NOT TO COMPETE. As partial consideration of the granting of this Nonstatutory Option, Holder agrees: (A) TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the event that the Holder is terminated for Cause or voluntarily terminates employment with the Corporation prior to the expiration of the term of this Agreement, Holder hereby agrees that for a period of one (1) year following such termination, he shall not, either in Holder's own behalf or as a partner, officer, director, employee, agent or shareholder engage in, invest in or render services to any person or entity engaged in the businesses in which the Corporation or any subsidiary of the Corporation is then engaged and situated within the United States of America. Nothing contained in this Section 17(a) shall be construed as restricting the Holder's right to sell or otherwise dispose of any business or investments owned or operated by the Holder as of the date hereof. (B) TERMINATION WITHOUT CAUSE OR FOR DISABILITY. In the event that the employment of the Holder is terminated by the Corporation without Cause or as a result of the total disability of the Holder, Holder hereby agrees that only during the period that the Holder accepts continued disability and/or severance compensation payments from the Corporation, he shall not, either in Holder's own behalf or as a partner, officer, director, employee, agent or shareholder engage in, invest in or render services to any person or entity engaged in the businesses in which the Corporation is then engaged and situated within the United States of America. Nothing contained in this Section 17(b) shall be construed as restricting the Holder's right to sell or otherwise dispose of any business or investments owned or operated by the Holder as of the date hereof. 18. AGREEMENT NOT TO SOLICIT EMPLOYEES. Holder agrees that, for a period of two (2) years following the termination of Holder's employment by the Corporation, Holder shall not, for Holder or on behalf of any business engaged in a business competitive with the Corporation, solicit or induce, or in any manner attempt to solicit or induce, any person employed by, or any agent of the Corporation to terminate employment or agency, as the case may be, with the Corporation. 19. REPURCHASE RIGHT. If Holder's employment with the Corporation terminates for any reason at any time (other than as a result of Holder's death or Disability, or in the event of termination of Holder's employment without good cause (as defined in the Plan) or upon retirement (with the Corporation's prior written consent)), Holdings and/or its designee(s) shall have the option (the "Purchase Option") to purchase, and if an Option is exercised, Holder (or the Holder's executor or the administrator of Holder's estate, in the event of the Holder's death, or Holder's legal representative in the event of the Holder's incapacity (hereinafter, collectively with such Holder, the "Grantor")) shall sell to Holdings and/or its assignee(s), all or any portion (at Holding's Option) of -6- 7 the shares of Stock and/or exercised Options held by the Grantor (such shares of Stock and exercised Options collectively being referred to as the "Purchasable Shares"). Holdings shall give notice in writing to the Grantor of the exercise of the Purchase Option within one (1) year from the date of the termination of the Holder's employment. Such notice shall state the number of Purchasable Shares to be purchased and the determination of the Board of Directors of the Fair Market Value (as defined in the Plan) per share of such Purchasable Shares. If no notice is given within the time limit specified above, the Purchase Option shall terminate. The purchase price to be paid for the Purchasable Shares purchased pursuant to the Purchase Option shall be, in the case of any Stock, the Fair Market Value per share times the number of shares being purchased, and in the case of any Option, the Fair Market Value per share times the number of vested shares subject to such Options which are being purchased, less the applicable per share Option exercise price. The purchase price shall be paid in cash. The closing of such purchase shall take place at Holding's principal executive offices within ten (10) days after the purchase price has been determined. At such closing, the Grantor shall deliver to the purchaser(s) the certificates or instruments evidencing the Purchasable Shares being purchased, duly endorsed (or accompanied by duly executed stock powers) and otherwise in good form for delivery, against payment of the purchase price by check of the purchaser(s). In the event that, notwithstanding the foregoing, the Grantor shall have failed to obtain the release of any pledge or other encumbrance or any Purchasable Shares by the scheduled closing date, at the option of Holdings, the closing shall nevertheless occur on such scheduled closing date, with the cash purchase price being reduced to the extent of all unpaid indebtedness for which such Purchasable Shares are then pledged or encumbered. To assure the enforceability of Holding's rights under this Paragraph 19, each certificate or instrument representing Stock or an Option held by Holder and/or the certificate or instrument shall bear a conspicuous legend in substantially the following form: "THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE INTERNATIONAL WIRE HOLDING COMPANY 1995 STOCK OPTION PLAN AND A NONSTATUTORY STOCK OPTION AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND OPTION AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES." Holding's rights under this Section 19 shall terminate upon the consummation of an underwritten public offering of the Stock, registered and effective under the Securities Act of 1993, as amended, pursuant to which Holdings receives aggregate cash sales proceeds, before underwriting discount, of at least $25 million or such lesser amount as the Committee shall determine. 20. SUCCESSORS. Except as otherwise provided herein, this Agreement is binding on and enforceable by the heirs, successors, and assigns of the parties. -7- 8 21. GOVERNING LAW. This Agreement shall be governed by the laws of the State of Delaware, except to the extent that Delaware Law is preempted by Federal Law. IN WITNESS WHEREOF, Holdings has caused this Agreement to be executed and the Holder has hereunto set Holder's hand as of the 8th day of November, 1996. HOLDINGS: INTERNATIONAL WIRE HOLDING COMPANY By: /s/ JAMES N. MILLS ---------------------------------- James N. Mills Chairman and Chief Executive Officer 101 South Hanley St. Louis, Missouri 63105 HOLDER: /s/ JOSEPH M. FIAMINGO ------------------------------------- Joseph M. Fiamingo 17724 Greystone Terrace Chesterfield, Missouri 63005 Number of Option Shares subject to the grant in Paragraph 2 hereof is six hundred thousand (600,000) and the Exercise Price is One Dollar ($1.00) per share. -8- EX-21.1 9 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 SUBSIDIARIES OF INTERNATIONAL WIRE GROUP, INC.
JURISDICTION OF INCORPORATION OR ORGANIZATION ------------ SUBSIDIARY - ---------- Wirekraft Industries, Inc. . . . . . . . . . . . Delaware ECM Holding Company . . . . . . . . . . . . . . . Delaware Wirekraft Employment Company . . . . . . . . . . Delaware Electro Componentes de Mexico, S.A. de C.V. . . . Mexico Wirekraft Industries de Mexico, S.A. de C.V. . . Mexico Omega Wire, Inc. . . . . . . . . . . . . . . . . Delaware OWI Corporation . . . . . . . . . . . . . . . . . New York Wire Technologies, Inc. . . . . . . . . . . . . . Indiana Wire Harness Industries, Inc. . . . . . . . . . . Delaware Camden Wire Company, Inc. . . . . . . . . . . . . New York
EX-27 10 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1996 DEC-31-1996 0 0 72,544 (1,363) 60,362 141,344 155,356 36,805 531,020 112,611 447,667 0 4 0 (35,195) 531,020 546,981 546,981 420,823 452,164 92,750 337 46,714 (88,220) 1,262 (89,482) 0 0 0 (89,482) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----