<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 1999
----------------
WILMAR INDUSTRIES, INC.
-----------------------
(Exact name of registrant specified in its charter)
New Jersey 0-27424 22-2232386
-----------------------------------------------------------
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
303 Harper Drive
Moorestown, NJ 08057
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code: (856) 439-1222
--------------
(Former name and former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
Effective December 6, 1999, Wilmar Industries, Inc. ("Wilmar" or the
"Company") acquired all of the outstanding shares of J.A. Sexauer, Inc., a
Delaware corporation ("Sexauer"), its wholly owned subsidiary Sexauer Ltd., a
company organized pursuant to the laws of Ontario, Canada ("Sexauer Ltd."), and
Trayco of S.C., Inc., a Delaware corporation ("Trayco" and together with Sexauer
and Sexauer, Ltd, the "Sexauer Group") from The Dyson-Kissner-Moran Corporation
("DKM") in accordance with a stock purchase agreement dated November 15, 1999
between Wilmar and DKM (the "Stock Purchase Agreement").
The Company acquired all of the shares of common stock, par value $1.00 per
share, of Sexauer and all of the shares of common stock, par value $1.00 per
share, of Trayco from DKM for an aggregate consideration of approximately $85
million, payable in cash. The purchase price is subject to post-closing
adjustment depending upon the Sexauer Group's net book value on the date of
Closing. The purchase price for the Sexauer Group was determined as a result of
arms-length negotiations between representatives of the Company and DKM. The
transaction is being treated for accounting purposes as a purchase.
The Sexauer Group, headquartered in Scarsdale, New York, is a leading
distributor of plumbing specialties to institutional facilities throughout the
United States and Canada. The Company generally intends to continue such uses
for the assets of the Sexauer Group, as well as to expand the Sexauer Group's
product line to include certain of the maintenance products currently sold by
the Company to the apartment house market. The Sexauer Group is now a wholly-
owned subsidiary of the Company.
On December 6, 1999, the Company entered into a revolving credit facility
in an aggregate principal amount of $30,000,000 and a term loan facility in an
aggregate principal amount of $55,000,000 pursuant to a Credit Agreement among
Wilmar and certain of its subsidiaries, First Union National Bank, as
administrative agent, and certain banks (the "Loan Agreement"). Proceeds of the
new credit facility, along with cash on hand, were used to pay the cash portion
of the purchase price and to replace the Company's existing line of credit. The
Company's obligations under the Credit Agreement have been guaranteed by certain
of the Company's subsidiaries, including the Sexauer Group.
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Consolidated Financial Statements of the Sexauer Group.
(1) Reports of Independent Public Accountants.
(2) Consolidated Balance Sheets of the Sexauer Group as of
January 31, 1999 and January 31, 1998.
(3) Consolidated Statements of Operations of the Sexauer Group for
the years ended January 31, 1999, 1998 and 1997.
(4) Consolidated Statements of Cash Flows of the Sexauer Group for
the years ended January 31, 1999, 1998 and 1997.
(5) Consolidated Statements of Changes in Stockholders' Equity of the
Sexauer Group for the years ended January 31, 1999, 1998 and
1997.
(6) Notes to Consolidated Financial Statements.
(b) Pro Forma Financial Information (Unaudited).
(1) Unaudited Pro Forma Consolidated Condensed Balance Sheet as of
September 30, 1999.
(2) Unaudited Pro Forma Consolidated Statements of Operations for the
period ended September 30, 1999.
(3) Unaudited Pro Forma Consolidated Statements of Operations for the
period ended December 25, 1998.
(4) Notes to Unaudited Consolidated Pro Forma Financial Statements.
(c) Exhibits.
(2.1) Stock Purchase Agreement dated November 15, 1999 between Wilmar
Industries, Inc. and The Dyson-Kissner-Moran Corporation.
(2.2) Amendment No. 1 to Stock Purchase Agreement dated December 6,
1999 between Wilmar Industries, Inc. and The Dyson-Kissner-
Moran Corporation.
(10.1) Credit Agreement dated December 6, 1999 among Wilmar
Industries, Inc., First Union National Bank, as administrative
agent, and certain banks.
(99.1) Press Release dated November 15, 1999.
(99.2) Press Release dated December 6, 1999.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WILMAR INDUSTRIES, INC.
(Registrant)
By /s/ William S. Sanford
----------------------------
William S. Sanford
Senior Vice President and
Chief Financial Officer
Dated: December 20, 1999
<PAGE>
Exhibit Index
-------------
Exhibit Page
- ------------ ------------
Exhibit 2.1 Stock Purchase Agreement dated November 15,
1999 between Wilmar Industries, Inc. and The
Dyson-Kissner-Moran Corporation.
Exhibit 2.2 Amendment No. 1 to Stock Purchase Agreement
dated December 6, 1999 between Wilmar
Industries, Inc. and The Dyson-Kissner-Moran
Corporation.
Exhibit 10.1 Credit Agreement dated December 6, 1999 among
Wilmar Industries, Inc., First Union National
Bank, as administrative agent, and certain
banks.
Exhibit 99.1 Press Release dated November 15, 1999.
Exhibit 99.2 Press Release dated December 6, 1999.
<PAGE>
J.A. SEXAUER, INC. AND SUBSIDIARY,
AND TRAYCO OF S.C., INC.
COMBINED FINANCIAL STATEMENTS
AS OF JANUARY 31, 1999, 1998 AND FOR
EACH OF THE THREE YEARS IN THE PERIOD
ENDED JANUARY 31, 1999
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of
J.A. Sexauer, Inc. and Subsidiary,
and Trayco of S.C., Inc.:
We have audited the accompanying combined balance sheets of J.A. Sexauer, Inc.
and Subsidiary, and Trayco of S.C., Inc. as of January 31, 1999 and 1998, and
the related combined statements of income, stockholder's equity and cash flows
for each of the three years in the period ended January 31, 1999. These
combined financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these combined
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 combined financial statements referred to above present
fairly, in all material respects, the financial position of J.A. Sexauer, Inc.
and Subsidiary, and Trayco of S.C., Inc., as of January 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended January 31, 1999, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
New York, New York
November 5, 1999
<PAGE>
J.A. SEXAUER, INC. AND SUBSIDIARY, AND TRAYCO OF S.C., INC.
-----------------------------------------------------------
COMBINED BALANCE SHEETS
-----------------------
AS OF JANUARY 31, 1999 AND 1998
-------------------------------
(000's omitted, except share data)
----------------------------------
<TABLE>
<CAPTION>
ASSETS 1999 1998
----------- ------- -------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 1,043 $ 949
Accounts receivable net of allowances of $112 and $112, respectively 10,952 10,956
Inventories 10,501 9,819
Prepaid expenses and other 1,395 1,285
Current deferred taxes 264 260
------- -------
Total current assets 24,155 23,269
PROPERTY AND EQUIPMENT, net of accumulated depreciation 2,420 2,306
of $4,005 and $3,732 for 1999 and 1998, respectively
DEFERRED INCOME TAXES 730 541
GOODWILL, net of accumulated amortization of $1,229 and $1,147, for 1999 and 1,515 1,597
1998, respectively
OTHER ASSETS 663 781
------- -------
Total assets $29,483 $28,494
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,016 $ 5,667
Accrued liabilities 3,071 3,241
Income taxes payable (49) (20)
------- -------
9,038 8,888
DUE TO THE DYSON-KISSNER-MORAN CORPORATION 6,595 6,891
OTHER LONG-TERM LIABILITIES 2,120 1,753
------- -------
Total liabilities 17,753 17,532
------- -------
STOCKHOLDER'S EQUITY:
Common stock, par value $1 per share; 3,000 shares authorized; 1,000 shares 1 1
issued and outstanding
Additional paid-in capital 3,615 3,615
Retained earnings 8,244 7,400
Accumulated other comprehensive loss (130) (54)
------- -------
Total stockholder's equity 11,730 10,962
------- -------
Total liabilities and stockholder's equity $29,483 $28,494
======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
J.A. SEXAUER, INC. AND SUBSIDIARY, AND TRAYCO OF S.C., INC.
-----------------------------------------------------------
COMBINED STATEMENTS OF INCOME
-----------------------------
FOR THE YEARS ENDED JANUARY 31, 1999, 1998 AND 1997
---------------------------------------------------
(000's omitted)
---------------
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
NET SALES $75,928 $76,075 $71,364
COST OF SALES 34,623 34,180 31,243
------- ------- -------
Gross profit 41,305 41,895 40,121
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 32,072 32,544 30,554
------- ------- -------
Income before interest and provision for income taxes 9,233 9,351 9,567
INTEREST EXPENSE 598 627 626
------- ------- -------
Income before provision for income taxes 8,635 8,724 8,941
PROVISION FOR INCOME TAXES 3,568 3,465 3,605
------- ------- -------
Net income $ 5,067 $ 5,259 $ 5,336
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
J.A. SEXAUER, INC. AND SUBSIDIARY, AND TRAYCO OF S.C., INC.
-----------------------------------------------------------
COMBINED STATEMENTS OF CASH FLOWS
---------------------------------
FOR THE YEARS ENDED JANUARY 31, 1999, 1998 AND 1997
---------------------------------------------------
(000's omitted)
---------------
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 5,067 $ 5,259 $ 5,336
Adjustments to reconcile net income to net cash
provided by (used in) operating activities-
Depreciation 323 307 278
Amortization 436 542 561
Deferred income taxes (193) (231) (140)
Changes in operating assets and liabilities-
Decrease (increase) in receivables 4 (685) (710)
(Increase) in inventories (682) (1,766) (444)
(Increase) in prepaid expenses and other (110) (103) (458)
(Decrease) increase in accounts payable, accrued liabilities 150 1,365 631
and income taxes
Other, net 138 (16) 130
------- ------- -------
Net cash provided by operating activities 5,133 4,672 5,184
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net (506) (428) (128)
------- ------- -------
Net cash (used in) investing activities (506) (428) (128)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt, net (14) (182) (167)
Decrease in amount due to parent (296) (53) (250)
Dividends paid to parent (4,223) (3,636) (4,239)
------- ------- -------
Net cash (used in) financing activities (4,533) (3,871) (4,656)
------- ------- -------
Net increase in cash 94 373 400
CASH, beginning of year 949 576 176
------- ------- -------
CASH, end of year $ 1,043 $ 949 $ 576
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for-
Interest $ 598 $ 605 $ 626
======= ======= =======
Taxes $ 3,873 $ 3,896 $ 3,746
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
J.A. SEXAUER, INC. AND SUBSIDIARY, AND TRAYCO OF S.C., INC.
-----------------------------------------------------------
COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY
-------------------------------------------
FOR THE YEARS ENDED JANUARY 31, 1999, 1998 AND 1997
---------------------------------------------------
(000's omitted, except per share data)
--------------------------------------
<TABLE>
<CAPTION>
Common Stock Accumulated
------------------- Additional Other
Number of Paid-in Retained Comprehensive
Shares Amount Capital Earnings Income (Loss)
----------- ------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, January 31, 1996 1,000 $1 $3,615 $ 4,680 $ 34
Net income - - - 5,336 -
Foreign currency translation adjustments - - - - 34
Comprehensive income - - - - -
Dividends paid to parent - - - (4,239) -
--------- ------ ---------- ------- -----
BALANCE, January 31, 1997 1,000 1 3,615 5,777 68
Net income - - - 5,259 -
Foreign currency translation adjustments - - - - (122)
Comprehensive income - - - - -
Dividends paid to parent - - - (3,636) -
--------- ------ ---------- ------- -----
BALANCE, January 31, 1998 1,000 1 3,615 7,400 (54)
Net income - - - 5,067 -
Foreign currency translation adjustments - - - - (76)
Comprehensive income - - - - -
Dividends paid to parent - - - (4,223) -
--------- ------ ---------- ------- -----
BALANCE, January 31, 1999 1,000 $1 $3,615 $ 8,244 $(130)
========= ====== ========== ======= =====
Comprehensive
Income Total
--------------- ---------
<C> <C>
<S>
BALANCE, January 31, 1996 $ 8,330
Net income $5,336 5,336
Foreign currency translation adjustments 34 34
------
Comprehensive income $5,370 -
======
Dividends paid to parent (4,239)
-------
BALANCE, January 31, 1997 9,461
Net income $5,259 5,259
Foreign currency translation adjustments (122) (122)
------
Comprehensive income $5,137 -
======
Dividends paid to parent (3,636)
-------
BALANCE, January 31, 1998 10,962
Net income $5,067 5,067
Foreign currency translation adjustments (76) (76)
------
Comprehensive income $4,991 -
======
Dividends paid to parent (4,223)
-------
BALANCE, January 31, 1999 $11,730
=======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
J.A. SEXAUER, INC. AND SUBSIDIARY, AND TRAYCO OF S.C., INC.
-----------------------------------------------------------
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------
JANUARY 31, 1999, 1998 AND 1997
-------------------------------
(000's omitted)
---------------
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
-------------------
Organization and Basis of Combination
- -------------------------------------
J.A. Sexauer, Inc. and Subsidiary, and Trayco of S.C., Inc. (the "Companies")
are in the business of distributing plumbing, heating and electrical replacement
parts to institutional markets in both the United States and Canada. The
Companies are wholly owned subsidiaries of The Dyson-Kissner-Moran Corporation
("DKM").
These financial statements are shown on a combined basis for the Companies as of
January 31, 1998 and 1999, and for each of the three years in the period ended
January 31, 1999. All significant intercompany transactions and account
balances between these entities have been eliminated.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and the reported amount of
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
Revenue Recognition
- -------------------
The Companies recognize revenue for product sales upon shipment. Estimates for
cash discounts and sales returns and allowances are recorded in the period the
sales are recorded based upon historical experience.
Inventories
- -----------
Inventories, consisting of finished goods, are valued at the lower of cost or
market under both the first-in, first-out (FIFO) and the last-in, first-out
(LIFO) cost methods. Inventories valued under the LIFO method amounted to
$9,666, $9,062 and $7,530 as of January 31, 1999, 1998 and 1997, respectively;
they would have been $726, $681 and $716 higher than reported in these
respective years, had they been valued under the FIFO method.
<PAGE>
Property and Equipment
- ----------------------
Property and Equipment is recorded at cost. Depreciation of property and
equipment is provided under the straight-line method based upon estimated useful
lives of 10 to 50 years for buildings and improvements, 3 to 10 years for
machinery and equipment and 3 to 10 years for furniture and fixtures. Leasehold
improvements are amortized over the lesser of the useful life or the term of the
lease.
Goodwill
- --------
Goodwill represents the excess of the cost over the net assets acquired in
connection with DKM's acquisition of the Companies. Goodwill is being amortized
on a straight-line basis over 40 years.
Income Taxes
- ------------
The Companies account for income taxes under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes,"
which requires the use of an asset and liability method of accounting for
deferred income taxes. Under SFAS No. 109, deferred tax assets or liabilities
at the end of each period are determined using the tax rate expected to apply to
taxable income in the period in which the deferred tax asset or liability is
expected to be settled or realized.
Translation of Foreign Currencies
- ---------------------------------
The Companies' international subsidiary uses its local currency as its
functional currency. Assets and liabilities are translated at exchange rates in
effect at the balance sheet date, and income and expense accounts at average
exchange rates during the period. Resulting translation adjustments are
recorded directly to a separate component of stockholder's equity.
Comprehensive Income
- --------------------
During the year ended January 31, 1999, the Companies adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." This statement establishes rules for the reporting of comprehensive
income and its components. Comprehensive income consists of net income and
foreign currency translation adjustments and is presented in the consolidated
statement of stockholder's equity. The adoption of SFAS 130 had no impact on
the Companies' combined financial position or results of operations. Prior year
financial statements have been reclassified to conform to the SFAS 130
requirements.
Reclassification
- ----------------
Certain prior year amounts have been reclassified to conform with current year's
presentation.
<PAGE>
2. PROPERTY AND EQUIPMENT
----------------------
Property and equipment consist of the following as of January 31:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Land $ 308 $ 308
Buildings and improvements 2,482 2,249
Furniture and fixtures 3,144 2,981
Machinery and equipment 491 500
------ ------
6,425 6,038
Less- Accumulated depreciation 4,005 3,732
------ ------
$2,420 $2,306
====== ======
</TABLE>
3. EMPLOYEE BENEFIT PLANS
----------------------
The Companies have profit sharing plans pursuant to Section 401(k) of the
Internal Revenue Code, whereby participants may contribute a percentage of
compensation, but not in excess of the maximum allowed under the Internal
Revenue Code. The plans provide for discretionary contributions by the
Companies, which amounted to approximately $715, $720 and $688 in the fiscal
years ended January 31, 1999, 1998 and 1997, respectively.
4. INCOME TAXES
------------
The Companies are included in the consolidated federal income tax return of DKM.
The Companies do not have a tax-sharing agreement with DKM. The Companies'
federal tax provision is computed using the separate return method, whereby the
allocation of current and deferred tax expense is based on what the Companies'
provision would have been had the Companies filed a separate return. State
taxes are recorded and paid directly to those agencies.
Income taxes are based on pretax earnings, which are segmented geographically
for the years ended January 31, as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
Domestic $8,216 $8,074 $8,114
Foreign 419 650 827
------ ------ ------
$8,635 $8,724 $8,941
====== ====== ======
</TABLE>
The components of the income tax provision (benefit) for the years ended January
31, were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
Current:
<S> <C> <C> <C>
Federal $3,112 $2,993 $2,932
State and local 421 424 415
Foreign 228 279 421
------ ------ ------
3,761 3,696 3,768
Deferred:
Federal (170) (204) (142)
State and local (23) (27) (21)
------ ------ ------
$3,568 $3,465 $3,605
====== ====== ======
</TABLE>
<PAGE>
Reconciliation of the provision for income taxes at the U.S. federal statutory
rate of 35% for the years ended January 31, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ -------
<S> <C> <C> <C>
Combined income before income taxes $8,635 $8,724 $8,941
====== ====== ======
Expected tax at 35% $3,022 $3,053 $3,129
State taxes, net of federal benefit 272 255 267
Foreign taxes in excess of 35% 81 51 132
Other nondeductible items 193 106 77
------ ------ ------
Provision for income taxes $3,568 $3,465 $3,605
====== ====== ======
</TABLE>
Deferred tax assets relate primarily to reserves and other accruals, which will
be deductible in future periods. There were no valuation allowances for
deferred tax assets as of January 31, 1999, 1998 and 1997. Management has
determined, based on the Companies' history of operating earnings and their
expectations for the future, that operating income will more likely than not be
sufficient to fully realize the benefits associated with the deferred tax
assets.
5. RELATED PARTY TRANSACTIONS
--------------------------
The Companies have agreements with an affiliate, which provide for certain
management and related services. Charges of $574, $400 and $400 were incurred
for such services during the years ended January 31, 1999, 1998 and 1997,
respectively.
Trayco of S.C., Inc. ("Trayco") has a long-term financing arrangement with DKM.
Debt under this arrangement is due December 31, 2008 with interest payable
monthly at a specified bank's prime rate (7.75%, 8.5% and 8.25% as of January
31, 1999, 1998 and 1997, respectively). Trayco incurred $597, $609 and $593 of
interest expense during the years ended January 31, 1999, 1998 and 1997,
respectively, for amounts outstanding under this agreement.
Payments made to DKM for federal income taxes in the years ended January 31,
1999, 1998 and 1997 were $3,181, $3,118 and $2,916 respectively.
The Companies paid dividends to DKM of $4,223, $3,636 and $4,239 for the years
ended January 31, 1999, 1998 and 1997, respectively.
<PAGE>
6. COMMITMENTS AND CONTINGENCIES
-----------------------------
The Companies and twenty other subsidiaries of DKM, jointly and severally
guarantee obligations under DKM's Credit Agreement and Senior Secured Note
Purchase Agreements. At January 31, 1999 and 1998, the amount outstanding under
these agreements was $132,615 and $90,020, respectively.
There are various lawsuits and claims pending against the Companies. In the
opinion of management, the ultimate resolution of these contingencies will not
have a material adverse effect on the financial position and results of
operations of the Companies.
The Companies have future minimum rental commitments under noncancelable leases
as of January 31, 1999 as follows:
<TABLE>
<CAPTION>
Year Ending
January 31, Amount
------------- ---------
<S> <C>
2000 $179
2001 177
2002 174
2003 172
Thereafter 10
----
Total $712
====
</TABLE>
Rental expense for the years ended January 31, 1999, 1998 and 1997 was $204,
$221 and $214, respectively.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following pro forma combined balance sheet gives effect to the acquisition
("Acquisition") of the Sexauer Group ("Sexauer") by Wilmar Industries, Inc.
("Wilmar" or the "Company") as if it had occurred on September 30, 1999. The
unaudited pro forma combined statements of operations for the nine months ended
September 30, 1999 and for the year ended December 25, 1998 give effect to the
Acquisition as if it had occurred at the beginning of the 1998 fiscal year.
The unaudited pro forma combined financial data should be read in conjunction
with the notes included herewith, the Company's financial statements and
Sexauer's financial statements. The unaudited pro forma combined financial data
do not purport to represent what the Company's results of operations or
financial position actually would have been had the Acquisition occurred on the
dates specified, or to project the Company's results of operation or financial
position for any future period or date. The pro forma adjustments are based
upon available information and certain adjustments that management believes are
reasonable. In the opinion of management, all adjustments have been made that
are necessary to present fairly the pro forma data.
<PAGE>
Unaudited Pro Forma Condensed Balance Sheet
September 30, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Wilmar Sexauer (a) Adjustments (b) Combined
---------- ---------- --------------- ---------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 25,586 $ 1,376 $(26,376) $ 586
Cash - restricted 307 307
Accounts Receivable trade, net 36,184 10,201 (250) 46,135
Inventory 29,379 11,467 (1,000) 39,846
Prepaid Expenses 370 1,655 2,025
Deferred Income Tax 1,419 1,419
---------- ---------- ---------- ---------
Total current assets $ 93,245 $24,699 $(27,626) $ 90,318
---------- ---------- ---------- ---------
Plant, Property & Equipment, net 4,731 2,688 1,950 9,369
Goodwill and Other Intangibles, net of Accumulated Amortization 21,687 2,243 67,231 91,161
Other Assets 4,830 840 (300) 5,370
---------- ---------- ---------- ---------
Total Assets $124,493 $30,470 $ 41,255 $196,218
========== ========== ========== =========
Current Liabilities:
Accounts Payable $ 17,584 $ 4,934 $ 22,518
Accrued Liabilities 4,923 3,337 $ 500 8,760
Income Taxes Payable 651 219 870
Note Payable 62,000 62,000
---------- ---------- ---------- ---------
Total current liabilities $ 23,158 $ 8,490 $ 62,500 $ 94,148
---------- ---------- ---------- ---------
Long Term Deferred Income Taxes 332 332
Other Long Term Liabilities 2,435 (2,032) 403
Due to Parent Company 7,196 (7,196) -
---------- ---------- ---------- ---------
Total Liabilities $ 23,158 $18,453 $ 53,272 $ 94,883
---------- ---------- ---------- ---------
Stockholder Equity:
Common Stock 103,726 1 (1) 103,726
Treasury Stock (12,804) (12,804)
Additional Paid In Capital 3,615 (3,615) -
Retained Earning 10,413 8,401 (8,401) 10,413
---------- ---------- ---------- ---------
Total Stockholders Equity $101,335 $12,017 $(12,017) $101,335
---------- ---------- ---------- ---------
Total Liabilities & Stockholders Equity $124,493 $30,470 $ 41,255 $196,218
========== ========== ========== =========
</TABLE>
6
<PAGE>
Unaudited Pro Forma Condensed Statement of Operations
Nine Months Ending September 30, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Wilmar Sexauer (c) Adjustments Combined
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $162,380 $59,278 $221,658
Cost of sales 114,931 34,340 149,271
---------- ------------ ----------- ---------
Gross Profit 47,449 24,938 - 72,387
Operating expenses:
Operating and selling expenses 22,496 22,496
Corporate general and administrative expenses 8,439 17,892 37 (e) 17,212
(265) (f)
(452) (g)
Amortization of acquisition goodwill and intangibles 843 1,587 (h) 2,430
---------- ------------ ----------- ---------
31,778 17,892 907 42,138
Operating income 15,671 7,046 (907) 21,810
-
Interest income (expense) 902 (480) (4,140) (i) (3,718)
---------- ------------ ----------- ---------
Income before taxes 16,573 6,566 (5,047) 18,092
Provision for income taxes 6,381 2,629 (1,369) (j) 7,641
---------- ------------ ----------- ---------
Net income $ 10,192 $ 3,937 $(3,678) $ 10,451
========== ============ =========== =========
Net income per common share
Basic $ 0.79 $ 0.81
========== =========
Dilutive $ 0.79 $ 0.81
========== =========
Weighted average common shares outstanding
Basic 12,836 12,836
========== =========
Dilutive 12,964 12,964
========== =========
</TABLE>
7
<PAGE>
Unaudited Pro Forma Condensed Statement of Operations
Year Ended December 25, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical Historical Pro Forma Pro Forma
Wilmar Sexauer (d) Adjustments Combined
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $192,605 $75,928 $268,533
Cost of sales 136,488 34,623 171,111
---------- ------------ ----------- ---------
GROSS PROFIT 56,117 41,305 - 97,422
Operating expenses:
Operating and selling expenses 26,357 26,357
Corporate general and administrative expenses 11,114 32,072 49 (e) 42,334
(327) (f)
(574) (g)
Amortization of acquisition goodwill and intangibles 2,115 (h) 2,115
---------- ------------ ----------- ---------
37,471 32,072 1,263 70,806
Operating income 18,646 9,233 (1,263) 26,616
Interest income (expense) 1,511 (598) (5,350) (I) (4,417)
---------- ------------ ----------- ---------
Income before taxes 20,157 8,635 (6,593) 22,199
Provision for income taxes 7,692 3,568 (1,772) (j) 9,488
---------- ------------ ----------- ---------
Net income $12,465 $ 5,067 $(4,821) $ 12,711
========== ============ =========== =========
Net income per common share
Basic $0.93 $0.95
========== =========
Dilutive $0.92 $0.94
========== =========
Weighted average common shares outstanding
Basic 13,368 13,368
========== =========
Dilutive 13,504 13,504
========== =========
</TABLE>
8
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS
(a) Balance sheet as of October 31, 1999.
(b) Pro forma adjustments are made for this acquisition which is based on a
purchase price of $85 million, plus costs of the acquisition. The
acquisition has been accounted for using the purchase method. The purchase
price has been allocated on a preliminary basis to the net assets acquired
based on the fair values of such net assets. The excess of the purchase
price over the fair value of net assets acquired is $67,231 in the
aggregate, and consists of customer lists ($10,131), trademark ($7,301),
financing fees ($1,000) and goodwill ($48,799). The preliminary lives
assigned to these intangibles assets in the accompanying pro forma
financial statements is as follows: customer lists- 30 years; trademark -
40 years; financing fees - 5 years; and goodwill - 35 years.
The acquisition is expected to be financed with debt borrowings of $62
million and cash on-hand of $26,376 (net of $1,376 of historical Sexauer
cash not included in the assets acquired). Other long-term liabilities are
reduced by $2,032 to reflect the discontinuance of a deferred compensation
plan at the date of acquisition, which obligation was funded by the
seller. Intercompany debt to parent will be funded by the seller and has
been eliminated in accompanying pro forma balance sheet. All equity
balances of the acquired company are eliminated under the purchase method
of accounting.
(c) The nine month period ended October 31, 1999.
(d) The year ended January 31, 1999.
(e) Pro forma adjustment to record additional depreciation expense related to
the mark-up of fixed assets to fair value.
(f) Pro forma adjustment to eliminate charges related to discontinued deferred
compensation plan of Sexauer.
(g) Pro forma adjustment to eliminate intercompany management fee charges
from Sexauer parent company.
(h) Pro forma adjustment related to amortization of intangible assets recorded
in the purchase as if the transaction had occurred at the beginning of
fiscal year 1998.
9
<PAGE>
(i) Pro forma adjustment related to interest expense on debt borrowings
incurred to finance the acquisition as if the transaction had occurred at
the beginning of fiscal year 1998.
(j) Pro forma tax adjustment based upon the changes to pre-tax income with the
above income statement adjustments.
<PAGE>
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BETWEEN
THE DYSON-KISSNER-MORAN CORPORATION
AND
WILMAR INDUSTRIES, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
1. The Acquisition................................................... 1
1.1 Purchase and Sale....................................... 1
1.2 The Purchase Price...................................... 1
1.3 Post Closing Adjustment to Base Purchase Price.......... 2
1.4 Intercompany Account Obligations; Cash.................. 3
2. The Closing....................................................... 3
2.1 Place and Time.......................................... 3
2.2 Deliveries by Seller.................................... 4
2.3 Deliveries by Buyer..................................... 4
3. Conditions to Buyer's Obligations................................. 4
3.1 No Injunction........................................... 4
3.2 Representations, Warranties and Agreements.............. 4
3.3 Legal Opinion........................................... 5
3.4 Regulatory Approvals.................................... 5
3.5 Consents of Third Parties............................... 5
3.6 Resignations of Director and Officers................... 5
3.7 Sales People............................................ 5
3.8 Removal as Borrower..................................... 5
3.9 Termination of Management Agreements and
Phantom Stock Plan..................................... 5
4. Conditions to Seller's Obligations................................ 5
4.1 No Injunction........................................... 5
4.2 Representations, Warranties and Agreements.............. 6
4.3 Legal Opinion........................................... 6
4.4 Regulatory Approvals.................................... 6
4.5 Releases................................................ 6
4.6 Substitute Letters of Credit and Performance
and Bid Bonds.......................................... 6
5. Representations and Warranties of Seller.......................... 6
5.1 Organization of the Company; Authorization.............. 6
5.2 No Conflict as to the Company........................... 7
5.3 Ownership of Shares..................................... 7
5.4 No Subsidiaries......................................... 8
5.5 Consents and Approvals of Governmental Bodies........... 8
5.6 Other Consents.......................................... 8
5.7 Financial Statements.................................... 8
5.8 Title to Properties..................................... 9
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
5.9 Real Property.............................................. 9
5.10 No Condemnation or Expropriation........................... 11
5.11 Litigation................................................. 11
5.12 Absence of Certain Changes................................. 12
5.13 No Material Adverse Changes................................ 13
5.14 Intellectual Property...................................... 13
5.15 Commitments................................................ 14
5.16 Employee Matters........................................... 16
5.17 Tax and Other Returns and Reports.......................... 20
5.18 Compliance with Law........................................ 21
5.19 Environmental Matters...................................... 21
5.20 Borrowing and Guarantees................................... 22
5.21 Inventory.................................................. 22
5.22 Accounts Receivable........................................ 22
5.23 Accounts Payable........................................... 22
5.24 Relations with Customers, Distributors and Suppliers....... 23
5.25 Transactions with Affiliates............................... 23
5.26 Books of Account........................................... 23
5.27 Minute Books............................................... 23
5.28 Warranty Claims............................................ 23
5.29 Insurance.................................................. 23
5.30 Warranties................................................. 24
5.31 Full Disclosure............................................ 24
6. Representations and Warranties of Buyer............................... 25
6.1 Organization of Buyer; Authorization....................... 25
6.2 Conflict as to Buyer....................................... 25
6.3 Consents and Approvals of Governmental Bodies.............. 25
6.4 Other Consents............................................. 25
7. Certain Agreements.................................................... 25
7.1 Access..................................................... 25
7.2 Filings; Other Regulatory Matters.......................... 26
7.3 Tax Matters................................................ 26
7.4 Action by the Parties...................................... 30
7.5 Exclusivity................................................ 30
7.6 Restrictive Covenants...................................... 31
7.7 Maintenance of Salespeople................................. 32
7.8 Labor Relations............................................ 32
7.9 Access to Information...................................... 32
7.10 Insurance Matters.......................................... 34
7.11 Certain Agreements......................................... 36
7.12 Checking Accounts.......................................... 36
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
7.13 Covered Matters........................................... 36
7.14 Assignment of Claims...................................... 38
7.15 Accounts Receivable....................................... 38
7.16 Automobile Leases......................................... 39
8. Conduct of the Company's Business Prior to the Closing............... 39
8.1 Operation in Ordinary Course.............................. 39
8.2 Business Organization..................................... 39
8.3 Corporate Organization.................................... 39
8.4 Other Restrictions........................................ 40
8.5 Real Property Rights Clarification........................ 41
9. Indemnification...................................................... 41
9.1 Indemnification by Seller................................. 41
9.2 Indemnification by Buyer.................................. 42
9.3 Certain Limits On and Provisions Relating
to Indemnification........................................ 43
9.4 Procedure for Claims...................................... 43
9.5 Claims Period............................................. 43
9.6 Third Party Claims........................................ 44
9.7 Effect of Investigation or Knowledge...................... 45
9.8 Losses Net................................................ 46
9.9 Sole and Exclusive Remedy................................. 46
10. Termination.......................................................... 46
10.1 Termination............................................... 46
10.2 Effect on Obligations..................................... 47
10.3 Return of Documentation................................... 47
10.4 Sole and Exclusive Remedy................................. 47
11. Notices.............................................................. 48
12. Brokers and Finders.................................................. 49
12.1 Seller's Obligations...................................... 49
12.2 Buyer's Obligations....................................... 49
13. Miscellaneous........................................................ 49
13.1 Expenses.................................................. 49
13.2 Captions; Section References.............................. 49
13.3 Modification and Waiver................................... 49
13.4 Exclusive Agreement; Amendment............................ 49
13.5 Governing Law............................................. 50
13.6 Binding Effect............................................ 50
13.7 Public Announcements...................................... 50
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
13.8 Counterparts............................................ 50
13.9 Specific Performance and Injunctive Relief.............. 50
13.10 Waiver of Conflict of Interest Claim.................... 50
</TABLE>
-iv-
<PAGE>
This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of November 15,
1999 by and between The Dyson-Kissner-Moran Corporation, a Delaware corporation
(the "Seller") and Wilmar Industries, Inc., a New Jersey corporation (the
"Buyer"). Certain capitalized terms used herein are defined parenthetically in
this Agreement. Capitalized terms used but not defined parenthetically herein
are defined in Annex A hereto. The meanings assigned to such terms shall be
applicable to each use of such terms throughout this Agreement.
INTRODUCTION
Seller owns all of the outstanding equity securities of J.A. Sexauer, Inc.,
a Delaware corporation ("Sexauer") and Trayco of S.C., Inc., a Delaware
corporation ("Trayco"), consisting of 1,000 shares of common stock, par value
$1.00 per share of Sexauer (the "Sexauer Shares") and 1,000 shares of common
stock, par value $1.00 per share of Trayco (the "Trayco Shares"). The parties
desire to provide for Seller's sale of the Sexauer Shares and the Trayco Shares
to Buyer and Buyer's purchase of the Sexauer Shares and Trayco Shares from
Seller on the terms and conditions of this Agreement.
The term "Company" is used in this Agreement to mean Sexauer, Trayco and
each of their respective subsidiaries collectively and the term "Shares" is used
in this Agreement to mean the Sexauer Shares and the Trayco Shares collectively.
In consideration of the premises and of the representations, warranties,
covenants and agreements herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
AGREEMENT
10 The Acquisition.
---------------
1.1 Purchase and Sale. Subject to the terms and conditions of this
-----------------
Agreement, at the Closing to be held as provided in Section 2.1 hereof, Seller
shall sell the Shares to Buyer, and Buyer shall purchase the Shares from Seller,
free and clear of any security interest, mortgage, lien, charge, adverse claim
or restriction of any kind, including without limitation, any restriction on the
voting, transfer, receipt of income or other exercise of any attributes of
ownership, other than a restriction on transfer attributable solely to Federal
or state securities laws (each, an "Encumbrance" and collectively,
"Encumbrances").
1.2 The Purchase Price. The aggregate purchase price for the Shares (the
------------------
"Base Purchase Price") shall be $85,000,000, subject to an adjustment as
provided in Section 1.3. At
<PAGE>
the Closing, Buyer shall pay and deliver the Base Purchase Price to Seller in
immediately available funds.
1.3 Post Closing Adjustment to Base Purchase Price.
----------------------------------------------
(a) Within sixty (60) days after the Closing Date, Buyer and Deloitte
& Touche, LLP ("Buyer's Accountant") shall prepare (with such assistance from
Seller as Buyer reasonably requires) and deliver to Seller a combined balance
sheet of the Company as of the Closing Date (the "Closing Balance Sheet") and a
calculation, in reasonable detail, of the Closing Date Net Working Capital based
on the Closing Balance Sheet. The Closing Balance Sheet shall be prepared in
accordance with the Company's accounting principles reflected in the Interim
Balance Sheet (to the extent such are consistent with GAAP), except as otherwise
described on Schedule 1.3, and otherwise in accordance with Schedule 1.3. During
the foregoing 60-day period and during the Dispute Period (as defined in
subsection (c) below), Buyer and the Company shall, at the request of Seller, on
reasonably prior notice and during normal business hours, afford Seller and its
accountants access to Buyer's Accountants and their work papers with respect to
the Closing Balance Sheet and access to the Company's financial personnel and
its books and records, and shall otherwise reasonably cooperate with Seller in
connection with its evaluation and review of the Closing Balance Sheet and the
Closing Date Net Working Capital.
(b) For purposes hereof, the term "Closing Date Net Working Capital"
shall be defined in Schedule 1.3. Any dispute as to the amount and calculation
of the Closing Date Net Working Capital shall be resolved pursuant to the
procedures set forth in Sections 1.3(c) and (d).
(c) Seller shall have sixty (60) days after receipt of the Closing
Balance Sheet (the "Dispute Period") to dispute any of the elements of or
amounts reflected on the Closing Balance Sheet or the calculation of the Closing
Date Net Working Capital (the "Disputed Matters"). If Seller does not give
written notice of a Disputed Matter within the Dispute Period to Buyer (a
"Dispute Notice"), the Closing Balance Sheet and the calculation of the Closing
Date Net Working Capital shall be deemed to have been accepted and agreed to by
Seller in the form in which it was delivered by Buyer, and shall be final and
binding upon the parties hereto. If Seller has a Disputed Matter, Seller shall
give Buyer a Dispute Notice within the Dispute Period, setting forth in
reasonable detail the elements and amounts with which it disagrees. Within
thirty (30) days after delivery of such Dispute Notice, the parties hereto shall
attempt to resolve such Disputed Matter and agree in writing upon the final
Closing Balance Sheet and the calculation of the Closing Date Net Working
Capital.
(d) If Buyer and Seller are unable to resolve any Disputed Matters
within the thirty (30) day period after Buyer's receipt of a Dispute Notice, the
Disputed Matter shall be submitted to arbitration in accordance with this
Section 1.3, unless the parties agree in writing to extend such thirty (30) day
period in an attempt to negotiate a settlement of such Disputed Matters. The
arbitrator (the "Arbitrator") shall be experienced with distribution businesses
and a
<PAGE>
partner at any one of the Big Five Accounting Firms other than Deloitte & Touche
or Arthur Andersen, mutually agreed to by Seller and Buyer. If Seller and Buyer
fail to agree upon the selection of the Arbitrator or any such Arbitrator
selected by them shall not have agreed to perform the services called for
hereunder, the Arbitrator shall thereupon be selected in accordance with the
rules of the American Arbitration Association, with preference being given to
any partner of a national accounting firm who may be willing to perform such
services other than any such firm which is then employed by Seller, the Company
or Buyer or any Affiliate thereof. The Arbitrator shall consider only the
Disputed Matters, and the arbitration shall be conducted in accordance with the
rules of the American Arbitration Association then in effect. The Arbitrator
shall act promptly to resolve all Disputed Matters and its decision with respect
to all Disputed Matters shall be set forth in writing and shall be final and
binding upon the parties hereto and shall not be appealable to any court, and
judgment may be entered on the record. The costs and expenses of the Arbitrator
shall be shared equally by Seller and Buyer.
(e) If the Closing Date Net Working Capital as finally determined is
less than $15,375,000, Seller shall, within ten (10) days after such final
determination, pay the difference to Buyer in cash, with interest at the rate of
eight percent (8%) per annum from the Closing Date to the date such difference
is paid. If the Closing Date Net Working Capital is more than $15,375,000, Buyer
shall within ten (10) days after such final determination, pay the difference to
Seller in cash, with interest at the rate of eight percent (8%) per annum from
the Closing Date to the date such difference is paid. The Base Purchase Price as
adjusted pursuant to this subsection (e) shall be the purchase price for the
Shares (the "Purchase Price").
1.4 Intercompany Account Obligations; Cash.
--------------------------------------
(a) As of the Effective Time, all then outstanding intercompany
obligations of any Group Member to Seller or any of its Affiliates (other than
any Group Member) shall be canceled or otherwise eliminated, as determined by
Seller, and all then outstanding intercompany obligations of Seller or any of
its Affiliates (other than any Group Member) to any Group Member shall be
canceled or otherwise eliminated, and in all cases neither Seller, any of its
Affiliates nor any Group Member shall have any further liability or obligation
in respect of any such intercompany obligation; provided that nothing in this
Section 1.4 shall affect any and all of the covenants, agreements, obligations
and other provisions of and applicable to Seller, Buyer or any Group Member set
forth in this Agreement, including, without limitation, Section 7 hereof.
(b) Buyer agrees that on and prior to the Closing Date, Seller shall
be entitled to receive from the Group Members by way of dividends, advances,
repayment of indebtedness or otherwise all cash and cash equivalents owned or
held by or for the benefit of each Group Member prior to and as of the Effective
Time, all of which is and shall be the sole property of Seller.
2. The Closing.
-----------
-3-
<PAGE>
2.1 Place and Time. The closing of the sale and purchase of the Shares
--------------
(the "Closing") shall take place at the offices of Morgan, Lewis & Bockius LLP,
1701 Market Street, Philadelphia, Pennsylvania 19103-2921 at 10:00 a.m. (Eastern
daylight time) on November 30, 1999, or as soon as practicable thereafter (the
"Closing Date") or at such other place, date and time as the parties may agree
in writing, subject to the following:
(a) If any of the conditions set forth in Section 3 hereof have not
been satisfied on the date on which the Closing would otherwise occur, Buyer
may, from time to time, by notice to Seller, defer the Closing to 10:00 a.m. on
a business day specified in that notice, but not later than December 31, 1999.
(b) If any of the conditions set forth in Section 4 hereof have not
been satisfied on the date on which the Closing would otherwise occur, Seller
may, from time to time, by notice to Buyer, defer the closing to 10:00 a.m. on a
business day specified in that notice, but not later than December 31, 1999.
2.2 Deliveries by Seller. At the Closing, Seller shall deliver the
--------------------
following to Buyer:
(a) certificates representing the Shares, duly endorsed for transfer
to Buyer or with separate stock transfer powers attached thereto and signed in
blank;
(b) the documents contemplated by Section 3 hereof; and
(c) all other documents, instruments and writings required by this
Agreement to be delivered by Seller at the Closing.
2.3 Deliveries by Buyer. At the Closing, Buyer shall deliver the
-------------------
following to Seller:
(a) wire transfers in immediately available funds to an account
designated by Seller in an amount equal to the Base Purchase Price;
(b) the documents contemplated by Section 4 hereof; and
(c) all other documents, instruments and writings required by this
Agreement to be delivered by Buyer at the Closing.
3. Conditions to Buyer's Obligations. The obligations of Buyer to effect the
---------------------------------
Closing shall be subject to the satisfaction at or prior to the Closing of the
following conditions, any one or more of which may be waived by Buyer:
3.1 No Injunction. There shall not be in effect any injunction, order or
-------------
decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that restricts Buyer's
acquisition of the Shares or that will require any
-4-
<PAGE>
divestiture as a result of Buyer's acquisition of the Shares or that will
require all or any part of the business of the Company to be held separate and
no litigation or proceedings seeking the issuance of such an injunction, order
or decree or seeking to impose substantial penalties on Buyer if this Agreement
is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The representations
------------------------------------------
and warranties of Seller set forth in this Agreement shall be true and correct
in all material respects (except that representations and warranties that are
qualified by their terms as to materiality shall be true in all respects) as of
the date of this Agreement and as of the Closing Date with the same effect as
though made at such time (except where such representation and warranty speaks
as of a specific date), (b) Seller and Company shall have performed and complied
in all material respects with the agreements contained in this Agreement
required to be performed and complied with by them prior to or at the Closing
and (c) Buyer shall have received a certificate dated the Closing Date to the
foregoing effects signed by an officer of Seller.
3.3 Legal Opinion. Buyer shall have received an opinion from counsel to
-------------
Seller dated the Closing Date reasonably acceptable to Buyer.
3.4 Regulatory Approvals. The waiting period (and any extensions
--------------------
thereof) applicable to the consummation of the transaction contemplated hereby
under the HSR Act shall have expired or been terminated.
3.5 Consents of Third Parties. All consents and approvals of third
-------------------------
parties identified with an asterisk in Schedule 5.6 to this Agreement shall have
been obtained on terms and conditions reasonably satisfactory to Buyer.
3.6 Resignations of Director and Officers. All directors and officers of
-------------------------------------
the Company whose resignations shall have been requested by Buyer shall have
submitted their resignations or shall have been removed effective as of the
Closing Date.
3.7 Sales People. There shall not be any change in the salespeople
------------
employed by the Company between October 1, 1999 and the Closing Date (including
salespeople who have given notice of their intent to depart the Company) which
could reasonably be expected to have a Material Adverse Effect.
3.8 Removal as Borrower. Seller shall deliver to Buyer evidence that the
-------------------
Company shall have been removed as a guarantor and shall have otherwise been
released from any and all liabilities and obligations in connection with those
certain (i) Credit Agreement (the "Credit Agreement") dated as of June 26, 1996,
as amended, among Seller, the guarantors named therein, the several lenders
parties thereto and NationsBank, N.A., as Administrative Agent, and (ii)
Subsidiary Guarantee of Seller's 7.54% Senior Secured Notes due May 31, 2006.
-5-
<PAGE>
3.9 Termination of Management Agreements and Phantom Stock Plan. Seller
-----------------------------------------------------------
shall deliver Buyer evidence of the termination of the Management Agreement and
the J.A. Sexauer Division 1992 Phantom Stock Plan (the "Phantom Stock Plan").
4. Conditions to Seller's Obligations. The obligations of Seller to effect
----------------------------------
the Closing shall be subject to the satisfaction at or prior to the Closing of
the following conditions, any one or more of which may be waived by Seller:
4.1 No Injunction. There shall not be in effect any injunction, order or
-------------
decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement or that restricts the sale of
the Shares to Buyer and no litigation or proceedings seeking the issuance of
such an injunction, order or decree or seeking to impose substantial penalties
on Seller if this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The representations
------------------------------------------
and warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects (except that representations and warranties that are
qualified by their terms as to materiality shall be true in all respects) as of
the date of this Agreement and as of the Closing Date with the same effect as
though made at such time, (b) Buyer shall have performed and complied in all
material respects with the agreements contained in this Agreement required to be
performed and complied with by it prior to or at the Closing and (c) Seller
shall have received a certificate dated the Closing Date to the foregoing
effects signed by an officer of Buyer.
4.3 Legal Opinion. Seller shall have received an opinion from Morgan,
-------------
Lewis & Bockius LLP, counsel to Buyer, dated the Closing Date, reasonably
acceptable to Seller.
4.4 Regulatory Approvals. The waiting period (and any extensions thereof)
--------------------
applicable to the consummation of the transaction contemplated hereby under the
HSR Act shall have expired or been terminated. All other licenses,
authorizations, consents, orders and regulatory approvals of Governmental Bodies
necessary for the consummation of Seller's sale of the Shares to Buyer shall
have been obtained and shall be in full force and effect.
4.5 Releases. Seller shall have received general releases executed by the
--------
Group Members, in form and substance reasonably satisfactory to Buyer and
Seller, of all officers and directors of each Group Member with respect to acts
or omissions occurring on or prior to the Closing Date.
4.6 Substitute Letters of Credit and Performance and Bid Bonds. Seller
----------------------------------------------------------
shall have received for cancellation all existing letters of credit and
performance and bid bonds in favor of the Company or for which the Company is an
account party and issued under the Credit Agreement (as defined in Section 3.8)
and/or for which Seller and/or any Affiliate is liable, which are set forth on
Schedule 4.6 to this Agreement and which are entered into after the date hereof
in the ordinary course of business (collectively, the "Bonds"), and Seller shall
have
-6-
<PAGE>
received evidence, in form and substance satisfactory to Seller, that Buyer has
caused substitute letters of credit and performance and bid bonds to be issued
in favor of and delivered to the holders of the Bonds.
5. Representations and Warranties of Seller.
----------------------------------------
(a) Seller represents and warrants to Buyer that as of the date hereof:
5.1 Organization of the Company; Authorization.
------------------------------------------
(a) Each of Seller and Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The Company has all
corporate authority and power to own, lease and operate its properties and
assets and to carry on its business as such business is now being conducted. The
execution, delivery and performance of this Agreement by Seller and of each
Transaction Document by Seller and Company have been duly and validly authorized
by all necessary corporate action of the Company and Seller and no other
corporate action on the part of the Company or Seller is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby and this
Agreement constitutes a valid and binding obligation of Seller, enforceable
against it in accordance with its terms.
(b) The Company is duly qualified and in good standing to do business
in the jurisdictions set forth on Schedule 5.1(b) attached hereto, which
jurisdictions are the only jurisdictions wherein the character of the properties
owned, leased or operated or the nature of the activities conducted by it makes
such qualification necessary, except where the failure to so qualify
individually or in the aggregate, would not have a Material Adverse Effect. Set
forth on Schedule 5.1(b) is the location (specifying state, county and city)
where the Company (A) has a place of business, (B) owns or leases real property,
and (C) owns or leases any other property, including inventory, equipment or
furniture. The Company has delivered to Parent complete and accurate copies of
the Certificate of Incorporation and Bylaws of the Company, as currently in
effect.
5.2 No Conflict as to the Company. Neither the execution and delivery of
-----------------------------
the Transaction Documents nor the consummation of the sale of the Shares by
Seller to Buyer will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of the Company or
Seller or (b) subject to receipt of the consents listed in Schedule 5.6 to this
Agreement, violate, be in conflict with, or constitute breach or a default (or
an event which, with notice or lapse of time or both, would constitute breach or
a default) under, or result in the loss of any material benefit under or result
in the termination of, or accelerate the performance required by, or in any
material respect excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of the
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<PAGE>
Company or Seller under, any agreement or Commitment to which the Company or
Seller is a party or by which any of their property or assets are bound, or to
which any of the property or assets of the Company or Seller are subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to the Company or Seller or by
which any of their property or assets are bound.
5.3 Ownership of Shares. The authorized capital stock of Sexauer consists
-------------------
of 3,000 shares of common stock, par value $1.00 per share, of which 1,000
shares are duly and validly authorized, issued, outstanding, fully paid and non-
assessable and constitute the Sexauer Shares. The authorized capital stock of
Trayco consist of 3,000 shares of common stock, par value $1.00 per share, of
which 1,000 shares are duly and validly authorized, issued, outstanding, fully
paid and non-assessable and constitute the Trayco Shares. Seller owns the
Shares, of record and beneficially, at the Closing, free and clear of all
Encumbrances. All issued and outstanding Sexauer Shares and Trayco Shares have
been validly issued, are fully paid and non-assessable, and have not been issued
in violation of and are not currently subject to any preemptive rights. No
legend or other reference to any purported Encumbrance appears upon any
certificate representing the Shares. The delivery of such certificates to Buyer
as provided in Section 2.2 hereof and the payment to Seller as provided in
Section 2.3 hereof will result in Buyer's immediate acquisition of record
ownership of the Shares, free and clear of all Encumbrances, except Encumbrances
created solely as a result of Buyer's ownership of the Shares. There are no
outstanding or authorized subscriptions, options, warrants, calls, conversion
rights, restrictions (except as created by Buyer), arrangements, commitments or
any other agreements binding on Seller or the Company of any kind that, directly
or indirectly, relate to the issuance, pledge, sale, transfer or other
disposition or encumbrance by the Company of any equity or other securities of
the Company or relate to the voting or control of Sexauer Shares or Trayco
Shares.
5.4 No Subsidiaries. Except as disclosed in Schedule 5.4 to this
---------------
Agreement, the Company does not, directly or indirectly, own or control, and
does not have any option, right, agreement or commitment of any kind to acquire
any capital, equity securities, partnership, participation, or other ownership
interest or other securities of any other Person or any direct or indirect
equity or ownership interest in any other business.
5.5 Consents and Approvals of Governmental Bodies. Except for filings
---------------------------------------------
under the HSR Act, no consent, permit, approval or authorization of, or
declaration, filing or registration with, any Governmental Body is required to
be made or obtained by the Company or Seller in connection with the execution,
delivery and performance of the Transaction Documents by Seller or the
consummation of the sale by Seller of the Shares to Buyer.
5.6 Other Consents. Except as listed in Schedule 5.6 to this Agreement,
--------------
no consent of any Person is required to be obtained by Seller or by the Company
for the execution, delivery and performance of the Transaction Documents by
Seller or the consummation of the sale by Seller of the Shares to Buyer,
including, without limitation, consents from parties to the Commitments.
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5.7 Financial Statements.
--------------------
(a) Seller has delivered to Buyer an audited combined balance sheet
of Sexauer and Trayco and the related combined statements of income and cash
flows for the periods ended January 31, 1999 and 1998 (the "Audited Statements")
and an unaudited combined consolidated balance sheet (the "Interim Balance
Sheet") of the Company as of September 30, 1999, together with the related
combined statements of income and cash flow for the eight (8) month period then
ended (together, the "Financial Statements"). The Financial Statements, except
as set forth in Schedule 5.7, (i) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, and (ii)
present fairly, in all material respects, the financial position and the results
of operations of the Company as of and for the periods indicated.
(b) As of the date hereof, the Company has no Liabilities which are
required to be set forth or reserved against on the liability side of a balance
sheet in accordance with GAAP, except: (i) Liabilities set forth or reserved
against on the Interim Balance Sheet, (ii) Liabilities incurred after the
Balance Sheet Date in the ordinary course of business and consistent with past
practice of the Company (which are, in the case of Liabilities incurred after
the date of this Agreement, consistent with the terms of this Agreement), or
(iii) Liabilities described on Schedule 5.7 attached hereto. To the Knowledge of
Seller, there are no contingent Liabilities which are not reflected on the
Interim Balance Sheet, the Schedules to this Agreement or to be reflected on the
Closing Balance Sheet which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(c) Since February 1, 1999, (i) there has been no adjustment to the
method in which the LIFO Inventory Reserve is calculated and (ii) all inventory
purchase decisions were made in the ordinary course of business without any
intention to reduce the Company's LIFO Inventory Reserve.
5.8 Title to Properties. The Company owns good and valid (and in the case
-------------------
of real property, marketable) title to all the properties and assets that it
purports to own (real, personal and mixed, tangible and intangible), including,
without limitation, all the properties and assets reflected as owned in the
Interim Balance Sheet (except for property sold since the Balance Sheet Date in
the ordinary course of business or leased under capitalized leases) and all the
properties and assets purchased or otherwise acquired by the Company since the
Balance Sheet Date. All properties and assets (other than real property)
reflected as owned in the Interim Balance Sheet are free and clear of all
Encumbrances, except Permitted Liens. All properties and assets purported to be
leased by the Company (including the Leased Real Property) are subject to valid
and effective (as to the Company and to Seller's Knowledge, as to the other
parties thereto) leases that are in full force and effect, and there does not
exist, and, subject to receipt of the consents set forth on Schedule 5.6 hereto,
the consummation of the transactions contemplated herein will not result in, any
default or event that with notice or the lapse of time, or both or
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<PAGE>
otherwise, would constitute a default under any such leases, except where such
default would not have a Material Adverse Effect. There are no existing
agreements, options, commitments or rights with, of or to any Person to acquire
any of the assets of the Company or any interest therein, except for contracts
for the sale of inventory entered into in the ordinary course of business
consistent with past practice. The assets and properties owned or leased by the
Company include all the material assets used in the conduct of the business of
the Company as currently conducted. The tangible properties and assets (other
than inventory) of the Company are in operating condition and repair, normal
wear and tear excepted and after taking into account the age thereof, and are,
as a whole, reasonably suitable for the business of the Company as currently
conducted.
5.9 Real Property. Except as set forth in Schedule 5.9:
-------------
(a) Schedule 5.9(a) contains a true, correct and complete list of all
real property (including, without limitation, addresses) owned by the Company
(together with all buildings, improvements and structures thereon and all
appurtenances relating thereto, the "Owned Real Property"). The Company owns the
Owned Real Property in fee subject to no Encumbrances, mortgages or pledges,
except Permitted Liens. The Company has no current leases outstanding with
respect to any part of any Owned Real Property, except as set forth in Schedule
5.9(a).
(b) Schedule 5.9(b) contains a true, correct and complete list of all
current and effective written leases and subleases under which the Company is
tenant or subtenant (as so modified, extended or amended, the "Real Property
Leases"), and the address of the demised premises (the "Leased Real Property",
together with the Owned Real Property, the "Real Property"), the names of the
lessor or sublessor and the tenant or subtenant (if other than the Company). The
tenant's interest in the Real Property Leases are subject to no Encumbrances
except Permitted Liens. The Company is not a party to any unwritten legally
enforceable leases or subleases.
(c) True and complete copies of the Real Property Leases have been
delivered or made available to Buyer by Seller. Subject to the terms of the
respective Real Property Leases and the Permitted Liens, the Company has a valid
and subsisting leasehold interest in each parcel of Leased Real Property for the
full term of the respective Real Property Lease. The Real Property Leases are in
full force and effect and are enforceable in accordance with their respective
terms (in each case as to the Company and, to Seller's Knowledge, the other
parties thereto), except as such enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization or other similar Laws, now or hereafter
in effect, affecting the enforcement of creditors' rights generally and general
principles of equity. The Company has not assigned, pledged, mortgaged,
hypothecated or otherwise transferred any Real Property Lease. Neither the
Company nor Seller has received written notice of default from the landlord
under any Real Property Lease, Seller has no Knowledge of the existence of any
default under any Real Property Lease, and Seller has no Knowledge of any event
which, with the giving of notice or the passage
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<PAGE>
of time, or both, would constitute a default under any Real Property Lease,
except, in any case, where such default would not result in any material payment
by the tenant, material restriction of the right of the tenant to use the
property or the right of the landlord to terminate the lease. No landlord or
tenant under any Real Property Lease has, by notice to the Company given
pursuant to the applicable Real Property Lease, exercised any option or right to
(i) cancel or terminate such Real Property Lease or shorten the term thereof,
(ii) lease additional premises to the Company, (iii) reduce or relocate the
premises demised by the Company by such Real Property Lease or (iv) purchase any
property. The Company does not owe any brokerage commissions or finders fees
with respect to any Real Property Lease or any renewal or extension thereof or
the exercise of any right or option by the Company thereunder.
(d) The Company has obtained all Permits, variances, special
exemptions and permanent certificates of occupancy, the absence of which would,
singly or in the aggregate, have a Material Adverse Effect (the "Approvals"), if
any, needed by the Company in connection with the use and occupancy by the
Company of any parcel of Real Property, all of which have been duly issued and
paid for and are in full force and effect in accordance with the respective
terms thereof, except where the failure to be in force and effect would not have
a Material Adverse Effect. The Company has not assigned, pledged, mortgaged,
hypothecated or otherwise transferred any Approval. Each parcel of Real Property
is being operated in accordance with all the terms, covenants and conditions of
the Approvals, except where the failure to so operate would not have a Material
Adverse Effect.
(e) To Seller's Knowledge, there are no pending or contemplated
zoning changes, "floor area ratio" changes, variances or special zoning
exceptions adversely affecting any parcel of Real Property.
(f) The real estate Taxes with respect to the Owned Real Property,
cover the whole of the Owned Real Property and do not cover or apply to any
other property, except as set forth in the information received by Buyer as a
result of Section 5.17.
(g) No special assessments are levied or, to Seller's Knowledge,
contemplated against any parcel of Owned Real Property.
(h) There is no material construction at any parcel of Owned Real
Property.
(i) To the Knowledge of Seller, the Company is not in default under,
and has not breached any of the terms of, any of the Permitted Liens, except
where such default or breach would not have a Material Adverse Effect.
(j) The Owned Real Property, including, without limitation, all
buildings, building systems, structural components, roofs, and building
equipment, are in operating condition and repair (normal wear and tear excepted
(after taking into account the age thereof) and are reasonably suitable for the
business of the Company as currently conducted).
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<PAGE>
(k) Except for the Real Property, the Company does not own or hold
any interest in real property.
(l) There are no written notices received by the Company of any
uncured violation of any Law by the Company affecting or against any parcel of
Real Property.
(m) To the Knowledge of Seller, there are no actions or proceedings
pending or threatened against the Company or any parcel of Owned Real Property
by any Person which would materially affect the future use, occupancy or value
of any parcel of Real Property.
5.10 No Condemnation or Expropriation. Neither the whole nor any
--------------------------------
portion of the Owned Real Property is subject to any governmental decree or
order of or otherwise taken by any Governmental Body with or without payment or
compensation therefor.
5.11 Litigation. Except as listed in Schedule 5.11 and except for
----------
matters for which Seller indemnifies Buyer pursuant to Section 9.1(d) and 9.1(e)
hereof, there is no action, suit, proceeding or investigation by or before any
court or Governmental Body pending or, to Seller's Knowledge, threatened at law
or in equity, against or affecting the Company or its assets or which seeks to
enjoin or obtain damages in respect of the consummation of this Agreement, nor
has any such court or Governmental Body indicated in writing to the Company an
intention to conduct the same. The Company is not subject to any adverse
judgment, order, decree, writ, injunction or award of any court, Governmental
Body or any arbitrator.
5.12 Absence of Certain Changes. Except as set forth in Schedule 5.12,
--------------------------
since February 1, 1999 the Company has conducted its business only in the
ordinary course consistent with past practice. Without limiting the generality
of the foregoing, except as set forth in Schedule 5.12, since the February 1,
1999 the Company has not:
(a) suffered damage or destruction to any of its material properties
or assets (whether or not covered by insurance), or made any material
disposition of any of its properties or assets other than in the ordinary course
of business consistent with past practice;
(b) made any change or amendment in its certificate of incorporation
or by-laws, or other governing instruments;
(c) issued or sold any equity securities or other securities,
acquired, directly or indirectly, by redemption or otherwise, any such equity
securities, reclassified, split-up or otherwise changed any such equity
securities, or granted or entered into any options, warrants, calls or
commitments of any kind with respect thereto;
(d) organized any subsidiary or acquired any equity securities of any
Person or any equity or ownership interest in any business;
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<PAGE>
(e) except for intercompany obligations with Seller and its
Affiliates, borrowed any funds or incurred, assumed or otherwise become subject
to, whether directly or by way of guarantee or otherwise, any obligation or
liability with respect to any such indebtedness for borrowed money, or, except
in the ordinary course of business consistent with past practice, incurred any
other material obligation or liability of any nature, whether accrued, absolute,
contingent or otherwise;
(f) subjected any properties or assets to an Encumbrance, except
Permitted Liens;
(g) increased in any manner the compensation of any employee except
in the ordinary course of business;
(h) except as contemplated by Section 3.9 hereof and except as set
forth on Schedule 5.15 or Schedule 5.16, created or materially modified any
bonus, deferred compensation, pension, profit sharing, retirement, insurance,
stock purchase, stock option, phantom stock ownership plan, or other fringe
benefit plan, arrangement or practice or any other employee benefit plan (as
defined in Section 3(3) of ERISA);
(i) made any capital expenditure or acquired any property or assets,
other than inventory, raw materials and supplies, for a cost in excess of
$100,000;
(j) entered into any agreement that materially restricts the Company
from carrying on its business;
(k) paid, discharged or satisfied any material claim, liability or
obligation, absolute, accrued, contingent or otherwise, other than the payment,
discharge or satisfaction in the ordinary course of business;
(l) waived or canceled any material claims or rights;
(m) except as set forth on Schedule 5.7, changed or modified in any
material manner the Company's existing credit, collection and payment policies,
procedures and practices with respect to accounts receivable and accounts
payable, respectively, including without limitation, material acceleration of
collections and receivables, material delay of collections or receivables
(whether or not past due), material acceleration of payment of payables or
material failure to pay or delay in payment of payables;
(n) disposed of or has failed to keep in effect any rights in, to or
for the use of any franchise, license, permit or certificate material to the
business of the Company; or
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<PAGE>
(o) entered into any agreement or understanding, whether orally or
in writing, to take any of the actions specified in paragraphs (a) through (n).
5.13 No Material Adverse Changes. Except as set forth on Schedule 5.13,
---------------------------
since October 1, 1999 there has not been any (i) event or circumstance that
could reasonably be expected to have or has had a Material Adverse Effect on the
Company taken as a whole, other than those resulting from economic conditions
generally prevailing in the United States or in the industry in which the
Company operates; (ii) actions by Seller that, if taken on or after the date of
this Agreement, would require the consent or approval of Buyer under Section 8.3
or 8.4 hereof; (iii) change in any of the accounting principles followed by the
Company or the method of applying such principles or (iv) except as set forth on
Schedule 5.13 and except as contemplated by Section 5.12, otherwise taken any
actions that are not in the ordinary course of business.
5.14 Intellectual Property.
---------------------
(a) Schedule 5.14(a) contains a complete and accurate list of all
(i) federal, state or foreign registrations of trademarks, service marks and
other marks or trade names of the Company (collectively, the "Trademarks"), and
all pending applications for any such registrations, (ii) all of the federal and
foreign patent and copyright (including proprietary software) registrations of
the Company and all pending applications for any such registrations, and (iii)
all catalogs currently used by the Company to sell goods (the items referred to
in clauses (i) and (ii) above are collectively referred to herein as
"Intellectual Property"). All registered patents, Trademarks and copyrights are
valid and in full force, are held of record exclusively in the Company's name
free and clear of all Encumbrances, other than Permitted Liens, or are licensed
to the Company (unless otherwise indicated on Schedule 5.14(a)) and, to Seller's
Knowledge, no material registered patent, Trademark or copyright is the subject
of any cancellation or reexamination proceeding before any Governmental Body or
any other proceeding before any Governmental Body challenging their extent or
validity, and all fees or the costs necessary for maintaining the same in full
force and effect, including, without limitation, maintenance fees, annuities and
renewals fees, which are due and payable as of the Closing Date, have been paid
or are accrued on the Interim Balance Sheet to the extent then payable. All
Intellectual Property of the Company listed on Schedule 5.14(a) has the status
indicated therein and all applications are still pending in good standing and
have not been abandoned. Except to the extent specifically disclosed on Schedule
5.14(a): (i) the Intellectual Property of the Company is valid and is not being
challenged in any judicial or administrative proceeding; (ii) the Company has
made all statutorily required filings, if any, to record its interests in the
federally registered Intellectual Property of the Company; (iii) to Seller's
Knowledge, no Person nor such Person's business or products is infringing,
misusing, or misappropriating any Intellectual Property of the Company; and (iv)
no other Person has any contractual right to receive or any obligation to pay a
royalty with respect to any Intellectual Property of the Company. No current or
former shareholder, employee, or consultant of the Company or any Subsidiary has
any material rights in or to any of the Intellectual Property of the Company. To
Seller's Knowledge, the Intellectual Property and the catalogs used by the
Company constitute
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<PAGE>
all of the material intellectual property that has been used by the Company
during the past twelve (12) months. Except as disclosed in Schedule 5.14(a), the
Company has the right to use (without payment to a third party) all of the
Intellectual Property in connection with its services or products in respect of
which the Intellectual Property is being used, except when the failure to have
such right would not have a Material Adverse Effect.
(b) The Company is not infringing upon, misappropriating or misusing
any intellectual property of any other Person, except where such infringement,
misappropriation or misuse would not have a Material Adverse Effect. Neither
Seller nor the Company has received any written assertion, charge, complaint,
claim, demand or notice alleging any such infringement, misappropriation or
misuse (including any claim that the Company must license or refrain from using
any intellectual property of any Person).
(c) The Company owns or has the right to use all trade secrets,
including "know-how," inventions, designs, customer lists, processes,
technology, formulas, computer software programs and technical data and
information used in the conduct of the business of the Company as currently
conducted (collectively, the "Trade Secrets") free and clear of any
Encumbrances, except Permitted Liens, including, without limitation, any pending
claim of any present or former employee of or consultant to the Company.
5.15 Commitments. Schedule 5.15 to this Agreement contains a list
-----------
(which in the case of customer and employee Commitments contains only a
numerical listing without names of customers or employees), as of the date
hereof, of each contract, agreement, understanding or other commitment, whether
written or oral (including any and all amendments thereto), to which the Company
is a party or by which it is bound relating to the business of the Company
described below (collectively, the "Commitments"):
(a) contract with any employee or consultant;
(b) collective bargaining agreements;
(c) contracts or arrangements providing for bonuses, options,
deferred compensation, stock or phantom stock rights;
(d) agreements with Seller or any of its respective Affiliates which
will remain in effect after the Closing;
(e) guaranties, performance bonds and surety or indemnification
agreements which will remain in effect after the Closing;
(f) contract for the future purchase of, or payment for, supplies or
products or services in any single instance exceeding $50,000, or in the
aggregate $100,000, or of a duration
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<PAGE>
of more than twelve months, in any case, other than purchase orders in the
ordinary course of business for current delivery;
(g) contract to sell or supply products in excess of $50,000, or of a
duration of more than twelve months, in any case, other than purchase orders in
the ordinary course of business for current delivery;
(h) contract to sell or supply products to any Governmental Body,
other than purchase orders in the ordinary course of business for current
delivery;
(i) representative, franchise, distribution or sales agency contract;
(j) contract limiting or restraining it from engaging or competing in
any lines of business with any Person;
(k) contract with any customer providing for a volume refund,
retrospective price adjustment or price guarantee;
(l) commitment by others to guarantee the obligations of the
Company;
(m) leases or subleases, either as lessee or sublessee, lessor or
sublessor, of personal property where the lease or sublease provides for an
annual rent in excess of $25,000;
(n) mortgage, indenture, note debenture, bond, letter of credit
agreement, surety agreement, loan agreement or other commitment for the
borrowing or lending of money relating to the Company or agreement for a line of
credit, in any case, which will remain in effect after the Closing;
(o) license, franchise or distributorship agreement, including
those which relate in whole or in part to any software, technical assistance or
other know-how used in the conduct of the Company's business during the prior
twenty-four months;
(p) commitment or agreement for any capital expenditure or leasehold
improvement in excess of $100,000; and
(q) material contract, agreement or commitment not otherwise
disclosed herein.
True and complete copies of such Commitments have been delivered or made
available to Buyer prior to the date hereof (except customer and employee
Commitments which will be made available between the date hereof and the Closing
Date) and each Commitment is a valid and binding obligation enforceable (as to
the Company and, except as set forth on Schedule 5.15, to Seller's Knowledge, as
to the other parties thereto, except that no representation or warranty is
hereby made as to the enforceability against an individual of any employment,
noncompetition or
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<PAGE>
confidentiality agreement) in accordance with its terms, except as such
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization or similar Laws, now or hereafter in effect, affecting the
enforcement of creditors' rights generally and general principles of equity.
Except as set forth in Schedule 5.15, the Company is not in violation of or
default under any of the Commitments to which it is a party or by which it or
any of its properties or assets is bound and, to Seller's Knowledge, no third
party is in violation of or default under any of the Commitments, except, in any
case, where such violation or default would not have a Material Adverse Effect.
Schedule 5.15 sets forth a list of each salesperson and territory number with
respect to salespersons who have not entered into noncompetition Commitments
with the Company.
5.16 Employee Matters.
----------------
(a) The Company does not have a collective bargaining agreement with
any labor union or other representative of employees and, to Seller's Knowledge,
there has been no demand or attempt by employees to organize a union or labor
organization during the past twenty-four (24) months. There are no unfair labor
practice charges or complaints against the Company, to Seller's Knowledge,
threatened or pending before the National Labor Relations Board or any other
federal, state, local or foreign court or agency. There has been no general
labor dispute, strike, slowdown, stoppage or other occurrence, event or
condition of a similar character, which is occurring or, to Seller's Knowledge,
threatened.
(b) Seller has previously delivered to Buyer the title and current
salary of each employee of the Company who has an annual salary in excess of
$50,000.
(c) Schedule 5.16 contains a complete and accurate list of all
Employee Benefit Plans. Except as set forth in Schedule 5.16, true and complete
copies of all the following documents with respect to each Employee Benefit
Plan, to the extent applicable, have been delivered or made available to Buyer:
(i) all documents constituting the Employee Benefit Plan, including but not
limited to, trust agreements, insurance policies, service agreements, and formal
and informal amendments thereto; (ii) the three most recently filed Forms 5500
or 5500-C/R and any financial statements attached thereto; (iii) the most recent
IRS determination letter for the Employee Benefit Plan; (iv) the most recent
summary plan description and any amendments or modifications thereof; (v) all
reports submitted within the preceding three years by third-party
administrators, actuaries, investment managers, consultants, or other
independent contractors; (vi) all notices that were issued within the preceding
three years by the IRS, Department of Labor, or any other governmental entity
with respect to the Employee Benefit Plan; and (vii) all employee manuals or
handbooks containing personnel or employee relations policies. Except for the
plans set forth on Schedule 5.16, the Company does not sponsor or maintain any
plan, fund, program, policy, arrangement, contract or commitment, whether or not
qualified for federal income tax purposes, whether or not funded, whether formal
or informal, and whether for the benefit of a single individual or more than one
individual, which is in the nature of (i) an employee pension benefit plan (as
defined in Section 3(2) of ERISA), (ii) an
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<PAGE>
employee welfare benefit plan (as defined in Section 3(1) of ERISA), (iii) an
incentive current or deferred compensation, or other benefit or compensation
arrangement for employees, former employees, their dependents and/or their
beneficiaries or (iv) an arrangement that could be characterized as providing
for additional compensation, compensation associated with a change of control,
severance benefits, perquisites, or fringe benefits.
(d) The Company does not sponsor or maintain, and is not a
contributing employer or otherwise a party to, has no obligation or liability
under or with respect to, and has never sponsored, maintained or participated
in, or been obligated to contribute to any defined benefit plan (as defined in
Section 3(35) of ERISA), multiemployer plan (as defined in Section 3(37) of
ERISA), or other plan subject to Section 302 of ERISA, Section 412 of the Code
or Title IV of ERISA.
(e) The plans marked on Schedule 5.16 as "Qualified Plans" are the
only Employee Benefit Plans intended to be qualified under Section 401(a) and
401(k) of the Code and exempt from tax under Section 501(a) of the Code and are
so qualified and exempt on the Closing Date. Except as otherwise provided in
Schedule 5.16, the Company has never maintained or contributed to any other
Qualified Plan during the ten (10) year period ending on the Closing Date.
Except as otherwise provided in Schedule 5.16, as of the Closing Date, all
amendments and actions required to bring each Employee Benefit Plan into
conformity in all respects with all applicable Laws have been timely made or
taken to the extent that such amendments or actions are required by current Law
to be made or taken in order to obtain a favorable determination letter, if
applicable. Nothing has occurred with respect to the design or operation of any
Qualified Plan that could cause the loss of such qualification or exemption or
the imposition of any liability, lien, penalty or tax under ERISA or the Code.
All Qualified Plans satisfy the minimum coverage requirements of Section 410(b)
of the Code and the nondiscrimination requirements of Section 401(a)(4) of the
Code as of the Closing Date. The Company is not presently or potentially liable
for failure to make contributions to any such Qualified Plan or their fiduciary
conduct in connection with such Qualified Plan.
(f) Full payment has been made of all amounts which the Company is
required, under applicable Law or under any Employee Benefit Plan, to have paid
as contributions thereto as of the last day of the most recent fiscal year of
each Employee Benefit Plan ended prior to the date hereof. The Company has made
adequate provision for reserves in accordance with GAAP to meet contributions
that have not been made because they are not yet due under the terms of any
Employee Benefit Plan or related agreements and all monies withheld from
employee paychecks with respect to Employee Benefit Plans have been transferred
to the appropriate plan in a timely manner as required by Law. Benefits under
all Employee Benefit Plans are as represented and have not been increased
subsequent to the date of such documents.
(g) All Employee Benefit Plans conform (and have at all times
conformed) in all material respects to the requirements of ERISA, the Code and
all applicable laws. Each Employee Benefit Plan has been maintained in all
material respects in accordance with its
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<PAGE>
documents and with all applicable provisions of the Code, ERISA and other
applicable Laws; and all reporting, disclosure, and notice requirements of
ERISA, the Code and other applicable laws have been satisfied with respect to
each Employee Benefit Plan.
(h) With respect to each Employee Benefit Plan, there has occurred
no non-exempt "prohibited transaction" (within the meaning of Section 4975 of
the Code or Section 406 of ERISA) or breach of any fiduciary duty described in
Section 404 of ERISA that if successful, would reasonably be expected to result
in any liability, direct or indirect, for the Company or any stockholder,
officer, director, or employee of the Company.
(i) The Company has not incurred any liability for any excise, income
or other Taxes or penalties with respect to any Employee Benefit Plan which
remains unpaid or which is not accrued for on the Closing Balance Sheet and, to
Seller's Knowledge, no event has occurred and no circumstance exists or has
existed that could give rise to any such liability. There are no pending or, to
Seller's Knowledge, threatened claims by or on behalf of any Employee Benefit
Plans, or by or on behalf of any participants or beneficiaries of any Employee
Benefit Plans or other persons, alleging any breach of fiduciary duty on the
part of the Company or any of its officers, directors or employees under ERISA
or any applicable Law, or claiming benefit payments other than those made in the
ordinary operation of such plans, nor, to Seller's Knowledge is there any basis
for any such claim. No Employee Benefit Plan is presently under audit or
examination (nor has notice been received of a potential audit or examination)
by the IRS, the Department of Labor, or any other governmental entity, and no
matters are pending with respect to any Employee Benefit Plan under any IRS plan
compliance program.
(j) Except as set forth on Schedule 5.16(j), no Employee Benefit Plan
contains any provision or is subject to any Law that would prohibit the
transactions contemplated by this Agreement or that would give rise to any
vesting of benefits, severance, termination, or other payments or liabilities as
a result of the transactions contemplated by this Agreement, and no payments or
benefits under any Employee Benefit Plan or other agreement of the Company will
be considered "excess parachute payments" under Section 280G of the Code.
(k) With respect to any Employee Benefit Plan that is an employee
welfare plan (within the meaning of Section 3(1) of ERISA), (i) with respect to
any welfare benefit fund (within the meaning of Section 419 of the Code) related
to a welfare plan, there is no disqualified benefit (within the meaning of
Section 4976(b) of the Code) that would result in the imposition of tax under
section 4976(a) of the Code, (ii) any Employee Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code) complies,
and in each and every case has complied, in all material respects with all of
the requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act, the applicable provisions of the Social Security Act, the
Health Insurance Portability and Accountability Act of 1996, and other
applicable Laws, and (iii) no Employee Benefit Plan provides any health, life or
other welfare coverage to employees of the Company or any of its subsidiaries
beyond termination of their employment with the Company or any of its
subsidiaries by reason of retirement or otherwise,
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<PAGE>
other than coverage as may be required under Section 4980B of the Code or Part 6
of ERISA, or under the continuation of coverage provisions of the Laws of any
state or locality.
(l) All persons classified by the Company as independent contractors
satisfy and have at all times satisfied the requirements of applicable Law to be
so classified; the Company has fully and accurately reported their compensation
on IRS Forms 1099 when required to do so; and the Company has no obligations to
provide benefits with respect to such persons under Employee Benefit Plans or
otherwise. The Company does not employ and has not employed any "leased
employees" as defined in Section 414(n) of the Code.
(m) The consummation of the transactions contemplated by this
Agreement will not (other than any payment made pursuant to Code Section
401(k)(10) under any 401(k) Plan and other than in respect of agreements covered
by Section 7.11 hereof) accelerate the time of payment or vesting, or increase
any compensation due to any current employee or former employee of the Company.
(n) No provision of any Employee Benefit Plan, and no act or
omission of the Company, in any way limits, modifies or otherwise adversely
affects the right of Buyer to amend or terminate any Employee Benefit Plan after
the Closing, subject to the requirements of applicable Law and the applicable
Employee Benefit Plan. Except as expressly provided in this Agreement
(including the purchase of the Shares), neither the Company nor Seller has made
any commitment or taken any action, whether or not legally binding, which would
commit Buyer to establish or continue any plan, fund or program providing any
employee benefits of any kind whatsoever for any present or former employee of
the Company, nor has the Company or Seller made any commitment or taken any
action prior to the Closing which would prevent Buyer from changing the benefits
provided by any Employee Benefit Plan, subject to the requirements of the
applicable Employee Benefit Plan and applicable Law. To Seller's Knowledge, no
statement, either oral or written, has been made by the Company or Seller to any
person with regard to an Employee Benefit Plan that was not in accordance with
the Employee Benefit Plan and that would reasonably be expected to have an
adverse economic consequence to the Company or Buyer following the Closing.
Except as expressly provided in this Agreement (including the purchase of the
Shares), nothing in this Agreement or the consummation of this transaction will
require Buyer to assume any obligation of the Company or Seller under any
Employee Benefit Plan. Except as specified in the respective Employee Benefit
Plan or under applicable Law and except as expressly provided in this Agreement
(including the purchase of the Shares), Buyer has no obligation to continue any
Employee Benefit Plan as of the Closing and may, in its sole and absolute
discretion, terminate, amend, modify or discontinue any such Employee Benefit
Plan, in whole or in part, without penalty and without prior notice to the
Company, Seller, any participant, beneficiary or present or former employee of
the Company.
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<PAGE>
5.17 Tax and Other Returns and Reports.
---------------------------------
Except as set forth in Schedule 5.17:
(a) All Federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by the Company,
including any amendments thereto (the "Tax Returns") with respect to any
federal, state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions (including
without limitation, all Income Tax, unemployment compensation, social security,
payroll, withholding, sales and use, excise, privilege, property, ad valorem,
franchise, license, school and any other tax or similar governmental charge or
imposition under laws of the United States or any state or municipal or
political subdivision thereof or any foreign country or political subdivision
thereof) (the "Taxes") have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be
filed, and all such Tax Returns properly reflect the liabilities of each of the
Company for Taxes for the periods, property or events covered thereby. All
Taxes, including, without limitation, those that are called for by the Tax
Returns have been properly accrued or paid. The accruals for Taxes contained in
the Interim Balance Sheet contain an adequate provision for all Taxes, and
nothing has occurred subsequent to that date to make any of such accruals
inadequate. The Company has not received any written notice of assessment or
proposed assessment of any Taxes which remain pending and there are no pending
Tax examinations of or Tax claims asserted in writing (or to Seller's Knowledge,
orally) against the Company or any of their assets or properties. No
deficiencies for any Taxes are currently asserted or assessed against the
Company and no written requests for waivers of the time to assess any such Taxes
are pending. The Company has not extended, or waived the application of, any
statute of limitations of any jurisdiction regarding the assessment or
collection of any Taxes. There are no Tax liens (other than any lien for
current Taxes not yet due and payable) on any of the assets or properties of
the Company. The Company has made all deposits required by law to be made with
respect to employees' withholding and other employment taxes, including without
limitation, the portion of such deposits relating to Taxes imposed upon the
Company. To Seller's Knowledge, no written (or to Seller's Knowledge, oral)
claim has been made since January 1, 1994 by any taxing authority in a
jurisdiction where the Company does not pay Tax or file Tax Returns, that the
Company is or may be subject to Tax in such a jurisdiction.
(b) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company is not a party to any Tax allocation or sharing agreement which will
survive the Closing. The Company (A) has not been a member of an Affiliated
Group (as defined in the Code) filing a consolidated federal Income Tax Return
(other than a group, the common parent of which was Seller), or (B) has no
Liability for the Taxes of any Person (other than Seller, any Group Member or
any other member of Seller's consolidated group) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local, or foreign Law), as
a transferee or successor, by contract, or otherwise.
-21-
<PAGE>
5.18 Compliance with Law. Except as set forth on Schedule 5.18, the
-------------------
operations and all activities of the Company have been, and are currently being,
conducted in accordance with all applicable Laws and regulations of all
Governmental Bodies having jurisdiction over the Company, except where the
failure so to be conducted would not have a Material Adverse Effect. Without
limiting the generality of the foregoing, to Seller's Knowledge, no Person with
apparent or actual authority to act on behalf of the Company, has unlawfully
offered, paid or agreed to pay, directly or indirectly, any money or anything of
value to or for the benefit of any individual who is or was an official or
employee or candidate for office of the government of any country or political
subdivision, agency or instrumentality thereof or any employee or agent of any
customer or supplier of the Company. Since January 1, 1994, the Company has not
received any written notification (or to Seller's Knowledge, oral) of any
asserted present or past failure by it to comply with any applicable Laws or
regulations which remain unsatisfied. Except as set forth on Schedule 5.18, the
Company has all Permits required to carry on and to conduct its businesses as
presently conducted and to own, lease, use and operate its properties and assets
at the places and in the manner now conducted and operated and is not in
violation of any such Permits, except, in any case, where the failure to have or
where such violation would not have a Material Adverse Effect. All such Permits
are, and immediately following the consummation of the transactions contemplated
hereby will be, in full force and effect, and, since January 1, 1994, the
Company has not received any written notice (or to Seller's Knowledge, oral)
pertaining to the failure to obtain or, to Seller's Knowledge, been threatened
in writing (or to Seller's Knowledge, orally) with the suspension or
cancellation of any Permits by any Governmental Body.
5.19 Environmental Matters.
---------------------
(a) Except as disclosed on Schedule 5.19, the Company has conducted
its business in compliance with all Environmental Laws, except where the failure
so to be conducted would not have a Material Adverse Effect.
(b) The Company has not received a written notice that any action,
suit, proceeding, administrative proceeding, hearing, investigation, charge,
complaint, claim, demand, cause of action, loss, judgment, decree, debt, damage,
liability, court costs, penalty or attorneys' fees (collectively, "Claims") has
been filed, sustained or commenced against the Company alleging any potential
liability under or any violation or failure to comply with any Environmental Law
which has not been satisfied. The Company is not a party to any agreement,
consent, order or adjudication of any type with any Person, including any
Governmental Body, that is authorized under any Environmental Law. Seller has
no Knowledge of any Claims against any Persons alleging potential liability
under any of the Environmental Laws with respect to the Leased Real Property.
(c) There has not been any spill, release or unauthorized discharge
of any Hazardous Substance in connection with the business of the Company or at
any of the properties or facilities used by the Company, where such spill,
release or discharge was required to be
-22-
<PAGE>
reported under the Environmental Law or would require abatement or correction
under any Environmental Law. The Company has not disposed of, treated or stored
any Hazardous Substance on any Real Property used by the Company other than in
accordance with applicable Environmental Laws.
(d) There does not exist any Environmental Condition in connection
with the business of the Company at or relating to the properties or facilities
used by the Company or any predecessor, or at or relating to any property owned,
leased or operated at any time by the Company or any such predecessor, or at or
relating to any property at which Hazardous Substances have been deposited or
disposed by or at the direction of the Company or any such predecessor, in any
case, which would result in a Material Adverse Effect, nor has the Company
received written notice of any such Environmental Condition.
(e) The Company has provided to Buyer a copy of each environmental
audit in its possession conducted by the Company or their representatives or
anyone else relating to the properties and facilities used by the Company in the
operations of its business.
(f) Except as disclosed on Schedule 5.19, there are not now nor have
there ever been any underground storage tanks on any Owned Real Property or, to
Seller's Knowledge, any Leased Real Property.
5.20 Borrowing and Guarantees. Except as set forth in the Schedules to
------------------------
this Agreement, the Company (a) does not have any indebtedness for borrowed
money which will remain outstanding after the Closing, (b) is not lending or
committed to lend any money (except for advances to employees in the ordinary
course of business), and (c) is not a guarantor or surety with respect to the
obligations of any Person other than the Company or which will remain
outstanding after the Closing.
5.21 Inventory. All inventory of the Company reflected on the Interim
---------
Balance Sheet or acquired since the date thereof through the Closing Date (a)
was acquired in the ordinary course of business, (b) is of good and merchantable
quality and (c) is valued at the lower of cost or market value, the cost thereof
being determined on a last-in, first-out formula in accordance with GAAP for
Sexauer and Trayco and on a first-in, first-out formula in accordance with GAAP
for Sexauer Ltd.
5.22 Accounts Receivable. The accounts receivable of the Company as
-------------------
reflected on the Interim Balance Sheet or arising since the date thereof through
the Closing Date (a) are valid and genuine, (b) have arisen solely out of bona
fide sales and deliveries of goods, performance of services or other business
transactions in the ordinary course of business, (c) are not subject to
defenses, set-offs or counterclaims other than normal returns, allowances and
warranty claims and (d) are collectible within one hundred fifty (150) days
after the Closing Date at the full recorded amount thereof less the amount
reserved for doubtful accounts in the Closing Balance Sheet.
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<PAGE>
5.23 Accounts Payable. All accounts payable as set forth on the Interim
----------------
Balance Sheet or arising since the date thereof have been incurred in the
ordinary course of business consistent with past practice.
5.24 Relations with Customers, Distributors and Suppliers. The Company
----------------------------------------------------
has used reasonable business efforts to maintain good working relationships with
all of its suppliers, distributors and customers. Except as disclosed in
Schedule 5.24, since February 1, 1999, no customer, distributor or supplier of
the Company with sales or purchases in excess of $50,000 per annum has indicated
in writing that it intends to cease or materially reduce its purchases from or
sales to the Company. Since January 1, 1994, no material current supplier of
the Company has notified the Company in writing of any recall or any warning
(other than warnings included as part of the product literature at the time of
sale) with respect to any products distributed by the Company. Schedule 5.24
lists the top twenty (20) suppliers of products distributed by the Company as
measured by sales revenue earned by the Company for the twelve month period
ended October 31, 1999.
5.25 Transactions with Affiliates. Except as disclosed in Schedule
----------------------------
5.25, neither the Company, nor any Affiliate of the Company (including, without
limitation, Seller), nor any director or officer of the Company or, to Seller's
Knowledge, any member of his or her immediate family, owns or has a controlling
ownership interest in any corporation or other entity that is a party to any
Commitment or material business arrangement or relationship with respect to the
business of the Company which will continue after the Closing.
5.26 Books of Account. The Company has not engaged in any material
----------------
transaction, maintained any bank account or used any funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the business. Schedule 5.26 sets forth
a list of each bank, broker or other depository with which the Company has an
account or safe deposit box and the names and numbers of such accounts or boxes.
Prior to the Closing, Seller shall deliver to Buyer the names of all persons
authorized to draw thereon or execute transactions.
5.27 Minute Books. The minute books of the Company, as previously made
------------
available to Buyer and its representatives, contain, in all material respects,
complete and accurate records of all meetings of and corporate actions or
written consents by the shareholders, Board of Directors, and committees of the
Board of Directors of the Company.
5.28 Warranty Claims. Except for law suits, damages and expenses covered
---------------
by insurance, but subject to applicable deductibles and self retention limits,
and except for matters for which Seller indemnifies Buyer pursuant to Section
9.1(d) and 9.1(e), there are, except for warranty claims of a nature and in
amounts incurred in the ordinary course of business and consistent with past
practice, no liabilities of the Company, fixed or contingent, asserted or
unasserted, with respect to any claim for the breach of any express or implied
product warranty with respect to any product sold by the Company prior to the
Closing Date.
-24-
<PAGE>
5.29 Insurance. Schedule 5.29 sets forth a list of all policies of
---------
liability, theft, fidelity, life, fire, product liability, workman's
compensation, health and other forms of insurance held by the Company and all
such policies are, to Seller's Knowledge, valid and enforceable policies and are
outstanding and duly in force, have been issued for the benefit of the Company
and all premiums which are due with respect thereto are paid to date. The
Company has promptly and properly notified its insurance carriers of any and all
claims known to it with respect to its operations or products for which it is
insured, except where the failure would not have a Material Adverse Effect.
Except for claims set forth on Schedule 5.29 and except for matters for which
Seller indemnifies Buyer pursuant to Sections 9.1(d) and 9.1(e), there are no
outstanding claims under any insurance policy issued for the benefit of the
Company. No written notice of cancellation or nonrenewal with respect to, or
disallowance of any claim under, any insurance policy has been received by the
Company since January 1, 1994. Except for matters for which Seller indemnifies
Buyer pursuant to Sections 9.1(d) and 9.1(e), the Company has not been refused
any insurance, nor has coverage been limited by any insurance carrier to which
the Company has applied for insurance or which has carried insurance for the
Company during the last three years.
5.30 Warranties. The Company makes no express warranties as to the
----------
products manufactured or sold, or the services provided by the Company other
than manufacturer's warranties.
5.31 Full Disclosure. There are no materially misleading misstatements
---------------
in any of the representations and warranties made by Seller in this Agreement
(including the Schedules with respect thereto and certificates delivered by
Seller pursuant to Section 3.2 of this Agreement) and, to Seller's Knowledge,
Seller has not omitted to state any fact necessary to make statements made
herein or therein not materially misleading, except that no representation or
warranty is hereby made with respect to general economic conditions or the
general condition of the industry in which the Company operates.
(b) Agreement by Buyer Regarding No Other Representations or Warranties
-------------------------------------------------------------------
by Seller. Buyer agrees that except for the representations and warranties
- ---------
(including the Schedules with respect thereto) made by Seller and expressly set
forth in Section 5 of this Agreement, neither Seller nor any Affiliate nor
representative thereof has made and shall not be construed as having made to
Buyer or to any representative or Affiliate thereof, and neither Buyer nor any
Affiliate nor any representative thereof has relied upon, any representation or
warranty of any kind. Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and warranties made by
Seller in Section 5 hereof, Buyer agrees that neither Seller nor any Affiliate
nor representative thereof makes or has made any representation or warranty to
Buyer or to any representative or Affiliate thereof with respect to:
(i) any projections, estimates or budgets heretofore or hereafter
delivered to or made available to Buyer or its counsel, accountants,
advisors, lenders, representatives
-25-
<PAGE>
or Affiliates of future revenues, expenses or expenditures, future results
of operations (or any component thereof), future cash flows (or any
component thereof) or future financial condition (or any component thereof)
of the Group or any Group Member or the future business, operations or
affairs of the Group or any Group Member; and
(ii) any other information, statement or documents heretofore or
hereafter delivered to or made available to Buyer or its counsel,
accountants, advisors, lenders, representatives or Affiliates with respect
to the Group or any Group Member or the business, operations or affairs of
the Group or any Group Member, except to the extent and as expressly
covered by a representation and warranty (including the Schedules with
respect thereto) contained in Section 5 hereof.
6. Representations and Warranties of Buyer. Buyer represents and warrants to
---------------------------------------
Seller as follows as of the date hereof:
6.1 Organization of Buyer; Authorization. Buyer is a corporation duly
------------------------------------
organized, validly existing and in good standing under the laws of New Jersey,
with full corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution, delivery and
performance of each Transaction Document has been duly and validly authorized by
all necessary corporate action of Buyer and this Agreement constitutes a valid
and binding obligation of Buyer, enforceable against it in accordance with its
terms.
6.2 Conflict as to Buyer. Neither the execution and delivery of the
--------------------
Transaction Documents nor the consummation of the purchase of the Shares by
Buyer will (a) violate any provision of the certificate of incorporation or by-
laws of Buyer, (b) violate, be in conflict with, or constitute a default (or an
event which, with notice of lapse of time or both, would constitute a default)
under any agreement or Commitment to which Buyer is party or (c) violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or other Governmental Body applicable to Buyer.
6.3 Consents and Approvals of Governmental Bodies. Except for filings
---------------------------------------------
under the HSR Act, no consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Body is required to be made or
obtained by Buyer in connection with the execution, delivery and performance of
the Transaction Documents by Buyer or the consummation of the purchase of the
Shares by Buyer.
6.4 Other Consents. No consent of any Person is required to be obtained
--------------
by Buyer to the execution, delivery and performance of the Transaction
Documents by Buyer or the consummation of the purchase of the Shares by Buyer.
7. Certain Agreements.
------------------
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<PAGE>
7.1 Access. Between the date of this Agreement and the earlier to occur
------
of the date of the termination of this Agreement and the Closing Date, Seller
shall, and shall cause the Company to, at Buyer's sole cost and expense, (a)
give Buyer and its authorized representatives and agents reasonable access, on
reasonable prior notice to Seller and during normal business hours, to all
plants, offices, warehouse and other facilities and properties of the Company,
to the customers, suppliers and accountants of the Company and to the books and
records of the Company, (b) permit Buyer and its authorized representatives and
agents to make inspections thereof and (c) cause its officers and its advisors
to furnish Buyer with such available financial and operating data and other
information with respect to the business and properties of the Company and to
discuss with Buyer and its authorized representatives and agents the affairs of
the Company, all as Buyer may from time to time reasonably request. Within
thirty (30) days after the end of each month, Seller shall provide Buyer with an
unaudited balance sheet and income statement as of the end of such month and
copies of all other monthly financial reports prepared by the Company for Seller
in the ordinary course of business.
7.2 Filings; Other Regulatory Matters.
---------------------------------
(a) As promptly as practical after the date hereof, Buyer and Seller
shall file with the Federal Trade Commission and the Antitrust Division of the
Department of Justice, the notification and other information required to be
filed under the HSR Act with respect to the transactions contemplated hereby.
Each of Buyer and Seller will, and Seller shall cause the Company to, use its
reasonable best efforts to ensure that all such filings by it shall be, as of
the date filed, true and accurate in all material respects and in accordance
with the requirements of the HSR Act and any such rules and regulations. Each
of Buyer and Seller agrees, and Seller shall cause the Company to, make
available, or cause to be made available, to the other, such information as each
of them may reasonably require relative to its business, assets and property and
to file any additional information required by such agencies under the HSR Act;
provided, that the parties shall have entered into mutually acceptable
- --------
arrangements to ensure the continued confidentiality of any such information.
(b) Each party hereto agrees, subject to applicable Laws relating to
the exchange of information, to promptly furnish the other party hereto with
copies of written communications (and memoranda setting forth the substance of
all oral communications) received by such party, or any of its Affiliates or
associates (as such terms are defined in Rule 12b-2 under the Exchange Act as in
effect on the date hereof), from or delivered by any of the foregoing to, any
Governmental Body relating to or in respect of the transaction contemplated
under this Agreement.
7.3 Tax Matters.
-----------
(a) Consistency Statement. Seller and Buyer agree that the entire
---------------------
purchase price shall be treated for Tax purposes as amounts received by Seller
for the sale of the Shares. The Purchase Price shall be allocated $71,000,000
to the Sexauer Shares and $14,000,000 to the
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<PAGE>
Trayco Shares. Neither Buyer nor Seller shall take, and Seller and Buyer, as
applicable, shall cause the Company to refrain from taking, any position
inconsistent with this understanding on any Tax Return, whether federal, state,
local or foreign. Any adjustments to the Base Purchase Price pursuant to Section
1.3 shall be allocated to the Sexauer Shares.
(b) Tax Returns.
-----------
(A) Seller shall prepare or cause to be prepared on a basis
consistent with past practice and shall file or cause to be filed all Federal
Income Tax Returns for the Company for all periods ending on or prior to the
Closing Date which are due after the Closing Date, and shall pay or cause to be
paid any and all Federal Income Taxes which are reflected as being owed by the
Company on such Tax Returns.
(B) Buyer shall prepare or cause to be prepared all other Tax
Returns and shall file or cause to be filed all Tax Returns for the Company for
(i) all periods ending after the Closing Date and (ii) for all periods ending on
or prior to the Closing Date (other than in respect of Federal Income Taxes, as
to which subsection (a) above shall be applicable) and shall pay or cause to be
paid any and all Taxes which are reflected as being owed by the Company on such
Tax Returns.
(C) Any Tax Returns prepared pursuant to this Section 7.3(b)
shall be prepared on a basis consistent with the last previous Tax Returns of
the Company, unless Seller and Buyer agree that there is no reasonable basis for
such position or that a change is necessary to comply with a change in Law.
Buyer shall afford Seller the opportunity to review, comment upon and suggest
changes or corrections to any Tax Return prepared by it or the Company pursuant
to Section 7.3(b)(B) and Seller shall afford Buyer the opportunity to review,
comment upon and suggest changes or corrections to information with respect to
the Company set forth in any Tax Returns prepared by it pursuant to Section
7.3(b)(A), in any case prior to the filing thereof and in no event less than 30
days prior to such filing.
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<PAGE>
(c) Cooperation on Tax Matters.
--------------------------
(A) Buyer, Company and Seller shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section 7.3 and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Buyer and the Company agree (i) to retain all books and records with
respect to Tax matters pertinent to the Company relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Seller, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, Buyer, the
Company or Seller, as the case may be, shall allow the other party to take
possession of such books and records.
(B) Buyer and Seller further agree, upon request, to use their
best efforts to obtain any certificate or other document from any Governmental
Body or any other Person as may be necessary to mitigate, reduce or eliminate
any Tax that could be imposed on the Company (including, but not limited to,
with respect to the transactions contemplated hereby).
(C) Buyer and Seller further agree, upon request, to provide the
other party with all information that either party may be required to report
pursuant to Section 6043 of the Code and all Treasury Regulations promulgated
thereunder.
(d) Tax Sharing Agreements. Buyer, Seller and the Company hereby
----------------------
agree that all tax sharing agreements or similar agreements with respect to or
involving Sexauer, Trayco, and each of their subsidiaries shall be and hereby
are terminated as of the Closing Date and, after the Closing Date, Sexauer,
Trayco, and each of their subsidiaries shall not be bound thereby or have any
liability, benefit or entitlement thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
-------------
registration and other similar Taxes (including any penalties and interest)
incurred in connection with this Agreement shall be paid by Seller when due, and
Seller will, at its own expense, file all necessary Tax Returns with respect to
all such transfer, documentary, sales, use, stamp, registration and other such
Taxes, and, if required by applicable law, Buyer will, and will cause its
Affiliates to, join in the execution of any such Tax Returns.
(f) Claims.
------
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(i) If a claim shall be made by any taxing authority, which, if
successful, might result in an indemnity payment by Seller to any Buyer
Indemnitee pursuant to Section 9 hereof (a "Tax Claim"), Buyer shall
promptly notify Seller in writing (a "Tax Notice") of such claim. If a Tax
Notice is not given to Seller within a sufficient period of time to allow
Seller effectively to contest such Tax Claim, taking into account the facts
and circumstances with respect to such Tax Claim, Seller shall not be
liable to any Buyer Indemnitee to the extent that Seller's position is
prejudiced as a result thereof.
(ii) Without limiting the generality of Section 9.6 hereof (but,
in the event of any conflict between Section 9.6 and this clause (ii), this
clause (ii) shall control), with respect to any Tax Claim which deals
solely with claims which if successful would result in an indemnity payment
by Seller to any Buyer Indemnitee pursuant to Section 9 hereof, Seller
shall have the right to control and conduct all proceedings and
negotiations in connection with such Tax Claim (including, without
limitation, selection of counsel) and, without limiting the foregoing, may
in its sole discretion pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with
respect thereto at its sole expense, and may, in its sole discretion,
either pay the Tax claimed and sue for a refund where applicable Law
permits such refund suits or contest the Tax Claim in any permissible
manner at its sole expense. Seller shall, within thirty (30) days of
receipt of a Tax Notice with respect to a Tax Claim (the "Tax Notice
Period"), notify Buyer in writing of its intention to control and conduct
the proceedings and negotiations in connection with such Tax Claim. In the
event that Seller does notify Buyer of its intention to control and conduct
the proceedings and negotiations in connection with any Tax Claim as
provided above, Buyer shall have the right to fully participate in such
proceedings and negotiations (including, without limitation, with counsel
of its choice), at its sole expense, and Seller shall fully cooperate with
Buyer in connection with such participation. If Seller does not deliver to
Buyer within the Tax Notice Period written notice that it will control and
conduct the proceedings and negotiations in connection with such Tax Claim,
Buyer may control, or cause the applicable Group Member to control, and
conduct such proceedings and negotiations in such manner as it may deem
reasonably appropriate. In the event that Seller does not exercise its
right to control and conduct the proceedings and negotiations in connection
with any Tax Claim as provided above, Seller shall have the right to fully
participate in such proceedings and negotiations (including, without
limitation, with counsel of its choice), at its sole expense, and Buyer
shall, and shall cause each Group Member to, fully cooperate with Seller
and its accountants and other representatives in connection with such
participation, and in all cases Buyer shall keep Seller fully informed as
to all matters concerning such Tax Claim and shall promptly notify Seller
in writing of any and all significant developments relating thereto.
Without limiting the provisions hereof, Buyer and each of its respective
Affiliates shall (and Buyer shall cause the Group Members to) fully
cooperate with Seller in contesting any Tax Claim controlled by Seller
pursuant to this Section 7.3(f)(ii), which cooperation shall include,
without limitation, the
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retention and (upon Seller's request) the provision to Seller of records
and information which are relevant to such Tax Claim, and making officers
and employees available on a timely and mutually convenient basis to
provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
(iii) Notwithstanding anything to the contrary contained herein,
in no event shall Buyer or any Group Member settle or otherwise compromise
any Tax Claim without Seller's prior written consent which may not be
unreasonably withheld.
(g) Seller shall be entitled to any net refunds of Income Taxes with
respect to a Group Member for any period or portion hereof that begins prior to
the Closing Date and ends on or before the Closing Date (whether or not such
period or portion thereof ends for applicable Income Tax purposes on or before
Closing Date), except to the extent such refund arises as the result of a
carryback of a loss or other Tax benefit from a period after the Closing Date.
Seller or its Affiliates may amend any Tax Return of Seller or any Group Member
for any period that ends, for applicable Income Tax purposes, on or before the
Closing Date without the prior written consent of Buyer; provided, however, that
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Seller shall not take any action that would have the effect of increasing the
Taxes of any Group Member for any taxable period (or portion thereof) beginning
after the Closing Date, in which event Buyer's prior written consent shall be
required, which consent shall not be unreasonably withheld or delayed. In no
event shall Buyer's written consent be required to amend any Tax Return which is
required by Law following resolution of a Tax dispute. Neither Buyer not any
Group Member shall amend, or take any similar action with respect to, any Tax
Return filed by Seller or by any Group Member with respect to any period that
ends, for applicable Income Tax purposes, on or before the Closing Date without
the prior written consent of Seller; provided that the foregoing shall not apply
to any amended Tax Return which may be required by Law following resolution of a
Tax dispute conducted in accordance with this Agreement. Buyer shall or shall
cause the Company to forward to Seller any refund of Income Taxes of the Company
pursuant to this subsection (g) within five (5) business days after such refund
is received (or reimburse Seller for any credit within five (5) business day
after the credit is allowed or applied against other Tax liability).
Notwithstanding the foregoing, the control of the prosecution of a claim for a
refund of Taxes paid pursuant to a deficiency assessed subsequent to the Closing
Date as a result of an audit shall be governed by the provisions of Section
7.3(f) hereof.
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7.4 Action by the Parties.
---------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto will use its best efforts to take or cause
to be taken all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including without limitation (i) the obtaining
of all necessary actions and non-actions, waivers and consents, if any, from any
Governmental Body, the making of all necessary registrations or the taking of
all reasonable steps as may be necessary to obtain an approval or waiver from,
or to avoid an action or proceeding by, any Governmental Body; (ii) the
obtaining of all necessary consents, approvals or waivers from any other Person;
(iii) the defending of any investigation, action, suit or other legal
proceeding, whether judicial or administrative, challenging this Agreement, or
the consummation of the transactions contemplated hereby; (iv) causing all the
conditions described in Articles 3 and 4, as applicable, to be satisfied; and
(v) the execution of all additional instruments necessary to consummate the
transactions contemplated by this Agreement.
(b) Seller shall cause the Company to comply with its obligations
under this Agreement which are to be performed prior to the Closing and Buyer
shall cause the Company to comply with its obligations under this Agreement
which are to be performed after the Closing.
(c) Without limiting the generality of subsection (a) above and
without limiting the condition set forth in Section 4.6 hereof, following
Closing, Buyer shall and shall cause the Company to use their respective best
efforts to cause substitute letters of credit and performance and bid bonds to
be issued in favor of and delivered to the holders of all Bonds which are not
canceled on or prior to the Closing Date.
7.5 Exclusivity.
-----------
(a) From the date hereof until the earlier of the Closing Date or the
termination of this Agreement, Seller shall not, and shall cause the agents,
officers, directors and representatives of the Company and any of their
Affiliates not to, directly or indirectly (i) solicit or initiate the submission
of proposals or offers from any Person for, (ii) participate in any discussions
or negotiate any terms pertaining to, or (iii) provide any nonpublic information
to any other Person, with respect to or in furtherance of, any proposal for a
merger or business combination involving, or acquisition of any interest in, or
(except in the ordinary course of business) sale of assets by, the Company,
except for the acquisition of the Shares by Buyer.
(b) From the date hereof until the earlier of the Closing Date or the
termination of this Agreement, Seller shall not and shall cause the agents,
officers, directors and representatives of the Company and any of their
Affiliates not to disclose Confidential Information (as defined in Section
7.6(c) hereof) relating to the business of the Company to any Person other than
as required by applicable Law, in order to enforce its rights hereunder, to
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auditors, counsel and other representatives, as may be compelled in any action
or suit, and to Governmental Bodies.
7.6 Restrictive Covenants.
---------------------
(a) Seller covenants that for the five (5) year period beginning on
the Closing Date, it will not, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as a partner, principal, agent,
representative, consultant, employee or otherwise with any business or
enterprise engaged directly or indirectly within any portion of the United
States or Canada in the Business. It is recognized by Buyer and by Seller that
the Business is and is expected to continue to be conducted throughout the
United States and Canada and that more narrow geographical limitations of any
nature on this non-competition covenant (and the non-solicitation covenant set
forth in Section 7.6(b) hereof) are therefore not appropriate. The foregoing
restriction shall not be construed to prohibit the ownership by Seller as a
passive investment, of not more than five percent (5%) of any class of
securities or other ownership interests of any Person which is engaged in any of
the foregoing businesses having a class of securities or other ownership
interests registered pursuant to the Securities Exchange Act of 1934.
(b) Seller further covenants that for a five (5) year period
beginning the Closing Date, it will not, either directly or indirectly, solicit
the employment of any person who is currently employed in a managerial capacity
by the Company on a full or part-time basis, and who is so employed at the time
of such solicitation.
(c) Seller recognizes and acknowledges that by reason of Seller's
ownership of the Company it has had access to confidential information relating
to the Business including without limitation, information and knowledge
pertaining to products and services offered, innovations, designs, ideas, plans,
trade secrets, proprietary information, advertising, distribution and sales
methods and systems, sales and profit figures, customer and client lists, and
relationships with dealers, distributors, wholesalers, customers, clients,
suppliers and others who have business dealings with the Business ("Confidential
Information"). Seller acknowledges that such Confidential Information is a
valuable and unique asset and covenants that it will not use or disclose any
such Confidential Information after the Closing Date to any Person for any
reason whatsoever, unless such information (a) is in the public domain through
no wrongful act of Seller, (b) has been rightfully received by Seller from a
third party without restriction and without breach of this Agreement, (c) is
disclosed to any Governmental Body or (d) is required to be disclosed by Law.
(d) Seller acknowledges that the restrictions contained in this
Section 7.6 are reasonable and necessary to protect the legitimate interests of
Buyer, and that any violation will result in irreparable injury to Buyer and the
Company.
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Seller agrees that Buyer and the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, which rights shall be cumulative and in addition to any other
rights or remedies to which Buyer may be entitled. In the event that any of the
provisions of this Section 7.6 should ever be adjudicated to exceed the time,
geographic, product or service, or other limitations permitted by applicable Law
in any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic, product or service, or other
limitations permitted by applicable law.
(e) The covenants set forth in this Section 7.6 shall be binding
upon the successors and assigns of substantially all of the assets of Seller,
except that, in the event of any such transaction, the foregoing shall not
prohibit any such successor or assignee from continuing any of its then existing
businesses.
7.7 Maintenance of Salespeople. Prior to the Closing Date, Seller agrees
--------------------------
to, and agrees to cause the Company to, use their respective commercially
reasonable efforts (which shall not include the payment or agreement to pay
money or to institute or increase compensation or other benefits) to maintain
employment of all salespeople employed by the Company as of the date hereof. In
the event a salesperson or officer leaves the employ of the Company for any
reason, Seller shall notify Buyer within three (3) business days of such
person's separation of employment from the Company or within three (3) business
days of the Company or Seller receiving written notice of such salesperson's
intent to leave the employ of the Company (and, in any event, prior to the
Closing if such termination occurs prior to the Effective Time).
7.8 Labor Relations. Buyer hereby agrees to defend and indemnify Seller
---------------
Indemnitees, and to hold each Seller Indemnitee harmless, from and against all
Losses, which are sustained or incurred by any Seller Indemnitee by reason of or
in connection with any claim, proceeding or suit brought against any Seller
Indemnitee under the Worker Adjustment Retraining and Notification Act, or any
local, state, federal or foreign law, which relates to actions taken by Buyer or
any Group Member at any time after the Closing with regard to any site of
employment or one or more facilities or operating units within any site of
employment of any Group Member.
7.9 Access to Information.
---------------------
(a) Without limiting the generality of Section 7.3(c), for a period
of six years from the Closing Date, Buyer shall (and shall cause each of the
Group Members to), during normal business hours and upon reasonable advance
notice, make available and provide Seller and its representatives (including,
without limitation, counsel and independent auditors) with access to the
facilities and properties of each of the Group Members and to all information,
files, documents and records (written and computer) relating to any Group Member
or any of its businesses or operations for any and all periods prior to or
including the Closing Date which Seller (or any Affiliate) requires with respect
to any reasonable business purpose (other than competing with the Company or
soliciting employees of the Company after the end of the five year restrictive
period), and shall (and shall cause each of the Group Members to) cooperate
fully with Seller and
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its representatives (including, without limitation, its counsel and independent
auditors) in connection with the foregoing, including, without limitation, by
making tax, accounting and financial personnel and other appropriate employees
and officers of each Group Member available to Seller and its representatives
(including, without limitation, counsel and independent auditors). Without
limiting the requirements of Section 7.3(c) and Section 7.13, during such six
year period, Buyer shall retain all information, files, documents and records
relating to the Group Members using the same document retention policies that it
applies to its own similar information, files, documents and records.
(b) Without limiting the generality of Section 7.3(c), Section 7.9(a)
or Section 7.13, from and after the Closing Date, Buyer shall (and shall cause
each of the Group Members to) fully cooperate with and assist, and shall cause
its officers and employees (and the officers and employees of the Group Members)
to fully cooperate with and assist, Seller and its representatives (including,
without limitation, its counsel and independent auditors), in connection with:
(i) the preparation of the Group Members' (or any Group
Member's) portion of any Federal consolidated Income Tax Return, and of any
state consolidated, combined or unitary Income Tax Return, for any period
for which Seller is required to prepare such Tax Returns pursuant to
Section 7.3(b)(A), and to that end Buyer shall cause the Group Members to
prepare for and to deliver to Seller, within thirty (30) days following the
Closing Date, that portion of Seller's Federal consolidated Income Tax
Returns or Seller's state consolidated, combined or unitary Income Tax
Returns for any period for which any Group Member is included thereon which
relates to the Group Members and the Group Members' income, gains, losses,
deductions and credits for any such period and shall cause the officers and
employees of the Group Members to cooperate and assist Seller in Seller's
review and verification of the same;
(ii) any Tax audit, examination or proposed or final assessment
or the like relating to Seller, the Group Members (or any Group Member);
(iii) the preparation of any financial statements of the Group
Members (or any Group Member) for (or including) any period (or portion
thereof) ending on or before the Effective Time, and to that end Buyer
shall cause each Group Member to prepare for and to deliver to Seller any
financial information of the type historically prepared by any Group Member
for all periods (or portions thereof) ending on or before the Effective
Time and to cause the officers and employees of any Group Member to fully
cooperate and assist Seller in its review and verification of the same;
(iv) the preparation of the Closing Balance Sheet and the
calculation of the Closing Date Net Working Capital;
(v) providing factual information regarding the operation of
the Company prior to the Effective Time in connection with any disputes
under this Agreement, including, without limitation, any disputes under
Sections 1.3 and 7.3(b) hereof; or
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(vi) the investigation, prosecution or defense of or response to
any actions, claims or inquiries commenced by any Buyer Indemnitee, or by
any Governmental Body or any other Person (including arising out of matters
set forth in Section 9.1 hereof), against Seller (or any other Seller
Indemnitee or any Affiliate thereof) or against Buyer (or any other Buyer
Indemnitee), or by Seller (or any Affiliate thereof) against Buyer (or any
other Buyer Indemnitee).
(c) The cooperation and assistance of Buyer and the Group Members and
their respective officers and employees under this Section 7.9 shall be rendered
during normal business hours and in a manner which does not materially disrupt
the business and operations of the applicable Group Member, and Buyer shall use
its best efforts in the case of the preparation of any Tax Return and any
financial statement, to cause such cooperation and assistance to be rendered
without adverse consequences to Seller during the period that each of the Group
Members has normally assisted Seller in the preparation of Tax Returns and
financial statements. Seller shall reimburse Buyer and the Group Members for
any extraordinary actual out-of-pocket expenses incurred by them in the
preparation of any such Tax Returns and any such financial statement (however,
such obligation shall not extend to any reimbursement of any cost or expense for
time spent by officers or employees of the Group Members or Buyer in the
assistance or preparation thereof, any administrative overhead of any Group
Members or Buyer or any accounting or other ordinary course fees and expenses).
7.10 Insurance Matters.
-----------------
(a) (i) Buyer and each Group Member acknowledge and agree that,
effective on December 31, 1999, coverage under all health and medical insurance,
plans or programs sponsored or maintained by Seller or any Affiliate thereof
(other than the Group Members) for all Employees, Former Employees and their
Beneficiaries as applied to any and all of the Group Members (collectively, the
"Seller's Health Plan") shall terminate and be of no further force or effect;
(ii) Any expense incurred by an Employee, Former Employee or
Beneficiary prior to the Effective Time that would have been covered under
Seller's Health Plan shall continue to be the responsibility of Seller. From
and after the Effective Time, Buyer shall cause the Group Members to pay to
Seller any premium or other charges due in respect of coverage of Employees,
Former Employees or Beneficiaries under Seller's Health Plan through the
Effective Time within thirty (30) days after receipt of an invoice or statement
relating to the same. The amount of such premiums and charges shall be
calculated in accordance with Seller's and the Group Members' prior practices
regarding such premiums and charges. Buyer agrees to notify all Employees,
Former Employees and their Beneficiaries of the manner in which pre-Effective
Time expenses under Seller's Health Plan are to be submitted for reimbursement
and to request that all such expenses be submitted within sixty (60) days after
the Closing Date;
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(iii) During the period from the Effective Time and until
December 31, 1999 (the "Continuation Period"), Seller shall continue coverage
for Employees under Seller's Health Plan; provided, however, during the
-------- -------
Continuation Period, any such coverage shall be determined without the benefit
of stop loss protection and excess insurance (in either case except to the
extent Seller is actually reimbursed by an insurance carrier) or internal
pooling arrangements. Buyer shall or shall cause the Company to reimburse Seller
for all of the costs (including, for so long as applicable beyond the
Continuation Period, run-out and benefits coverage continuation provided
pursuant to Part 6 of Subtitle B of Title I of ERISA and/or Section 4980B of the
Code) of this continued coverage for covered expenses incurred by Employees
after the Effective Time in excess of the Premium Credit Amount by remitting to
Seller promptly upon being invoiced for the applicable premiums, premium
equivalents, losses and charges and reconciliation items that it was remitting
for such coverages immediately prior to the Closing Date; provided, however,
-------- -------
that any such amount shall be determined without the benefit of stop loss
protection and excess insurance (in either case except to the extent Seller is
actually reimbursed by an insurance carrier) or internal pooling arrangements.
Seller shall remit to Buyer any associated reconciliation amount in Buyer's
favor that was not credited against amounts owned. Neither Buyer nor the Group
Members shall have any obligation to Seller to provide any employee benefits
after December 31, 1999.
(iv) Buyer and each Group Member acknowledge and agree that,
effective as of the Effective Time, coverage for all Employees, Former Employees
and their Beneficiaries under all life insurance, disability, AD&D or any other
welfare or benefit plans or programs sponsored or maintained by Seller as
applied to any and all of the Group Members shall terminate and be of no further
force or effect.
(b) From and after the Effective Time, (i) the Group Members shall
cease to be covered with respect to any event or occurrence after the Effective
Time under all insurance policies covering any Group Member and (ii) with
respect to any event or occurrence prior to the Effective Time, the Group
Members shall, subject to the terms and conditions of such policies, continue to
be entitled to the benefits thereof.
(c) Buyer shall cause the Group Members to pay to Seller from time to
time any and all Retro-Premium Insurance Amounts within thirty (30) days after
receipt by Buyer of an invoice from Seller that Seller has paid Retro-Premium
Insurance Amounts other than in respect of matters for which Seller indemnifies
Buyer pursuant to Section 9.1(d) or 9.1(e) hereof. Buyer shall cause the Group
Members to promptly notify Patterson Planning and Seller of any claims which
would be subject to any insurance coverage maintained by Seller or any of its
Affiliates (other than any Group Member) for the benefit of any Group Member and
based on events or occurrences on or prior to the Closing Date, and shall cause
the Group Members to keep Patterson Planning and Seller advised of the status
(and any developments regarding) of any such claims, and to cooperate with
Patterson Planning and Seller and any insurance carrier in connection with the
investigation and defense of any such claims, all in accordance and
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consistent with the standard practices and procedures established from time to
time by Patterson Planning and Seller or any such insurance carrier.
(d) No covenant or agreement by any party hereto to indemnify any
other party hereto shall release, or be deemed to release, any insurer or other
indemnitor of any Losses which might be the basis for any Indemnification
Matter.
(e) Effective as of the Closing Date, Seller shall remain
responsible under Seller's Health Plan in respect of Former Employees under
Seller's Health Plan for benefits coverage continuation provided pursuant to
Part 6 of Subtitle B of Title I of ERISA and/or Section 4980B of the Code and
for post-retirement medical benefits.
7.11 Certain Agreements. Seller shall retain full responsibility for any
------------------
obligation of any Group Member to pay (i) any bonus, special or incentive
compensation, whether presently due or due after the Closing (other than all
salary continuation obligations), that in any case is related in any way to or
affected by the transactions contemplated hereunder and (ii) any payments owing
under the Phantom Stock Plan. At Seller's request, Buyer shall cause the
Company to pay such compensation. Seller shall promptly pay Buyer the amount
paid by the Company or its Affiliates, including any employer portions of Taxes
arising from such payments, net of any Tax benefits to be realized by the
Company or Buyer with respect to all such payments, to the extent that such Tax
benefits were not taken into account in a Seller Tax Period in the calculation
of Federal Income Taxes. The parties acknowledge and agree that the Company, as
a subsidiary of Seller, shall be entitled to deduct amounts paid under the
Phantom Stock Plan for Federal Income Tax purposes in respect of Seller Tax
Periods, irrespective of whether any such amounts are paid after the Closing
Date, such that Seller shall receive the benefit of any such deductions.
7.12 Checking Accounts. Seller hereby agrees to pay and be solely
-----------------
responsible for any check presented after the Closing Date on the accounts set
forth on Schedule 7.12 (the "Retained Accounts") or which was outstanding as of
the Closing Date but not included in the liabilities on the Closing Balance
Sheet. Buyer hereby agrees not to (and to cause each Group Member not to) write
any additional checks after the Closing Date on any of the Retained Accounts.
Seller hereby agrees not to write any additional checks on any account of a
Group Member after the Closing Date, except for the Retained Accounts. Seller
shall promptly either close the Retained Accounts or transfer ownership thereof
from the applicable Group Member to Seller.
7.13 Covered Matters.
---------------
(a) (i) It is understood and agreed by Buyer and each Group Member
that the Group Members are the owners of, and entitled to the benefits under,
certain insurance policies (the "Insurance Policies"), which Insurance Policies
cover claims and other matters which may be the subject of the indemnification
by Seller of Buyer Indemnities for asbestos claims and other product liability
claims as set forth in Section 9.1(d) and Section 9.1(e) hereof (the "Covered
Matters").
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(ii) Notwithstanding Section 9.6 hereof, Buyer and each Group
Member agree that, from and after the Closing Date, Seller shall have the sole
and exclusive right, exercised in its sole discretion, to assume and direct the
control of, and to conduct, prosecute and defend, all matters relating to or
arising out of the Insurance Policies and the Covered Matters. Seller's rights
referred to in the immediately preceding sentence shall include, without
limitation, the exclusive right, in its sole discretion, to (i) control and
conduct any and all proceedings, negotiations, settlements and related
activities in connection with the Insurance Policies and the Covered Matters,
(ii) retain (and dismiss) legal counsel and other advisors with respect thereto
as it deems necessary or appropriate, (iii) direct, control and conduct any and
all investigations, tests and studies, (iv) sue in the name of and on behalf of
each of the Group Members to enforce rights against the insurers under the
Insurance Policies, whether at law, in equity or otherwise, and (v) to take all
such other actions as may be necessary or appropriate, in Seller's sole
discretion, in connection with the Insurance Policies and the Covered Matters.
(iii) In the event that, for any reason, Seller is unable to
execute or enforce any of the rights and remedies under this Section 7.13, Buyer
and each of the Group Members shall, promptly at the request and at the sole
expense of Seller, take any and all actions necessary or appropriate for Seller
to obtain the full benefit of such rights and remedies.
(b) Buyer, each Group Member and Seller agree that, effective at the
Effective Time, each Group Member hereby sells, assigns and transfers to Seller
any and all rights, entitlements and benefits, and any and all remedies that
each Group Member may have at law, in equity or otherwise, with respect to and
under (i) the Insurance Policies and the Covered Matters, (ii) all proceeds from
all Insurance Policies, which proceeds may be applied by Seller in its sole
discretion, including, but not limited to, to satisfy or discharge judgments,
settlements and defense costs and expenses, (iii) each Group Member's right to
direct and to sue (whether at law, in equity or otherwise and whether for
declaratory judgment or otherwise) the insurers under the Insurance Policies,
all in the name and on behalf of the applicable Group Member (including, without
limitation, in order to enforce the coverages under the Insurance Policies) and
(iv) all attributes and incidents of ownership and coverage under each of the
Insurance Policies, all as shall be necessary or appropriate to obtain the
benefit of the Insurance Policies in respect of the Covered Matters. Without
limiting the generality of the foregoing, the rights and remedies referred to in
the immediately preceding sentence, shall include, without limitation, all
rights, remedies, benefits and entitlements under all of the Insurance Policies,
and any and all proceeds thereunder, maintained by or for the benefit of Group
Members covering (in whole or in part) any costs, expenses, settlements, damages
or other amounts relating to or arising out of any of the Covered Matters.
Buyer and each Group Member hereby agree that, in the event that Buyer or any
Group Member shall receive any proceeds from any of the Insurance Policies in
respect of a Covered Matter, such proceeds shall promptly be remitted and paid
to Seller, as Seller's sole and exclusive property. In the event that,
notwithstanding the foregoing, any such proceeds are retained by Buyer or any of
the Group Members, it is understood and agreed that such retention
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shall constitute indemnification by Seller of the Buyer Indemnities in respect
of Covered Matters under Section 9.1 hereof.
(c) Without limiting the generality of Sections 7.3 or 7.9 hereof,
from and after the Closing Date, Buyer and each of the Group Members shall fully
cooperate with and assist, and shall cause their respective officers and
employees to fully cooperate with and assist, Seller, the insurers under the
Insurance Policies and their respective representatives (including without
limitation, counsel) in connection with the Insurance Policies and the Covered
Matters. Such cooperation shall include, but not be limited to, at Seller's
request and at its sole expense (i) providing during normal business hours
officers and employees of the Group Members as witnesses and as sources of
information, (ii) providing access to and copies of such documents, financial
records and other information in the possession of the Group Members as Seller
deems necessary or appropriate in the conduct of the matters contemplated by
this Section 7.13 or which otherwise impact on or otherwise affect the Covered
Matters (including, without limitation, all computer sales records, original
vendor cards, product catalogs, sample boards and salesmen's records), (iii) as
necessary, executing and delivering pleadings, interrogatories and other court
papers and (iv) providing prompt notice to Seller (and at Seller's request
appropriate insurers and counsel) of the receipt by any Group Member of service
of process and any other written materials with respect to the Insurance
Policies or the Covered Matters.
(d) Notwithstanding anything to the contrary contained herein,
effective at the Effective Time, the Group Members hereby sell, assign and
transfer to Seller all handwritten ledger sheets/schedules showing prepaid
insurance during the period December 1948 through December 1966. Buyer and each
of the Group Members acknowledge and agree that possession of the foregoing
documents shall be transferred to Seller on or prior to the Closing Date.
7.14 Assignment of Claims. After the Closing Date, to the extent that any
--------------------
applicable Group Member has a claim against a Person, which claim is based on an
Indemnification Matter pursuant to Sections 9.1(c), 9.1(d) or 9.1(e), such
applicable Group Member hereby assigns to Seller such Group Member's right,
title and interest in and to such claim that such Group Member has against such
Person up to the amount incurred by Seller and its Affiliates in connection with
the defense of such claim and the amount of the indemnification by Seller of
Buyer Indemnities under such Sections.
7.15 Accounts Receivable.
-------------------
(a) Following the 150th day after the Closing Date, Buyer shall send to
Seller notice signed by its President or Chief Financial Officer of the amount
(the "Uncollected Amount") of the accounts receivable of the Company arising
prior to the Closing Date which have not been collected (the "Receivables
Notice") if the Uncollected Amount is in excess of the reserve for bad debt set
forth on the Closing Balance Sheet. Upon the delivery of the Receivables
Notice, Buyer shall have the option, but not the obligation, to sell to Seller,
in which event Seller shall purchase, the accounts receivable of the Company
arising prior to the Closing Date which have
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not been collected (the "Uncollected Accounts") from the Company. In the event
that Buyer exercises its option to sell the Uncollected Accounts to Seller
pursuant to this Section, Seller shall pay to Buyer the amount by which the
Uncollected Amount exceeds the reserve for bad debt set forth on the Closing
Balance Sheet in immediately available funds within ten business days of
delivery of the Receivables Notice.
(b) Buyer shall apply all payments from customers which are accounts
receivable as directed by such customer. If the customer fails to direct
payment, the payment will be placed in an open account and the customer will be
telephoned to request direction as to which invoice the payment relates, the
payment shall be credited in accordance with the customer's instructions. In
the absence of direction from the customer after Buyer has requested direction,
payment shall be applied to the oldest account receivable first. Buyer shall
cause the Company to collect all of the accounts receivable of the Company
arising prior to the Closing Date in good faith and in a manner consistent with
the Company's standard collection practices. If a customer asserts that the
sole reason for failure to pay the accounts receivable is an action or omission
of the Company following the Closing, such outstanding accounts receivable shall
not be considered part of the Uncollected Amount.
7.16 Automobile Leases. Reference is made to the motor vehicle leases set
-----------------
forth on Schedule 5.15(f)(2) and Schedule 5.15.(f)(3) (the "Automobile Leases").
Seller shall use commercially reasonable efforts to obtain the consent of the
other contracting party to assign such Automobile Lease to the Company prior to
the Closing Date. In the event that Seller is able to obtain such consent, the
Company shall assume the liabilities and obligations of Seller arising or to be
performed under such Automobile Leases. In the event that Seller is unable to
obtain such consent, Seller shall not terminate the Automobile Leases and the
Company will make the payments under the Automobile Leases and insure the
automobiles and otherwise abide by the terms of the Automobile Leases.
8. Conduct of the Company's Business Prior to the Closing.
------------------------------------------------------
8.1 Operation in Ordinary Course. Between the date of this Agreement and
----------------------------
the earlier to occur of the termination of this Agreement and the Closing Date,
the Company shall, and Seller shall cause the Company to, conduct its businesses
in all material respects in the ordinary course and consistent with past
practice.
8.2 Business Organization. Between the date of this Agreement and the
---------------------
earlier to occur of the termination of this Agreement and the Closing Date, the
Company shall use commercially reasonable efforts (which shall not include the
payment or agreement to pay money or to institute or increase compensation or
other benefits) and Seller shall cause the Company to use commercially
reasonable efforts, to (a) preserve substantially intact the business
organization of the Company and keep available the services of the present
officers and employees of the Company, and (b) preserve in all material respects
the present business relationships of the Company.
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8.3 Corporate Organization. Between the date of this Agreement and the
----------------------
earlier to occur of the termination of this Agreement and the Closing Date,
Seller shall not cause or permit any amendment of the certificate of
incorporation or by-laws (or other governing instrument) of the Company, and the
Company shall not and Seller shall cause the Company not to:
(a) issue, sell or otherwise dispose of any equity securities of the
Company or any of its subsidiaries, or create or suffer to be created any
Encumbrance thereon, or create, sell or otherwise dispose of any options,
rights, conversion rights or other agreements or commitments of any kind
relating to the sale or disposition of any equity securities of the Company or
any of its subsidiaries;
(b) reclassify, split up or otherwise change any of its equity
securities;
(c) grant any general increase in the rates of pay of its hourly-paid
employees, grant any increase in the salary or other compensation of any of its
officers or other salaried employees or grant any bonuses of any kind to any of
its employees, except, in any case, pursuant to existing compensation, bonus and
incentive plans and policies;
(d) be party to any merger, consolidation or other business
combination;
(e) sell, lease, license or otherwise dispose of any of its
properties or assets (including without limitation, rights with respect to any
Intellectual Property or other proprietary rights), except in the ordinary
course of business;
(f) organize any new subsidiary or acquire any equity securities of
any Person or any equity or ownership interest in any business; or
(g) commit to do any of the foregoing.
8.4 Other Restrictions. Between the date of this Agreement and the
------------------
earlier to occur of the termination of this Agreement and the Closing Date, the
Company shall not, and Seller shall cause the Company not to:
(a) except for intercompany borrowings and/or loans with, to or from
Seller and its Affiliates, borrow any funds or otherwise become subject to,
whether directly or by way of guarantee or otherwise, any indebtedness for
borrowed money;
(b) except for Permitted Liens, create any material Encumbrance on
any of its material properties or assets;
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(c) create or materially modify, except as noted in the Schedules to
this Agreement, any bonus, deferred compensation, pension, profit sharing,
retirement, insurance, stock purchase, stock option, or other fringe benefit
plan, arrangement or practice or any other employee benefit plan (as defined in
Section 3(3) of ERISA);
(d) terminate the employment of any officer, salesperson or other key
employee of the Company for any reason or permit any such employee to resign
from the Company, in any case, without giving notice to Buyer within three (3)
business days after, as applicable, such termination or receiving written notice
of (i) such termination or resignation or (ii) such employee's intention to
terminate employment or resign;
(e) make any capital expenditure or acquire any property or assets
(other than inventory, raw materials and supplies) for a cost in excess of
$50,000 in any one case or $100,000 in the aggregate;
(f) enter into any agreement that materially restricts the Company or
any of its subsidiaries from carrying on its business;
(g) pay, discharge or satisfy any material claim, liability or
obligation, absolute, accrued, contingent or otherwise, other than the payment,
discharge or satisfaction in the ordinary course of business;
(h) cancel or waive any material claims or rights;
(i) exercise any material right or option under any Real Property
Lease or extend or renew any Real Property Lease;
(j) enter into any amendment, modification, waiver, termination,
assignment, mortgage or hypothecation of any Real Property Lease or sublet or
encumber all or any portion of any Leased Real Property;
(k) acquire or purchase any interest in real property, including,
without limitation, fee and leasehold interests;
(l) sell, dispose of, transfer, mortgage, hypothecate or encumber all
or any portion of the Owned Real Property; or
(m) open any additional checking or money market accounts other than
the Retained Accounts.
8.5 Real Property Rights Clarification. On or prior to the Closing Date,
----------------------------------
Seller shall deliver or cause to be delivered to Buyer executed satisfaction or
discharges in recordable form of all mortgages which encumber the Owned Real
Property or any lease of any Real Property.
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<PAGE>
9. Indemnification.
---------------
9.1 Indemnification by Seller. Subject to the limitations contained in
-------------------------
this Section 9, after the Closing Date, Seller shall indemnify Buyer, its
successors and assigns, and each of their respective directors, officers and
agents (the "Buyer Indemnitees") against and hold each of them harmless from any
and all claims, losses, damages (excluding any consequential damages, punitive
damages and lost profits), fines, penalties, liabilities and expenses
(including, without limitation, remediation or clean up costs, settlement costs
and any legal, accounting and other expenses for investigating or defending any
actions or threatened actions, or in asserting, preserving or enforcing any
indemnification rights hereunder) ("Losses") incurred by such Buyer Indemnitee
in connection with or arising out of each and all of the following:
(a) any breach of any representation or warranty made by Seller in
this Agreement (except with respect to clause (c) of the definition of Permitted
Liens and except with respect to Sections 5.7, 5.13(i) and 5.31 (in each case,
which shall retain any materiality or Material Adverse Effect qualifier
contained therein), without regard to any materiality or Material Adverse Effect
qualifier contained therein);
(b) any breach of any covenant, agreement or obligation of Seller to
be performed after the Closing Date contained in this Agreement or any other
certificate or document delivered pursuant to this Agreement;
(c) any liability to a Governmental Body arising out of unredeemed
credits for merchandise returned prior to the Closing in excess of the reserve
therefor on the Closing Balance Sheet;
(d) any asbestos claims arising out of the sale of products by the
Company prior to the Closing Date to the extent not actually paid by insurance;
(e) any product liability claims arising out of occurrences occurring
prior to the Closing Date and arising out of the sale of products by the Company
prior to the Closing Date to the extent not actually paid by insurance;
(f) any liability for Federal Income Taxes of any Group Member,
including but not limited to under Treasury Regulation Section 1.1502-6, with
respect to any Seller Tax Period. For purposes of this Agreement, all Federal
Income Taxes with respect to any Group Member shall be apportioned between the
Seller Tax Period and the period beginning the day after the Closing Date, as
though the taxable year of the Group Member terminated on the Closing Date;
(g) any liability arising under the Management Agreement or the
Phantom Stock Plan; and
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<PAGE>
(h) any liability for the occurrence of workers compensation claims
occurring prior to the Closing Date to the extent exceeding the reserve for
workers compensation claims on the Closing Balance Sheet.
9.2 Indemnification by Buyer. Subject to the limitations contained in
------------------------
this Section 9, after the Closing Date, Buyer shall indemnify and hold harmless
Seller, its successors and assigns, and each of their respective employees,
directors, officers, stockholders and agents (the "Seller Indemnitees") against
and hold each of them harmless from any and all Losses incurred by such Seller
Indemnitee in connection with or arising out of each and all of the following:
(a) any breach of any representation or warranty made by Buyer in
this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto;
(b) the breach of any covenant, agreement or obligation of Buyer's or
the Company (to be performed after the Closing), contained in this Agreement or
any certificate or document delivered pursuant to this Agreement;
(c) any of the Bonds; and;
(d) any of the Automobile Leases.
9.3 Certain Limits On and Provisions Relating to Indemnification.
------------------------------------------------------------
(a) Notwithstanding the foregoing, with respect to any claim by a
Buyer Indemnitee for indemnification under Section 9.1(a) (other than any claims
for any inaccuracy in or breach of Section 5.1(a) or Sections 5.3 or 5.17
(insofar as such Section 5.17 covers Income Taxes)), such Buyer Indemnitee may
not seek indemnification with respect to any claim for Losses until the sum of
all Losses for which such Buyer Indemnitee is seeking indemnification under
Section 9.1(a) equals or exceeds $425,000 and then only for such excess. The
maximum aggregate amount recoverable from Seller with respect to any Losses in
connection with claims by a Buyer Indemnitee for indemnification under Section
9.1(a) (other than claims for any inaccuracy in or breach of Section 5.1(a) or
Sections 5.3 or 5.17) shall not exceed $25,000,000. For purposes of calculating
the amount of Losses for which a Buyer Indemnitee or Seller Indemnitee may be
entitled, only Losses in excess of $5,000, individually, shall be considered.
(b) Notwithstanding anything to the contrary contained herein, no
Buyer Indemnitee shall be entitled to indemnification for any Losses to the
extent that the Losses incurred or sustained by a Buyer Indemnitee are reflected
on the Closing Balance Sheet as a current liability and are included in the
calculation of Closing Date Net Working Capital.
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<PAGE>
9.4 Procedure for Claims.
--------------------
(a) Any Person who desires to seek indemnification under any part of
this Section 9 (each, an "Indemnified Party") shall give written notice in
reasonable detail (a "Claim Notice") to each party responsible or alleged to be
responsible for indemnification hereunder (an "Indemnitor") prior to any
applicable Expiration Date. Such notice shall briefly explain the nature of the
claim and the parties known to be involved, and shall specify the amount of
Losses thereof to the extent then known. If the matter to which a claim relates
shall not have been resolved as of the date of the Claim Notice, the Indemnified
Party shall estimate the amount of the Losses in the Claim Notice, but also
specify therein that the claim has not yet been liquidated (an "Unliquidated
Claim"). If an Indemnified Party gives a Claim Notice for an Unliquidated
Claim, the Indemnified Party shall also give a second Claim Notice within a
reasonable period after the matter giving rise to the claim becomes finally
resolved (the "Liquidated Claim Notice") and the Liquidated Claim Notice shall
specify the amount of the Losses.
(b) If any Indemnitor shall be obligated to indemnify an Indemnified
Party pursuant to this Section 9, such Indemnitor shall pay to such Indemnified
Party the amount to which such Indemnified Party shall be entitled within
fifteen (15) days after the day on which such Indemnitor became so obligated to
the Indemnified Party.
(c) Any Claim Notice shall be considered timely made for the purposes
of this Section 9 if given prior to the termination of the applicable Expiration
Date and in accordance with the notice requirements of Section 11.
9.5 Claims Period. Any claim for indemnification under this Section 9
-------------
shall be made by giving a Claim Notice under Section 9.4 on or before the
applicable "Expiration Date" specified below in this Section 9.5. The following
claims shall have the following respective "Expiration Dates": (a) April 30,
2001 for any claims that are not specified in any of the succeeding clauses; (b)
the date on which the applicable statute of limitations expires for any claim
for Losses related to (i) a breach of any covenant or agreement to be performed
after the Closing Date, (ii) a breach of any representations or warranties of a
party to this Agreement that were made with an intent to mislead or defraud or
with a reckless disregard of the accuracy thereof or (iii) a breach of the
representation and warranty contained in Sections 5.1(a), 5.3 or 5.17; (c) in
perpetuity for any claim for Losses related to or arising under Sections 9.1(c),
9.1(d) or 9.1(e); or (d) the fifth anniversary of the Closing Date for a breach
of the representation and warranty contained in Section 5.19. If more than one
of such Expiration Dates applies to a particular claim, the latest of such
Expiration Dates shall be the controlling Expiration Date for such claim. So
long as an Indemnified Party gives a Claim Notice for an Unliquidated Claim on
or before the applicable Expiration Date, such Indemnified Party shall be
entitled to pursue its rights to indemnification regardless of the date on which
such Indemnified Party gives the related Liquidated Claim Notice.
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<PAGE>
9.6 Third Party Claims.
------------------
(a) As soon as is reasonable following the receipt of written notice
of a claim by a third party (a "Third Party Claim"), the party receiving such
Third Party Claim shall send a Claim Notice and, if applicable, a Liquidated
Claim Notice as required pursuant to Section 9.4(a). Failure of the Indemnified
Party to give a Claim Notice of such Third Party Claim to the Indemnitor shall
not relieve the Indemnitor of any liability pursuant to this Section 9 (except
(i) to the extent that the Indemnitor shall suffer actual prejudice thereby or
(ii) if the Claim Notice was sent after the applicable Expiration Date). Except
as hereinafter provided in this Section 9.6, the Indemnified Party shall not,
and the Indemnitor shall, have the right (using counsel reasonably satisfactory
to the Indemnified Party) to contest, defend, litigate or settle such Third
Party Claim which involves (and continues to involve) solely monetary damages;
provided that the Indemnitor shall have notified the Indemnified Party in
writing of its intention to contest, defend or litigate such Third Party Claim
within sixty (60) days of the Indemnified Party having given the Claim Notice to
the Indemnitor (or such shorter period as may be required to file an answer or
take other action to contest the Third Party Claim) and provided further that
the Indemnitor shall diligently contest the Third Party Claim (the condition
being referred to as the "Litigation Condition"). The Indemnified Party shall
have the right to participate in, and to be represented by counsel (at its own
expense) in any such contest, defense, litigation or settlement conducted by the
Indemnitor; provided, however, that the Indemnified Party shall be entitled to
reimbursement therefor after the Indemnified Party shall give written notice to
the Indemnitor of its failure to satisfy the Litigation Condition. In addition,
the Indemnitor may not settle any Third Party Claim seeking specific performance
or other equitable relief by or against the Indemnified Party if the result of
such settlement could have a Material Adverse Effect on the Company.
(b) Except as otherwise provided herein, the Indemnified Party, if it
shall have assumed the defense of any Third Party Claim as provided for in this
Agreement, shall not consent to a settlement of, or the entry of any judgment
arising from, any such Third Party Claim without the prior written consent of
the Indemnitor (which consent shall not be unreasonably withheld or delayed).
The Indemnitor shall not, without the prior written consent of the Indemnified
Party, enter into any compromise or settlement which commits the Indemnified
Party to take, or to forebear to take, any action or which does not provide for
a complete release by such third party of the Indemnified Party. The
Indemnified Party shall have the sole and exclusive right to settle any Third
Party Claim, on such terms and conditions as it deems reasonably appropriate, to
the extent such Third Party Claim involves solely equitable or other non-
monetary relief applicable solely to the Indemnified Party. All expenses
(including, without limitation, reasonable attorneys fees) incurred by the
Indemnitor in connection with the foregoing shall be paid by the Indemnitor. No
failure by an Indemnitor to acknowledge in writing its indemnification
obligations under this Section 9 shall relieve it of such obligations to the
extent they exist.
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<PAGE>
(c) If an Indemnified Party is entitled to indemnification against a
Third Party Claim, and the Indemnitor fails to accept a tender of, or assume,
the defense of a Third Party Claim pursuant to this Section 9.6, or if the
Indemnitor fails to meet the Litigation Condition, (i) the Indemnitor shall not
be entitled, or shall lose its right, to contest, defend, litigate and settle
such a Third Party Claim and (ii) the Indemnified Party shall have the right,
without prejudice to its rights of indemnification hereunder, in its discretion
exercised in good faith, to contest, defend and litigate such Third Party Claim,
and may settle such Third Party Claim, either before or after the initiation of
litigation, at such time and upon such terms as the Indemnified Party deems fair
and reasonable, provided that at least three (3) business days prior to any such
settlement, written notice of its intention to settle is given to the
Indemnitor. If, pursuant to this Section 9.6, the Indemnified Party so
contests, defends, litigates or settles a Third Party Claim for which it is
entitled to indemnification hereunder, the Indemnified Party shall be reimbursed
by the Indemnitor for the Losses of contesting, defending, litigating and/or
settling the Third Party Claim which are incurred from time to time, forthwith
following the presentation to the Indemnitor of itemized bills for said Losses.
(d) Without limiting the generality of Section 7.3(c), Section 7.9 or
Section 7.13, Buyer shall cause the employees of the Company to cooperate with
Seller in defending any Third Party Claims in which Seller is the Indemnified
Party or is responsible pursuant to Section 9.1.
9.7 Effect of Investigation or Knowledge.
------------------------------------
(a) Any claim by a Buyer Indemnitee for indemnification shall not be
adversely affected by any investigation by or opportunity to investigate
afforded to Buyer, nor shall such a claim be adversely affected by Buyer's
knowledge on or before the Closing Date of any breach of the type specified in
Section 9 or of any state of facts that may give rise to such a breach. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
adversely affect the right to indemnification, payment of Losses or other remedy
based on such representations, warranties, covenants or obligations.
(b) Notwithstanding Section 9.5 or Section 9.7(a) above, with respect
to any claim by Seller or Buyer against the other based upon a breach of any
covenant or agreement of the other herein which is required to be performed on
or prior to the Closing Date (the "Pre-Closing Covenants"), such Pre-Closing
Covenant shall not survive the Closing and the breach thereof shall be deemed to
have been waived by the party for whose benefit such Pre-Closing Covenant
exists; provided, that in the event that such breach has had a Material Adverse
Effect in the case of the Company, or a material adverse effect on Seller in the
case of Seller, and the party who has breached such Pre-Closing Covenant has
taken actions to intentionally conceal the existence of such breach from the
party for whose benefit such Pre-Closing Covenant exists, and provided further
that the party for whose benefit such Pre-Closing Covenant exists has sustained
or incurred Losses that would otherwise constitute an Indemnification Matter
covered by the
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<PAGE>
provisions of Sections 9.1 or 9.2, as the case may be, then the applicable Pre-
Closing Covenant shall be deemed to have survived the Closing.
9.8 Losses Net. The amount of Losses for which indemnification is
----------
provided under this Section 9 shall be net of Tax benefits to be received by the
Indemnified Party (assuming payment of the indemnification claim by the
Indemnifying Party), and net of any amounts recoverable by the Indemnified Party
under insurance policies with respect to such Losses.
9.9 Sole and Exclusive Remedy. After the Closing Date, each party hereto
-------------------------
acknowledges and agrees that such party's sole and exclusive remedy with respect
to Losses and any and all other claims relating to the subject matter of this
Agreement and the transactions contemplated hereby (other than disputes arising
under Section 1.3 hereof which disputes shall be resolved as set forth in such
Section and other than pursuant to Sections 7.3(b)(C) and 13.9) shall be in
accordance with, and limited by, the indemnification provisions set forth in
this Section 9 and in Section 12, except with respect to any intentional
misrepresentation, willful breach of representation set forth herein, or fraud
by Seller or Buyer.
10. Termination.
-----------
10.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing by:
(a) The mutual written consent of Buyer and Seller;
(b) Buyer, if the conditions set forth in Section 3 hereof shall not
have been met by December 31, 1999, except if such conditions have not been met
solely as a result of the action or inaction of the party seeking to terminate;
(c) Seller, if the conditions set forth in Section 4 hereof shall not
have been met by December 31, 1999, except if such conditions have not been met
solely as a result of the action or inaction of the party seeking to terminate;
(d) at any time before the Closing, by Buyer or Seller in writing, in
the event that any Governmental Body shall have issued an order, decree, ruling
or taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable; or
(e) at any time before the Closing, by either Buyer or Seller in
writing, without liability to the terminating party on account of such
termination, if such terminating party is not then in material breach of this
Agreement and the nonterminating party shall (i) fail to perform in any material
respect its agreements contained herein required to be performed on or prior to
the Closing Date and such nonterminating party has not cured in all material
respects such breach on or prior to December 31, 1999 and such nonterminating
party is diligently
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pursuing such cure; provided that it is understood and agreed that the
nonterminating party shall not have the ability or right to cure a breach of its
obligation to close the transactions contemplated hereby (notwithstanding that
the nonterminating party's conditions to such obligation to close contained in
Sections 3 or 4, as the case may be, have been satisfied or that the terminating
party stands ready, willing and able to satisfy such conditions but for such
breach) or (ii) breach in any material respect any of its representations or
warranties contained herein and such nonterminating party has not cured in all
material respects such breach on or prior to December 31, 1999 and such
nonterminating party is diligently pursuing such cure. Any termination pursuant
to this Section 10.1 (other than a termination pursuant to Section 10.1(a)
hereof) shall be effected by written notice from the party so terminating to the
other parties hereto.
10.2 Effect on Obligations. Termination of this Agreement pursuant to
---------------------
Section 10.1 shall terminate all obligations and liabilities of the parties to
each other hereunder, except for the obligations under Sections 10.3, 12 and 13;
provided that in the event of a termination of this Agreement pursuant to
subsection 10.1(e) above under circumstances where the nonterminating party has
breached its obligation to close the transactions contemplated hereby
(notwithstanding that the nonterminating party's conditions to such obligation
to close contained in Sections 3 or 4, as the case may be, have been satisfied
or that the terminating party stands ready, willing and able to satisfy such
conditions but for such breach), the terminating party may exercise all
available rights and remedies at law.
10.3 Return of Documentation. Following a termination in accordance with
-----------------------
Section 10, Buyer shall return all agreements, documents, contracts,
instruments, books, records, materials and all other information of the Group,
any Group Member or any Affiliate thereof provided by any Group Member, Seller
or by any representative of any Group Member or Seller to Buyer or any
representatives of Buyer in connection with the transactions contemplated by
this Agreement, and Seller shall return all agreements, documents, contracts,
instruments, books, records, materials and all other information of Buyer
provided by Buyer or any representative of Buyer to Seller in connection with
the transactions contemplated by this Agreement.
10.4 Sole and Exclusive Remedy. Prior to the Closing, each party hereto
-------------------------
acknowledges and agrees that such party's sole and exclusive remedy with respect
to Losses and any and all claims for any breach or liability under this
Agreement or otherwise relating to the subject matter of this Agreement and the
transactions contemplated hereby shall be solely in accordance with, and limited
by, Sections 10.1, 10.2 and 13.9 hereof, except with respect to any intentional
misrepresentation, willful breach of the covenants set forth herein or fraud by
Seller or Buyer.
<PAGE>
11. Notices. All notices, consents, assignments and other communications under
-------
this Agreement shall be in writing and shall be deemed to have been duly given
when (a) delivered by hand, (b) sent by telecopier (with receipt confirmed), (c)
three (3) business days after being sent by registered mail, return receipt
requested, or (d) one (1) business day after being sent by recognized overnight
delivery service, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate as to itself by notice to the other parties).
(a) If to Buyer:
Wilmar Industries, Inc.
303 Harper Drive
Moorestown, NJ 08057
Attention: General Counsel
Telecopy: (609) 439-1333
With a copy to:
Morgan, Lewis & Bockius LLP
502 Carnegie Center
Princeton, NJ 08540
Attention: Steven M. Cohen, Esq.
Telecopy: (609) 919-6639
(b) If to Seller:
The Dyson-Kissner-Moran Corporation
565 Fifth Avenue
New York, NY 10017
Attention: General Counsel
Telecopy: (212) 599-5105
With a copy to:
Tory Haythe
237 Park Avenue, 20th Floor
New York, NY 10017
Attention: Bradley P. Cost, Esq.
Telecopy: (212) 682-0200
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<PAGE>
12. Brokers and Finders.
-------------------
12.1 Seller's Obligations. Neither Buyer nor any Group Member shall have
--------------------
any obligation to pay any financial advisory, finder's fee or other compensation
to any Person claiming by, through or under Seller or any Group Member in
connection with the sale of the Shares contemplated by this Agreement and the
transactions contemplated herein, and Seller hereby agrees to defend, indemnify
and hold Buyer harmless from any Losses sustained or incurred by Buyer by reason
of any such claim for any such fee or other compensation.
12.2 Buyer's Obligations. Seller shall not have any obligation to pay any
-------------------
financial advisory, finder's fee or other compensation to any Person claiming
by, through or under Buyer (or any Affiliate thereof) in connection with this
Agreement and the transactions contemplated herein, and Buyer hereby agrees to
defend, indemnify and hold Seller harmless from any Losses sustained or incurred
by Seller by reason of any such claim for any such fee or other compensation.
It is understood and agreed that Buyer shall be solely responsible for the fees
and the expenses of Speery Mitchell & Company and William Blair & Company, LLC
in connection with this Agreement and the transactions contemplated hereby.
13. Miscellaneous.
-------------
13.1 Expenses. Each party shall bear its own expenses incident to the
--------
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
13.2 Captions; Section References. The captions in this Agreement are for
----------------------------
convenience of reference only and shall not be given any effect in the
interpretation of this Agreement. Unless otherwise specified, section references
in this Agreement refer to the applicable section or subsection of this
Agreement.
13.3 Modification and Waiver. No amendment, modification or alteration of
-----------------------
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly executed by the parties hereto, except that any of the
terms or provisions of this Agreement may be waived in writing at any time by
the party which is entitled to the benefits of such waived terms or provisions
of this Agreement and the same shall not be deemed to or constitute a waiver of
any other provision hereof (whether or not similar). No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof.
13.4 Exclusive Agreement; Amendment. This Agreement supersedes all prior
------------------------------
agreements among the parties with respect to its subject matter other than the
Confidentiality Agreement dated June 7, 1999, and is intended (with the
Schedules referred to herein) as a complete and exclusive statement of the terms
of the agreement among the parties with respect thereto and cannot be changed or
terminated orally.
-52-
<PAGE>
13.5 Governing Law. This Agreement and (unless otherwise provided) all
-------------
amendments hereof and waivers and consents hereunder shall be governed by the
internal law of the State of New Jersey, without regard to the conflicts of law
principles thereof.
13.6 Binding Effect. This Agreement shall inure to the benefit of and be
--------------
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other party.
13.7 Public Announcements. No party hereto shall make any public
--------------------
statements, including without limitation, any press releases, with respect to
this Agreement and the transactions contemplated hereby without the prior
written consent of the other party except as may be required by law and then,
only after reasonable prior notice to the other party hereto.
13.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
13.9 Specific Performance and Injunctive Relief. Each of the parties
------------------------------------------
acknowledges and agrees that the other party would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each of the
parties agrees that the other party shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter in addition to any other remedy to which it may be
entitled as expressly set forth in this Agreement.
13.10 Waiver of Conflict of Interest Claim. It is expressly understood
------------------------------------
and agreed that in the event of any controversy, suit, petition, arbitration or
other legal action which arises or is commenced in connection with this
Agreement, its schedules or exhibits, or the transactions contemplated hereby,
Seller, Buyer and each Group Member shall be free following the Closing to
retain counsel of their choice to represent them in connection with any such
controversy, suit, petition, arbitration or other legal action. In furtherance
of the foregoing, Buyer, each Group Member and Seller expressly waive any claim
of conflict of interest and agree that they will not take any steps following
the Closing to attempt to disqualify Tory Haythe or Morgan, Lewis & Bockius LLP
if any such firm is selected and retained by the other for any reason whatsoever
and acknowledges that this waiver is granted with full knowledge of Tory
Haythe's and Morgan, Lewis & Bockius' participation in, representation of a
party to, this Agreement and the transactions contemplated hereby.
-53-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WILMAR INDUSTRIES, INC.
By: /s/ William S. Green
---------------------
Name: William S. Green
Title: Chief Executive Officer
THE DYSON-KISSNER-MORAN CORPORATION
By: /s/ Robert D. Farley
---------------------
Name: Robert D. Farley
Title: Vice President
<PAGE>
Annex A
Definitions Used in the Stock Purchase Agreement
As used in this Agreement, the following terms shall have the meaning
assigned thereto in this Annex (or the meaning assigned thereto in the
referenced section of this Agreement):
"Affiliate" shall mean, with respect to any Person, any other Person which
shall be directly or indirectly controlling or controlled by or under common
control with such Person. For purposes of this Agreement, a particular Person
shall be deemed to control another Person if that Person or possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of such entity, whether through ownership of voting securities, by
contract or otherwise.
"Agreement" shall have the meaning assigned thereto in the introduction to
this Agreement and as the same may be amended from time to time in accordance
with its terms.
"Approvals" shall have the meaning assigned thereto in Section 5.9(d) of
this Agreement.
"Arbitrator" shall have the meaning assigned thereto in Section 1.3(d) of
this Agreement.
"Audited Statements" shall have the meaning assigned thereto in Section
5.7(a) of this Agreement.
"Automobile Leases" shall have the meaning assigned thereto in Section 7.16
of this Agreement.
"Balance Sheet Date" shall mean September 30, 1999.
"Base Purchase Price" shall have the meaning assigned thereto in Section
1.2 of this Agreement.
"Beneficiary" shall mean the Person(s) designated by an Employee, Former
Employee, by operation of Law or otherwise, as the party entitled to
compensation, benefits, damages, insurance coverage, payments, indemnification
or any other goods or services as a result of any liability or claim under any
applicable welfare or benefit plan or program.
"Big Five Accounting Firm" shall mean any one of the following independent
public accounting firms or their successors: Arthur Andersen, Pricewaterhouse
Coopers & Lybrand, Deloitte & Touche, Ernst & Young or KPMG Peat Marwick.
"Bonds" shall have the meaning assigned thereto in Section 4.6 of this
Agreement.
<PAGE>
"Business" shall mean the business of distributing plumbing, heating,
electrical and general maintenance products of the type distributed by the
Company on the date hereof to the institutional, commercial (including apartment
houses) and industrial after markets, provided that such term shall not mean the
business of manufacturing and distributing any of such products.
"Buyer" shall mean Wilmar Industries, Inc., a New Jersey corporation.
"Buyer Indemnitees" shall have the meaning assigned thereto in Section 9.1
of this Agreement.
"Buyer's Accountant" shall have the meaning assigned thereto in Section
1.3(a) of this Agreement.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. (S)(S)9601 et seq.
-- ---
"Claim Notice" shall have the meaning assigned thereto in Section 9.4(a) of
this Agreement.
"Claims" shall have the meaning assigned thereto in Section 5.19(b) of this
Agreement.
"Closing" shall have the meaning assigned thereto in Section 2.1 of this
Agreement.
"Closing Balance Sheet" shall have the meaning assigned thereto in Section
1.3(a) of this Agreement.
"Closing Date" shall have the meaning assigned thereto in Section 2.1 of
this Agreement.
"Closing Date Net Working Capital" shall have the meaning assigned thereto
in Section 1.3(b) of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitments" shall have the meaning assigned thereto in Section 5.15 of
this Agreement.
"Company" shall have the meaning assigned thereto in the introduction to
this Agreement. For purposes of subsection (c) through (o) of Section 5.16 of
this Agreement, the term "Company" includes any ERISA Affiliate.
"Confidential Information" shall have the meaning assigned thereto in
Section 7.6(c) of this Agreement.
<PAGE>
"Dispute Notice" shall have the meaning assigned thereto in Section 1.3(c)
of this Agreement.
"Dispute Period" shall have the meaning assigned thereto in Section 1.3(c)
of this Agreement.
"Disputed Matters" shall have the meaning assigned thereto in Section
1.3(c) of this Agreement.
"Effective Time" shall mean the close of business Eastern Standard Time on
the Closing Date.
"Employee Benefit Plans" shall mean (i) any pension plan, 401(k) plan,
profit-sharing plan, health or welfare plan, and any other employee benefit plan
(within the meaning of Section 3(3) of ERISA) that is maintained or sponsored by
the Company or to which the Company contributes, and (ii) any other benefit
arrangement, obligation, or practice, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered, to
one or more present or former employees, that is maintained or sponsored by the
Company or to which the Company contributes, including, without limitation,
employment agreements, severance policies or agreements, executive compensation
arrangements, rabbi trusts, incentive arrangements, sick leave, vacation pay,
salary continuation, workers' compensation, bonus plans, stock option, stock
grant or stock purchase plans, medical insurance, life insurance, tuition
reimbursement programs or scholarship programs, any plans subject to section 125
of the Code, and any plans providing benefits or payments in the event of a
change of ownership or control.
"Employees" shall mean all individuals with whom a Group Member maintains,
on the Closing Date, an employer-employee relationship, including any
individuals on lay-off, disability or leave of absence, whether paid or unpaid.
"Encumbrance" shall have the meaning assigned thereto in Section 1.1 of
this Agreement.
"Environmental Condition" shall mean any condition or circumstance, that
(i) requires abatement or correction under any Environmental Law, (ii) includes
the presence of Hazardous Substances, (iii) gives rise to any civil or criminal
liability under any Environmental, Law, or (iv) creates a public or private
nuisance.
"Environmental Laws" shall mean CERCLA, RCRA, the Clean Water Act, 33
U.S.C. (S)(S) 1321 et seq., the Clean Air Act, 42 U.S.C. (S)7401 et seq. and any
-- --- -- ---
and all other federal, state, county, provincial, local laws, regulations and
ordinances and foreign statutes, regulations, ordinances, laws and requirements
relating to health and safety and pollution or protection of the environment,
including laws, regulations and requirements relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or
<PAGE>
Hazardous Substances into the environment (including without limitation ambient
air, surface water, groundwater or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, record keeping, notification, reporting or handling of Hazardous
Substances, pollutants, contaminants, chemicals, or industrial, toxic or other
hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and all regulations and rules issued thereunder, or any successor law
"ERISA Affiliate" means any person that, together with the Company, is or
was at any time treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA and any general partnership of which the Company is or has
been a general partner.
"Expiration Date" shall have the meaning assigned thereto in Section 9.5 of
this Agreement.
"Former Employees" shall mean all individuals as to whom an employer-
employee relationship with any Group Member existed prior to the Closing Date,
but does not exist on the Closing Date, who remain entitled to benefits under
any applicable welfare or benefit plan or program.
"Financial Statements" shall have the meaning assigned thereto in Section
5.7(a) of this Agreement.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"Governmental Body" shall mean any domestic or foreign national, state or
municipal or other local government or multi-national body (including without
limitation the European Union), any governmental or regulatory authority,
agency, commission, subdivision or any other such entity.
"Group" shall mean Sexauer, Trayco and all of the subsidiaries of either
Sexauer or Trayco, taken as a whole.
"Group Member" shall mean, individually, Sexauer, Trayco and each of the
subsidiaries of either Sexauer or Trayco.
"Hazardous Substance" shall mean (i) any petroleum products, explosives,
alcohols, chemical solvents, polychlorinated biphenyls ("PCBs") or related or
similar materials, (ii) any substance, waste, material or good defined as
hazardous, radioactive, extremely hazardous, toxic or dangerous, or as a
pollutant or contaminant, under any Environmental Law, or by any federal, state
or municipal government or governmental agency, (iii) nuclear fuel or materials,
chemical
<PAGE>
waste or known human carcinogens, and (iv) any asbestos, asbestos-containing
substances or urea formaldehyde insulation.
"HSR Act" shall mean the Hart-Scott Rodino Antitrust Improvement Act of
1976, as amended, and the rules and regulations thereunder.
"Income Tax(es)" shall mean any Tax imposed on or measured by gross or net
income or net worth and commonly referred to as an income tax in the relevant
taxing jurisdiction, excluding any state or local gross receipts or business or
occupational taxes and excluding state or local franchise taxes imposed solely
by reason of the place of formation of an entity.
"Indemnification Matter" shall mean any matter in which either Buyer or
Seller or any Buyer Indemnitee or Seller Indemnitee reasonably believes that
such party has a claim for Losses in respect of which indemnity may be sought
pursuant to Sections 9 or 12 hereof.
"Indemnified Party" shall have the meaning assigned thereto in Section
9.4(a) of this Agreement.
"Indemnitor" shall have the meaning assigned thereto in Section 9.4(a) of
this Agreement.
"Intellectual Property" shall have the meaning assigned thereto in Section
5.14(a) of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" or words of similar effect shall mean the actual knowledge of
the officers of Seller and shall mean the actual knowledge of Messrs. Silva,
Sbezzi and Pescoslido at the Company after reasonable inquiry of the appropriate
personnel at Seller and the Company.
"Laws" shall mean all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, its
political subdivisions or of any Governmental Body.
"Leased Real Property" shall have the meaning assigned thereto in Section
5.9(b) of this Agreement.
"Liabilities" shall mean any liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, including,
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others or liabilities for taxes due or then accrued or to become
due, or contingent liabilities relating to activities of the Company or the
conduct of its business prior to the date hereof or the Closing, as the case may
be, regardless of whether claims in respect hereof have been asserted as of such
date.
<PAGE>
"Lien" shall mean any restriction on voting or transfer or pledge,
easement, right of way, mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind or any
conditional sale contract, title retention contract or other contract to give
any of the foregoing.
"LIFO Inventory Reserve" shall mean the inventory reserve of the Company on
a last in, first out basis.
"Liquidated Claim Notice" shall have the meaning assigned thereto in
Section 9.4(a) of this Agreement.
"Litigation Condition" shall have the meaning assigned thereto in Section
9.6(a) of this Agreement.
"Losses" shall have the meaning assigned thereto in Section 9.1 of this
Agreement.
"Management Agreement" shall mean that certain Service and Management
Agreement dated as of March 1, 1988, as amended, and February 1, 1999, by and
between Patterson Planning and the Company.
"Material Adverse Effect" shall mean any event or condition individually or
in the aggregate that has or that is reasonably likely to have a material
adverse effect (i) on the business, financial condition, operating results,
properties or the assets and liabilities of the Company taken as a whole or (ii)
on the Company's ability to perform any of its obligations under this Agreement.
"Owned Real Property" shall have the meaning assigned thereto in Section
5.9(a) of this Agreement.
"Patterson Planning" shall mean Patterson Planning & Services, Inc., an
Affiliate of Seller.
"Permit" shall mean any license, franchise, permit, consent, concession,
order, approval, authorization or registration from, of or with a Governmental
Body.
"Permitted Liens" shall mean:
(a) Liens for Taxes not yet due or which are being contested in good
faith by appropriate proceedings (which suspend the collection of such
Taxes), provided that adequate reserves with respect to contested taxes and
ancillary charges are maintained on the books of any Group Member;
<PAGE>
(b) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(c) easements, rights-of-way, restrictions and other similar
encumbrances (excluding monetary liens) incurred prior to the date of this
Agreement in the ordinary course of business which, in the case of such
encumbrances on the assets or properties of any Group Member, do not
materially detract from the value of any such properties or assets or
materially interfere with or materially and adversely affect any present
use of such properties or assets or render title unmarketable;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue or which are being contested in good faith by appropriate
proceedings (which suspend the performance under such obligations);
(e) deposits to secure the performance of bids, contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(f) statutory Liens on the property of any Group Member in favor of
landlords securing leases; and
(g) Liens in existence on the Closing Date listed on Schedule 5.8
hereto.
"Person" shall mean any natural person, corporation, partnership,
proprietorship, joint venture association, trust or other legal entity.
"Phantom Stock Plan" shall have the meaning assigned thereto in Section 3.8
of this Agreement.
"Premium Credit Amount" shall mean the amount of premiums in respect of
Seller's Health Plan and in respect of Employees for the month in which the
Closing occurs multiplied by a fraction, the numerator of which is the number of
days remaining in such month after the Closing Date and the denominator of which
is the number of days in such month. The parties understand and agree that in
the event the Closing Date occurs on the last day of a month, then the Premium
Credit Amount shall be zero.
"Purchase Price" shall have the meaning assigned thereto in Section 1.3 of
this Agreement.
"RCRA" means the Federal Resource Conservation and Recovery Act of 1976,
42 U.S.C. (S)6901 et seq.
-- ---
<PAGE>
"Real Property" shall have the meaning assigned thereto in Section 5.9(b)
of this Agreement.
"Real Property Leases" shall have the meaning assigned thereto in Section
5.9(b) of this Agreement.
"Retro-Premium Insurance Amounts" shall mean any liability or other
obligation paid by Seller (or any Affiliate of Seller) and not reimbursed by a
Group Member on or prior to the Closing for any additional premiums and expenses
on retrospective adjustments, or amounts due under self insurance retentions
under any policies of insurance maintained by Seller (or any Affiliate of the
Seller) for the benefit of any Group Member attributable to events or
occurrences on or prior to the Closing Date.
"Seller" shall mean The Dyson-Kissner-Moran Corporation, a Delaware
corporation.
"Seller Indemnitees" shall have the meaning assigned thereto in Section 9.2
of this Agreement.
"Seller Tax Period" means any period, as to Federal Income Taxes only, that
ends on or prior to the Closing Date.
"Sexauer" shall mean J.A. Sexauer, Inc., a Delaware corporation.
"Sexauer Canada" shall mean Sexauer, Ltd., an Ontario corporation.
"Sexauer Shares" shall have the meaning assigned thereto in the
introduction to this Agreement.
"Shares" shall have the meaning assigned thereto in the introduction to
this Agreement.
"Taxes" shall have the meaning assigned thereto in Section 5.17(a) of this
Agreement.
"Tax Returns" shall have the meaning assigned thereto in Section 5.17(a) of
this Agreement.
"Third Party Claim" shall have the meaning assigned thereto in Section
9.6(a) of this Agreement.
"Threshold" shall have the meaning assigned thereto in Section 9.3 of this
Agreement.
"Trademarks" shall have the meaning assigned thereto in Section 5.14(a) of
this Agreement.
<PAGE>
"Trade Secrets" shall have the meaning assigned thereto in Section 5.14(c)
of this Agreement.
"Transaction Documents" shall mean this Agreement and each agreement,
document and instrument executed and delivered pursuant to this Agreement.
"Trayco" shall mean Trayco of S.C., Inc., a Delaware corporation.
"Trayco Shares" shall have the meaning assigned thereto in the introduction
to this Agreement.
"Unliquidated Claim" shall have the meaning assigned thereto in Section
9.4(a) of this Agreement.
<PAGE>
List of Exhibits and Schedules
------------------------------
Schedule 1.3 Closing Balance Sheet Rules
Schedule 4.6 Letters of Credit and Performance and Bid Bonds
Schedule 5.1(b) Foreign Qualification
Schedule 5.4 Subsidiaries
Schedule 5.6 Third Party Consents
Schedule 5.7 Liabilities/Financial Statements
Schedule 5.9 Real Property
Schedule 5.11 Litigation
Schedule 5.12 Absence of Certain Changes
Schedule 5.13 Material Adverse Changes
Schedule 5.14(a) Trademarks and Tradenames
Schedule 5.15 Commitments
Schedule 5.16 Employee Matters
Schedule 5.17 Tax and Other Returns and Reports
Schedule 5.18 Compliance with Law
Schedule 5.19 Environmental Matters
Schedule 5.24 Relations with Customer and Suppliers
Schedule 5.25 Transactions with Affiliates
Schedule 5.26 Checking Accounts
Schedule 5.29 Insurance
Schedule 7.12 Retained Accounts
The aforementioned is a list of all omitted schedules. The Company agrees to
furnish supplementally a copy of any omitted schedule to the Commission upon
request.
<PAGE>
EXHIBIT 2.2
AMENDMENT NO. 1
AMENDMENT No. 1 dated as of December 6, 1999 (this "Amendment") by and
between Wilmar Industries, Inc., a New Jersey corporation ("Buyer"), and The
Dyson-Kissner-Moran Corporation, a Delaware corporation ("Seller"), to that
certain Stock Purchase Agreement dated as of November 15, 1999 (the "Purchase
Agreement") by and among Buyer and Seller and to the Disclosure Schedules to the
Purchase Agreement. Capitalized terms used herein and in the Schedules hereto
and not otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
W I T N E S S E T H
-------------------
WHEREAS, the parties hereto desire to amend the Disclosure Schedules
and the Purchase Agreement as more particularly described below.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I.
AMENDMENT
1.1 The parties hereto acknowledge and agree that Schedule 7.12 of
the Disclosure Schedules to the Purchase Agreement is hereby deleted in its
entirety and a new Schedule 7.12 set forth as Schedule A attached hereto shall
be substituted in lieu thereof.
1.2 The parties hereto acknowledge and agree that Schedule 5.1(b) of
the Disclosure Schedules to the Purchase Agreement is hereby amended by deleting
the reference to "Mississippi" under the subheading "I. Trayco of S.C., Inc., a
-----------------------
Delaware corporation."
- --------------------
1.3 The parties hereto acknowledge and agree that the reference in
the first sentence of Section 5.3 of the Purchase Agreement to "1,000 shares" is
hereby deleted and replaced with a reference to "2,000 shares."
1.4 The parties hereto acknowledge and agree that the Effective Time
of the purchase and sale of the Shares shall be 12:01 A.M. on November 27, 1999.
The purchase and sale of the Shares shall be deemed to have occurred as of the
Effective Time, and the business and affairs of the Company shall be deemed to
have been operated for the account of Buyer after the Effective Time.
1.5 The parties hereto acknowledge and agree that the Base Purchase
Price payable by Buyer to Seller at the Closing shall be $85,000,000 plus
interest at the rate of 8.5% per annum per day for each day after the Effective
Time (but including November 27, 1999) to and including the Closing Date.
<PAGE>
2
1.6 The parties hereto acknowledge and agree that all references to
"Closing Date", "Closing" and/or "date hereof" set forth in (i) Sections 1.3(e),
5.21, 5.22, 5.23, 5.28, 7.13, 7.15, 9.1(c), 9.1(e), 9.1(f) and 9.1(h) of the
Purchase Agreement and (ii) the definitions of Former Employees and Seller Tax
Period in Annex A to the Purchase Agreement are hereby deleted and replaced with
references to "Effective Time."
1.7 The parties hereto acknowledge and agree that the references to
"Effective Time" set forth in Section 1.4 of the Purchase Agreement are hereby
replaced with references to "Closing Date."
1.8 The parties hereto acknowledge and agree that the phrase "or
which was outstanding as of the Closing Date" set forth in Section 7.12 of the
Purchase Agreement is hereby deleted and replaced with a reference to "or which
was outstanding as of the Effective Time."
1.9 The parties hereto acknowledge and agree that the reference to
"Closing Date" the second time it appears in the first sentence of Section
1.3(a) of the Purchase Agreement is hereby replaced with a reference to
"Effective Time."
1.10 The parties acknowledge and agree that the Closing and the
Closing Date referred to in Section 2.1 of the Purchase Agreement shall take
place on and shall be, as the case may be, the date of this Amendment.
1.11 The parties hereto acknowledge and agree that Section 3 of the
Purchase Agreement is amended to add thereto the following:
"3.10 Insurance Side Letter. Seller shall deliver to
---------------------
Buyer the letter in the form of Schedule C attached to
Amendment No. 1 hereto, which letter shall be addressed to
Buyer's insurance agent."
1.12 Notwithstanding anything to the contrary contained in the
Disclosure Schedules or the Purchase Agreement, the parties hereto acknowledge
and agree that the provisions and procedures set forth on Schedule B to this
Amendment shall augment, amend and supersede, as applicable, any contrary or
conflicting provisions or procedures set forth in the Disclosure Schedules or in
the Purchase Agreement. It is the intention and agreement of the parties hereto
that the provisions and procedures set forth in such Schedule B shall control
over any contrary or conflicting provisions set forth in the Disclosure
Schedules or in the Purchase Agreement.
ARTICLE II.
MISCELLANEOUS
2.1 Invalidity, Etc. If any provision of this Amendment, or the
----------------
application of any such provision to any person or circumstance, shall be held
invalid by a court of competent
<PAGE>
3
jurisdiction, the remainder of this Amendment, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid, shall not be affected thereby.
2.2 Governing Law. This Amendment shall be interpreted, construed,
-------------
and enforced under and according to the laws of the State of New Jersey.
2.3 Counterparts. This Amendment may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
2.4 Ratification. Except as amended hereby, the Disclosure Schedules
------------
to the Purchase Agreement and the Purchase Agreement are hereby ratified and
confirmed in all respects.
* * *
<PAGE>
4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first above written.
BUYER:
WILMAR INDUSTRIES, INC.
By: /s/ Fred B. Gross
-----------------------------------
Name: Fred B. Gross
Title: Vice President
SELLER:
THE DYSON-KISSNER-MORAN
CORPORATION
By: /s/ Robert D. Farley
-----------------------------------
Name: Robert D. Farley
Title: Vice President
<PAGE>
List of Schedules
- -----------------
Schedule A Amendment to Schedule 7.12 of the Disclosure Schedule
Schedule B Certain Closing Balance Sheet Provisions and Procedures
Schedule C Insurance Side Letter
The aforementioned is a list of all omitted schedules. The Company agrees to
furnish supplementally a copy of any omitted schedule to the Securities and
Exchange Commission upon request.
<PAGE>
EXHIBIT 10.1
CREDIT AGREEMENT
dated December 6, 1999
by and among
Wilmar Industries, Inc. and its Subsidiaries
listed on Schedule 1 hereto,
as Borrowers,
the Lenders listed on Schedule 2 hereto,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
PNC BANK, NATIONAL ASSOCIATION,
as Co-Agent,
and
NATIONAL CITY BANK OF PENNSYLVANIA,
as Co-Agent
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - DEFINITIONS....................................................................... 1
Section 1.1. Definitions........................................................ 1
Section 1.2. General............................................................ 14
Section 1.3. Other Definitions and Provisions................................... 14
ARTICLE II - CREDIT FACILITIES................................................................ 15
Section 2.1. Revolving Credit Loans............................................. 15
Section 2.2. Term Loans......................................................... 15
Section 2.3. Swingline Loans.................................................... 15
Section 2.4. Procedure for Advances of Revolving Credit Loans,
Swingline Loans and Term Loans..................................... 17
Section 2.5. Repayment of Loans................................................. 18
Section 2.6. Notes.............................................................. 20
Section 2.7. Permanent Reduction of the Aggregate Revolving Commitment.......... 21
Section 2.8. Termination of Credit Facilities................................... 21
Section 2.9. Use of Proceeds.................................................... 22
Section 2.10. Joint and Several Obligations...................................... 22
ARTICLE III - LETTER OF CREDIT FACILITY....................................................... 22
Section 3.1. L/C Commitment..................................................... 22
Section 3.2. Procedure for Issuance of Letters of Credit........................ 23
Section 3.3. Commissions and Other Charges...................................... 23
Section 3.4. L/C Participations................................................. 24
Section 3.5. Reimbursement Obligation of the Borrowers.......................... 25
Section 3.6. Obligations Absolute............................................... 25
Section 3.7. Effect of Application.............................................. 26
ARTICLE IV - GENERAL LOAN PROVISIONS.......................................................... 26
Section 4.1. Interest........................................................... 26
Section 4.2. Notice and Manner of Conversion or Continuation of Loans........... 28
Section 4.3. Fees............................................................... 29
Section 4.4. Manner of Payment.................................................. 30
Section 4.5. Credit of Payments and Proceeds.................................... 30
Section 4.6. Adjustments........................................................ 31
Section 4.7. Nature of Obligations of Lenders Regarding Extensions of Credit;
Assumption by the Administrative Agent............................. 31
Section 4.8. Changed Circumstances.............................................. 32
Section 4.9. Indemnity.......................................................... 34
Section 4.10. Capital Requirements............................................... 34
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Section 4.11. Taxes.............................................................. 34
Section 4.12. Security........................................................... 36
ARTICLE V - CLOSING; CONDITIONS OF CLOSING AND BORROWING...................................... 36
Section 5.1. Closing............................................................ 36
Section 5.2. Conditions to Closing and Initial Extensions of Credit............. 36
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.................................. 41
Section 6.1. Representations and Warranties..................................... 41
ARTICLE VII - FINANCIAL INFORMATION AND NOTICES............................................... 48
Section 7.1. Financial Statements and Projections............................... 48
Section 7.2. Officer's Compliance Certificate................................... 49
Section 7.3. Accountants' Certificate........................................... 49
Section 7.4. Other Reports...................................................... 50
Section 7.5. Notice of Litigation and Other Matters............................. 50
Section 7.6. Accuracy of Information............................................ 51
ARTICLE VIII - AFFIRMATIVE COVENANTS.......................................................... 51
Section 8.1. Preservation of Corporate Existence and Related Matters............ 51
Section 8.2. Maintenance of Property............................................ 52
Section 8.3. Insurance.......................................................... 52
Section 8.4. Accounting Methods and Financial Records........................... 52
Section 8.5. Payment and Performance of Obligations............................. 52
Section 8.6. Compliance With Laws and Approvals................................. 52
Section 8.7. Environmental Laws................................................. 52
Section 8.8. Compliance with ERISA.............................................. 53
Section 8.9. Compliance With Agreements......................................... 53
Section 8.10. Conduct of Business................................................ 53
Section 8.11. Visits and Inspections............................................. 53
Section 8.12. Additional Subsidiaries............................................ 54
Section 8.13. Year 2000 Compatibility............................................ 54
Section 8.14. Taxes.............................................................. 54
Section 8.16. Further Assurances................................................. 54
ARTICLE IX - FINANCIAL COVENANTS.............................................................. 55
Section 9.1. Funded Debt to EBITDA Ratio........................................ 55
Section 9.2. Fixed Charge Coverage Ratio........................................ 55
Section 9.3. Minimum Net Worth Test............................................. 55
ARTICLE X - NEGATIVE COVENANTS................................................................ 55
Section 10.1. Limitations on Debt................................................ 55
Section 10.2. Limitations on Guaranty Obligations................................ 56
Section 10.3. Limitations on Liens............................................... 56
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Section 10.4. Limitations on Loans, Advances, Investments and Acquisitions....... 57
Section 10.5. Limitations on Mergers and Liquidation............................. 59
Section 10.6. Limitations on Sale of Assets...................................... 60
Section 10.7. Limitations on Dividends and Distributions......................... 60
Section 10.8. Limitations on Exchange and Issuance of Capital Stock.............. 60
Section 10.9. Transactions with Affiliates....................................... 60
Section 10.10. Certain Accounting Changes; Business Changes....................... 61
Section 10.11. Restrictive Agreements............................................. 61
ARTICLE XI - DEFAULT AND REMEDIES............................................................. 61
Section 11.1. Events of Default.................................................. 61
Section 11.2. Remedies........................................................... 64
Section 11.3. Rights and Remedies Cumulative; Non-Waiver, etc.................... 64
ARTICLE XII - THE ADMINISTRATIVE AGENT........................................................ 65
Section 12.1. Appointment; Rights and Duties of Co-Agents........................ 65
Section 12.2. Delegation of Duties............................................... 65
Section 12.3. Exculpatory Provisions............................................. 65
Section 12.4. Reliance by the Administrative Agent............................... 66
Section 12.5. Notice of Default.................................................. 66
Section 12.6. Non-Reliance on the Administrative Agent and Other Lenders......... 67
Section 12.7. Indemnification.................................................... 67
Section 12.8. The Administrative Agent in Its Individual Capacity................ 68
Section 12.9. Resignation of the Administrative Agent; Successor
Administrative Agent............................................... 68
ARTICLE XIII - MISCELLANEOUS.................................................................. 68
Section 13.1. Notices............................................................ 68
Section 13.2. Expenses; Indemnity................................................ 70
Section 13.3. Set-off............................................................ 70
Section 13.4. Governing Law...................................................... 71
Section 13.5. Consent to Jurisdiction............................................ 71
Section 13.6. Binding Arbitration; Waiver of Jury Trial.......................... 72
Section 13.7. Reversal of Payments............................................... 73
Section 13.8. Injunctive Relief; Punitive Damages................................ 73
Section 13.9. Accounting Matters................................................. 73
Section 13.10. Successors and Assigns; Participations............................. 74
Section 13.11. Rights and Duties Upon Assignment.................................. 75
Section 13.12. Register........................................................... 75
Section 13.13. Issuance of New Notes.............................................. 75
Section 13.14. Participations..................................................... 76
Section 13.15. Disclosure of Information; Confidentiality......................... 77
Section 13.16. Certain Pledges or Assignments; Consents........................... 77
Section 13.17. Performance of Duties.............................................. 78
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Section 13.18. All Powers Coupled with Interest................................... 78
Section 13.19. Survival of Indemnities............................................ 78
Section 13.20. Titles and Captions................................................ 78
Section 13.21. Severability of Provisions......................................... 78
Section 13.22. Counterparts....................................................... 78
Section 13.23. Term of Agreement.................................................. 78
Section 13.25. Judgment Currency.................................................. 79
</TABLE>
<PAGE>
THIS CREDIT AGREEMENT (this "Agreement"), dated the 6th day of December,
1999, is made by and among Wilmar Industries, Inc., a New Jersey corporation
("Wilmar"), the Subsidiaries (as hereinafter defined) of Wilmar listed on
Schedule 1 hereto (including Wilmar, each individually a "Borrower" and
collectively, the "Borrowers"), the Lenders who are or may become a party to
this Agreement and are listed on Schedule 2 hereto, FIRST UNION NATIONAL BANK,
as Administrative Agent for the Lenders, PNC BANK, NATIONAL ASSOCIATION, as
Co-Agent for the Lenders and NATIONAL CITY BANK OF PENNSYLVANIA, as Co-Agent for
the Lenders.
STATEMENT OF PURPOSE
--------------------
The Borrowers have requested, and the Lenders have agreed, to extend
certain credit facilities to the Borrowers on the terms and conditions of this
Agreement in order for the Borrowers to finance the Acquisition, to refinance
certain existing indebtedness, to fund working capital, and for general
corporate purposes (including acquisitions).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, and
intending to be legally bound hereby, such parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1. Definitions. The following terms when used in this Agreement
-----------
shall have the meanings assigned to them below:
"Acquisition" means the acquisition by Wilmar of one hundred percent (100%)
-----------
of the stock of J.A. Sexauer, Inc. and Trayco of S.C., Inc. pursuant to the
Purchase Agreement.
"Administrative Agent" means First Union in its capacity as Administrative
--------------------
Agent hereunder, and any successor thereto appointed pursuant to Section 12.9.
"Administrative Agent's Office" means the office of the Administrative
-----------------------------
Agent specified in or determined in accordance with the provisions of Section
13.1(c).
"Affiliate" means, with respect to any Person, any other Person (other
---------
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. The term control means (a) the
power to vote five percent (5%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any
<PAGE>
other power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"Aggregate Revolving Commitment" means the aggregate amount of the Lenders'
------------------------------
Revolving Commitments hereunder, as such amount may be reduced or modified at
any time or from time to time pursuant to the terms hereof. On the Closing
Date, the Aggregate Revolving Commitment shall be Thirty Million Dollars
($30,000,000).
"Agreement" means this Credit Agreement including the schedules and
---------
exhibits attached hereto, as amended, restated or otherwise modified.
"Applicable Law" means all applicable provisions of constitutions, laws,
--------------
statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities and
all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
-----------------
4.1(c).
"Application" means an application, in the form specified by the Issuing
-----------
Lender from time to time, requesting the Issuing Lender to issue a Letter of
Credit.
"Assignment and Acceptance" shall have the meaning assigned thereto in
-------------------------
Section 13.10.
"Available Revolving Commitment" means, as to any Lender at any time, an
------------------------------
amount equal to (a) such Lender's Revolving Commitment less (b) such Lender's
----
Extensions of Credit.
"Base Rate" means, at any time, the higher of (a) the Prime Rate and (b)
---------
the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in the
----
Base Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon the
--------------
Base Rate as provided in Section 4.1(a).
"Borrower" means individually, and "Borrowers" means collectively, Wilmar
--------
Industries, Inc., a New Jersey corporation, and each of its Subsidiaries set
forth on Schedule 1 hereto, each in its capacity as a borrower hereunder;
provided that Inactive Subsidiaries shall not be required to be Borrowers
hereunder.
"Business Day" means (a) for all purposes other than as set forth in clause
------------
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in Philadelphia, Pennsylvania and Charlotte, North Carolina are open for the
conduct of their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, any LIBOR Rate Loan, any day that is a Business Day described in
<PAGE>
clause (a) and that is also a day for trading by and between banks in Dollar
deposits in the London interbank market.
"Capital Asset" means, with respect to Wilmar and its Subsidiaries, any
-------------
asset that should, in accordance with GAAP, be classified and accounted for as a
capital asset on a Consolidated balance sheet of Wilmar and its Subsidiaries.
"Capital Lease" means, with respect to Wilmar and its Subsidiaries, any
-------------
lease of any property that should, in accordance with GAAP, be classified and
accounted for as a capital lease on a Consolidated balance sheet of Wilmar and
its Subsidiaries.
"Change in Control" shall have the meaning assigned thereto in Section
-----------------
11.1(i).
"Closing Adjusted Net Worth" means eighty-five percent (85%) of Net Worth
--------------------------
as of the end of the most recent fiscal quarter ended prior to the Closing Date.
"Closing Date" means the date of this Agreement or such later Business Day
------------
upon which each condition described in Section 5.1 and Section 5.2 shall be
satisfied or waived in all respects in a manner acceptable to the Administrative
Agent, in its sole discretion.
"Co-Agent" means individually, and "Co-Agents" means collectively, each of
-------- ---------
PNC Bank, National Association and National City Bank of Pennsylvania in their
capacity as a Co-Agent hereunder and any successor thereto.
"Code" means the Internal Revenue Code of 1986, and the rules and
----
regulations thereunder, each as amended, supplemented or otherwise modified.
"Collateral" means the Securities as defined in the Pledge Agreement.
----------
"Commitment Percentage" means, as to any Lender at any time, the ratio of
---------------------
(a) the amount of the Revolving Commitment of such Lender to (b) the Aggregate
Revolving Commitment of all of the Lenders.
"Consolidated" means, when used with reference to financial statements or
------------
financial statement items of Wilmar and its Subsidiaries, such statements or
items on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"Credit Facility" means the collective reference to the Revolving Credit
---------------
Facility, the Term Loan Facility and the L/C Facility.
"Debt" means, with respect to Wilmar and its Subsidiaries at any date and
----
without duplication, the sum of the following calculated in accordance with
GAAP: (a) all liabilities,
3
<PAGE>
obligations and indebtedness for borrowed money including but not limited to
obligations evidenced by bonds, debentures, notes or other similar instruments
of any such Person, (b) all obligations to pay the deferred purchase price of
property or services of any such Person, (c) all obligations of any such Person
as lessee under Capital Leases, (d) all Debt secured by any Lien upon property
or assets owned by such Person, notwithstanding that such Person has not assumed
or become liable for the payment of such Debt, (e) all Guaranty Obligations of
any such Person, (f) all obligations, contingent or otherwise, of any such
Person relative to the face amount of letters of credit, whether or not drawn,
including without limitation any Reimbursement Obligation, and banker's
acceptances issued for the account of any such Person, (g) all obligations of
any such Person to redeem, repurchase, exchange, defease or otherwise make
payments in respect of capital stock or other securities of such Person and (h)
all obligations incurred by any such Person pursuant to Hedging Agreements; but
excluding trade and other accounts payable incurred in the ordinary course.
"Default" means any of the events specified in Section 11.1 which with the
-------
passage of time, the giving of notice or any other condition, would constitute
an Event of Default.
"Dollars or $" means, unless otherwise qualified, dollars in lawful
------------
currency of the United States.
"EBITDA" means, for the most recent Rolling Period, the consolidated net
------
income of Wilmar and its Consolidated Subsidiaries for such period, plus
Interest Expense, taxes, depreciation and amortization for such period, in each
case as defined in accordance with GAAP and, if applicable, to the extent each
has been deducted in determining net income. If for any Rolling Period, Wilmar
shall have consummated an acquisition of a business, EBITDA shall be calculated
on a pro forma basis as if the acquisition had taken place on the first day of
such Rolling Period.
"Eligible Assignee" means, with respect to any assignment of the rights,
-----------------
interest and obligations of a Lender hereunder, a Person that is at the time of
such assignment (a) a commercial bank organized under the laws of the United
States or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a commercial bank organized under the laws of any other
country that is a member of the Organization of Economic Cooperation and
Development, or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company, insurance
company or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $1,000,000,000, (d) already a Lender hereunder (whether as an original
party to this Agreement or as the assignee of another Lender), (e) the successor
(whether by transfer of assets, merger or otherwise) to all or substantially all
of the commercial lending business of the assigning Lender, or (f) any other
Person that has been approved in writing as an Eligible Assignee by the
Borrowers and the Administrative Agent.
4
<PAGE>
"Employee Benefit Plan" means any employee benefit plan within the meaning
---------------------
of Section 3(3) of ERISA which (a) is maintained for employees of any Borrower
or any ERISA Affiliate or (b) has at any time within the preceding six years
been maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
------------------
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and the
-----
rules and regulations thereunder, each as amended, supplemented or otherwise
modified.
"ERISA Affiliate" means any Person who together with any Borrower is
---------------
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the percentage
-----------------------------
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
"Event of Default" means any of the events specified in Section 11.1,
----------------
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Existing Facility" means Wilmar's unsecured line of credit with First
-----------------
Union in the maximum principal amount of Ten Million Dollars ($10,000,000).
"Extensions of Credit" means, as to any Lender at any time, an amount equal
--------------------
to the sum of (a) the aggregate principal amount of all Revolving Credit Loans
made by such Lender then outstanding, (b) such Lender's Commitment Percentage of
the L/C Obligations then outstanding and (c) such Lender's Commitment Percentage
of the principal amount of the Swingline Loans then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
----
thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
------------------
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the
5
<PAGE>
Administrative Agent and confirmed in Federal Reserve Board Statistical Release
H.15 (519) or any successor or substitute publication selected by the
Administrative Agent. If, for any reason, such rate is not available, then
Federal Funds Rate shall mean a daily rate which is determined, in the opinion
of the Administrative Agent, to be the rate at which federal funds are being
offered for sale in the national federal funds market at 9:00 a.m. (Philadelphia
time). Rates for weekends or holidays shall be the same as the rate for the most
immediate preceding Business Day.
"First Union" means First Union National Bank, a national banking
-----------
association, and its successors.
"First Union Facility" means Wilmar's unsecured line of credit with First
--------------------
Union for the issuance of documentary letters of credit in the maximum principal
amount of Five Million Dollars ($5,000,000).
"Fixed Charge Coverage Ratio" means, for the most recent Rolling Period for
---------------------------
Wilmar and its Consolidated Subsidiaries, the ratio of: (a) EBITDA plus rent
expense paid to (b) Interest Expense, plus principal payments made on any Funded
Debt, plus expenditures for Capital Assets, plus rent expense paid, in each
case, during the Rolling Period ending as of the date of determination.
"Fiscal Year" means the fiscal year of Wilmar and its Subsidiaries ending
-----------
on December 31.
"Foreign Subsidiary" means Sexauer, Ltd. and any additional Borrowers which
------------------
are formed in a jurisdiction other than the United States of America and which
join this Agreement pursuant to Section 8.12 hereof.
"Funded Debt" means, as of the date of determination, the aggregate
-----------
principal amount of all indebtedness of Wilmar and its Consolidated Subsidiaries
for: (i) borrowed money, other than trade indebtedness incurred in the normal
and ordinary course of business for value received; (ii) installment purchase of
real or personal property; (iii) obligations owing under Capital Leases; (iv)
"synthetic" leases and other similar lease arrangements; and (v) guaranties of
Funded Debt of others, without duplication.
"Funded Debt to EBITDA Ratio" means, as of the date of determination, the
---------------------------
ratio of: (a) Funded Debt to (b) EBITDA.
"GAAP" means generally accepted accounting principles, as recognized by the
----
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
Wilmar and its Subsidiaries throughout the period indicated and consistent with
the prior financial practice of Wilmar and its Subsidiaries.
6
<PAGE>
"Governmental Approvals" means all authorizations, consents, approvals,
----------------------
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
----------------------
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" means, with respect to Wilmar and its Subsidiaries,
-------------------
without duplication, any obligation, contingent or otherwise, of any such Person
pursuant to which such Person has directly or indirectly guaranteed any Debt or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of any
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
condition or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part); provided, that the term Guaranty Obligation shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means any substances or materials (a) which are or
-------------------
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Applicable Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Applicable Law, (d) the discharge or emission or release of which requires a
permit or license under any Applicable Law or other Governmental Approval, (e)
which are deemed to constitute a nuisance, a trespass or pose a health or safety
hazard to persons or neighboring properties, (f) which consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.
"Hedging Agreement" means any agreement with respect to an interest rate
-----------------
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of any Borrower, and any confirming letter
executed pursuant to such hedging agreement, all as amended, restated or
otherwise modified.
7
<PAGE>
"Inactive Subsidiary" means a direct or indirect Subsidiary of Wilmar
-------------------
listed on Schedule 3 attached hereto.
----------
"Interest Expense" means, for any period, total interest expense
----------------
(including, without limitation, interest expense attributable to capital leases)
determined on a consolidated basis, without duplication, for Wilmar and its
Subsidiaries in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
---------------
4.1(b).
"Issuing Lender" means First Union, in its capacity as issuer of any Letter
--------------
of Credit, or any successor thereto.
"L/C Commitment" means the lesser of (a) Ten Million Dollars ($10,000,000)
--------------
and (b) the Aggregate Revolving Commitment.
"L/C Facility" means the letter of credit facility established pursuant to
------------
Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum of (a) the
---------------
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.
"L/C Participants" means the collective reference to all the Lenders other
----------------
than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender set forth
------
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 13.10.
"Lending Office" means, with respect to any Lender, the office of such
--------------
Lender maintaining such Lender's Commitment Percentage of the Loans.
"Letters of Credit" shall have the meaning assigned thereto in Section 3.1.
-----------------
"LIBOR" means the rate of interest per annum determined on the basis of the
-----
rate for deposits in Dollars, in amounts substantially equal to the amount of
the LIBOR Rate Loan to which such LIBOR Rate will apply, for a period equal to
the applicable Interest Period which appears on the Telerate Page 3750 at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of the applicable Interest Period (rounded upward, if necessary, to the
nearest one-hundredth of one percent (1/100%)). If, for any reason, such rate
does not appear on Telerate Page 3750, then LIBOR shall be determined by the
Administrative Agent to be the arithmetic average (rounded upward, if necessary,
to the nearest one-hundredth of one percent (1/100%)) of the rate per annum at
which deposits in Dollars would be offered by first class
8
<PAGE>
banks in the London interbank market to the Administrative Agent approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period for a period equal to such Interest Period and in an
amount substantially equal to the amount of the applicable Loan.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the
----------
next higher 1/100th of 1%) determined by the Administrative Agent pursuant to
the following formula:
LIBOR Rate = LIBOR
----------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the
---------------
LIBOR Rate as provided in Section 4.1(a).
"Lien" means, with respect to any asset, any mortgage, lien pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loans" means the collective reference to the Revolving Credit Loans, the
-----
Term Loans and the Swingline Loans and "Loan" means any of such Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, the
--------------
Applications, any Hedging Agreement with any Lender (which such Hedging
Agreement is permitted or required hereunder), the Pledge Agreement, and each
other document, instrument, certificate and agreement executed and delivered by
Wilmar, its Subsidiaries or their counsel in connection with this Agreement or
otherwise referred to herein or contemplated hereby, all as may be amended,
restated or otherwise modified.
"Material Adverse Effect" means, with respect to Wilmar or any of its
-----------------------
Subsidiaries, a material adverse effect on the properties, business, prospects,
operations or condition (financial or otherwise) of Wilmar and its Subsidiaries
taken as a whole or the ability of Wilmar and its Subsidiaries taken as a whole
to perform their obligations under the Loan Documents.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"Net Cash Proceeds" means, as applicable, (a) with respect to any sale or
-----------------
other disposition of assets, the gross cash proceeds received by Wilmar or any
of its Subsidiaries from
9
<PAGE>
such sale less the sum of (i) all income taxes and other taxes assessed by a
----
Governmental Authority as a result of such sale and any other fees and expenses
incurred in connection therewith and (ii) the principal amount of, premium, if
any, and interest on any Debt secured by a Lien on the asset (or a portion
thereof) sold, which Debt (other than the Loans) is required to be repaid in
connection with such sale, and (b) with respect to any payment under an
insurance policy or in connection with a condemnation proceeding, the amount of
cash proceeds received by Wilmar or its Subsidiaries from an insurance company
or Governmental Authority, as applicable, net of all expenses of collection.
"Net Worth" means, as of any date of determination, Wilmar and its
---------
Consolidated Subsidiaries' total assets less its total liabilities.
"Notes" means the collective reference to the Revolving Credit Notes, the
-----
Term Loan Notes and the Swingline Notes and "Note" means any of such Notes.
"Notice of Account Designation" shall have the meaning assigned thereto in
-----------------------------
Section 2.4(d).
"Notice of Borrowing" shall have the meaning assigned thereto in Section
-------------------
2.4(a).
"Notice of Conversion/Continuation" shall have the meaning assigned thereto
---------------------------------
in Section 4.2.
"Notice of Prepayment" shall have the meaning assigned thereto in Section
--------------------
2.5(d).
"Obligations" means, in each case, whether now in existence or hereafter
-----------
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar petition) the Loans, (b) the L/C
Obligations, (c) all payment and other obligations owing by the Borrowers to any
Lender or the Administrative Agent under any Hedging Agreement with any Lender
or Affiliate thereof (which such Hedging Agreement is permitted or required
hereunder), and (d) all other fees and commissions (including attorney's fees),
charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by the Borrowers to the Lenders or the
Administrative Agent, of every kind, nature and description, direct or indirect,
absolute or contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note, in each
case under or in respect of this Agreement, any Note, any Letter of Credit or
any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned thereto
--------------------------------
in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in Section 4.11(b).
-----------
10
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
----
agency.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
------------
Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees of any Borrower or any ERISA
Affiliate or (b) has at any time within the preceding six years been maintained
for the employees of any Borrower or any of their current or former ERISA
Affiliates.
"Person" means an individual, corporation, limited liability company,
------
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Pledge Agreement" means the Pledge Agreement required to be executed and
----------------
delivered by Borrowers pursuant to Section 5.2(a) hereof, in form and substance
acceptable to Administrative Agent, as it may be amended or modified from time
to time, or joined pursuant to Paragraph 8.12 hereof.
"Prime Rate" means, at any time, the rate of interest per annum publicly
----------
announced from time to time by First Union as its prime rate. Each change in the
Prime Rate shall be effective as of the opening of business on the day such
change in the Prime Rate occurs. The parties hereto acknowledge that the rate
announced publicly by First Union as its Prime Rate is an index or base rate and
shall not necessarily be its lowest or best rate charged to its customers or
other banks.
"Purchase Agreement" means the Stock Purchase Agreement dated November 15,
------------------
1999 by and between Wilmar and the Dyson-Kissner-Moran Corporation, as amended
by _________.
"Register" shall have the meaning assigned thereto in Section 13.10(d).
--------
"Reimbursement Obligation" means the obligation of the Borrowers to
------------------------
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Required Lenders" means, at any date, any combination of holders of at
----------------
least fifty-one percent (51%) of the aggregate outstanding Extensions of Credit,
or if no amounts are outstanding under the Notes, any combination of Lenders
whose Commitment Percentages aggregate at least fifty-one percent (51%).
"Responsible Officer" means any of the following: the chief executive
-------------------
officer, chief financial officer or treasurer of Wilmar or any Subsidiary, as
applicable, or any other officer of Wilmar or any Subsidiary, as applicable,
reasonably acceptable to the Administrative Agent.
11
<PAGE>
"Revolving Commitment" means, as to any Lender, the obligation of such
--------------------
Lender to make Revolving Credit Loans to, to make or participate in Swingline
Loans to, and issue or participate in Letters of Credit issued for the account
of the Borrowers hereunder in an aggregate principal or face amount at any time
outstanding not to exceed the amount set forth opposite such Lender's name on
Schedule 2 hereto, as the same may be reduced or modified at any time or from
- ----------
time to time pursuant to the terms hereof.
"Revolving Credit Facility" means the revolving credit facility established
-------------------------
pursuant to Article II hereof.
"Revolving Credit Loans" means any revolving loan made to the Borrowers
----------------------
pursuant to Section 2.1, and all such revolving loans collectively as the
context requires.
"Revolving Credit Notes" means the collective reference to the Revolving
----------------------
Credit Notes made by the Borrowers payable to the order of each Lender,
substantially in the form of Exhibit A-1 hereto, evidencing the Revolving Credit
-----------
Facility, and any amendments and modifications thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension thereof, in
whole or in part; Revolving Credit Note means any of such Revolving Credit
Notes.
"Revolving Credit Termination Date" means the earliest of the dates
---------------------------------
referred to in Section 2.8(a).
"Rolling Period" means, as of any date, the most recent four (4)
--------------
consecutive fiscal quarters of Wilmar and its Consolidated Subsidiaries
completed on or before such date
"Security Documents" means the collective reference to the Pledge Agreement
------------------
and each other agreement or writing pursuant to which Wilmar or any Subsidiary
thereof purports to pledge or grant a security interest in any property or
assets securing the Obligations or any such Person purports to guaranty the
payment and/or performance of the Obligations.
"Solvent" means, as to any Borrower on a particular date, that any such
-------
Person (a) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage and is able to pay
its debts as they mature, (b) owns property having a value, both at fair
valuation and at present fair saleable value, greater than the amount required
to pay its probable liabilities (including contingencies), and (c) does not
believe that it will incur debts or liabilities beyond its ability to pay such
debts or liabilities as they mature.
"Subsidiary" means as to any Person, any corporation, partnership, limited
----------
liability company or other entity of which more than fifty percent (50%) of the
outstanding capital stock or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity is at the
time, directly or indirectly, owned by or the management is otherwise controlled
12
<PAGE>
by such Person (irrespective of whether, at the time, capital stock or other
ownership interests of any other class or classes of such corporation,
partnership, limited liability company or other entity shall have or might have
voting power by reason of the happening of any contingency). Unless otherwise
qualified references to Subsidiary or Subsidiaries herein shall refer to
those of the Borrower.
"Sweep Plus Cash Management Arrangement" means the cashpivot cash
--------------------------------------
management arrangement between Borrowers and First Union for First Union to
provide cash management services to Borrowers.
"Swingline Commitment" means the obligation of the Swingline Lender to make
--------------------
Swingline Loans to Borrowers in a maximum principal amount not exceeding at any
time the amount set forth opposite the Swingline Lender's name on Schedule 2
hereto as the same may be reduced or modified at any time or from time to time
pursuant to the terms hereof. On the Closing Date, the Swingline Commitment
shall be Five Million Dollars ($5,000,000).
"Swingline Lender" means First Union in its capacity as swingline lender
----------------
hereunder.
"Swingline Loan" means any swingline loan made by the Swingline Lender to
--------------
the Borrowers pursuant to Section 2.3, and all such swingline loans collectively
as the context requires.
"Swingline Note" means the Swingline Note made by the Borrowers payable to
--------------
the order of the Swingline Lender, substantially in the form of Exhibit A-3
-----------
hereto, evidencing the Swingline Loans, and any amendments and modifications
thereto, any substitutes therefor, and any replacements, restatements, renewals
or extension thereof, in whole or in part.
"Swingline Termination Date" means the first to occur of (a) the
--------------------------
resignation of First Union as Administrative Agent in accordance with Section
12.9 or (b) the Revolving Credit Termination Date.
"Taxes" shall have the meaning assigned thereto in Section 4.11(a).
-----
"Term Loan" means any term loan made to the Borrowers pursuant to Section
---------
2.2, and all such term loans collectively as the context requires.
"Term Loan Commitment" means, as to any Lender, the obligation of such
--------------------
Lender to make a Term Loan to Borrowers in an original principal amount equal to
the amount set forth opposite such Lender's name on Schedule 2 hereto as the
same may be reduced or modified at any time or from time to time pursuant to the
terms hereof. On the Closing Date, the aggregate amount of all the Lenders'
Term Loan Commitments shall be Fifty-Five Million Dollars ($55,000,000).
13
<PAGE>
"Term Loan Facility" means the term loan facility established pursuant to
------------------
Article II hereof.
"Term Loan Note" means the collective reference to the Term Loan Notes made
--------------
by the Borrowers payable to the order of each Lender, substantially in the form
of Exhibit A-2 hereto, evidencing the Term Loan Facility, and any amendments and
-----------
modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extension thereof, in whole or in part; "Term Loan
Note" means any of such Term Loan Notes.
"Term Loan Termination Date" means the earliest of: (a) December 6, 2004;
--------------------------
(b) the date of payment in full by Borrowers of all Obligations under the Term
Loan Facility; or (c) the date of termination by the Administrative Agent on
behalf of the Lenders pursuant to Section 11.2(a).
"Termination Event" means: (a) a Reportable Event described in Section
-----------------
4043 of ERISA, or (b) the withdrawal of any Borrower or any ERISA Affiliate from
a Pension Plan during a plan year in which it was a substantial employer as
defined in Section 4001(a)(2) of ERISA, or (c) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate, or the appointment of
a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event
or condition which would constitute grounds under Section 4042(a) of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan, or (f) the partial or complete withdrawal of any Borrower or any ERISA
Affiliate from a Multiemployer Plan, or (g) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA, or (h) any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Uniform Customs" the Uniform Customs and Practice for Documentary Credits
---------------
(1994 Revision), International Chamber of Commerce Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the Commonwealth of
---
Pennsylvania from time to time.
"United States" means the United States of America.
-------------
"Wholly-Owned" means, with respect to a Subsidiary, that all of the shares
------------
of capital stock or other ownership interests of such Subsidiary are, directly
or indirectly, owned or controlled by Wilmar and/or one or more of its Wholly-
Owned Subsidiaries.
14
<PAGE>
Section 1.2. General. Unless otherwise specified, a reference in this
-------
Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Any reference herein to "Philadelphia time" shall
refer to the applicable time of day in Philadelphia, Pennsylvania.
Section 1.3. Other Definitions and Provisions.
--------------------------------
(1) Use of Capitalized Terms. Unless otherwise defined
------------------------
therein, all capitalized terms defined in this Agreement shall have the defined
meanings when used in this Agreement, the Notes and the other Loan Documents or
any certificate, report or other document made or delivered pursuant to this
Agreement.
(2) Miscellaneous. 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.
ARTICLE II
CREDIT FACILITIES
-----------------
Section 1.4. Revolving Credit Loans. Subject to the terms and conditions
----------------------
of this Agreement, each Lender severally agrees to make Revolving Credit Loans
to the Borrowers from time to time from the Closing Date through the Revolving
Credit Termination Date as requested by the Borrowers in accordance with the
terms of Section 2.4; provided, that (a) the aggregate principal amount of all
--------
outstanding Revolving Credit Loans (after giving effect to any amount requested)
shall not exceed the Aggregate Revolving Commitment less the sum of all
----
outstanding Swingline Loans and L/C Obligations and (b) the principal amount of
outstanding Revolving Credit Loans from any Lender to the Borrowers shall not at
any time exceed such Lender's Revolving Commitment as set forth on Schedule 2
----------
hereto less such Lender's Commitment Percentage of outstanding L/C Obligations
----
and Swingline Loans (if any). Each Revolving Credit Loan by a Lender shall be in
a principal amount equal to such Lender's Commitment Percentage of the aggregate
principal amount of Revolving Credit Loans requested on such occasion. Subject
to the terms and conditions hereof, the Borrowers may borrow, repay and reborrow
Revolving Credit Loans hereunder until the Revolving Credit Termination Date.
Section 1.5. Term Loans. Subject to the terms and conditions of this
----------
Agreement, each Lender severally agrees to make a Term Loan to the Borrowers on
the Closing Date in the original principal amount of its Term Loan Commitment.
15
<PAGE>
Section 1.6. Swingline Loans.
---------------
(1) Availability. Subject to the terms and conditions of this
------------
Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrowers
from time to time from the Closing Date through, but not including, the
Swingline Termination Date; provided, that the aggregate principal amount of all
--------
outstanding Swingline Loans (after giving effect to any amount requested), shall
not exceed the lesser of (i) the Aggregate Revolving Commitment less the sum of
all outstanding Revolving Credit Loans and the L/C Obligations and (ii) the
Swingline Commitment.
(2) Repayment. Unless otherwise agreed in writing, the
---------
Borrowers shall repay the outstanding principal amount of each Swingline Loan on
the earlier to occur of: (i) the Swingline Termination Date or (ii) demand.
(3) Refunding.
---------
(1) Swingline Loans shall be refunded by the Lenders
on demand by the Swingline Lender. Such refundings shall be made by the Lenders
in accordance with their respective Commitment Percentages and shall thereafter
be reflected as Revolving Credit Loans of the Lenders on the books and records
of the Administrative Agent. Each Lender shall fund its respective Commitment
Percentage of Revolving Credit Loans as required to repay Swingline Loans
outstanding to the Swingline Lender upon demand by the Swingline Lender but in
no event later than 2:00 p.m. (Philadelphia time) on the next succeeding
Business Day after such demand is made. No Lender's obligation to fund its
respective Commitment Percentage of a Swingline Loan shall be affected by any
other Lender's failure to fund its Commitment Percentage of a Swingline Loan,
nor shall any Lender's Commitment Percentage be increased as a result of any
such failure of any other Lender to fund its Commitment Percentage.
(2) The Borrowers shall pay to the Swingline Lender
on demand the amount of such Swingline Loans to the extent amounts received from
the Lenders are not sufficient to repay in full the outstanding Swingline Loans
requested or required to be refunded. In addition, the Borrowers hereby
authorize the Administrative Agent to charge any account maintained with the
Swingline Lender (up to the amount available therein) in order to immediately
pay the Swingline Lender the amount of such Swingline Loans to the extent
amounts received from the Lenders are not sufficient to repay in full the
outstanding Swingline Loans requested or required to be refunded. If any portion
of any such amount paid to the Swingline Lender shall be recovered by on or
behalf of the Borrowers from the Swingline Lender in bankruptcy or otherwise,
the loss of the amount so recovered shall be ratably shared among all the
Lenders that have not reimbursed the Swingline Lender pursuant to clause (i)
above in accordance with their respective ratable share (unless the amounts so
recovered by or on behalf of the Borrowers pertain to a Swingline Loan extended
after the occurrence and during the continuance of an Event of Default of which
the Administrative Agent has received actual notice
16
<PAGE>
and which such Event of Default has not been waived by the Required Lenders or
the Lenders, as applicable).
(3) Each Lender acknowledges and agrees that its
obligation to refund Swingline Loans in accordance with the terms of this
Section 2.3 is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, non-satisfaction of the
conditions set forth in Article V. Further, each Lender agrees and acknowledges
that if prior to the refunding of any outstanding Swingline Loans pursuant to
this Section 2.3, one of the events described in Section 11.1(i) or (j) shall
have occurred, each Lender will, on the date the applicable Revolving Credit
Loan would have been made pursuant to Section 2.3(c) hereof, purchase an
undivided participating interest in the Swingline Loan to be refunded in an
amount equal to its Commitment Percentage of the aggregate amount of such
Swingline Loan. Each Lender will immediately transfer to the Swingline Lender,
in immediately available funds, the amount of its participation. Whenever, at
any time after the Swingline Lender has received from any Lender such Lender's
participating interest in a Swingline Loan, the Swingline Lender receives any
payment on account thereof, the Swingline Lender will distribute to such Lender
its participating interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded).
Section 1.7. Procedure for Advances of Revolving Credit
Loans, Swingline Loans and Term Loans.
--------------------------------------
(1) Requests for Borrowing. The Borrowers shall give the
----------------------
Administrative Agent irrevocable prior written notice in the form attached
hereto as Exhibit B (a "Notice of Borrowing") not later than 11:00 a.m.
---------
(Philadelphia time) (i) on the same Business Day as each Base Rate Loan and each
Swingline Loan and (ii) at least three (3) Business Days before each LIBOR Rate
Loan, of its intention to borrow, specifying (A) the date of such borrowing,
which shall be a Business Day, (B) the amount of such borrowing, which shall be
in an amount equal to the amount of the Aggregate Revolving Commitment then
available to the Borrowers, or if less, (x) with respect to Base Rate Loans, in
an aggregate principal amount of $1,000,000 or a whole multiple of $250,000 in
excess thereof, (y) with respect to LIBOR Rate Loans, in an aggregate principal
amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof, and
(z) with respect to Swingline Loans, $1, (C) whether the Loans are to be LIBOR
Rate Loans or Base Rate Loans or, if a combination thereof, the amount allocated
to each and (D) in the case of a LIBOR Rate Loan, the duration of the Interest
Period applicable thereto. Notices received after 11:00 a.m. (Philadelphia time)
shall be deemed received on the next Business Day. The Administrative Agent
shall promptly notify the Lenders of each Notice of Borrowing.
(2) Automatic Swingline Loan Borrowing. Whenever the
----------------------------------
Borrowers desire a Swingline Loan advance hereunder, the Borrowers shall give
written notice (or
17
<PAGE>
telephone notice promptly confirmed in writing) to the Swingline Lender not
later than 11:00 a.m. (Philadelphia time) on the Business Day of the requested
Swingline Loan advance; provided, however, that in lieu of any advance procedure
otherwise set forth in this Section 2.4, Borrowers may automatically request
Swingline Loans pursuant to the Sweep Plus Cash Management Arrangement for so
long as such service is made available by the Swingline Lender. Each such notice
shall be irrevocable, shall constitute a reaffirmation of the accuracy of the
representations and warranties as of such date (except where such representation
and warranty is expressly stated as of a specific date) and of the absence of
any Default or Event of Default and shall specify (A) that a Swingline Loan
advance is requested, (B) the date of the requested Swingline Loan advance
(which shall be a Business Day) and (C) the principal amount of the Swingline
Loan advance requested.
(3) Authority of Wilmar. Each of the Borrowers hereby
-------------------
irrevocably authorizes and requests that Wilmar execute all Notices of
Borrowing, make all elections as to interest rates and take any other actions
required of or permitted by the Borrowers under this Agreement, on its
respective behalf, in each case, with the same force and effect as if such
Borrower had executed such Notice of Borrowing, made such election or taken such
other action itself. Any request, application, or other communication by Wilmar
may be relied on by the Administrative Agent and the Lenders, and any
communication by the Administrative Agent and Lenders shall be made to Wilmar,
and shall be binding on each Borrower, jointly and severally, as fully as if
such request, application or other communication were made directly by or to
each such Borrower.
(4) Disbursement of Revolving Credit Loans, Swingline Loans
-------------------------------------------------------
and Term Loans. Not later than 2:00 p.m. (Philadelphia time) on the proposed
- --------------
borrowing date, (i) each Lender will make available to the Administrative Agent,
for the account of the Borrowers, at the office of the Administrative Agent in
funds immediately available to the Administrative Agent, such Lender's
Commitment Percentage of the Revolving Credit Loans and Term Loans to be made on
such borrowing date and (ii) the Swingline Lender will make available to the
Administrative Agent for the account of the Borrowers, at the Administrative
Agent's Office in funds immediately available to the Administrative Agent, the
Swingline Loans to be made on such borrowing date. The Borrowers hereby
irrevocably authorize the Administrative Agent to disburse the proceeds of each
borrowing requested pursuant to this Section 2.4 in immediately available funds
by crediting or wiring such proceeds to the deposit account of the Borrowers
identified in the most recent notice substantially in the form of Exhibit C
---------
hereto (a "Notice of Account Designation") delivered by the Borrowers to the
Administrative Agent or may be otherwise agreed upon by the Borrowers and the
Administrative Agent from time to time. Subject to Section 4.7 hereof, the
Administrative Agent shall not be obligated to disburse the portion of the
proceeds of any Revolving Credit Loan requested pursuant to this Section 2.4 to
the extent that any Lender has not made available to the Administrative Agent
its Commitment Percentage of such Loan. Revolving Credit Loans to be made for
the purpose of refunding Swingline Loans shall be made by the Lenders as
provided in Section 2.3(c) hereof.
18
<PAGE>
Section 1.8. Repayment of Loans.
------------------
(1) Repayment of Revolving Credit Loans and Swingline Loans.
-------------------------------------------------------
The Borrowers shall repay the outstanding principal amount of (i) all Revolving
Credit Loans in full on the Revolving Credit Termination Date, and (ii) all
Swingline Loans on demand or otherwise in accordance with Section 2.3(b),
together, in each case, with all accrued but unpaid interest thereon and fees
and expenses.
(2) Repayment of Term Loans. Borrowers shall make
-----------------------
repayments of the principal amount outstanding under the Term Loans in twenty
(20) consecutive quarterly principal installments commencing on March 31, 2000
on the following dates and in the following amounts:
Payment Date Amount
------------ ------
March 31, 2000 $1,375,000
June 30, 2000 $1,375,000
September 30, 2000 $1,375,000
December 31, 2000 $1,375,000
March 31, 2001 $2,062,500
June 30, 2001 $2,062,500
September 30, 2001 $2,062,500
December 31, 2001 $2,062,500
March 31, 2002 $2,750,000
June 30, 2002 $2,750,000
September 30, 2002 $2,750,000
December 31, 2002 $2,750,000
March 31, 2003 $3,437,500
June 30, 2003 $3,437,500
September 30, 2003 $3,437,500
December 31, 2003 $3,437,500
March 31, 2004 $4,125,000
June 30, 2004 $4,125,000
September 30, 2004 $4,125,000
December 31, 2004 $4,125,000
19
<PAGE>
Borrowers shall repay in full all amounts outstanding under the Term Loans,
together with accrued interest and fees, on the Term Loan Termination Date.
(3) Mandatory Repayments.
--------------------
(1) If at any time the outstanding principal amount of
all Revolving Credit Loans exceeds the Aggregate Revolving Commitment less the
----
sum of all outstanding Swingline Loans and L/C Obligations, the Borrowers shall
repay immediately upon notice from the Administrative Agent, by payment to the
Administrative Agent for the account of the Lenders, Revolving Credit Loans and
Swingline Loans, and furnish cash collateral reasonably satisfactory to the
Administrative Agent and/or repay the L/C Obligations, in an amount equal to
such excess with each such repayment applied first to the principal amount of
-----
outstanding Swingline Loans, second to the principal amount of the L/C
------
Obligations and third to the principal amount of outstanding Revolving Credit
-----
Loans. Such cash collateral shall be applied in accordance with Section
11.2(b). Each such repayment shall be accompanied by any amount required to be
paid pursuant to Section 4.9 hereof.
(2) Borrowers shall make a prepayment/repayment of the
Loans in the amount of the Net Cash Proceeds received by any Borrower (and not
reinvested in the business of Borrowers within one hundred eighty (180) days of
the receipt thereof) from: (A) all sales, transfers or other dispositions of
assets (not in the ordinary course of business) ("asset sales"); provided
however that Borrowers need not make a prepayment of the first $3,000,000 of
aggregate Net Cash Proceeds of asset sales they receive during any fiscal year
and (B) all insurance proceeds in excess of $3,000,000 received in any fiscal
year. The mandatory prepayments set forth in this Section 2.5(c)(ii) shall be
applied first to reduce the remaining amortization payments on the Term Loans in
inverse order of maturity, and second to reduce principal amounts outstanding
under the Revolving Credit Loans.
(4) Optional Repayments. The Borrowers may at any time
-------------------
and from time to time repay the Loans, in whole or in part, upon at least three
(3) Business Days irrevocable notice to the Administrative Agent with respect to
LIBOR Rate Loans and one (1) Business Day irrevocable notice with respect to
Base Rate Loans and Swingline Loans, in the form attached hereto as Exhibit D (a
---------
"Notice of Prepayment") specifying the date and amount of repayment and whether
the repayment is of LIBOR Rate Loans, Base Rate Loans, Swingline Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $1,000,000 or a whole multiple of
$250,000 in excess thereof with respect to Base Rate Loans, $3,000,000 or a
whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Loans
and $1 with
20
<PAGE>
respect to Swingline Loans. Each such repayment shall be accompanied by any
amount required to be paid pursuant to Section 4.9 hereof.
(5) Limitation on Repayment of LIBOR Rate Loans. The
-------------------------------------------
Borrowers may not repay any LIBOR Rate Loan on any day other than on the last
day of the Interest Period applicable thereto unless such repayment is
accompanied by any amount required to be paid pursuant to Section 4.9 hereof.
Section 1.9. Notes.
-----
(1) Revolving Credit Notes. Each Lender's Revolving Credit
----------------------
Loans and the obligation of the Borrowers to repay such Revolving Credit Loans
shall be evidenced by a separate Revolving Credit Note executed by the Borrowers
payable to each Lender representing the Borrowers' obligation to pay such
Lender's Revolving Commitment or, if less, the aggregate unpaid principal amount
of all Revolving Credit Loans made and to be made by such Lender to the
Borrowers hereunder, plus interest and all other fees, charges and other amounts
----
due thereon. Each Revolving Credit Note shall be dated the date hereof and shall
bear interest on the unpaid principal amount thereof at the applicable interest
rate per annum specified in Section 4.1.
(2) Term Loan Notes. The Term Loans and the obligations of
---------------
the Borrowers to repay such Term Loans shall be evidenced by a separate Term
Loan Note executed by the Borrowers payable to each Lender representing the
Borrowers' obligation to pay such Lender's Term Loan Commitment or, if less, the
aggregate unpaid principal amount of all Term Loans made by such Lender to the
Borrowers hereunder, plus interest on such principal amounts and all other fees,
----
charges and other amounts due thereon. Each Term Loan Note shall be dated the
date hereof and shall bear interest on the unpaid principal amount thereof at
the applicable interest rate per annum specified in Section 4.1.
(3) Swingline Notes. The Swingline Loans and the obligations
---------------
of the Borrowers to repay such Swingline Loans shall be evidenced by a Swingline
Note executed by the Borrowers payable to the order of the Swingline Lender
representing the Borrowers' obligation to pay the Swingline Lender's Swingline
Commitment or, if less, the aggregate unpaid principal amount of all Swingline
Loans made by the Swingline Lender to the Borrowers hereunder, plus interest on
----
such principal amounts and all other fees, charges and other amounts due
thereon. The Swingline Note shall be dated the date hereof and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 4.1.
Section 1.10. Permanent Reduction of the Aggregate Revolving Commitment.
---------------------------------------------------------
(1) Voluntary Reduction. The Borrowers shall have the
-------------------
right at any time and from time to time, upon at least five (5) Business Days
prior written notice to the Administrative Agent, to permanently reduce, without
premium or penalty, (i) the Aggregate
21
<PAGE>
Revolving Commitment at any time or (ii) portions of the Aggregate Revolving
Commitment, from time to time, in an aggregate principal amount not less than
$3,000,000 or any whole multiple of $1,000,000 in excess thereof.
(2) Payment. Each permanent reduction permitted pursuant
-------
to this Section 2.7 shall be accompanied by a payment of principal sufficient to
reduce the aggregate outstanding Extensions of Credit of the Lenders after such
reduction to the Aggregate Revolving Commitment as so reduced and if the
Aggregate Revolving Commitment as so reduced is less than the aggregate amount
of all outstanding Letters of Credit, the Borrowers shall be required to deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Any reduction of the Aggregate Revolving Commitment to zero shall be accompanied
by payment of all outstanding Obligations under the Revolving Credit Facility
(and furnishing of cash collateral satisfactory to the Administrative Agent for
all L/C Obligations) and shall result in the termination of the Aggregate
Revolving Commitment and Revolving Credit Facility. Such cash collateral shall
be applied in accordance with Section 11.2(b). If the reduction of the Aggregate
Revolving Commitment requires the repayment of any LIBOR Rate Loan, such
repayment shall be accompanied by any amount required to be paid pursuant to
Section 4.9 hereof.
Section 1.11. Termination of Credit Facilities.
--------------------------------
(1) The Revolving Credit Facility shall terminate on the
earliest of(a) December 6, 2004, (b) the date of termination by the Borrowers
pursuant to Section 2.7(a), and (c) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section 11.2(a).
(2) The Swingline Commitment shall terminate on the Swingline
Termination Date.
(3) In addition to the mandatory repayments required
pursuant to Section 2.5(b) hereof, the Term Loan Facility shall terminate on the
Term Loan Termination Date.
Section 1.12. Use of Proceeds. The Borrowers shall use the proceeds of
---------------
the Extensions of Credit (a) to refinance the Existing Facility, (b) to finance
the Acquisition, and (c) for the working capital and general corporate
requirements of Wilmar and its Subsidiaries, including additional acquisitions
and the payment of certain fees and expenses incurred in connection with the
transactions.
Section 1.13. Joint and Several Obligations. The obligations of Borrowers
-----------------------------
hereunder are and shall be joint and several; provided, however, that,
-------- -------
notwithstanding anything herein to the contrary, the aggregate liability under
this Agreement of a Foreign Subsidiary which is a
22
<PAGE>
Borrower shall be limited at all times to the outstanding balance of all funds
advanced to such Foreign Subsidiary by Lenders hereunder or by Wilmar or another
Borrower, and interest, fees and expenses associated therewith.
ARTICLE III
LETTER OF CREDIT FACILITY
-------------------------
Section 1.14. L/C Commitment. Subject to the terms and conditions hereof,
--------------
the Issuing Lender, in reliance on the agreements of the other Lenders set forth
in Section 3.4(a), agrees to issue standby letters of credit ("Letters of
Credit") for the account of the Borrowers on any Business Day from the Closing
Date through but not including the Revolving Credit Termination Date in such
form as may be approved from time to time by the Issuing Lender; provided, that
--------
the Issuing Lender shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, (a) the L/C Obligations would exceed the
L/C Commitment or (b) the Available Revolving Commitment of any Lender would be
less than zero. Each Letter of Credit shall (i) be denominated in Dollars in a
minimum amount of $1,000,000, (ii) be a standby letter of credit issued to
support obligations of Wilmar or any of its Subsidiaries, contingent or
otherwise, incurred in the ordinary course of business, (iii) expire on a date
satisfactory to the Issuing Lender, which date shall be no later than the
earlier of: (a) one year from the date of issuance or (b) the Revolving Credit
Termination Date and (iv) be subject to the Uniform Customs and, to the extent
not inconsistent therewith, the laws of the Commonwealth of Pennsylvania. The
Issuing Lender shall not at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuing Lender or
any L/C Participant to exceed any limits imposed by, any Applicable Law.
References herein to issue and derivations thereof with respect to Letters of
Credit shall also include extensions or modifications of any existing Letters of
Credit, unless the context otherwise requires.
Section 1.15. Procedure for Issuance of Letters of Credit. The Borrowers
-------------------------------------------
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at the Administrative Agent's Office an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
shall process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 3.1 and Article V hereof,
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 (3)
Business Days after its receipt of the 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 Borrowers. The Issuing
Lender shall promptly furnish to the Borrowers a copy of such Letter of Credit
and promptly notify each Lender of the issuance and
23
<PAGE>
upon request by any Lender, furnish to such Lender a copy of such Letter of
Credit and the amount of such Lender's L/C participation therein.
Section 1.16. Commissions and Other Charges.
-----------------------------
(1) The Borrowers shall pay to the Administrative Agent,
for the account of the Issuing Lender and the L/C Participants, a letter of
credit fee with respect to each Letter of Credit in an amount equal to the
Applicable Margin for LIBOR Rate Loans on the date of issuance of such Letter of
Credit on a per annum basis multiplied by the face amount of such Letter of
Credit as then in effect. Such commission shall be payable quarterly in arrears
on the last Business Day of each calendar quarter and on the Revolving Credit
Termination Date.
(2) In addition to the foregoing fee, the Borrowers shall
pay the Issuing Lender a fronting fee of one-eighth of one percent (_%) per
annum on the face amount of each Letter of Credit as then in effect, payable
quarterly in arrears on the last Business Day of each calendar quarter and on
the Revolving Credit Termination Date.
(3) The Administrative Agent shall, promptly following its
receipt thereof, distribute to the Issuing Lender and the L/C Participants all
fees received by the Administrative Agent in accordance with their respective
Commitment Percentages.
(4) The Borrowers shall pay to the Issuing Lender upon
request all normal costs of expenses of the Issuing Letter in connection with
the issuance, transfer or other administration of any Letter of Credit.
Section 1.17. L/C Participations.
------------------
(1) The Issuing Lender irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's
Commitment Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrowers
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Commitment Percentage
of the amount of such draft, or any part thereof, which is not so reimbursed.
24
<PAGE>
(2) Upon becoming aware of any amount required to be paid
by any L/C Participant to the Issuing Lender pursuant to Section 3.4(a) in
respect of any unreimbursed portion of any payment made by the Issuing Lender
under any Letter of Credit, the Issuing Lender shall notify each L/C Participant
of the amount and due date of such required payment and such L/C Participant
shall pay to the Issuing Lender the amount specified on the applicable due date.
If any such amount is paid to the Issuing Lender after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand, in addition
to such amount, the product of (i) such amount, times (ii) the daily average
-----
Federal Funds Rate as determined by the Administrative Agent during the period
from and including the date such payment is due 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. A certificate of the Issuing Lender with
respect to any amounts owing under this Section 3.4(b) shall be conclusive in
the absence of manifest error. With respect to payment to the Issuing Lender of
the unreimbursed amounts described in this Section 3.4(b), if the L/C
Participants receive notice that any such payment is due (A) prior to 1:00 p.m.
(Philadelphia time) on any Business Day, such payment shall be due that Business
Day, and (B) after 1:00 p.m. (Philadelphia time) on any Business Day, such
payment shall be due on the following Business Day.
(3) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant its
Commitment Percentage of such payment in accordance with this Section 3.4, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrowers or otherwise, or any payment of interest on account
thereof), the Issuing Lender will distribute to such L/C Participant its pro
---
rata share thereof; provided, that in the event that any such payment received
- ---- --------
by the Issuing Lender shall be required to be returned by the Issuing Lender,
such L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.
Section 1.18. Reimbursement Obligation of the Borrowers. The Borrowers
-----------------------------------------
agree to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrowers of the date and amount of a draft paid under any Letter
of Credit 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 and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrowers under this Article III from the date such
amounts are paid under the Letter of Credit (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate which would be
payable on any outstanding Base Rate Loans which were then overdue. If the
Borrowers fail to timely reimburse the Issuing Lender on the date the Borrowers
receive the notice referred to in this Section 3.5, the Borrowers shall be
deemed to have timely given a Notice of Borrowing hereunder to the
Administrative Agent requesting the Lenders to make a Base Rate Loan on such
date in an amount equal to the amount of such drawing and, regardless
25
<PAGE>
of whether or not the conditions precedent specified in Article V have been
satisfied, the Lenders shall make Base Rate Loans in such amount, the proceeds
of which shall be applied to reimburse the Issuing Lender for the amount of the
related drawing and costs and expenses.
Section 1.19. Obligations Absolute. The Borrowers' obligations under this
--------------------
Article III (including without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrowers may have or
have had against the Issuing Lender or any beneficiary of a Letter of Credit.
The Borrowers also agree with the Issuing Lender that the Issuing Lender shall
not be responsible for, and the Borrowers' Reimbursement Obligation under
Section 3.5 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrowers 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 any Borrower 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. The Borrowers agree 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 Customs and, to the extent not inconsistent therewith, the UCC shall
be binding on the Borrowers and shall not result in any liability of the Issuing
Lender to the Borrowers. The responsibility of the Issuing Lender to the
Borrowers 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. In furtherance and not
in limitation of the foregoing, Administrative Agent may accept facially
conforming documents without responsibility for further investigation,
regardless of any notice or information to the contrary.
Section 1.20. Effect of Application. To the extent that any provision of
---------------------
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.
ARTICLE IV
GENERAL LOAN PROVISIONS
-----------------------
Section 1.21. Interest.
--------
26
<PAGE>
(1) Interest Rate Options. Subject to the provisions of
---------------------
this Section 4.1, at the election of the Borrowers, the aggregate principal
balance of (i) the Revolving Credit Notes or any portion thereof and the Term
Loans or any portion thereof shall bear interest at (A) the Base Rate plus the
"Applicable Margin" as set forth in Section 4.1(c) or (B) the LIBOR Rate plus
----
the Applicable Margin as set forth in Section 4.1(c); provided that the LIBOR
--------
Rate shall not be available until three (3) Business Days after the Closing Date
and (ii) any Swingline Loan shall bear interest at the Base Rate plus the
----
Applicable Margin as set forth in Section 4.1(c). The Borrowers shall select the
rate of interest and Interest Period, if any, applicable to any Loan at the time
a Notice of Borrowing is given pursuant to Section 2.4 or at the time a Notice
of Conversion/Continuation is given pursuant to Section 4.2. Each Loan or
portion thereof bearing interest based on the Base Rate shall be a "Base Rate
Loan," each Loan or portion thereof bearing interest based on the LIBOR Rate
shall be a "LIBOR Rate Loan." Any Loan or any portion thereof as to which the
Borrowers have not duly specified an interest rate as provided herein shall be
deemed a Base Rate Loan.
(2) Interest Periods. In connection with each LIBOR Rate
----------------
Loan, the Borrowers, by giving notice at the times described in Section 4.1(a),
shall elect an interest period (each, an Interest Period ) to be applicable to
such Loan, which Interest Period shall be a period of one (1), two (2), three
(3), or six (6) months with respect to each LIBOR Rate Loan; provided that:
--------
(1) the Interest Period shall commence on the date of
advance of or conversion to any LIBOR Rate Loan and, in the case of immediately
successive Interest Periods, each successive Interest Period shall commence on
the date on which the next preceding Interest Period expires;
(2) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, that if any Interest Period with respect to a
--------
LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(3) any Interest Period with respect to a LIBOR Rate
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 the relevant
calendar month at the end of such Interest Period;
(4) no Interest Period shall extend beyond the
Revolving Credit Termination Date; and
27
<PAGE>
(5) there shall be no more than six (6) Interest
Periods outstanding at any time.
(3) Applicable Margin. The Applicable Margin provided for
-----------------
in Section 4.1(a) with respect to the Loans (the "Applicable Margin") shall (i)
on the Closing Date and through three (3) Business Days after receipt by
Administrative Agent of the Borrowers' June 30, 2000 financial statements, equal
the percentages set forth in Level II for the chart below and (ii) for each
fiscal quarter thereafter be determined by reference to Wilmar and its
Subsidiaries' ratio of Funded Debt to EBITDA as of the end of the fiscal quarter
immediately preceding the delivery of the applicable Officer's Compliance
Certificate as follows:
<TABLE>
<CAPTION>
Ratio of Funded Debt to Applicable Base Applicable
Level EBITDA Rate Margin LIBOR Margin
----- ------ ----------- ------------
<S> <C> <C> <C>
I more than or equal to 2.50 .25% 2.00%
II more than or equal to 2.00 and less than 2.50 0% 1.75%
III more than or equal to 1.50 and less than 2.00 0% 1.50%
IV less than 1.50 0% 1.25
</TABLE>
Adjustments, if any, in the Applicable Margin shall be made by the
Administrative Agent on the third (3rd) Business Day after receipt by the
Administrative Agent of quarterly financial statements for Wilmar and its
Subsidiaries and the accompanying Officer's Compliance Certificate setting forth
the ratio of Funded Debt to EBITDA of Wilmar and its Subsidiaries as of the most
recent fiscal quarter end. Subject to Section 4.1(d), in the event the Borrowers
fail to deliver such financial statements and certificate within the time
required by Section 7.1 hereof, the Applicable Margin shall be the highest
Applicable Margin set forth above until the delivery of such financial
statements and certificate.
(4) Default Rate. Subject to Section 11.3, at the discretion
------------
of the Administrative Agent and Required Lenders, upon the occurrence and during
the continuance of an Event of Default, (i) the Borrowers shall no longer have
the option to request LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans
shall bear interest at a rate per annum two percent (2%) in excess of the rate
then applicable to LIBOR Rate Loans, as applicable, until the end of the
applicable Interest Period and thereafter at a rate equal to two percent (2%) in
excess of the rate then applicable to Base Rate Loans, and (iii) all outstanding
Base Rate Loans shall bear interest at a rate per annum equal to two percent
(2%) in excess of the rate then applicable to Base Rate Loans. Interest shall
continue to accrue on the Notes at the rates set forth above after the filing by
or against the Borrowers of any petition seeking any relief in bankruptcy or
under any act or law pertaining to insolvency or debtor relief, whether state,
federal or foreign, as well as before and after any judgment.
28
<PAGE>
(5) Interest Payment and Computation. Interest on each
--------------------------------
Base Rate Loan shall be payable in arrears on the last Business Day of each
calendar quarter commencing December 31, 1999; and interest on each LIBOR Rate
Loan shall be payable on the last day of each Interest Period applicable
thereto, and if such Interest Period extends over three (3) months, at the end
of each three (3) month interval during such Interest Period. Interest on LIBOR
Rate Loans and all fees payable hereunder shall be computed on the basis of a
360-day year and assessed for the actual number of days elapsed and interest on
Base Rate Loans shall be computed on the basis of a 365/66-day year and assessed
for the actual number of days elapsed.
(6) Maximum Rate. In no contingency or event whatsoever
------------
shall the aggregate of all amounts deemed interest hereunder or under any of the
Notes charged or collected pursuant to the terms of this Agreement or pursuant
to any of the Notes exceed the highest rate permissible under any Applicable Law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that the Lenders
have charged or received interest hereunder in excess of the highest applicable
rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative
Agent's option (i) promptly refund to the Borrowers any interest received by
Lenders in excess of the maximum lawful rate or (ii) shall apply such excess to
the principal balance of the Obligations. It is the intent hereof that the
Borrowers not pay or contract to pay, and that neither the Administrative Agent
nor any Lender receive or contract to receive, directly or indirectly in any
manner whatsoever, interest in excess of that which may be paid by the Borrowers
under Applicable Law.
Section 1.22. Notice and Manner of Conversion or Continuation of Loans.
--------------------------------------------------------
Provided that no Event of Default has occurred and is then continuing, the
Borrowers shall have the option to (a) convert at any time following the third
Business Day after the Closing Date all or any portion of its outstanding Base
Rate Loans (other than Swingline Loans) in a principal amount equal to
$3,000,000 or any whole multiple of $1,000,000 in excess thereof into one or
more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i)
convert all or any part of its outstanding LIBOR Rate Loans in a principal
amount equal to $1,000,000 or a whole multiple of $250,000 in excess thereof
into Base Rate Loans or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans.
Whenever the Borrowers desire to convert or continue Loans as provided above,
the Borrowers shall give the Administrative Agent irrevocable prior written
notice in the form attached as Exhibit E (a "Notice of Conversion/Continuation")
---------
not later than 11:00 a.m. (Philadelphia time) three (3) Business Days before the
day on which a proposed conversion or continuation of such Loan is to be
effective specifying (A) the Loans to be converted or continued, and, in the
case of any LIBOR Rate Loan to be converted or continued, the last day of the
Interest Period therefor, (B) the effective date of such conversion or
continuation (which shall be a Business Day), (C) the principal amount of such
Loans to be converted or continued, and (D) the Interest Period to be applicable
to such converted or continued LIBOR Rate Loan. The Administrative Agent shall
promptly notify the Lenders of such Notice of Conversion/Continuation.
29
<PAGE>
Section 1.23. Fees.
----
(1) Commitment Fee. The Borrowers shall pay to the
--------------
Administrative Agent, for the account of the Lenders, a non-refundable
commitment fee at a rate per annum on the average daily unused portion of the
Aggregate Revolving Commitment, such fee: (i) on the Closing Date and through
three Business Days after receipt by Administrative Agent of the Borrowers' June
30, 2000 financial statements, to equal the commitment fee set forth in Level II
for the chart below and (ii) for each fiscal quarter thereafter, to be
determined by reference to Wilmar and its Subsidiaries' ratio of Funded Debt to
EBITDA as of the end of the fiscal quarter immediately preceding the delivery of
the applicable Officer's Compliance Certificate as follows:
<TABLE>
<CAPTION>
Ratio of Funded Debt to Commitment
Level EBITDA Fee
----- ------ ---
<S> <C> <C>
I more than or equal to 2.50 .50%
II more than or equal to 2.00 and less than 2.50 .375%
III more than or equal to 1.50 and less than 2.00 .300%
IV less than 1.50 .25%
</TABLE>
Adjustments, if any, in the commitment fee shall be made by the
Administrative Agent on the third (3rd) Business Day after receipt by the
Administrative Agent of quarterly financial statements for Wilmar and its
Subsidiaries as of the most recent fiscal quarter end. In the event the
Borrowers fail to deliver such financial statements and certificate within the
time required by Section 7.1 hereof, the commitment fee shall be the highest
commitment fee set forth above until the delivery of such financial statements
and certificate. The commitment fee shall be payable in arrears on the last
Business Day of each calendar quarter during the term of this Agreement
commencing December 31, 1999, and on the Revolving Credit Termination Date. Such
commitment fee shall be distributed by the Administrative Agent to the Lenders
pro rata in accordance with the Lenders' respective Commitment Percentages. The
- --- ----
amount of outstanding Swingline Loans shall not be considered usage of the
Aggregate Revolving Commitment for purposes of calculating such commitment fee.
(2) Administrative Agent's and Other Fees. In order to
-------------------------------------
compensate the Administrative Agent for structuring and syndicating the Loans
and for its obligations hereunder, the Borrowers agree to pay to the
Administrative Agent, for its account, the fees set forth in the separate fee
letter agreement executed by the Borrowers and the Administrative Agent dated
November 1, 1999.
Section 1.24. Manner of Payment. Each payment by the Borrowers on account
-----------------
of the principal of or interest on the Loans or of any fee, commission or other
amounts (including the
30
<PAGE>
Reimbursement Obligation) payable to the Lenders under this Agreement or any
Note shall be made not later than 1:00 p.m. (Philadelphia time) on the date
specified for payment under this Agreement to the Administrative Agent at the
Administrative Agent's Office for the account of the Lenders (other than as set
forth below) pro rata in accordance with their respective Commitment Percentages
--- ----
(except as specified below), in Dollars, in immediately available funds and
shall be made without any set-off, counterclaim or deduction whatsoever. Any
payment received after such time but before 2:00 p.m. (Philadelphia time) on
such day shall be deemed a payment on such date for the purposes of Section
11.1, but for all other purposes shall be deemed to have been made on the next
succeeding Business Day. Any payment received after 2:00 p.m. (Philadelphia
time) shall be deemed to have been made on the next succeeding Business Day for
all purposes. Upon receipt by the Administrative Agent of each such payment, the
Administrative Agent shall distribute to each Lender at its address for notices
set forth herein its pro rata share of such payment in accordance with such
--- ----
Lender's Commitment Percentage (except as specified below) and shall wire advice
of the amount of such credit to each Lender. Each payment to the Administrative
Agent of the Issuing Lender's fees or L/C Participants commissions shall be made
in like manner, but for the account of the Issuing Lender or the L/C
Participants, as the case may be. Each payment to the Administrative Agent of
Administrative Agent's fees or expenses shall be made for the account of the
Administrative Agent and any amount payable to any Lender under Sections 4.8,
4.9, 4.10, 4.11 or 13.2 shall be paid to the Administrative Agent for the
account of the applicable Lender. Subject to Section 4.1(b)(ii) in any payment
under this Agreement or any Note shall be specified to be made upon a day which
is not a Business Day, it shall be made on the next succeeding day which is a
Business Day and such extension of time shall in such case be included in
computing any interest if payable along with such payment.
Section 1.25. Credit of Payments and Proceeds. In the event that the
-------------------------------
Borrowers shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by the Borrowers hereunder, then to all indemnity obligations then
due and payable by the Borrowers hereunder, then to all Administrative Agent's
and Issuing Lender's fees then due and payable, then to all commitment and other
fees and commissions then due and payable, then to accrued and unpaid interest
on the Swingline Note to the Swingline Lender, then to the principal amount
outstanding under the Swingline Note to the Swingline Lender, then to accrued
and unpaid interest on the Term Loans, then to the remaining amortization
payments on the Term Loans in inverse order of maturity, then to accrued and
unpaid interest on the Revolving Credit Notes, the Reimbursement Obligation and
any termination payments due in respect of a Hedging Agreement with any Lender
(which such Hedging Agreement is permitted or required hereunder) (pro rata in
--- ----
accordance with all such amounts due), then to the principal amount of the
Revolving Credit Notes and Reimbursement Obligation (pro rata in accordance with
--- ----
all such amounts due) and then to the cash collateral account described in
Section 11.2(b) hereof to the extent of any L/C Obligations then outstanding, in
that order.
31
<PAGE>
Section 1.26. Adjustments. If any Lender (a "Benefitted Lender") shall at
----------- -----------------
any time receive any payment of all or part of the Obligations owing to it, or
interest thereon, or if any Lender shall at any time receive any collateral in
respect to the Obligations owing to it (whether voluntarily or involuntarily, by
set-off or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of the Obligations
owing to such other Lender, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Extensions of Credit, 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, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefitted Lender, such purchase shall be rescinded, and the purchase price
and benefits returned to the extent of such recovery, but without interest. The
Borrowers agree that each Lender so purchasing a portion of another Lender's
Extensions of Credit may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
Section 1.27. Nature of Obligations of Lenders Regarding Extensions of
--------------------------------------------------------
Credit; Assumption by the Administrative Agent. The obligations of the Lenders
- ----------------------------------------------
under this Agreement to make the Loans and issue or participate in Letters of
Credit are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.4(d) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrowers on such date 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, until paid, equal to the product of
(a) the amount not made available by such Lender in accordance with the terms
hereof, times (b) the daily average Federal Funds Rate during such period as
-----
determined by the Administrative Agent, times (c) 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 amount not made available by such Lender in accordance
with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360. A certificate of the
Administrative Agent with respect to any amounts owing under this Section shall
be conclusive, absent manifest error. If such Lender's Commitment Percentage of
such borrowing is not made available to the Administrative Agent by such Lender
within three (3) Business Days of such borrowing date, the Administrative Agent
shall be entitled to recover such amount made available by the Administrative
Agent with interest thereon at the rate per annum applicable to Base Rate Loans
hereunder, on demand, from the Borrowers. The failure of any
32
<PAGE>
Lender to make available its Commitment Percentage of any Loan requested by the
Borrowers shall not relieve it or any other Lender of its obligation, if any,
hereunder to make its Commitment Percentage of such Loan available on the
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make its Commitment Percentage of such Loan available on the borrowing
date.
Section 1.28. Changed Circumstances.
---------------------
(1) Circumstances Affecting LIBOR Rate Availability. If
-----------------------------------------------
with respect to any Interest Period the Administrative Agent or any Lender
(after consultation with Administrative Agent) shall determine that, by reason
of circumstances affecting the foreign exchange and interbank markets generally,
deposits in Eurodollars, in the applicable amounts are not being quoted via
Telerate Page 3750 or offered to the Administrative Agent or such Lender for
such Interest Period, then the Administrative Agent shall forthwith give notice
thereof to the Borrowers. Thereafter, until the Administrative Agent notifies
the Borrowers that such circumstances no longer exist, the obligation of the
Lenders to make LIBOR Rate Loans and the right of the Borrowers to convert any
Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and the
Borrowers shall repay in full (or cause to be repaid in full) the then
outstanding principal amount of each such LIBOR Rate Loans together with accrued
interest thereon, on the last day of the then current Interest Period applicable
to such LIBOR Rate Loan or convert the then outstanding principal amount of each
such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest
Period.
(2) Laws Affecting LIBOR Rate Availability. If, after
--------------------------------------
the date hereof, the introduction of, or any change in, any Applicable Law or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any of their respective
Lending Offices) with any request or directive (whether or not having the force
of law) of any such Authority, central bank or comparable agency, shall make it
unlawful or impossible for any of the Lenders (or any of their respective
Lending Offices) to honor its obligations hereunder to make or maintain any
LIBOR Rate Loan, such Lender shall promptly give notice thereof to the
Administrative Agent and the Administrative Agent shall promptly give notice to
the Borrowers and the other Lenders. Thereafter, until the Administrative Agent
notifies the Borrowers that such circumstances no longer exist, (i) the
obligations of the Lenders to make LIBOR Rate Loans and the right of the
Borrowers to convert any Loan or continue any Loan as a LIBOR Rate Loan shall be
suspended and thereafter the Borrowers may select only Base Rate Loans
hereunder, and (ii) if any of the Lenders may not lawfully continue to maintain
a LIBOR Rate Loan to the end of the then current Interest Period applicable
thereto as a LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately
be converted to a Base Rate Loan for the remainder of such Interest Period.
33
<PAGE>
(3) Increased Costs. If, after the date hereof, the introduction of,
---------------
or any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Authority, central
bank or comparable agency:
(1) shall subject any of the Lenders (or any of their respective
Lending Offices) to any tax, duty or other charge with respect to any Note,
Letter of Credit or Application or shall change the basis of taxation of
payments to any of the Lenders (or any of their respective Lending Offices) of
the principal of or interest on any Note, Letter of Credit or Application or any
other amounts due under this Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of any of the Lenders or any of their
respective Lending Offices imposed by the jurisdiction in which such Lender is
organized or is or should be qualified to do business or such Lending Office is
located); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrowers of such fact and demand compensation
therefor and, within fifteen (15) days after such notice by the Administrative
Agent, the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Lenders for such increased cost or reduction.
The Administrative Agent will promptly notify the Borrowers of any event of
which it has knowledge which will entitle such Lender to compensation pursuant
to this Section 4.8(c); provided, that the Administrative Agent shall incur no
--------
liability whatsoever to the Lenders or the Borrowers in the event it fails to do
so. A certificate of such Lender setting forth the basis for determining such
amount or amounts necessary to compensate such Lender shall be forwarded to the
Borrowers through the Administrative Agent and shall be conclusively presumed to
be correct save for manifest error. Lenders shall determine the applicability
of, and the amount due under, this Section 4.8 consistent with the manner in
which they apply similar provisions and calculate similar amounts payable to
them by other borrowers having in their credit agreements provisions comparable
to this Section 4.8.
34
<PAGE>
Section 1.29. Indemnity. The Borrowers hereby indemnify each of the
---------
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrowers to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrowers to borrow on a
date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion or (c) due to any payment, prepayment or conversion of
any LIBOR Rate Loan on a date other than the last day of the Interest Period
therefor. The amount of such loss or expense shall be determined, in the
applicable Lender's sole discretion, based upon the assumption that such Lender
funded its Commitment Percentage of the LIBOR Rate Loans in the London interbank
market and using any reasonable attribution or averaging methods which such
Lender deems appropriate and practical. A certificate of such Lender setting
forth the basis for determining such amount or amounts necessary to compensate
such Lender shall be forwarded to the Borrowers through the Administrative Agent
and shall be conclusively presumed to be correct save for manifest error.
Section 1.30. Capital Requirements. If either (a) the introduction of, or
--------------------
any change in, or in the interpretation of, any Applicable Law or (b) compliance
with any guideline or request from any central bank or comparable agency or
other Governmental Authority (whether or not having the force of law), has or
would have the effect of reducing the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, any
Lender or any corporation controlling such Lender as a consequence of, or with
reference to the Revolving Commitments and other commitments of this type, below
the rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrowers shall pay to such Lender
from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate
as to such amounts submitted to the Borrowers and the Administrative Agent by
such Lender, shall, in the absence of manifest error, be presumed to be correct
and binding for all purposes. Lenders shall determine the applicability of, and
the amount due under, this Section 4.10 consistent with the manner in which they
apply similar provisions and calculate similar amounts payable to them by other
borrowers having in their credit agreements provisions comparable to this
Section 4.10.
Section 1.31. Taxes.
-----
(1) Payments Free and Clear. Any and all payments by the
-----------------------
Borrowers hereunder or under the Notes or the Letters of Credit shall be made
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholding, and all liabilities with
respect thereto excluding, (i) in the case of each Lender and the Administrative
Agent, income and franchise taxes imposed by the jurisdiction under the laws of
which such Lender or the Administrative Agent (as the case may be) is organized
or is or should be qualified to do business or any political subdivision thereof
and (ii) in the case of each
35
<PAGE>
Lender, income and franchise taxes imposed by the jurisdiction of such Lender's
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as Taxes ). If the Borrowers shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note or Letter of Credit to any Lender or the Administrative Agent, (A) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 4.11) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the amount such party would have received had no
such deductions been made, (B) the Borrowers shall make such deductions, (C) the
Borrowers shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with applicable law, and (D) the Borrowers shall
deliver to the Administrative Agent evidence of such payment to the relevant
taxing authority or other authority in the manner provided in Section 4.11(d).
(2) Stamp and Other Taxes. In addition, the Borrowers shall pay any
---------------------
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(3) Indemnity. The Borrowers shall indemnify each Lender and the
---------
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(4) Evidence of Payment. Within thirty (30) days after the date of
-------------------
any payment of Taxes or Other Taxes, the Borrowers shall furnish to the
Administrative Agent, at its address referred to in Section 13.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(5) Delivery of Tax Forms. Each Lender organized under the laws of a
---------------------
jurisdiction other than the United States or any state thereof shall deliver to
the Borrowers, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms) properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or
36
<PAGE>
deduction for or on account of any United States federal income taxes, and (ii)
an Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
taxes. Each such Lender further agrees to deliver to the Borrowers, with a copy
to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrowers, certifying in the case of a Form 1001 or 4224
that such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes (unless in
any such case an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders such forms inapplicable or the exemption to
which such forms relate unavailable and such Lender notifies the Borrowers and
the Administrative Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(6) Survival. Without prejudice to the survival of any
--------
other agreement of the Borrower hereunder, the agreements and obligations of the
Borrowers contained in this Section 4.11 shall survive the payment in full of
the Obligations and the termination of the Revolving Commitments.
Section 1.32. Security. The Obligations of the Borrowers shall be secured
--------
as provided in the Security Documents.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
--------------------------------------------
Section 1.33. Closing. The closing shall take place at the offices of
-------
Pepper Hamilton LLP on December 6, 1999, or on such other date as the parties
hereto shall mutually agree.
Section 1.34. Conditions to Closing and Initial Extensions of Credit. The
------------------------------------------------------
obligation of the Lenders to close this Agreement and to make the initial Loan
or issue the initial Letter of Credit is subject to the satisfaction of each of
the following conditions:
(1) Executed Loan Documents. This Agreement, the Revolving
-----------------------
Credit Notes, the Term Loan Notes, the Swingline Note and the Pledge Agreement
shall have been duly authorized, executed and delivered to the Administrative
Agent by the parties thereto, shall be in full force and effect and no default
shall exist thereunder, and the Borrowers shall have delivered original
counterparts thereof to the Administrative Agent.
37
<PAGE>
(2) Closing Certificates; etc.
--------------------------
(1) Officer's Certificate of the Borrowers. The
--------------------------------------
Administrative Agent shall have received a certificate from a Responsible
Officer, in form and substance satisfactory to the Administrative Agent, to the
effect that all representations and warranties of the Borrowers contained in
this Agreement and the other Loan Documents are true, correct and complete; that
the Borrowers are not in violation of any of the covenants contained in this
Agreement and the other Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default or Event of Default has
occurred and is continuing; and that the Borrowers have satisfied each of the
closing conditions.
(2) Certificate of Secretary of each Borrower. The
-----------------------------------------
Administrative Agent shall have received a certificate of the secretary or
assistant secretary of each Borrower certifying as to the incumbency and
genuineness of the signature of each officer of such Borrower executing Loan
Documents to which it is a party and certifying that attached thereto is a true,
correct and complete copy of (A) the articles of incorporation of such Borrower
and all amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation, (B) the bylaws of
such Borrower as in effect on the date of such certifications and (C)
resolutions duly adopted by the Board of Directors of such Borrower authorizing
the borrowings contemplated hereunder and the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party.
(3) Certificates of Good Standing. The Administrative Agent
-----------------------------
shall have received certificates as of a recent date of the good standing of
each Borrower under the laws of its jurisdiction of organization.
(4) Opinions of Counsel. The Administrative Agent shall
-------------------
have received favorable opinions of counsel to the Borrowers addressed to the
Administrative Agent and the Lenders with respect to the Borrowers, the Loan
Documents and such other matters as the Lenders shall request.
(5) Tax Forms. The Administrative Agent shall have received
---------
copies of the United States Internal Revenue Service forms required by Section
4.11(e) hereof.
(3) Acquisition.
-----------
(1) Purchase Agreement. The Administrative Agent shall have
------------------
received a copy of the executed Purchase Agreement.
(2) Due Diligence. The Borrowers shall have delivered to
-------------
the Administrative Agent all documents (including corporate documentation)
necessary, in the
38
<PAGE>
Administrative Agent's sole discretion, for legal and financial due diligence in
connection with the Acquisition.
(3) Release. The Administrative Agent shall have received
-------
evidence, in form and substance satisfactory to it, that: (A) J.A. Sexauer, Inc.
and Trayco of S.C., Inc. have been released as subsidiary guarantors under: (i)
the Credit Agreement dated June 26, 1996 by and among The Dyson-Kissner-Moran
Corporation and its subsidiaries from time to time party thereto, NationsBank,
N.A., as senior creditor agent, and the several lenders party thereto (the
"Sexauer Credit Agreement") and (ii) the 7.5% Senior Secured Notes due May 31,
2006 issued by The Dyson-Kissner-Moran Corporation pursuant to those certain
Note Purchase Agreements dated June 26, 1996 (the "Sexauer Note Agreements" and
collectively with the Sexauer Credit Agreement, the "Sexauer Credit and Note
Documents") and (B) all stock of J.A. Sexauer, Inc., Trayco of S.C. Inc. and
Sexauer Ltd. in connection with the Sexauer Credit and Note Documents has been
released by the lenders and purchasers under the Sexauer Credit and Note
Documents.
(4) Pledged Collateral. The Administrative Agent shall have
------------------
received original stock certificates or other certificates evidencing the
capital stock or other ownership interests pledged pursuant to the Pledge
Agreement, together with an undated stock power for each such certificate duly
executed in blank by the registered owner thereof.
(5) Lien Search. The Administrative Agent shall have received
-----------
the results of a Lien search (including a search as to judgments, pending
litigation and tax matters) made against each Borrowers under the Uniform
Commercial Code (or applicable judicial docket) as in effect in any state in
which any of its assets are located, indicating among other things that its
assets are free and clear of any Lien except for Liens permitted hereunder.
(6) Hazard and Liability Insurance. The Administrative Agent
------------------------------
shall have received certificates of insurance, evidence of payment of all
insurance premiums for the current policy year of each, and, if requested by the
Administrative Agent, copies (certified by a Responsible Officer) of insurance
policies otherwise in form and substance reasonably satisfactory to the
Administrative Agent.
(7) Consents; Defaults.
------------------
(1) Governmental and Third Party Approvals. The Borrowers
--------------------------------------
shall have obtained all necessary approvals, authorizations and consents of any
Person and of all Governmental Authorities and courts having jurisdiction with
respect to the transactions contemplated by this Agreement and the other Loan
Documents.
(2) No Injunction, Etc. No action, proceeding,
------------------
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any
39
<PAGE>
Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the Administrative Agent's sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.
(3) No Event of Default. No Default or Event of Default
-------------------
shall have occurred and be continuing.
(8) Financial Matters.
-----------------
(1) Financial Statements. The Administrative Agent shall
--------------------
have received the most recent audited Consolidated financial statements of
Wilmar and its Subsidiaries, all in form and substance satisfactory to the
Administrative Agent.
(2) Financial Condition Certificate. The Borrowers shall
-------------------------------
have delivered to the Administrative Agent a certificate, in form and substance
satisfactory to the Administrative Agent, and certified as accurate by a
Responsible Officer, that (A) each of the Borrowers are Solvent, (B) attached
thereto is a pro forma balance sheet of Wilmar and its Subsidiaries setting
--- -----
forth on a pro forma basis the financial condition of Wilmar and its
--- -----
Subsidiaries on a Consolidated basis as of that date, reflecting a pro forma
--- -----
basis the effect of the transactions contemplated herein, including all fees and
expenses in connection therewith, and evidencing compliance on a pro forma basis
--- -----
with the covenants contained in Articles IX and X hereof, and (C) attached
thereto are the financial projections previously delivered to the Administrative
Agent representing the good faith opinions of Wilmar and the senior management
thereof as to the projected results contained therein.
(3) Payment at Closing; Fee Letters. The Borrowers shall
-------------------------------
have paid the fees set forth or referenced in Section 4.3 and any other accrued
and unpaid fees or commissions due hereunder (including, without limitation,
legal fees and expenses) to the Administrative Agent and Lenders, and to any
other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing and registration of
any of the Loan Documents. The Administrative Agent shall have received duly
authorized and executed copies of the fee letter agreement referred to in
Section 4.3(c).
(9) Miscellaneous.
-------------
(1) Notice of Borrowing. The Administrative Agent shall
-------------------
have received a Notice of Borrowing from the Borrowers in accordance with
Section 2.4(a), and a Notice of Account Designation specifying the account or
accounts to which the proceeds of any Loans made after the Closing Date are to
be disbursed.
40
<PAGE>
(2) Proceedings and Documents. All opinions,
-------------------------
certificates and other instruments and all proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in form and
substance to the Lenders. The Lenders shall have received copies of all other
instruments and other evidence as the Lender may reasonably request, in form and
substance satisfactory to the Lenders, with respect to the transactions
contemplated by this Agreement and the taking of all actions in connection
therewith.
(3) Existing Facility. The Borrowers shall have
-----------------
delivered to the Administrative Agent evidence that the Existing Facility has
been repaid in full and terminated and all collateral security therefor has been
released.
(4) First Union Facility. The Borrowers shall have
--------------------
delivered to Administrative Agent an executed copy of the First Union Facility
documents.
(5) Due Diligence and Other Documents. The Borrowers
---------------------------------
shall have delivered to the Administrative Agent such other documents,
certificates and opinions as the Administrative Agent may reasonably request.
Section 1.35. Conditions to All Extensions of Credit. The obligations of
--------------------------------------
the Lenders to make any Extensions of Credit are subject to the satisfaction of
the following conditions precedent on the relevant borrowing or issue date, as
applicable:
(1) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties contained in Article VI shall be true and correct
on and as of such borrowing or issuance date with the same effect as if made on
and as of such date; except for any representation and warranty made as of an
earlier date, which representation and warranty shall remain true and correct as
of such earlier date.
(2) No Existing Default. No Default or Event of Default
-------------------
shall have occurred and be continuing hereunder (i) on the borrowing date with
respect to such Loan or after giving effect to the Loans to be made on such date
or (ii) or the issue date with respect to such Letter of Credit or after giving
affect to such Letters of Credit on such date.
(3) Officer's Compliance Certificate; Additional Documents.
------------------------------------------------------
The Administrative Agent shall have received the current Officer's Compliance
Certificate and each additional document, instrument, legal opinion or other
item of information reasonably requested by it.
(4) Conditions. Each borrowing by the Borrowers or request
----------
for the issuance of a Letter of Credit shall constitute a representation and
warranty by the Borrowers as
41
<PAGE>
of the date of such Loan or issuance of such Letter of Credit that the
conditions of this Section 5.3 have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
-----------------------------------------------
Section 1.36. Representations and Warranties. To induce the
------------------------------
Administrative Agent and Lenders to enter into this Agreement and to induce the
Lenders to make Extensions of Credit, the Borrowers hereby represent and warrant
to the Administrative Agent and Lenders both before and after giving effect to
the transactions contemplated hereunder that:
(1) Organization; Power; Qualification. Wilmar and each of
----------------------------------
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation, has the power
and authority to own its properties and to carry on its business as now being
and hereafter proposed to be conducted and is duly qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization, except
where the failure to obtain such qualification or authorization would not have a
Material Adverse Effect. The jurisdictions in which Wilmar and each of its
Subsidiaries (including without limitation the Inactive Subsidiaries) are
organized and qualified to do business as of the Closing Date are described on
Schedule 6.1(a).
- ---------------
(2) Ownership. Each Subsidiary of Wilmar, and each of their
---------
respective Subsidiaries (including without limitation the Inactive
Subsidiaries), as of the Closing Date, is listed on Schedule 6.1(b). As of the
---------------
Closing Date, the capitalization of Wilmar and each of its Subsidiaries
(including without limitation the Inactive Subsidiaries) consists of the number
of shares, authorized, issued and outstanding, of such classes and series, with
or without par value, described on Schedule 6.1(b). All outstanding shares have
---------------
been duly authorized and validly issued and are fully paid and nonassessable.
The shareholders of the Subsidiaries of Wilmar (including without limitation the
Inactive Subsidiaries) and the number of shares owned by each as of the Closing
Date are described on Schedule 6.1(b). As of the date of the most recently
---------------
filed 10-Q, there are no outstanding stock purchase warrants, subscriptions,
options, securities, instruments or other rights of any type or nature
whatsoever, which are convertible into, exchangeable for or otherwise provide
for or permit the issuance of capital stock of Wilmar or any of its Subsidiaries
(including without limitation the Inactive Subsidiaries), except as described on
Schedule 6.1(b).
- ---------------
(3) Authorization of Agreement, Loan Documents and Borrowing.
--------------------------------------------------------
Wilmar and each of its Subsidiaries has the right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which it is a party in accordance with their
42
<PAGE>
respective terms. This Agreement and each of the other Loan Documents have been
duly executed and delivered by the duly authorized officers of Wilmar and each
of its Subsidiaries party thereto, and each such document constitutes the legal,
valid and binding obligation of Wilmar and each Subsidiary party thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar state
or federal debtor relief laws from time to time in effect which affect the
enforcement of creditors rights in general and the availability of equitable
remedies.
(4) Compliance of Agreement, Loan Documents and Borrowing with Laws,
----------------------------------------------------------------
Etc. The execution, delivery and performance by Wilmar and its Subsidiaries of
- ----
the Loan Documents to which each such Person is a party, in accordance with
their respective terms, the borrowings hereunder and the transactions
contemplated hereby do not and will not, by the passage of time, the giving of
notice or otherwise, (i) require any Governmental Approval or violate any
Applicable Law relating to Wilmar or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute a default under the articles of
incorporation, bylaws or other organizational documents of Wilmar or any of its
Subsidiaries or any indenture, agreement or other instrument to which such
Person is a party or by which any of its properties may be bound or any
Governmental Approval relating to such Person, or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by such Person other than Liens arising under the
Loan Documents.
(5) Compliance with Law; Governmental Approvals. Wilmar and each of
-------------------------------------------
its Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and effect,
is final and not subject to review on appeal and is not the subject of any
pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating to it
or any of its respective properties, except for such failures to comply that
would not, singly or in the aggregate, have a Material Adverse Effect.
(6) Tax Returns and Payments. Wilmar and each of its Subsidiaries has
------------------------
duly filed or caused to be filed all federal, state, local and other tax returns
required by Applicable Law to be filed, and has paid, or made adequate provision
for the payment of, all federal, state, local and other taxes, assessments and
governmental charges or levies upon it and its property, income, profits and
assets which are due and payable, except for such taxes that are being contested
in good faith by appropriate proceedings. No Governmental Authority has
asserted any Lien or other claim against Wilmar or any Subsidiary thereof with
respect to unpaid taxes which has not been discharged or resolved. The charges,
accruals and reserves on the books of Wilmar and each of its Subsidiaries in
respect of federal, state, local and other taxes for all Fiscal Years and
portions thereof since the organization of Wilmar and each of its Subsidiaries
are in the judgment of Wilmar adequate, and Wilmar does not anticipate any
additional taxes or assessments for any of such years.
43
<PAGE>
(7) Intellectual Property Matters. Wilmar and each of its
-----------------------------
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business. Except as set forth on Schedule 6.1(g), no event has
occurred which permits, or after notice or lapse of time or both would permit,
the revocation or termination of any such rights, and neither Wilmar nor any
Subsidiary thereof is liable to any Person for infringement under Applicable Law
with respect to any such rights as a result of its business operations.
(8) Environmental Matters.
---------------------
(1) The properties owned, leased or operated by Wilmar and its
Subsidiaries now or in the past do not contain, and to their knowledge have not
previously contained, any Hazardous Materials in amounts or concentrations which
(A) constitute or constituted a violation of applicable Environmental Laws or
(B) could give rise to liability under applicable Environmental Laws which
could, either singly or in the aggregate, cause a Material Adverse Effect;
(2) Wilmar, each Subsidiary of Wilmar and such properties and all
operations conducted in connection therewith are in compliance, and have been in
compliance, with all applicable Environmental Laws, except to the extent any
instances of noncompliance either singly or in the aggregate could not have a
Material Adverse Effect, and there is no contamination at, under or about such
properties or such operations which could interfere with the continued operation
of such properties or materially impair the fair saleable value thereof;
(3) Neither Wilmar nor any Subsidiary thereof has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters, Hazardous Materials, or compliance
with Environmental Laws, nor does Wilmar or any Subsidiary thereof have
knowledge or reason to believe that any such notice will be received or is being
threatened;
(4) Hazardous Materials have not been transported or disposed of
to or from the properties owned, leased or operated by Wilmar and its
Subsidiaries in violation of, or in a manner or to a location which could give
rise to liability under, Environmental Laws which could, either singly or in the
aggregate, cause a Material Adverse Effect, nor have any Hazardous Materials
been generated, treated, stored or disposed of at, on or under any of such
properties in violation of, or in a manner that could give rise to liability
under, any applicable Environmental Laws which could, either singly or in the
aggregate, cause a Material Adverse Effect;
44
<PAGE>
(5) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of Wilmar, threatened,
under any Environmental Law to which Wilmar or any Subsidiary thereof is or will
be named as a party, 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
Wilmar, any Subsidiary of Wilmar or such properties or operations; and
(6) There has been no release, or to the best of Wilmar's
knowledge, threat of release, of Hazardous Materials at or from properties
owned, leased or operated by Wilmar or any Subsidiary, now or in the past, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws which could, either singly or in the aggregate, cause a
Material Adverse Effect.
(9) ERISA.
-----
(1) As of the Closing Date, neither Wilmar, any Subsidiary
nor any ERISA Affiliate maintains or contributes to, or has any obligation
under, any Employee Benefit Plans other than those identified on
Schedule 6.1(i);
- -------- ------
(2) To the best of Wilmar's knowledge, Wilmar, each
Subsidiary and each ERISA Affiliate is in compliance in all material respects
with all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except for
any required amendments for which the remedial amendment period as defined in
Section 401(b) of the Code has not yet expired. Except as otherwise provided on
Schedule 6.1(i), each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. To the best of
Wilmar's knowledge, no liability has been incurred by Wilmar, any Subsidiary or
any ERISA Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Employee Benefit Plan or any Multiemployer Plan;
(3) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code) been
incurred (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has Wilmar, any Subsidiary or
any ERISA Affiliate failed to make any contributions or to pay any amounts due
and owing as required by Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any event
requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Pension Plan;
45
<PAGE>
(4) To the best of Wilmar's knowledge, neither Wilmar, any
Subsidiary nor any ERISA Affiliate has: (A) engaged in a nonexempt prohibited
transaction described in Section 406 of the ERISA or Section 4975 of the Code,
(B) incurred any liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and unpaid,
(C) failed to make a required contribution or payment to a Multiemployer Plan,
or (D) failed to make a required installment or other required payment under
Section 412 of the Code;
(5) No Termination Event has occurred or is reasonably
expected to occur; and
(6) No proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of Wilmar after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by Wilmar, any
Subsidiary, or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(10) Margin Stock. Neither Wilmar nor any Subsidiary thereof is
------------
engaged principally or as one of its activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock (as each
such term is defined or used in Regulation U of the Board of Governors of the
Federal Reserve System). No part of the proceeds of any of the Loans or Letters
of Credit will be used for purchasing or carrying margin stock or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation T, U or X of such Board of Governors.
(11) Government Regulation. Neither Wilmar nor any Subsidiary
---------------------
thereof is an investment company or a company controlled by an investment
company (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither Wilmar nor any Subsidiary thereof is, or after
giving effect to any Extension of Credit will be, subject to regulation under
the Public Utility Holding Company Act of 1935 or the Interstate Commerce Act,
each as amended, or any other Applicable Law which limits its ability to incur
or consummate the transactions contemplated hereby.
(12) Employee Relations. Wilmar and each of its Subsidiaries has
------------------
a stable work force in place and is not, as of the Closing Date, party to any
collective bargaining agreement nor has any labor union been recognized as the
representative of its employees except as set forth on Schedule 6.1(l). Wilmar
---------------
knows of no pending, threatened or contemplated strikes, work stoppage or other
collective labor disputes involving its employees or those of its Subsidiaries.
(13) Burdensome Provisions. Neither Wilmar nor any Subsidiary
---------------------
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any
46
<PAGE>
corporate or partnership restriction, Governmental Approval or Applicable Law
which is so unusual or burdensome as in the foreseeable future could be
reasonably expected to have a Material Adverse Effect. Wilmar and its
Subsidiaries do not presently anticipate that future expenditures needed to meet
the provisions of any statutes, orders, rules or regulations of a Governmental
Authority will be so burdensome as to have a Material Adverse Effect.
(14) Financial Statements. The (i) Consolidated balance sheets of
--------------------
Wilmar and its Subsidiaries as of December 31, 1998 and the Consolidated balance
sheets of J.A. Sexauer, Inc., Trayco of S.C., Inc. and their Subsidiaries as of
January 31, 1999 and the related statements of income and retained earnings and
cash flows for the Fiscal Years then ended and (ii) unaudited Consolidated
balance sheet of Wilmar and its Subsidiaries as of September 30, 1999 and
related unaudited interim statements of revenue and retained earnings, copies of
which have been furnished to the Administrative Agent and each Lender, are
complete and fairly present the assets, liabilities and financial position of
Wilmar and its Subsidiaries as at such dates, and the results of the operations
and changes of financial position for the periods then ended. All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP (subject to normal year-end adjustments
and the absence of footnote disclosures in the case of interim financial
statements). Wilmar and its Subsidiaries have no Debt or other material unusual
forward or long-term commitment which is not fairly reflected in the foregoing
financial statements or in the notes thereto to the extent required to be
disclosed in accordance with GAAP.
(15) No Material Adverse Change. Since: (i) for Wilmar and its
--------------------------
Subsidiaries (other than J.A. Sexauer, Inc., Trayco of S.C., Inc. and their
Subsidiaries), December 31, 1998 and (ii) for J.A. Sexauer, Inc., Trayco of
S.C., Inc. and their Subsidiaries, January 31, 1999, there has been no material
adverse change in the properties, business, operations, prospects, or condition
(financial or otherwise) of Wilmar and its Subsidiaries and no event has
occurred or condition arisen that could reasonably be expected to have a
Material Adverse Effect.
(16) Solvency. As of the Closing Date and after giving effect to each
--------
Extension of Credit made hereunder, each Borrower will be Solvent.
(17) Titles to Properties. Wilmar and each of its Subsidiaries has
--------------------
such title to the real property owned by it as is necessary or desirable to the
conduct of its business and valid and legal title to all of its personal
property and assets, including, but not limited to, those reflected on the
balance sheets of Wilmar and its Subsidiaries delivered pursuant to Section
6.1(o), except those which have been disposed of by Wilmar or its Subsidiaries
subsequent to such date which dispositions have been in the ordinary course of
business or as otherwise expressly permitted hereunder.
47
<PAGE>
(18) Liens. None of the properties and assets of Wilmar or any
-----
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
Section 10.3. No financing statement under the Uniform Commercial Code of any
state which names Wilmar or any Subsidiary thereof or any of their respective
trade names or divisions as debtor and which has not been terminated, has been
filed in any state or other jurisdiction, and neither Wilmar nor any Subsidiary
thereof has signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement,
except to perfect those Liens permitted by Section 10.3 hereof.
(19) Debt and Guaranty Obligations. Schedule 6.1(s) is a complete and
----------------------------- ---------------
correct listing of all Debt and Guaranty Obligations of Wilmar and its
Subsidiaries as of the Closing Date in excess of $1,000,000. Wilmar and its
Subsidiaries have performed in all material respects and are in material
compliance with all of the terms of such Debt and Guaranty Obligations and all
instruments and agreements relating thereto, and no default or event of default,
or event or condition which with notice or lapse of time or both would
constitute such a default or event of default on the part of Wilmar or its
Subsidiaries exists with respect to any such Debt or Guaranty Obligation.
(20) Litigation. There are no actions, suits or proceedings pending
----------
nor, to the knowledge of Wilmar, threatened against or in any other way relating
adversely to or affecting Wilmar or any Subsidiary thereof or any of their
respective properties in any court or before any arbitrator of any kind or
before or by any Governmental Authority, which, if adversely resolved, would
have a Material Adverse Effect.
(21) Absence of Defaults. No event has occurred or is continuing
-------------------
which constitutes a Default or an Event of Default, or which constitutes, or
which with the passage of time or giving of notice or both would constitute, a
default or event of default by Wilmar or any Subsidiary thereof under any
judgment, decree or order to which Wilmar or any of its Subsidiaries is a party
or by which Wilmar or any of its Subsidiaries or any of their respective
properties may be bound which default would have a Material Adverse Effect or
which would require Wilmar or any of its Subsidiaries to make any payment
thereunder in excess of $1,000,000 prior to the scheduled maturity date
therefor.
(22) Accuracy and Completeness of Information. All written
----------------------------------------
information, reports and other papers and data produced by or on behalf of
Wilmar or any Subsidiary thereof and furnished to the Lenders were, at the time
the same were so furnished, complete and correct in all material respects to the
extent necessary to give the recipient a true and accurate knowledge of the
subject matter. No document furnished or written statement made to the
Administrative Agent or the Lenders by Wilmar or any Subsidiary thereof in
connection with the negotiation, preparation or execution of this Agreement or
any of the Loan Documents contains or will contain any untrue statement of a
fact material to the creditworthiness of Wilmar or its Subsidiaries or omits or
will omit to state a fact necessary in order to make the statements
48
<PAGE>
contained therein not misleading in any material respect. The Borrowers are not
aware of any facts which they have not disclosed in writing to the
Administrative Agent having a Material Adverse Effect, or insofar as the
Borrowers can now foresee, could reasonably be expected to have a Material
Adverse Effect.
(23) Inactive Subsidiaries. There does not exist, by virtue
---------------------
of statute, common law, contract or otherwise, any liability of, or any activity
or condition relating to, any Inactive Subsidiary, including without limitation,
with respect to any environmental condition, taxes, employee benefit plan,
program or statutory obligation, tort claim or contract dispute, which may
survive the liquidation of any such Inactive Subsidiary (whether by operation of
law, express assumption or otherwise), except for those liabilities which (a)
are reserved for or otherwise reflected in the financial statements of Wilmar
and its Consolidated Subsidiaries or (b) do not in the aggregate as to all
Inactive Subsidiaries exceed Fifty Thousand Dollars ($50,000). The Borrowers
comprise all of the Subsidiaries of Wilmar other than the Inactive Subsidiaries.
(24) Year 2000 Compliance. Wilmar and its Subsidiaries have
--------------------
commenced to conduct a review and assessment of their material computer systems
and applications, micro-processor based goods and equipment owned or used by
them in their business, and all products currently sold by them, and are making
inquiry of their material suppliers, vendors and customers, with respect to
functionality before, during and after the year 2000 (the "Year 2000 Problem").
Wilmar and its Subsidiaries have prepared a program to ensure that all such
systems, goods, equipment and products owned or used by them and material to the
conduct of their business will be Year 2000 compliant in a timely manner. Wilmar
and its Subsidiaries reasonably believe, based on the foregoing review,
assessment and inquiry that the Year 2000 Problem will not result in a Material
Adverse Effect.
Section 1.37. Survival of Representations and Warranties, Etc. All
------------------------------------------------
representations and warranties set forth in this Article VI and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
made under this Agreement shall be made or deemed to be made at and as of the
Closing Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
---------------------------------
Until all the Obligations have been paid and satisfied in full and the
Revolving Commitments terminated, unless consent has been obtained in the manner
set forth in Section 13.16 hereof, the Borrowers will furnish or cause to be
furnished to the Administrative Agent
49
<PAGE>
and to the Lenders at their respective addresses as set forth on Schedule 2, or
----------
such other office as may be designated by the Administrative Agent and Lenders
from time to time:
Section 1.38. Financial Statements and Projections.
------------------------------------
(1) Quarterly Financial Statements. As soon as practicable
------------------------------
and in any event within fifty (50) days after the end of the first three (3)
fiscal quarters on each Fiscal Year, an unaudited Consolidated and consolidating
balance sheet of Wilmar and its Subsidiaries as of the close of such fiscal
quarter and unaudited Consolidated and consolidating statements of income,
retained earnings and cash flows for the fiscal quarter then ended and that
portion of the Fiscal Year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding Fiscal Year and prepared by Wilmar in accordance with GAAP
and, if applicable, containing disclosure of the effect on the financial
position or results of operations of any change in the application of accounting
principles and practices during the period, and certified by the chief financial
officer of Wilmar to present fairly in all material respects the financial
condition of Wilmar and its Subsidiaries as of their respective dates and the
results of operations of Wilmar and its Subsidiaries for the respective periods
then ended, subject to normal year end adjustments.
(2) Annual Financial Statements. As soon as practicable and
---------------------------
in any event within ninety (90) days after the end of each Fiscal Year, an
audited Consolidated balance sheet of Wilmar and its Subsidiaries as of the
close of such Fiscal Year and audited Consolidated statements of income,
retained earnings and cash flows for the Fiscal Year then ended, including the
notes thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by an
independent certified public accounting firm acceptable to the Administrative
Agent in accordance with GAAP and, if applicable, containing disclosure of the
effect on the financial position or results of operation of any change in the
application of accounting principles and practices during the year, and
accompanied by a report thereon by such certified public accountants that is not
qualified with respect to scope limitations imposed by Wilmar or any of its
Subsidiaries or with respect to accounting principles followed by Wilmar or any
of its Subsidiaries not in accordance with GAAP.
Section 1.39. Officer's Compliance Certificate. At each time financial
--------------------------------
statements are delivered pursuant to Sections 7.1 (a) or (b) and at such other
times as the Administrative Agent shall reasonably request, a certificate of the
chief financial officer or the treasurer of Wilmar in the form of Exhibit F
---------
attached hereto (an "Officer's Compliance Certificate").
Section 1.40. Accountants' Certificate. At each time financial statements
------------------------
are delivered pursuant to Section 7.1(b), a certificate of the independent
public accountants certifying such financial statements addressed to the
Administrative Agent for the benefit of the Lenders:
50
<PAGE>
(1) stating that in making the examination necessary for the
certification of such financial statements, they obtained no knowledge of any
Default or Event of Default or, if such is not the case, specifying such Default
or Event of Default and its nature and period of existence;
(2) including the calculations prepared by such accountants
required to establish whether or not Wilmar and its Subsidiaries are in
compliance with the financial covenants set forth in Article IX hereof as at the
end of each respective period; and
(3) including a fully executed copy of a letter from such
accountants to Wilmar (i) expressly acknowledging that a primary intent of
Wilmar (with respect to such statements) is for such accountants' examination
and report with respect to such statements of Wilmar to benefit or influence the
Lenders (A) in connection with Extensions of Credit and other financial
accommodations to Wilmar from time to time, or (B) otherwise in connection with
the preparation, review, execution, delivery, amendment, modification,
administration, collection and/or enforcement of the Loan Documents, and (ii)
expressly authorizing the Lenders to rely on the examination and report of such
accountants with respect to the audited financial statements of Wilmar as of and
for such Fiscal Year then ending.
Section 1.41. Other Reports
-------------
(1) Promptly upon receipt thereof, copies of all reports, if
any, submitted to Wilmar or its Board of Directors by its independent public
accountants in connection with their auditing function, including, without
limitation, any management report and any management responses thereto;
(2) Promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as Wilmar or any
Subsidiary shall send to its stockholders, copies of all registration statements
(without exhibits), and all annual, quarterly or other reports which Wilmar or
any Subsidiary files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities and
Exchange Commission) including without limitation, Forms 10Q and Forms 10K; and
(3) Such other information regarding the operations,
business affairs and financial condition of Wilmar or any of its Subsidiaries as
the Administrative Agent or any Lender may reasonably request.
Section 1.42. Notice of Litigation and Other Matters. Prompt (but in no
--------------------------------------
event later than ten (10) days after an officer of a Borrower obtains knowledge
thereof) telephonic and written notice of:
51
<PAGE>
(1) the commencement of all proceedings and investigations
by or before any Governmental Authority and all actions and proceedings in any
court or before any arbitrator against or involving Wilmar or any Subsidiary
thereof or any of their respective properties, assets or businesses, which if
resolved adversely to any Borrower, would have a Material Adverse Effect, or
which would result in an Event of Default hereunder;
(2) any notice of any violation received by Wilmar or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws which in any such case
could reasonably be expected to have a Material Adverse Effect;
(3) any labor controversy that has resulted in, or threatens
to result in, a strike or other work action against Wilmar or any Subsidiary
thereof which would have a Material Adverse Effect;
(4) any attachment, judgment, lien, levy or order exceeding
$1,000,000 that may be assessed against or threatened against Wilmar or any
Subsidiary thereof;
(5) any Default or Event of Default;
(6) (i) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee Benefit Plan
under Section 401(a) of the Code (along with a copy thereof), (ii) all notices
received by Wilmar, any Subsidiary or any ERISA Affiliate of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (iii) all notices received by Wilmar, any Subsidiary or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA, and (iv) Wilmar or
any Subsidiary obtaining knowledge or reason to know that Wilmar, any Subsidiary
or any ERISA Affiliate has filed or intends to file a notice of intent to
terminate any Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA; and
(7) any event which makes any of the representations set
forth in Section 6.1 inaccurate in any material respect.
Section 1.43. Accuracy of Information. All written information, reports,
-----------------------
statements and other papers and data furnished by or on behalf of the Borrowers
to the Administrative Agent or any Lender (other than financial forecasts)
whether pursuant to this Article VII or any other provision of this Agreement,
or any of the Security Documents, shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent necessary
to give the Administrative Agent or any Lender complete, true and accurate
knowledge of the subject matter based on the Borrowers' knowledge thereof.
52
<PAGE>
ARTICLE VIII
AFFIRMATIVE COVENANTS
---------------------
Until all of the Obligations have been paid and satisfied in full and the
Revolving Commitments terminated, unless consent has been obtained in the manner
provided for in Section 13.16, each Borrower will, and will cause each of its
Subsidiaries to:
Section 1.44. Preservation of Corporate Existence and Related Matters.
-------------------------------------------------------
Except as permitted by Section 10.5, preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business, and qualify and remain qualified as a
foreign corporation and authorized to do business in each jurisdiction in which
the failure to so qualify would have a Material Adverse Effect.
Section 1.45. Maintenance of Property. Protect and preserve all
-----------------------
properties useful in and material to its business, including copyrights,
patents, trade names and trademarks; maintain in good working order and
condition all buildings, equipment and other tangible real and personal
property; and from time to time make or cause to be made all renewals,
replacements and additions to such property necessary for the conduct of its
business, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 1.46. Insurance. Maintain insurance, including hazard and
---------
business interruption insurance, with financially sound and reputable insurance
companies against such risks and in such amounts as are customarily maintained
by similar businesses and as may be required by Applicable Law, and on the
Closing Date and from time to time thereafter, deliver to the Administrative
Agent upon its request a detailed list of the insurance then in effect, stating
the names of the insurance companies, the amounts and rates of the insurance,
the dates of the expiration thereof and the properties and risks covered
thereby.
Section 1.47. Accounting Methods and Financial Records. Maintain a system
----------------------------------------
of accounting, and keep such books, records and accounts (which shall be true
and complete in all material respects) as may be required or as may be necessary
to permit the preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
Section 1.48. Payment and Performance of Obligations. Pay and perform all
--------------------------------------
Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that Wilmar or such Subsidiary may contest any item
--------
described in clauses (a) or (b) of this Section 8.5 in good faith so long as
adequate reserves are maintained with respect thereto in accordance with GAAP.
53
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Section 1.49. Compliance With Laws and Approvals. Observe and remain in
----------------------------------
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business,
and except in each case where the failure to so comply or maintain such
Government Approvals would not have a Material Adverse Effect.
Section 1.50. Environmental Laws. In addition to and without limiting the
------------------
generality of Section 8.6, (a) comply with, and ensure such compliance by all
tenants and subtenants with all applicable Environmental Laws and obtain and
comply with and maintain, and ensure that all tenants and subtenants obtain and
comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by 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
promptly comply with all lawful orders and directives of any Governmental
Authority regarding Environmental Laws, and (c) defend, indemnify and hold
harmless the Administrative Agent and the Lenders, and their respective parents,
Subsidiaries, Affiliates, employees, agents, officers and directors, from and
against any 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 presence
of Hazardous Materials, or the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of Wilmar or such
Subsidiary, 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
directly result from the gross negligence or willful misconduct of the party
seeking indemnification therefor.
Section 1.51. Compliance with ERISA. In addition to and without limiting
---------------------
the generality of Section 8.6, (a) comply in all material respects with all
applicable provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans, (b) not take any action
or fail to take action the result of which could be a liability to the PBGC or
to a Multiemployer Plan, (c) not participate in any prohibited transaction that
could result in any civil penalty under ERISA or tax under the Code, (d) operate
each Employee Benefit Plan in such a manner that will not incur any tax
liability under Section 4980B of the Code or any liability to any qualified
beneficiary as defined in Section 4980B of the Code and (e) furnish to the
Administrative Agent upon the Administrative Agent's request such additional
information about any Employee Benefit Plan as may be reasonably requested by
the Administrative Agent.
Section 1.52. Compliance With Agreements. Comply in all respects with
--------------------------
each term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business, except where the
failures to comply would not have a Material Adverse
54
<PAGE>
Effect; provided, that Wilmar or such Subsidiary may contest any such lease,
--------
agreement or other instrument in good faith through applicable proceedings so
long as adequate reserves are maintained in accordance with GAAP.
Section 1.53. Conduct of Business. Engage only in businesses in
-------------------
substantially the same fields as the businesses conducted on the Closing Date
and in lines of business reasonably related thereto.
Section 1.54. Visits and Inspections. Permit representatives of the
----------------------
Administrative Agent or any Lender, from time to time during business hours and
upon reasonable prior written notice, to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files, including,
but not limited to, management letters prepared by independent accountants; and
discuss with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of operations and
business prospects.
Section 1.55. Additional Subsidiaries. Within ten (10) days after any
-----------------------
Subsidiary of any Borrower is created or acquired, or an Inactive Subsidiary
ceases to meet the definition of an Inactive Subsidiary hereunder, cause to be
executed and delivered to the Administrative Agent: (a) one or more of the
following in the Administrative Agent's sole discretion, a duly executed joinder
to the Credit Agreement or a guaranty agreement, together with a joinder to or
confirmation of the Pledge Agreement, such that 100% of the capital stock or
other equity interests of each such Subsidiary formed under the laws of a
jurisdiction within the United States and 65% of the capital stock or other
equity interest of each such Subsidiary formed under the laws of a jurisdiction
outside of the United States, is pledged to the Administrative Agent for the
ratable benefit of itself and the Lenders; (b) favorable legal opinions
addressed to the Administrative Agent and Lenders in form and substance
satisfactory thereto with respect to such executed and delivered joinders,
guaranties or confirmations; and (c) and such other documents and closing
certificates as may be requested by the Administrative Agent.
Section 1.56. Year 2000 Compatibility. Take all actions reasonably
-----------------------
necessary to assure that Borrowers' computer based systems are able to operate
and effectively process data which includes dates on and after January 1, 2000.
At the request of the Administrative Agent, the Borrowers shall provide
reasonable assurances satisfactory to the Administrative Agent of the Borrowers'
Year 2000 compatibility.
Section 1.57. Taxes. Pay and discharge all taxes, assessments or other
-----
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any penalty for non-payment or late payment is
incurred, unless the same are (a) currently being contested in good faith by
appropriate proceedings, diligently prosecuted and (b) are covered by
appropriate reserves maintained in accordance with GAAP.
55
<PAGE>
Section 1.58. Amendment to Certificate of Incorporation of Wilmar. At the
---------------------------------------------------
same time that the Certificate of Incorporation of Wilmar is next amended, cause
Sections A.2(d) and B.2(d) of the Stock Purchase and Redemption Agreement
Description of Series A Senior Preferred Stock and Series B Junior Preferred
Stock to be deleted in their entirety.
Section 1.59. Further Assurances. Make, execute and deliver all such
------------------
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in and insure the
Administrative Agent and the Lenders their respective rights under this
Agreement, the Notes, the Letters of Credit and the other Loan Documents.
ARTICLE IX
FINANCIAL COVENANTS
-------------------
Until all of the Obligations have been paid and satisfied in full and the
Revolving Commitments terminated, unless consent has been obtained in the manner
set forth in Section 13.16 hereof, Wilmar and its Subsidiaries on a Consolidated
basis will not:
Section 1.60. Funded Debt to EBITDA Ratio. As of the last day of any
---------------------------
fiscal quarter of Wilmar and its Consolidated Subsidiaries, permit the Funded
Debt to EBITDA Ratio to be greater than 2.75 to 1.0.
Section 1.61. Fixed Charge Coverage Ratio. As of the last day of any
---------------------------
fiscal quarter of Wilmar and its Consolidated Subsidiaries, permit the Fixed
Charge Coverage Ratio to be less than 1.75 to 1.0.
Section 1.62. Minimum Net Worth Test. Permit, as of the last day of any
----------------------
fiscal quarter of Wilmar and its Consolidated Subsidiaries, Net Worth to be less
than Closing Adjusted Net Worth plus fifty percent (50%) of net income of Wilmar
and its Consolidated Subsidiaries for each fiscal quarter subsequent to the most
recent fiscal quarter ended prior to the Closing Date without deduction for
losses.
ARTICLE X
NEGATIVE COVENANTS
------------------
Until all of the Obligations have been paid and satisfied in full and the
Revolving Commitments terminated, unless consent has been obtained in the manner
set forth in Section 13.16 hereof, no Borrower has and no Borrower will permit
any of its Subsidiaries to:
56
<PAGE>
Section 1.63. Limitations on Debt. Create, incur, assume or suffer to
-------------------
exist any Debt except:
(1) the Obligations;
(2) Debt incurred in connection with a Hedging Agreement
with a counterparty and upon terms and conditions (including interest rate)
reasonably satisfactory to the Administrative Agent;
(3) Debt existing on the Closing Date and not otherwise
permitted under this Section 10.1, as set forth on Schedule 6.1(t) and the
renewal and refinancing (but not the increase at the aggregate principal amount
thereof) thereof;
(4) Debt of Wilmar and its Subsidiaries incurred in
connection with Capitalized Leases and (ii) purchase money Debt of Wilmar and
its Subsidiaries, in an aggregate amount not to exceed $5,000,000 on any date of
determination;
(5) Debt consisting of Guaranty Obligations permitted by
Section 10.2;
(6) loans by and among Borrowers;
(7) Debt incurred under the First Union Facility;
(8) so long as no Default or Event of Default has occurred
or is continuing, or would be caused thereby, incur subordinated unsecured Debt
not exceeding $10,000,000 on any date of determination; provided, however, that:
(i) such Debt may be incurred only to finance acquisitions permitted under
Section 10.4(a) hereof and (ii) such Debt shall be unsecured and subject to
subordination provisions in form and substance satisfactory to Administrative
Agent and Required Lenders; and
(9) so long as no Default or Event of Default has occurred
or is continuing, or would be caused thereby, incur unsecured Debt not exceeding
$3,000,000 on any date of determination; provided, however, that: (i) such Debt
may be incurred only to finance acquisitions permitted under Section 10.4(a)
hereof; (ii) such Debt may be owed only to sellers under such acquisitions
permitted under Section 10.4(a) hereof and (iii) the documentation evidencing
such Debt shall be in form and substance satisfactory to Administrative Agent
and Required Lenders;
provided, that no agreement or instrument with respect to Debt permitted to be
- --------
incurred by this Section shall restrict, limit or otherwise encumber (by
covenant or otherwise) the ability of any Subsidiary of Wilmar to make any
payment to Wilmar or any other Subsidiary (in the form of
57
<PAGE>
dividends, intercompany advances or otherwise) for the purpose of enabling the
Borrowers to pay the Obligations.
Section 1.64. Limitations on Guaranty Obligations. Create, incur, assume
-----------------------------------
or suffer to exist any Guaranty Obligations except Guaranty Obligations in favor
of the Administrative Agent for the benefit of the Administrative Agent and the
Lenders.
Section 1.65. Limitations on Liens. Create, incur, assume or suffer to
--------------------
exist, any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:
(1) Liens for taxes, assessments and other governmental
charges or levies (excluding any Lien imposed pursuant to any of the provisions
of ERISA or Environmental Laws) not yet due or as to which the period of grace
(not to exceed thirty (30) days), if any, related thereto has not expired or
which are being contested in good faith and by appropriate proceedings if
adequate reserves are maintained to the extent required by GAAP;
(2) the claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials, supplies or rentals
incurred in the ordinary course of business, (i) which are not overdue for a
period of more than thirty (30) days or (ii) which are being contested in good
faith and by appropriate proceedings;
(3) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment of,
obligations under workers compensation, unemployment insurance or similar
legislation or obligations, deposits to secure performance or payment bonds,
bids, tenders, contracts, leases, franchises or public or statutory obligations
required in the ordinary course of business (not to exceed $1,000,000 in the
aggregate) under customer service contracts;
(4) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract from the value of such property or impair the use thereof
in the ordinary conduct of business;
(5) Liens of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(6) Liens not otherwise permitted by this Section 10.3 and
in existence on the Closing Date and described on Schedule 10.3;
-------------
58
<PAGE>
(7) Liens securing Debt permitted under Section 10.1(d);
provided that (i) such Liens shall be created substantially simultaneously with
- --------
the acquisition of the related asset, and (ii) such Liens do not at any time
encumber any property other than the property financed by such Debt; and
(8) Liens in favor of First Union on the stock of the
Subsidiaries, other than the Inactive Subsidiaries, to secure Borrowers'
indebtedness under the First Union Facility, which such liens will be pari passu
with and on the same terms and conditions as the Liens granted to Administrative
Agent for the benefit of Lenders under the Pledge Agreement.
Section 1.66. Limitations on Loans, Advances, Investments and
-----------------------------------------------
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
- ------------
indirectly, any capital stock, interests in any partnership or joint venture
(including without limitation the creation or capitalization of any Subsidiary
except for Subsidiaries existing on the date hereof), evidence of Debt or other
obligation or security, substantially all or a portion of the business or assets
of any other Person or any other investment or interest whatsoever in any other
Person, or make or permit to exist, directly or indirectly, any loans, advances
or extensions of credit to, or any investment in cash or by delivery of property
in, any Person, except, in the absence of an Event of Default or Default, and if
such payment will not create a Default or Event of Default, Borrowers may:
(1) make acquisitions of stock or assets by Wilmar and its
Subsidiaries during any Fiscal Year, the purchase price of which, including
contingent payments and deferred purchase price, does not exceed, in the
aggregate, Twenty-Five Million Dollars ($25,000,000); provided, however, that:
(A) if the purchase price for such acquisition is less than Five Million Dollars
($5,000,000), then Borrowers shall provide to Administrative Agent all documents
reasonably requested by Administrative Agent no later than ten (10) Business
Days prior to the execution of a binding agreement to consummate such
acquisition and (B) if the purchase price for such acquisition equals or exceeds
Five Million Dollars ($5,000,000), then Borrowers shall provide to
Administrative Agent the following information no later than ten (10) Business
Days prior to the execution of a binding agreement to consummate such
acquisition:
(1) a narrative description of the proposed acquisition
which describes the business to be acquired, the legal structure for the
acquisition, the acquisition price to be paid, and other material features of
the proposed acquisition;
(2) copies of the financial statements, if available, or
federal income tax returns if not, dated as of the three (3) most recently ended
fiscal years of such business or the seller of such assets, or if such business
or the seller of such assets was formed or organized within the past three (3)
years, dated since the formation or organization of such business or seller;
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<PAGE>
(3) an amendment or supplement to the disclosure
schedules hereunder to include the required disclosure hereunder as applicable
to such business or assets; provided, however, that any such information is
subject to the approval of Required Banks;
(4) pro forma financial statements of the
--- -----
business or assets of Wilmar and its Subsidiaries giving effect to the proposed
acquisition on an historical basis for the two most recent fiscal quarters for
which an Officer's Compliance Certificate has been delivered and on a projected
basis for the period ending on the five year anniversary of the Closing Date,
including the information required pursuant to Section 7.1(a) hereof and
demonstrating compliance with the covenants set forth in Sections 9.1 through
9.3 hereof as of the end of each fiscal quarter, and setting forth the
adjustments made to historical financial statements in the pro forma financial
--- -----
statements; and
(5) such additional documents as Administrative Agent may
reasonably request, each of the foregoing to be in form and substance reasonably
satisfactory to Administrative Agent.
(2) make investments not otherwise permitted by this Section
10.4 in Subsidiaries (other than Inactive Subsidiaries) existing on the Closing
Date and the other existing loans, advances and investments not otherwise
permitted by this Section 10.4 described on Schedule 10.4;
-------------
(3) make investments in (i) marketable direct obligations issued
or unconditionally guaranteed by the United States of America or any agency
thereof maturing within 120 days from the date of acquisition thereof, (ii)
commercial paper maturing no more than 120 days from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. or
Moody's Investors Service, Inc., (iii) certificates of deposit maturing no more
than 120 days from the date of creation thereof issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $500,000,000
and having a rating of A or better by a nationally recognized rating agency;
provided, that the aggregate amount invested in such certificates of deposit
- --------
shall not at any time exceed $5,000,000 for any one such certificate of deposit
and $10,000,000 for any one such bank, or (iv) time deposits maturing no more
than 30 days from the date of creation thereof with commercial banks or savings
banks or savings and loan associations each having membership either in the FDIC
or the deposits of which are insured by the FDIC and in amounts not exceeding
the maximum amounts of insurance thereunder; and
(4) make investments by the Borrower or any Subsidiary (other
than Inactive Subsidiaries) in the form of acquisitions of all or substantially
all of the business or a
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<PAGE>
line of business (whether by the acquisition of capital stock, assets or any
combination thereof) of any other Person if such acquisition has been previously
approved in writing by the Required Lenders; and
(5) form additional Subsidiaries; provided, however, that
Borrowers comply with the terms of Section 8.12 hereof.
Section 1.67. Limitations on Mergers and Liquidation. Merge, consolidate
--------------------------------------
or enter into any similar combination with any other Person or liquidate, wind-
up or dissolve itself (or suffer any liquidation or dissolution), except, in the
absence of a Default or Event of Default, and if such act would not create a
Default or Event of Default:
(1) any Wholly-Owned Subsidiary of a Borrower may merge with
any Borrower or other Wholly-Owned Subsidiary of a Borrower (other than an
Inactive Subsidiary);
(2) any Wholly-Owned Subsidiary (other than an Inactive
Subsidiary) may merge into the Person such Wholly-Owned Subsidiary was formed to
acquire in connection with an acquisition permitted by Section 10.4(a);
(3) any Wholly-Owned Subsidiary of a Borrower may wind-up
into a Borrower or any other Wholly-Owned Subsidiary of a Borrower (other than
an Inactive Subsidiary);
(4) any Borrower may merge with or into any other Borrower;
and
(5) any Inactive Subsidiary may, after prior written notice
to Administrative Agent liquidate, wind-up or dissolve itself (or suffer a
liquidation or dissolution).
Section 1.68. Limitations on Sale of Assets. Convey, sell, lease, assign,
-----------------------------
transfer or otherwise dispose of all or substantially all of its property,
business or assets (including, without limitation, the sale of any receivables
and leasehold interests and any sale-leaseback or similar transaction), whether
now owned or hereafter acquired, unless: (i) such sale, lease, assignment,
transfer or disposition is not to an Inactive Subsidiary and (ii) Borrowers
comply with the mandatory prepayment provisions of Section 2.5(c)(ii) hereof.
Section 1.69. Limitations on Dividends and Distributions. Declare or pay
------------------------------------------
any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares of
its capital stock, or make any change in its capital structure that could
reasonably be expected to have a Material Adverse Effect; provided that:
--------
61
<PAGE>
(1) Wilmar or any Subsidiary may pay dividends in shares of
its own capital stock to any Person other than an Inactive Subsidiary; provided,
however, that such shares constitute Collateral (as defined in the Pledge
Agreement); and
(2) any Subsidiary may pay cash dividends to Wilmar.
Section 1.70. Limitations on Exchange and Issuance of Capital Stock.
-----------------------------------------------------
Issue, sell or otherwise dispose of: (A) any class or series of capital stock
that, by its terms or by the terms of any security into which it is convertible
or exchangeable, is, or upon the happening of an event or passage of time would
be, (i) convertible or exchangeable into Debt; (ii) required to be redeemed or
repurchased, including at the option of the holder, in whole or in part, or has,
or upon the happening of an event or passage of time would have, a redemption or
similar payment due or (B) any preferred stock of Wilmar.
Section 1.71. Transactions with Affiliates. Directly or indirectly (a)
----------------------------
make any loan or advance to, or purchase or assume any note or other obligation
to or from, any of its officers, directors, shareholders or other Affiliates, or
to or from any member of the immediate family of any of its officers, directors,
shareholders or other Affiliates in amounts exceeding $200,000 in the aggregate
at any time, or subcontract any operations to any of its Affiliates or (b) enter
into, or be a party to, any other transaction with any of its Affiliates, except
pursuant to the reasonable requirements of its business and upon fair and
reasonable terms that are fully disclosed to and approved in writing by the
Required Lenders prior to the consummation thereof and are no less favorable to
it than it would obtain in a comparable arm's length transaction with a Person
not its Affiliate.
Section 1.72. Certain Accounting Changes; Business Changes. Change its
--------------------------------------------
Fiscal Year end, make any change in its accounting treatment and reporting
practices except as required by GAAP, or enter into any new line of business in
which a Borrower is not currently engaged.
Section 1.73. Restrictive Agreements. Enter into any Debt which contains
----------------------
any negative pledge on assets or any covenants more restrictive than the
provisions of Articles VIII, IX and X hereof, or which restricts, limits or
otherwise encumbers its ability to incur Liens on or with respect to any of its
assets or properties other than the assets or properties securing such Debt.
ARTICLE XI
DEFAULT AND REMEDIES
--------------------
Section 1.74. Events of Default. Each of the following shall constitute
-----------------
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
62
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(1) Default in Payment of Principal of Loans and
--------------------------------------------
Reimbursement Obligations. The Borrowers shall default in any payment of
- -------------------------
principal of any Loan, Note or Reimbursement Obligation when and as due (whether
at maturity, by reason of acceleration or otherwise).
(2) Other Payment Default. The Borrowers shall default in
---------------------
the payment when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on any Loan, Note or Reimbursement Obligation or the
payment of any other Obligation, and such default shall continue unremedied for
three (3) Business Days.
(3) Misrepresentation. Any representation or warranty made
-----------------
or deemed to be made by Wilmar or any of its Subsidiaries under this Agreement,
any Loan Document or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect when made or deemed
made.
(4) Default in Performance of Certain Covenants. Wilmar
-------------------------------------------
or any of its Subsidiaries shall default in the performance or observance of any
covenant or agreement contained in Sections 7.1 or 7.5(e) or Articles IX or X of
this Agreement.
(5) Default in Performance of Other Covenants and
---------------------------------------------
Conditions. Wilmar or any Subsidiary thereof shall default in the performance or
- ----------
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this Section
11.1) or any other Loan Document and such default shall continue for a period of
thirty (30) days after written notice thereof has been given to the Borrowers by
the Administrative Agent.
(6) Hedging Agreement. Any termination payment shall be
-----------------
due by the Borrowers under any Hedging Agreement and such amount is not paid
within thirty (30) Business Days of the due date thereof.
(7) Cross-Default. Wilmar or any of its Subsidiaries shall
-------------
(i) default in the payment of any Debt (other than the Notes or any
Reimbursement Obligation) the aggregate outstanding amount of which Debt is in
excess of $2,500,000 beyond the period of grace if any, provided in the
instrument or agreement under which such Debt was created; (ii) default in the
observance or performance of any other agreement or condition relating to any
Debt (other than the Notes or any Reimbursement Obligation) the aggregate
outstanding amount of which Debt is in excess of $2,500,000 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 Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving
of notice if required, any such Debt to become due prior to its stated maturity
(any applicable grace period having
63
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expired); or (iii) default in the payment when due, or in the performance or
observation of any obligation or condition of any contract, the breach,
cancellation or termination of which would have a Material Adverse Effect,
unless, but only as long as, the existence of any such default is being
contested by Wilmar or such Subsidiary in good faith by appropriate proceedings
and adequate reserves in respect thereof have been established on the books of
Wilmar or such Subsidiary to the extent required by GAAP.
(8) Change in Control. Any person or group of persons
-----------------
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended) shall obtain ownership or control in one or more series of transactions
of more than thirty-three percent (33%) of the common stock or of the voting
power of Wilmar entitled to vote in the election of members of the board of
directors of Wilmar or there shall have occurred under any indenture or other
instrument evidencing any Debt in excess of $1,000,000 any change in control (as
defined in such indenture or other evidence of Debt) obligating Wilmar to
repurchase, redeem or repay all or any part of the Debt or capital stock
provided for therein (any such event, a "Change in Control").
(9) Voluntary Bankruptcy Proceeding. Wilmar or any
-------------------------------
Subsidiary thereof shall (i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or
other laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign, (v) admit in writing its inability to pay
its debts as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any corporate action for the purpose of authorizing any
of the foregoing.
(10) Involuntary Bankruptcy Proceeding. A case or other
---------------------------------
proceeding shall be commenced against Wilmar or any Subsidiary thereof in any
court of competent jurisdiction seeking (i) relief under the federal bankruptcy
laws (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, and such case or proceeding shall continue without
dismissal or stay for a period of sixty (60) consecutive days or an order
granting the relief requested in such case or proceeding (including but not
limited to, an order for relief under such federal bankruptcy laws) shall be
entered or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for Wilmar or any Subsidiary thereof or for all or any substantial part
of their respective assets, domestic or foreign, and such case or proceeding
shall continue without dismissal or stay for a period of sixty (60) consecutive
days, or an order granting the relief requested in such case or proceeding
(including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
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(11) Failure of Agreements. Any provision of this
---------------------
Agreement or of any other Loan Document shall for any reason cease to be valid
and binding on Wilmar or any Subsidiary party thereto or any such Person shall
so state in writing, or this Agreement or any other Loan Document shall for any
reason cease to create a valid and perfected first priority Lien on, or security
interest in, any of the collateral purported to be covered thereby, in each case
other than in accordance with the express terms hereof or thereof.
(12) Termination Event. The occurrence of any of the
-----------------
following events: (i) Wilmar, any Subsidiary or any ERISA Affiliate fails to
make full payment when due of all amounts which, under the provisions of any
Pension Plan or Section 412 of the Code, Wilmar, any Subsidiary or any ERISA
Affiliate is required to pay as contributions thereto, (ii) an accumulated
funding deficiency in excess of $1,000,000 occurs or exists, whether or not
waived, with respect to any Pension Plan, (iii) a Termination Event or (iv)
Wilmar, any Subsidiary or any ERISA Affiliate as employers under one or more
Multiemployer Plan makes a complete or partial withdrawal from any such
Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies
such withdrawing employer that such employer has incurred a withdrawal liability
requiring payments in an amount exceeding $1,000,000.
(13) Judgment. A judgment or order for the payment of
--------
money which causes the aggregate amount of all such judgments to exceed
$1,000,000 in any Fiscal Year shall be entered against Wilmar or any of its
Subsidiaries by any court and such judgment or order shall continue without
discharge or stay for a period of thirty (30) days.
Section 1.75. Remedies. Upon the occurrence of an Event of Default, 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 Borrowers:
(1) Acceleration; Termination of Facilities. Declare the
---------------------------------------
principal of and interest on the Loans, the Notes and the Reimbursement
Obligations at the time outstanding, and all other amounts owed to the Lenders
and to the Administrative Agent under this Agreement or any of the other Loan
Documents (other than any Hedging Agreement) (including, without limitation, all
L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) and
all other Obligations (other than obligations owing under any Hedging
Agreement), to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or the other Loan Documents to the contrary notwithstanding, and
terminate the Credit Facility and any right of the Borrowers to request
borrowings or Letters of Credit thereunder; provided, that upon the occurrence
--------
of an Event of Default specified in Section 11.1(i) or (j), the Credit
Facility shall be automatically terminated and all Obligations (other than
obligations owing under any Hedging Agreement) shall automatically become due
and payable.
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(2) Letters of Credit. With respect to all Letters of
-----------------
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to the preceding paragraph, require the
Borrowers at such time to deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash collateral account
shall be applied by the Administrative Agent to the payment of drafts drawn
under such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any, shall be
applied to repay the other Obligations. After all such Letters of Credit shall
have expired or been fully drawn upon, the Reimbursement Obligation shall have
been satisfied and all other Obligations shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrowers.
(3) Rights of Collection. Exercise on behalf of the
--------------------
Lenders all of its other rights and remedies under this Agreement, the other
Loan Documents and Applicable Law, in order to satisfy all of the Borrowers'
Obligations.
Section 1.76. Rights and Remedies Cumulative; Non-Waiver, etc. The
-----------------------------------------------
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between the Borrowers, the Administrative Agent and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default.
ARTICLE XII
THE ADMINISTRATIVE AGENT
------------------------
Section 1.77. Appointment; Rights and Duties of Co-Agents. Each of the
-------------------------------------------
Lenders hereby irrevocably designates and appoints First Union as Administrative
Agent of such Lender under this Agreement and the other Loan Documents for the
term hereof and each such Lender irrevocably authorizes First Union as
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
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Agent by the terms of this Agreement and such other Loan Documents, together
with such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or such other Loan
Documents, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the
Administrative Agent. Any reference to the Administrative Agent in this Article
XII shall be deemed to refer to the Administrative Agent solely in its capacity
as Administrative Agent and not in its capacity as a Lender. The parties hereto
hereby agree that the Co-Agents, in their capacity as Co-Agents hereunder, shall
not have any obligations, rights or duties hereunder.
Section 1.78. Delegation of Duties. The Administrative Agent may execute
--------------------
any of its respective 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 the Administrative Agent with reasonable care.
Section 1.79. Exculpatory Provisions. Neither the Administrative Agent
----------------------
nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned solely by
its or such Person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by Wilmar or any of its Subsidiaries or any
officer thereof contained in this Agreement or the other Loan Documents 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 the other Loan Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the other Loan
Documents or for any failure of Wilmar or any of its Subsidiaries to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of Wilmar or
any of its Subsidiaries.
Section 1.80. Reliance by the 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,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to
Wilmar), 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 such Note
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shall have been transferred in accordance with Section 13.10 hereof. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders (or, when expressly
required hereby or by the relevant other Loan Document, all the 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 except for its own gross
negligence or willful misconduct. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders (or, when
expressly required hereby, all the 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.
Section 1.81. 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 it has received notice from a Lender or the Borrowers
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, it shall promptly 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, except to the extent that other provisions of
------
this Agreement expressly require that any such action be taken or not be taken
only with the consent and authorization or the request of the Lenders or
Required Lenders, as applicable.
Section 1.82. Non-Reliance on the Administrative Agent and Other Lenders.
----------------------------------------------------------
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Administrative Agent hereinafter taken, including any review
of the affairs of Wilmar or any of its Subsidiaries, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Wilmar and its Subsidiaries and made its own decision to make its Loans and
issue or participate in Letter of Credit hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this
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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 Wilmar and its
Subsidiaries. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder or by the
other Loan Documents, 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, financial and other condition or
creditworthiness of Wilmar or any of its Subsidiaries which may come into the
possession of the Administrative Agent or any of its respective officers,
directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.
Section 1.83. Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such and (to the extent not reimbursed
by the Borrowers and without limiting the obligation of the Borrowers to do so;
provided, that if the Administrative Agent is reimbursed by Borrowers after
indemnification by Lenders, Administrative Agent shall reimburse Lenders as
appropriate), ratably according to the respective amounts of their Commitment
Percentages, 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 Notes or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or 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 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 bad faith, gross negligence or willful misconduct. The agreements in
this Section 12.7 shall survive the payment of the Notes, any Reimbursement
Obligation and all other amounts payable hereunder and the termination of this
Agreement.
Section 1.84. The Administrative Agent in Its Individual Capacity. The
---------------------------------------------------
Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrowers as though the Administrative Agent were not an Administrative
Agent hereunder. With respect to any Loans made or renewed by it and any Note
issued to it and with respect to any Letter of Credit issued by it or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Administrative Agent, and the terms
Lender and Lenders shall include the Administrative Agent in its individual
capacity.
Section 1.85. Resignation of the Administrative Agent; Successor
--------------------------------------------------
Administrative Agent. Subject to the appointment and acceptance of a successor
- --------------------
as provided below, the Administrative Agent may resign at any time by giving
notice thereof to the Lenders and the Borrowers. Upon
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<PAGE>
any such resignation, the Required Lenders (with the consent of Wilmar which
such consent shall not be unreasonably or untimely withheld; provided, however,
that no consent shall be required in the event that a Default or Event of
Default has occurred and is continuing) shall have the right to appoint a
successor Administrative Agent, which successor shall have minimum capital and
surplus of at least $500,000,000. If no successor Administrative Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the Administrative Agent's giving of
notice of resignation, then the Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, which successor shall have
minimum capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Section 12.9 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.
ARTICLE XIII
MISCELLANEOUS
-------------
Section 1.86. Notices.
-------
(1) Method of Communication. Except as otherwise provided
-----------------------
in this Agreement, all notices and communications hereunder shall be in writing,
or by telephone subsequently confirmed in writing. Any notice shall be effective
if delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested. A telephonic notice to the
Administrative Agent as understood by the Administrative Agent will be deemed to
be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(2) Addresses for Notices. Notices to any party shall be
---------------------
sent to it at the following addresses, or any other address as to which all the
other parties are notified in writing.
If to the Borrowers:
Wilmar Industries, Inc.
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303 Harper Drive
Moorestown, New Jersey 08057
Attention: William S. Sanford, Senior Vice President
and CFO
Telephone No.: (856) 533-3115
Telecopy No.: (856) 439-8846
With copies to: Morgan, Lewis & Bockius, LLP
502 Carnegie Center
Princeton, NJ 08840
Attention: Steven M. Cohen, Esquire
Telephone No.: (609) 919-6604
Telecopy No.: (609) 919-6639
If to First Union as First Union National Bank
Administrative Agent: One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
With copies to: First Union Securities, Inc.
One South Penn Square
PA4843
Philadelphia, Pennsylvania 19107-7618
Attention: Thomas Harper
Telephone: (215) 786-5213
Telecopy No.: (215) 786-2877
and to: Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19107-2799
Attention: Lisa D. Kabnick, Esquire
Telephone No.: (215) 981-4814
Telecopy No.: (215) 981-4750
If to any Lender: To the Address set forth on Schedule 2 hereto
----------
(3) Administrative Agent's Office. The Administrative
-----------------------------
Agent hereby designates its office located at the address set forth above, or
any subsequent office which shall
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have been specified for such purpose by written notice to the Borrowers and
Lenders, as the Administrative Agent's Office referred to herein, to which
payments due are to be made and at which Loans will be disbursed and Letters of
Credit issued.
Section 1.87. Expenses; Indemnity. The Borrowers will (a) pay all
-------------------
reasonable out-of-pocket expenses of the Administrative Agent in connection with
(i) the preparation, execution and delivery of this Agreement and each other
Loan Document, whenever the same shall be executed and delivered, including
without limitation all out-of-pocket syndication and due diligence expenses and
reasonable fees and disbursements of counsel for the Administrative Agent and
(ii) the preparation, execution and delivery of any waiver, amendment or consent
by the Administrative Agent or the Lenders relating to this Agreement or any
other Loan Document, including without limitation reasonable fees and
disbursements of counsel for the Administrative Agent, (b) pay all reasonable
out-of-pocket expenses of the Administrative Agent and each Lender actually
incurred in connection with the administration and enforcement of any rights and
remedies of the Administrative Agent and Lenders under the Credit Facility,
including consulting with appraisers, accountants, engineers, attorneys and
other Persons concerning the nature, scope or value of any right or remedy of
the Administrative Agent or any Lender hereunder or under any other Loan
Document or any factual matters in connection therewith, which expenses shall
include without limitation the reasonable fees and disbursements of such
Persons, and (c) defend, indemnify and hold harmless the Administrative Agent
and the Lenders, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any losses,
penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim, investigation,
litigation or other proceeding (whether or not the Administrative Agent or any
Lender is a party thereto) and the prosecution and defense thereof, arising out
of or in any way connected with the Agreement, any other Loan Document or the
Loans, including without limitation reasonable attorney's and consultant's fees,
except to the extent that any of the foregoing directly result from the gross
negligence or willful misconduct of the party seeking indemnification therefor.
Section 1.88. Set-off. In addition to any rights now or hereafter granted
-------
under Applicable Law and not by way of limitation of any such rights, upon and
after the occurrence of any Event of Default and during the continuance thereof,
the Lenders and any assignee or participant of a Lender in accordance with
Sections 13.10 or 13.14 are hereby authorized by the Borrowers at any time or
from time to time, without notice to the Borrowers or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Lenders, or any such assignee or participant to or for the credit or the
account of any Borrower against and on account of the Obligations irrespective
of whether or not (a) the Lenders shall have made any demand under this
Agreement or any of the other Loan Documents or (b) the Administrative Agent
shall have declared any or
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all of the Obligations to be due and payable as permitted by Section 11.2 and
although such Obligations shall be contingent or unmatured.
Section 1.89. Governing Law. This Agreement, the Notes and the other Loan
-------------
Documents, unless otherwise expressly set forth therein, shall be governed by,
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania, without reference to the conflicts or choice of law principles
thereof.
Section 1.90. Consent to Jurisdiction; Service of Process.
-------------------------------------------
(1) The Borrowers hereby irrevocably consent to the personal
jurisdiction of the state and federal courts located in Philadelphia County,
Pennsylvania, in any action, claim or other proceeding arising out of any
dispute in connection with this Agreement, the Notes and the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations. Each Borrower hereby irrevocably appoints each
and every officer of Wilmar as its attorney upon whom may be served any summons,
complaint, pleading or other process in any action, claim or proceeding brought
by the Administrative Agent or any Lender in connection with this Agreement, the
Notes or the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations, on behalf of
itself or its property, in the manner specified in Section 13.1. Nothing in
this Section 13.5 shall affect the right of the Administrative Agent or any
Lender to serve legal process in any other manner permitted by Applicable Law or
affect the right of the Administrative Agent or any Lender to bring any action
or proceeding against the Borrowers or their properties in the courts of any
other jurisdictions.
(2) To the extent that any Borrower has or hereafter may
acquire: (i) any immunity from jurisdiction of the state or federal courts
located in Philadelphia County, Pennsylvania or from any legal process out of
any such court (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, or (ii) any objection to the laying of the venue or of an
inconvenient forum or any suit, action or proceeding brought in a state or
federal court located in Philadelphia County, Pennsylvania under process served
in accordance with this Agreement or any Loan Document, each Borrower hereby
irrevocably waives such immunity or objection in respect of any suit, action or
proceeding arising out of or relating to this Agreement or any Loan Document.
Section 1.91. Binding Arbitration; Waiver of Jury Trial.
-----------------------------------------
(1) Binding Arbitration. Upon demand of any party, whether
-------------------
made before or after institution of any judicial proceeding, any dispute, claim
or controversy arising out of, connected with or relating to the Notes or any
other Loan Documents ("Disputes"), between or among parties to the Notes or any
other Loan Document shall be resolved by binding
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arbitration as provided herein. Institution of a judicial proceeding by a party
does not waive the right of that party to demand arbitration hereunder. Disputes
may include, without limitation, tort claims, counterclaims, claims brought as
class actions, claims arising from Loan Documents executed in the future,
disputes as to whether a matter is subject to arbitration, or claims concerning
any aspect of the past, present or future relationships arising out of or
connected with the Loan Documents. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association and Title 9 of the
U.S. Code. All arbitration hearings shall be conducted in Philadelphia,
Pennsylvania. The expedited procedures set forth in Rule 51, et seq. of the
-- ---
Arbitration Rules shall be applicable to claims of less than $1,000,000.
All applicable statutes of limitation shall apply to any Dispute. A judgment
upon the award may be entered in any court having jurisdiction. Notwithstanding
anything foregoing to the contrary, any arbitration proceeding demanded
hereunder shall begin within ninety (90) days after such demand thereof and
shall be concluded within one-hundred and twenty (120) days after such demand.
These time limitations may not be extended unless a party hereto shows cause for
extension and then such extension shall not exceed a total of sixty (60) days.
The panel from which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted. The parties hereto do not
waive any applicable Federal or state substantive law except as provided herein.
Notwithstanding the foregoing, this paragraph shall not apply to any Hedging
Agreement that is a Loan Document.
(2) Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND
----------
EACH BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS.
(3) Preservation of Certain Remedies. Notwithstanding the
--------------------------------
preceding binding arbitration provisions, the parties hereto and the other Loan
Documents preserve, without diminution, certain remedies that such Persons may
employ or exercise freely, either alone, in conjunction with or during a
Dispute. Each such Person shall have and hereby reserves the right to proceed in
any court of proper jurisdiction or by self help to exercise or prosecute the
following remedies: (i) all rights to foreclose against any real or personal
property or other security by exercising a power of sale granted in the Loan
Documents or under applicable law or by judicial foreclosure and sale, (ii) all
rights of self help including peaceful occupation of property and collection of
rents, set off, and peaceful possession of property, (iii) obtaining provisional
or ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an involuntary bankruptcy
proceeding, and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not
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limit the power of an arbitrator to grant similar remedies that may be requested
by a party in a Dispute.
Section 1.92. Reversal of Payments. To the extent the Borrowers make a
--------------------
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders, or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
Section 1.93. Injunctive Relief; Punitive Damages.
-----------------------------------
(1) The Borrowers recognize that, in the event the Borrowers
fail to perform, observe or discharge any of their obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to the
Lenders. Therefore, the Borrowers agree that the Lenders, at the Lenders option,
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
(2) The Administrative Agent, Lenders and Wilmar (on behalf
of itself and its Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
(3) The parties agree that they shall not have a remedy of
punitive or exemplary damages against any other party in any Dispute and hereby
waive any right or claim to punitive or exemplary damages they have now or which
may arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
Section 1.94. Accounting Matters. All financial and accounting
------------------
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by
Wilmar or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent to the
contrary agreed to by the Borrowers, be performed in accordance with GAAP as in
effect on the Closing Date. In the event that changes in GAAP shall be mandated
by the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrowers' certified public
accountants, to the extent that such changes
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would modify such accounting terms or the interpretation or computation thereof,
such changes shall be followed in defining such accounting terms only from and
after the date the Borrowers and the Lenders shall have amended this Agreement
to the extent necessary to reflect any such changes in the financial covenants
and other terms and conditions of this Agreement.
Section 1.95. Successors and Assigns; Participations.
--------------------------------------
(1) Benefit of Agreement. This Agreement shall be binding
--------------------
upon and inure to the benefit of the Borrowers, the Administrative Agent and the
Lenders, all future holders of the Notes, and their respective successors and
assigns, except that the Borrowers shall not assign or transfer any of their
rights or obligations under this Agreement without the prior written consent of
each Lender.
(2) Assignment by Lenders. Each Lender may, with the
---------------------
consent of the Borrowers (so long as no Default or Event of Default has occurred
and is continuing) and the consent of the Administrative Agent, which consents
shall not be unreasonably withheld, assign to one or more Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Extensions of Credit at
the time owing to it and the Notes held by it); provided that:
--------
(1) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Lender's rights and obligations under
this Agreement;
(2) each such assignment shall be the same percentage
of each Credit Facility hereunder;
(3) if less than all of the assigning Lender's
Revolving Commitment is to be assigned, the Revolving Commitment so assigned
shall not be less than $5,000,000;
(4) the parties to each such assignment shall execute
and deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance in the form of Exhibit F attached hereto
---------
(an Assignment and Acceptance), together with any Note or Notes subject
to such assignment;
(5) such assignment shall not, without the consent of
the Borrowers, require the Borrowers to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state; and
(6) the assigning Lender shall pay to the
Administrative Agent an assignment fee of $3,000 upon the execution by such
Lender of the Assignment and
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<PAGE>
Acceptance; provided that no such fee shall be payable upon any assignment by a
--------
Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) 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 hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
Section 1.96. Rights and Duties Upon Assignment. By executing and
---------------------------------
delivering an Assignment and Acceptance, the assigning Lender thereunder and the
assignee thereunder confirm to and agree with each other and the other parties
hereto as set forth in such Assignment and Acceptance.
Section 1.97. Register. The Administrative Agent may maintain a copy of
--------
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders and the amount of the
Extensions of Credit with respect to each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence
of manifest error, and the Borrowers, the Administrative Agent and the Lenders
may treat each person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrowers or Lenders at any reasonable time and from time
to time upon reasonable prior notice.
Section 1.98. Issuance of New Notes. Upon its receipt of an Assignment
---------------------
and Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of Exhibit G:
---------
(1) accept such Assignment and Acceptance;
(2) record the information contained therein in the Register;
(3) give prompt notice thereof to the Lenders and the Borrowers;
and
(4) promptly deliver a copy of such Assignment and Acceptance to
the Borrowers.
Within five (5) Business Days after receipt of notice, the Borrowers shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee in
amounts equal to the Revolving Commitment and Term
77
<PAGE>
Loan Commitment assumed by it pursuant to such Assignment and Acceptance and a
new Note or Notes to the order of the assigning Lender in an amount equal to the
Revolving Commitment and Term Loan Commitment retained by it hereunder. Such new
Note or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of the assigned Notes delivered to the assigning Lender. Each
surrendered Note or Notes shall be canceled and returned to the Borrowers.
Section 1.99. Participations. Each Lender may sell participations to one
--------------
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Extensions of Credit and the Notes held by it); provided that:
--------
(1) each such participation shall be in an amount not less than
$5,000,000;
(2) such Lender's obligations under this Agreement (including,
without limitation, its Revolving Commitment) shall remain unchanged;
(3) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(4) such Lender shall remain the holder of the Notes held by it
for all purposes of this Agreement;
(5) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement;
(6) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this Agreement or any
other Loan Document other than waivers, amendments or modifications which would
reduce the principal of or the interest rate on any Loan or Reimbursement
Obligation, extend the term or increase the amount of the Revolving Commitment,
reduce the amount of any fees to which such participant is entitled, extend any
scheduled payment date for principal of any Loan or, except as expressly
contemplated hereby or thereby, release substantially all of the Collateral; and
(7) any such disposition shall not, without the consent of the
Borrowers, require the Borrowers to file a registration statement with the
Securities and Exchange Commission to apply to qualify the Loans or the Notes
under the blue sky law of any state.
78
<PAGE>
Section 1.100. Disclosure of Information; Confidentiality. The
------------------------------------------
Administrative Agent and the Lenders shall hold all non-public information with
respect to the Borrowers obtained pursuant to the Loan Documents in accordance
with their customary procedures for handling confidential information; provided,
--------
that the Administrative Agent may disclose information relating to this
Agreement to Gold Sheets and other similar bank trade publications, such
-----------
information to consist of deal terms and other information customarily found in
such publications and provided further, that the Administrative Agent and
-------- -------
Lenders may disclose any such information to the extent such disclosure is
required by law or requested by any regulatory authority. Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to Sections 13.10 or 13.14, disclose to the assignee,
participant, proposed assignee or proposed participant, any information relating
to the Borrowers furnished to such Lender by or on behalf of the Borrowers;
provided, that prior to any such disclosure, each such assignee, proposed
- --------
assignee, participant or proposed participant shall agree with the Borrowers or
such Lender to preserve the confidentiality of any confidential information
relating to the Borrowers received from such Lender.
Section 1.101. Certain Pledges or Assignments; Consents. Nothing herein
----------------------------------------
shall prohibit any Lender from pledging or assigning any Note to any Federal
Reserve Bank in accordance with Applicable Law. Except as set forth below, any
term, covenant, agreement or condition of this Agreement or any of the other
Loan Documents (other than any Hedging Agreement, the terms and conditions of
which may be amended, modified or waived by the parties thereto) may be amended
or waived by the Lenders, and any consent given by the Lenders, if, but only if,
such amendment, waiver or consent is in writing signed by the Required Lenders
(or by the Administrative Agent with the consent of the Required Lenders) and
delivered to the Administrative Agent and, in the case of an amendment, signed
by the Borrowers; provided, that no amendment, waiver or consent shall (a)
--------
increase the amount or extend the time of the obligation of the Lenders to make
Loans or issue or participate in Letters of Credit (including without limitation
pursuant to Section 3.4), (b) extend the originally scheduled time or times of
payment of the principal of any Loan or Reimbursement Obligation or the time or
times of payment of interest on any Loan or Reimbursement Obligation or reduce
the amount required to be paid, (c) reduce the rate of interest or fees payable
on any Loan or Reimbursement Obligation, (d) reduce the principal amount of any
Loan or Reimbursement Obligation, (e) permit any subordination of the principal
or interest on any Loan or Reimbursement Obligation, (f) permit any assignment
(other than as specifically permitted or contemplated in this Agreement) of any
of the Borrowers' rights and obligations hereunder, (g) release any material
portion of the Collateral or release any Security Document (other than as
specifically permitted or contemplated in this Agreement or the applicable
Security Document) or (h) amend the provisions of this Section 13.16, Section
13.19 hereof or the definition of Required Lenders, without the prior written
consent of each Lender. In addition, no amendment, waiver or consent to the
provisions of (a) Article XII shall be made without the written consent of the
Administrative Agent and (b) Article III without the written consent of the
Issuing Lender.
79
<PAGE>
Section 1.102. Performance of Duties. The Borrowers' obligations under
---------------------
this Agreement and each of the Loan Documents shall be performed by the
Borrowers at their sole cost and expense.
Section 1.103. All Powers Coupled with Interest. All powers of attorney
--------------------------------
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not been
terminated.
Section 1.104. Survival of Indemnities. Notwithstanding any termination of
-----------------------
this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before.
Section 1.105. Titles and Captions. Titles and captions of Articles,
-------------------
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
Section 1.106. Severability of Provisions. Any provision of this Agreement
--------------------------
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 1.107. Counterparts. This Agreement may be executed in any number
------------
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
Section 1.108. Term of Agreement. This Agreement shall remain in effect
-----------------
from the Closing Date through and including the date upon which all Obligations
shall have been indefeasibly and irrevocably paid and satisfied in full. The
Administrative Agent is hereby permitted to release all Liens on the Collateral
in favor of the Administrative Agent, for the ratable benefit of itself and the
Lenders, upon repayment of the outstanding principal of and all accrued interest
on the Loans, payment of all outstanding fees and expenses hereunder and the
termination of the Lender's Revolving Commitments. No termination of this
Agreement shall affect the rights and obligations of the parties hereto arising
prior to such termination.
80
<PAGE>
Section 1.109. Inconsistencies with Other Documents; Independent Effect
--------------------------------------------------------
of Covenants.
- ------------
(1) In the event there is a conflict or inconsistency
between this Agreement and any other Loan Document, the terms of this Agreement
shall control; provided, that any provision of the Security Documents which
imposes additional burdens on Wilmar or its Subsidiaries or further restricts
the rights of Wilmar or its Subsidiaries or gives the Administrative Agent or
Lenders additional rights shall not be deemed to be in conflict or inconsistent
with this Agreement and shall be given full force and effect.
(2) The Borrowers expressly acknowledge and agree that each
covenant contained in Articles VIII, IX or X hereof shall be given independent
effect. Accordingly, the Borrowers shall not engage in any transaction or other
act otherwise permitted under any covenant contained in Articles VIII, IX or X
if, before or after giving effect to such transaction or act, the Borrowers
shall or would be in breach of any other covenant contained in Articles VIII,
IX, or X.
Section 1.110. Judgment Currency.
-----------------
(a) The Borrowers' obligations under this Agreement or any
other Loan Document to make payments in U.S. Dollars (the "Obligation Currency")
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than the Obligation
Currency, except to the extent that such tender or recovery results in the
effective receipt by the Lenders of the full amount of the
81
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
Attest: WILMAR INDUSTRIES, INC., as Borrower
By: /s/ Michael T. Toomey By: /s/ Fred B. Gross
--------------------- -----------------
Name: Michael T. Toomey Name: Fred B. Gross
Title: Treasurer Title: Vice President
Attest: J.A. SEXAUER, INC., as Borrower
By: /s/ Michael T. Toomey By: /s/ Fred B. Gross
--------------------- -----------------
Name: Michael T. Toomey Name: Fred B. Gross
Title: Asst. Treasurer Title: Vice President
Attest: SEXAUER LTD., as Borrower
By: /s/ Michael T. Toomey By: /s/ Fred B. Gross
--------------------- -------------------
Name: Michael T. Toomey Name: Fred B. Gross
Title: Asst. Treasurer Title: President
Attest: TRAYCO OF S.C., INC., as Borrower
By: /s/ Michael T. Toomey By: /s/ Fred B. Gross
--------------------- ---------------------
Name: Michael T. Toomey Name: Fred B. Gross
Title: Asst. Treasurer Title: Vice President
Attest: WILMAR HOLDINGS, INC., as Borrower
By: /s/ Michael T. Toomey By: /s/ Fred B. Gross
--------------------- -------------------
Name: Michael T. Toomey Name: Fred B. Gross
Title: Treasurer Title: President
[EXECUTIONS CONTINUED]
-81a-
<PAGE>
Obligation Currency expressed to be payable to the Lenders under this Agreement
or any other Loan Document. If for the purpose of obtaining or enforcing
judgment against Borrowers in any court or in any jurisdiction, it becomes
necessary to convert into or from any currency other than the Obligation
Currency (such other currency being hereinafter referred to as the "Judgment
Currency") an amount due in the Obligation Currency, the conversion shall be
made at the rate of exchange (as quoted by the Administrative Agent or if the
Administrative Agent does not quote a rate of exchange on such currency, by a
known dealer in such currency designated by the Administrative Agent)
determined, in each case, as of the day immediately preceding the day on which
the judgment is given (such business day being hereinafter referred to as the
"Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Borrowers covenant and agree to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount), as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.
(c) For purposes of determining any rate of exchange for this
Section, such amounts shall include any premium and costs payable in connection
with the purchase of the Obligation Currency.
82
<PAGE>
Attest: WILMAR FINANCIAL, INC., as Borrower
By: /s/ Michael T. Toomey By: /s/ Fred B. Gross
--------------------- -------------------
Name: Michael T. Toomey Name: Fred B. Gross
Title: Treasurer Title: President
Attest: ACE MAINTENANCE MART USA, INC., as Borrower
By: /s/ Michael T. Toomey By: /s/ Fred B. Gross
--------------------- ---------------------
Name: Michael T. Toomey Name: Fred B. Gross
Title: Asst. Treasurer Title: Vice President
FIRST UNION NATIONAL BANK, as
Administrative Agent and Lender
By: /s/ Paul Hogan
--------------
Name: Paul Hogan
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION, as
By: /s/ Robert J. Giannone
----------------------
Name: Robert J. Giannone
Title: Asst. Vice President
[EXECUTIONS CONTINUED]
-82a-
<PAGE>
NATIONAL CITY BANK OF PENNSYLVANIA,
By: /s/ W. Christopher Kohler
-------------------------
Name: W. Christopher Kohler
Title: Asst. Vice President
MELLON BANK, N.A., as Lender
By: /s/ Devon L. Starks
-------------------
Name:/s/ Devon L. Starks
Title: Asst. Vice President
SUMMIT BANK, as Lender
By: /s/ Alan B. Herman
------------------
Name: Alan B. Herman
Title:Vice President
SUN NATIONAL BANK, as Lender
By: /s/ Daniel F. Hires
-------------------
Name: Daniel F. Hires
Title:Regional Vice President
THE CHASE MANHATTAN BANK, as Lender
By: /s/ Wing Y. Lee-Ong
-------------------
Name: Wing Y. Lee-Ong
Title: Vice President
-83-
<PAGE>
EXHIBITS
- --------
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Term Note
Exhibit A-3 - Form of Swingline Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment
Exhibit E - Form of Notice of Conversion/Continuation
Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance
SCHEDULES
- ---------
Schedule 1 - Borrowers
Schedule 2 - Lenders and Commitments
Schedule 3 - Inactive Subsidiaries
Schedule 6.1(a) - Jurisdictions of Organization and Qualification
Schedule 6.1(b) - Subsidiaries and Capitalization
Schedule 6.1(g) - Intellectual Property Matters
Schedule 6.1(i) - ERISA Plans
Schedule 6.1(l) - Labor and Collective Bargaining Agreements
Schedule 6.1(s) - Debt and Guaranty Obligations
Schedule 10.3 - Existing Liens
Schedule 10.4 - Existing Loans, Advances and Investments
The aforementioned is a list of all exhibits and schedules. The Company agrees
to furnish supplementally a copy of any omitted exhibit or schedule to the
Securities and Exchange Commission request.
A-1
<PAGE>
Wilmar
For Immediate Release
Contact: William Sanford
Senior Vice President
Chief Financial Officer
(609) 533-3115
WILMAR ANNOUNCES MAJOR ACQUISITION
(MOORESTOWN, NJ) November 15, 1999, Wilmar Industries, Inc. NASDAQ:WLMR)
today announced that it has signed a definitive purchase agreement to acquire
100% of the stock of J.A. Sexauer, Inc., Sexauer Ltd., and Trayco of S.C.,
Inc., ("Sexauer"). Founded in 1921, Sexauer is a leading distributor of
plumbing specialties to institutional facilities throughout the United States
and Canada, and had revenues of approximately $75 million during fiscal year
1999. Sexauer is a wholly-owned subsidiary of The Dyson-Kissner-Moran
Corporation, a New York-based privately-owned holding company. Headquartered in
Scarsdale, New York, Sexauer markets over 25,000 plumbing repair and maintenance
products to over 40,000 active customers. Sexauer has its main distribution
facilities in Louisville, and Florence, S.C., with regional centers in Reno,
Dallas, Toronto and Edmonton, Canada. Sexauer goes to market through a direct
sales force of 200 field representatives and a comprehensive master catalog .
William S. Green, Chairman and CEO of Wilmar explained "The Sexauer
acquisition will provide a major catalyst for accelerating our goal of becoming
a leading supplier to lodging and institutional facilities as we are now to the
multi-family housing industry. This acquisition introduces Wilmar's broad
product line to over 270,000 institutional facilities, tripling our potential
customer base".
Gil Silva, President of Sexauer, stated "This is a very exciting
partnership for us. Sexauer will now have the ability to significantly increase
our distribution capabilities and improve customer service due to the expansive
Wilmar distribution network."
Wilmar's President, Michael Grebe, said "Sexauer has a world class direct
field sales force as well as an excellent reputation in the institutional
markets. Going forward, Wilmar will market to institutional facilities through
the Sexauer companies."
William S. Green further stated, This is Wilmar's largest and most
significant acquisition to date. It substantially increases the size of our
Company. Following the closing of the Sexauer transaction, Wilmar will operate
from twenty-seven distribution centers and employ 420 field sales reps in all
fifty states, Canada and Puerto Rico."
Total consideration for the acquisition is $85 million, according to
Wilmar. Wilmar intends to finance the acquisition through a combination of
company cash and a new senior credit facility, for which Wilmar has already
received a firm financing commitment. Completion of the acquisition is subject
to customary conditions to closing, including compliance with the Hart-Scott-
Rodino Act . The company intends to close the transaction before year end.
Wilmar Industries, Inc. is a national marketer and direct distributor of
repair and maintenance products, principally to the apartment housing market,
and operates 21 distribution centers throughout the United States.
Forward-looking statements in this news release, if any, are made under the
safe harbor provisions of the Private Securities Reform Act of 1995. Certain
important factors that could cause results to differ materially from those
anticipated by the forward-looking statements are discussed from time to time in
reports filed by the Company with the Securities and Exchange Commission
<PAGE>
Wilmar
For Immediate Release
Contact: William Sanford
Senior Vice President
Chief Financial Officer
(856) 533-3115
WILMAR COMPLETES MAJOR ACQUISITION
(MOORESTOWN, NJ) December 6, 1999, Wilmar Industries, Inc. NASDAQ:WLMR)
today announced that it had completed its acquisition of J.A. Sexauer, Inc.,
Trayco of S.C., Inc. and Sexauer Canada Ltd. from The Dyson-Kissner-Moran
Corporation which was previously announced in our November 15, 1999 press
release.
Wilmar Industries, Inc. is a national marketer and direct distributor of
repair and maintenance products, principally to the apartment housing and
institutional markets, and operates 25 distribution centers throughout the
United States.
Forward-looking statements in this news release, if any, are made under the
safe harbor provisions of the Private Securities Reform Act of 1995. Certain
important factors that could cause results to differ materially from those
anticipated by the forward-looking statements are discussed from time to time in
reports filed by the Company with the Securities and Exchange Commission
