UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
FINISHMASTER, INC.
(Name of Issuer)
Common Stock, No Par Value
(Title of Class of Securities)
31787P 10 8
(CUSIP Number)
Andre B. Lacy Copy to:
President, Chairman and CEO Robert H. Reynolds, Esq.
Lacy Distribution, Inc. Barnes & Thornburg
LDI Management, Inc. 1313 Merchants Bank Building
251 N. Illinois Street, Suite 1800 11 S. Meridian Street, Suite 1313
Indianapolis, Indiana 46204 Indianapolis, Indiana 46204
(317) 237-2251 (317) 638-1313
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 5, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [x]. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
PAGE 1 OF 15
<PAGE>
SCHEDULE 13D
- ------------------------ ---------------------------
CUSIP No. 31787P 10 8 Page 2 of 15 Pages
- ------------------------ ---------------------------
================================================================================
1 NAME OF REPORTING PERSON Lacy Distribution, Inc.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Indiana
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER 0
NUMBER OF -------------------------------------------------------------
SHARES 8 SHARED VOTING POWER 4,045,000*
BENEFICIALLY -------------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER 0
EACH -------------------------------------------------------------
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 4,045,000*
WITH
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,045,000*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.4%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
================================================================================
* On June 5, 1996, Lacy Distribution, Inc., an Indiana corporation ("Lacy"),
LDI, Ltd., an Indiana limited partnership ("LDI"), and Maxco, Inc., a
Michigan corporation ("Seller"), entered into a Stock Purchase Agreement
(the "Purchase Agreement") whereby Lacy agreed to acquire Four Million
Forty Five Thousand (4,045,000) shares of common stock, no par value (the
"Shares"), of FinishMaster, Inc., a Michigan corporation ("Issuer"), owned
by Seller. The Shares, which represent Seller's total ownership of Issuer,
constitute approximately 67.4% of the total issued and outstanding shares
of common stock of Issuer. The consummation of the purchase of the Shares
pursuant to the Purchase Agreement (the "Stock Purchase") is subject to the
satisfaction of certain conditions, terms and provisions contained in the
Purchase Agreement, including the expiration or termination of the waiting
period applicable to Lacy's acquisition of the Shares under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. A copy of
the Purchase Agreement is attached hereto as Exhibit 3. Lacy is a
wholly-owned subsidiary of LDI. LDI has two general partners: (i) LDI
Management, Inc., an Indiana corporation ("LDIM"), which serves as the
managing general partner, and (ii) Andre B. Lacy.
<PAGE>
SCHEDULE 13D
- ------------------------ ---------------------------
CUSIP No. 31787P 10 8 Page 3 of 15 Pages
- ------------------------ ---------------------------
================================================================================
1 NAME OF REPORTING PERSON LDI, Ltd.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X}
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Indiana
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER 0
NUMBER OF
SHARES 8 SHARED VOTING POWER 4,045,100*
BENEFICIALLY ---------------------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER 0
EACH ---------------------------------------------------------------
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 4,045,100*
WITH
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,450,100*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.4%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN, HC
================================================================================
* On June 5, 1996, Lacy Distribution, Inc., an Indiana corporation ("Lacy"),
LDI, Ltd., an Indiana limited partnership ("LDI"), and Maxco, Inc., a
Michigan corporation ("Seller"), entered into a Stock Purchase Agreement
(the "Purchase Agreement") whereby Lacy agreed to acquire Four Million
Forty Five Thousand (4,045,000) shares of common stock, no par value (the
"Shares"), of FinishMaster, Inc., a Michigan corporation ("Issuer"), owned
by Seller. The Shares, which represent Seller's total ownership of Issuer,
constitute approximately 67.4% of the total issued and outstanding shares
of common stock of Issuer. The consummation of the purchase of the Shares
pursuant to the Purchase Agreement (the "Stock Purchase") is subject to the
satisfaction of certain conditions, terms and provisions contained in the
Purchase Agreement, including the expiration or termination of the waiting
period applicable to Lacy's acquisition of the Shares under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. A copy of
the Purchase Agreement is attached hereto as Exhibit 3. Lacy is a
wholly-owned subsidiary of LDI. LDI has two general partners: (i) LDI
Management, Inc., an Indiana corporation ("LDIM"), which serves as the
managing general partner, and (ii) Andre B. Lacy. In addition to the Shares
to be acquired by Lacy pursuant to the Purchase Agreement, LDI owns 100
shares of common stock of Issuer which it acquired on August 3, 1995.
<PAGE>
- ------------------------ ---------------------------
CUSIP No. 31787P 10 8 Page 4 of 15 Pages
- ------------------------ ---------------------------
================================================================================
1 NAME OF REPORTING PERSON LDI Management, Inc.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Indiana
================================================================================
NUMBER OF 7 SOLE VOTING POWER 0
SHARES
BENEFICIALLY -------------------------------------------------------------
OWNED BY
EACH 8 SHARED VOTING POWER 4,045,100*
REPORTING -------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER 0
WITH -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER 4,045,100*
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,045,100*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.4%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
================================================================================
* On June 5, 1996, Lacy Distribution, Inc., an Indiana corporation ("Lacy"),
LDI, Ltd., an Indiana limited partnership ("LDI"), and Maxco, Inc., a
Michigan corporation ("Seller"), entered into a Stock Purchase Agreement
(the "Purchase Agreement") whereby Lacy agreed to acquire Four Million
Forty Five Thousand (4,045,000) shares of common stock, no par value (the
"Shares"), of FinishMaster, Inc., a Michigan corporation ("Issuer"), owned
by Seller. The Shares, which represent Seller's total ownership of Issuer,
constitute approximately 67.4% of the total issued and outstanding shares
of common stock of Issuer. The consummation of the purchase of the Shares
pursuant to the Purchase Agreement (the "Stock Purchase") is subject to the
satisfaction of certain conditions, terms and provisions contained in the
Purchase Agreement, including the expiration or termination of the waiting
period applicable to Lacy's acquisition of the Shares under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. A copy of
the Purchase Agreement is attached hereto as Exhibit 3. Lacy is a
wholly-owned subsidiary of LDI. LDI has two general partners: (i) LDI
Management, Inc., an Indiana corporation ("LDIM"), which serves as the
managing general partner, and (ii) Andre B. Lacy. In addition to the Shares
to be acquired by Lacy pursuant to the Purchase Agreement, LDI owns 100
shares of common stock of Issuer which it acquired on August 3, 1995.
<PAGE>
- ------------------------ ---------------------------
CUSIP No. 31787P 10 8 Page 5 of 15 Pages
- ------------------------ ---------------------------
================================================================================
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON Andre B. Lacy
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
================================================================================
NUMBER OF 7 SOLE VOTING POWER 0
SHARES
BENEFICIALLY -------------------------------------------------------------
OWNED BY
EACH 8 SHARED VOTING POWER 4,045,100*
REPORTING -------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER 0
WITH -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER 4,045,100*
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,045,100*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.4%*
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
* On June 5, 1996, Lacy Distribution, Inc., an Indiana corporation ("Lacy"),
LDI, Ltd., an Indiana limited partnership ("LDI"), and Maxco, Inc., a
Michigan corporation ("Seller"), entered into a Stock Purchase Agreement
(the "Purchase Agreement") whereby Lacy agreed to acquire Four Million
Forty Five Thousand (4,045,000) shares of common stock, no par value (the
"Shares"), of FinishMaster, Inc., a Michigan corporation ("Issuer"), owned
by Seller. The Shares, which represent Seller's total ownership of Issuer,
constitute approximately 67.4% of the total issued and outstanding shares
of common stock of Issuer. The consummation of the purchase of the Shares
pursuant to the Purchase Agreement (the "Stock Purchase") is subject to the
satisfaction of certain conditions, terms and provisions contained in the
Purchase Agreement, including the expiration or termination of the waiting
period applicable to Lacy's acquisition of the Shares under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. A copy of
the Purchase Agreement is attached hereto as Exhibit 3. Lacy is a
wholly-owned subsidiary of LDI. LDI has two general partners: (i) LDI
Management, Inc., an Indiana corporation ("LDIM"), which serves as the
managing general partner, and (ii) Andre B. Lacy. In addition to the Shares
to be acquired by Lacy pursuant to the Purchase Agreement, LDI owns 100
shares of common stock of Issuer which it acquired on August 3, 1995.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
Title of Security: Common Stock, No Par Value
Issuer: FinishMaster, Inc.
4529 40th Street, S.E.
Kentwood, Michigan 49512
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c), (f) This Statement is being filed jointly by: (i) Lacy
Distribution, Inc. ("Lacy"), (ii) LDI, Ltd. ("LDI"), (iii) LDI Management, Inc.
("LDIM") and (iv) Andre B. Lacy (collectively, the "Reporting Persons").
Attached hereto as Exhibit 1 is a copy of an agreement among Lacy, LDI, LDIM and
Andre B. Lacy relating to the joint filing of this Statement as required by Rule
13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended.
Lacy, an Indiana corporation and a wholly-owned subsidiary of LDI, is a
holding company for LDI's distribution group, which consists of Ed Tucker
Distributor, Inc., Answer Products, Inc., Tucker Rocky Distributing Canada,
Inc., and Pike's Peak Motorcycle Supply, Ltd. (collectively, the "Tucker-Rocky
Distributing Companies") and Major Video Concepts, Inc. The Tucker-Rocky
Distributing Companies are the world's largest wholesale distributor of
after-market parts, apparel and accessories for motorcycle, watercraft and
snowmobile enthusiasts. Major Video Concepts, Inc. is the country's second
largest wholesale distributor of movie cassettes. Lacy's principal business
address, and the address of its principal office, is 251 N. Illinois Street,
Suite 1800, Indianapolis, Indiana 46204.
LDI, an Indiana limited partnership, is a privately-held management and
investment holding company. LDI's holdings include Lacy (its wholesale
distribution group), a door and lumber millwork group, and a private investment
portfolio. Its principal business address, and the address of its principal
office, is 251 N. Illinois Street, Suite 1800, Indianapolis, Indiana 46204.
LDIM, an Indiana corporation, is the managing general partner of LDI. Its
principal business address, and the address of its principal office, is 251 N.
Illinois Street, Suite 1800, Indianapolis, Indiana 46204.
Andre B. Lacy is a general partner of LDI and the sole shareholder of LDIM.
The schedule set forth in Exhibit 2 annexed hereto, which provides identity and
background information on Mr. Lacy and the directors, executive officers and 5%
or greater controlling shareholders of Lacy and LDIM, is incorporated herein by
reference.
6 of 15
<PAGE>
(d) and (e) During the last five years, neither Lacy, LDI, LDIM, Andre
B. Lacy, nor any persons controlling Lacy, LDI or LDIM, nor, to the best
knowledge of Lacy, LDI, LDIM or Andre B. Lacy, any of the persons listed on
Exhibit 2 annexed hereto, (i) has been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
as a result of which such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or State securities laws or finding any violation of such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Stock Purchase Agreement dated June 5, 1996 (the "Purchase
Agreement"), among Lacy, LDI and Maxco, Inc., a Michigan corporation ("Seller"),
Lacy has agreed to purchase, and Seller has agreed to sell, subject to the
satisfaction of certain conditions, terms and provisions, 4,045,000 shares of
common stock, no par value (the "Shares"), of FinishMaster, Inc., a Michigan
corporation ("Issuer"), at a price of $11.50 per share, or $46,517,500 in the
aggregate (the "Purchase Price"). The Purchase Agreement also requires Seller
and certain of Seller's directors (the "Resigning Directors") to enter into
Non-Competition Agreements with Lacy pursuant to which Seller and the Resigning
Directors will receive consideration in the aggregate amount of $16,500,000 (the
"Non-Compete Consideration"). The Non-Compete Consideration is payable according
to the following schedule: (i) $12,000,000 is payable to Seller immediately upon
consummation of the purchase of the Shares pursuant to the Purchase Agreement
(the "Stock Purchase") and (ii) $4,500,000 in the aggregate is to be paid to
Seller and the four Resigning Directors in five annual installments of $900,000
each commencing in July, 1997. Of each such annual installment of $900,000,
$20,000 is payable to each of the four Resigning Directors and the remainder
($820,000) is payable to Seller. Lacy intends to borrow approximately $58.5
million under an existing Credit Agreement (as hereinafter defined) to fund the
Purchase Price and Non-Compete Consideration. A copy of the Purchase Agreement,
which includes the form of the Non- Competition Agreement as an exhibit, is
attached hereto as Exhibit 3.
Pursuant to a Credit Agreement dated as of March 29, 1996, as amended from
time to time (the "Credit Agreement"), among LDI, Lacy, various financial
institutions (the "Lenders") and Bank of America National Trust and Savings
Association, as Agent ("Agent"), each of the Lenders, severally and for itself
alone, agreed to make loans (the "Loans") to Lacy and LDI on a revolving credit
basis from time to time up to an aggregate amount of $200,000,000 for working
capital and other corporate purposes. A Loan may be obtained as a Floating Rate
Loan (variable rate) or a Eurodollar Loan (fixed rate). A copy of the Credit
Agreement is attached hereto as Exhibit 4.
7 of 15
<PAGE>
The obligation of the Lenders to make the Loans is subject to the
satisfaction of certain customary conditions and covenants. Borrowings under the
Credit Agreement are guaranteed by each of LDI's and Lacy's significant
operating subsidiaries and affiliates, but will not be guaranteed by Issuer.
Borrowings under the Credit Agreement are otherwise unsecured.
ITEM 4. PURPOSE OF TRANSACTION.
(a)-(j) Lacy and LDI have entered into the Purchase Agreement to
acquire a majority ownership interest in Issuer. Upon consummation of the Stock
Purchase, Lacy will own approximately 67.4% of the issued and outstanding shares
of Issuer.
The acquisition by Lacy of a majority interest in Issuer is part of
LDI's strategic business plan and growth strategy. As part of its planning
process, LDI identified the automotive paint and refinishing industry as an
opportunity that would allow LDI to utilize its experience in distribution
businesses. (See response to Item 2 hereof for a discussion of LDI's
distribution business.) In analyzing this industry, LDI became familiar with
Issuer and approached Seller about selling its interest in Issuer to Lacy.
Issuer is one of the nation's largest distributors of automotive paints,
coatings and paint-related accessories.
As a condition to the consummation of the Stock Purchase, at least a
majority of the members of the Board of Directors of Issuer will resign as
directors. Such resigning directors will include at least the following four
individuals, three of whom will also resign as officers of Issuer, such
resignations to be effective immediately upon consummation of the Stock
Purchase: (i) Max A. Coon - Chairman of the Board; (ii) Eric L. Cross Secretary
and Director; (iii) Richard G. Johns - Director; and (iv) Vincent Shunsky
Treasurer and Director (collectively, the "Resigning Directors"). (Each of the
Resigning Directors is a director and/or officer of Seller and will remain so
after consummation of the Stock Purchase.) In addition, Seller shall also have
caused persons designated by Lacy to be elected to fill the vacancies created by
such resignations. Except for replacing the Resigning Directors, LDI has planned
no changes in the current management or operations of Issuer once it becomes the
Issuer's new majority shareholder.
As another condition to the consummation of the Stock Purchase, the
current Board of Directors of Issuer shall have taken all actions necessary to
amend the articles of incorporation and by-laws of the Issuer (the "Amendments")
to exempt the Issuer and the Stock Purchase from the provisions of the Michigan
Control Share Acquisition Law and the Michigan Business Combination Law. The
Amendments will be made by Issuer's existing Board of Directors before
consummation of the Stock Purchase and, therefore, before Lacy has actual
ownership of the Shares.
8 of 15
<PAGE>
The Purchase Agreement provides that Lacy may, subject to Seller's
approval, assign its rights thereunder. Lacy may exercise such right prior to
consummation of the Stock Purchase and assign its rights under the Purchase
Agreement to an affiliate.
Although the Reporting Persons may develop other plans or proposals for
Issuer in the future, none of the Reporting Persons have any current plans or
proposals, other than those described above in response to this Item 4, which
relate to or would result in:
(a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or its wholly-owned
subsidiary;
(c) a sale or transfer of a material amount of assets of the Issuer or
its wholly-owned subsidiary;
(d) any other change in the present board of directors or management
of the Issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or corporate
structure;
(g) any other changes in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) a class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1940, as amended; or
(j) any action similar to any of those enumerated above.
9 of 15
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Lacy beneficially owns 4,045,000 Shares, representing approximately
67.4% of the issued and outstanding shares of common stock of the Issuer,
pursuant to its right to purchase the Shares under the Purchase Agreement.
LDI, as the sole shareholder of Lacy, beneficially owns 4,045,100
Shares, representing approximately 67.4% of the issued and outstanding shares of
common stock of the Issuer. In addition to the Shares to be acquired by Lacy
pursuant to the Purchase Agreement, LDI owns 100 shares of common stock of
Issuer which it acquired on August 3, 1995.
LDIM, as the managing general partner of LDI, beneficially owns
4,045,100 Shares, representing approximately 67.4% of the issued and outstanding
shares of common stock of the Issuer.
Andre B. Lacy, as a general partner of LDI and the sole shareholder of
LDIM, beneficially owns 4,045,100 Shares, representing approximately 67.4% of
the issued and outstanding shares of common stock of the Issuer.
(b) On June 5, 1996, Lacy, LDI, and Seller entered into the Purchase
Agreement whereby Lacy agreed to acquire the 4,045,000 Shares of Issuer owned by
Seller. The Shares, which represent Seller's total ownership of Issuer,
constitute approximately 67.4% of the total issued and outstanding shares of
common stock of Issuer. The consummation of the Stock Purchase is subject to the
satisfaction of certain conditions, terms and provisions contained in the
Purchase Agreement, including the expiration or termination of the waiting
period applicable to Lacy's acquisition of the Shares under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. A copy of the
Purchase Agreement is attached hereto as Exhibit 3. Lacy is a wholly-owned
subsidiary of LDI. LDI has two general partners: (i) LDIM, which serves as the
managing general partner, and (ii) Andre B. Lacy. In addition to the Shares to
be acquired by Lacy pursuant to the Purchase Agreement, LDI owns 100 shares of
common stock of Issuer which it acquired on August 3, 1995.
Lacy:
Sole Voting Power: 0
Shared Voting Power: 4,045,000
Sole Dispositive Power: 0
Shared Dispositive Power: 4,045,000
LDI:
Sole Voting Power: 0
Shared Voting Power: 4,045,100
Sole Dispositive Power: 0
Shared Dispositive Power: 4,045,100
10 of 15
<PAGE>
LDIM:
Sole Voting Power: 0
Shared Voting Power: 4,045,100
Sole Dispositive Power: 0
Shared Dispositive Power: 4,045,100
Andre B. Lacy:
Sole Voting Power: 0
Shared Voting Power: 4,045,100
Sole Dispositive Power: 0
Shared Dispositive Power: 4,045,100
(c) Other than the execution of the Purchase Agreement described above,
no other transactions in the shares of common stock of the Issuer were effected
during the past sixty days by the persons named in response to Item 5(a) hereof.
(d) Until consummation of the Stock Purchase, Seller has the right to
receive or the power to direct the receipt of dividends from, or the proceeds of
the sale of, the 4,045,000 Shares, subject to the terms of the Purchase
Agreement. Seller owns more than 5% of the outstanding shares of common stock of
Issuer.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
On August 3, 1995, LDI purchased 100 shares of common stock of Issuer
in the open market.
On June 5, 1996, Lacy, LDI and Seller entered into the Purchase
Agreement pursuant to which Lacy has agreed to purchase, and Seller has agreed
to sell, subject to the satisfaction of certain conditions, terms and
provisions, 4,045,000 Shares of Issuer at an aggregate Purchase Price of
$46,517,500. The Purchase Agreement also requires Seller and the Resigning
Directors to enter into Non-Competition Agreements with Lacy pursuant to which
Seller and the Resigning Directors will receive Non-Compete Consideration in the
aggregate amount of $16,500,000. The Non-Compete Consideration is payable
according to the following schedule: (i) $12,000,000 is payable to Seller
immediately upon consummation of the Stock Purchase and (ii) $4,500,000 in the
aggregate is to be paid to Seller and the four Resigning Directors in five
annual installments of $900,000 each commencing in July, 1997. Of each such
annual installment of $900,000, $20,000 is payable to each of the four Resigning
Directors and the remainder ($820,000) is payable to Seller. A copy of the
Purchase Agreement, which includes the form of the Non-Competition Agreement as
an exhibit, is attached hereto as Exhibit 3.
11 of 15
<PAGE>
The closing of the transactions contemplated by the Purchase Agreement
are subject to conditions which are ordinary and customary for similar
transactions, including, without limitation, expiration or early termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended. Subject to the foregoing, the Reporting Persons presently
intend to consummate the transaction contemplated by the Purchase Agreement in
July, 1996.
As described more fully above in response to Item 3, LDI, Lacy, the
Lenders and Agent have entered into the Credit Agreement. Borrowings under the
Credit Agreement will be used to finance the entire amount of the Purchase Price
and Non-Compete Consideration. The obligations of the Lenders to make the Loans
under the Credit Agreement are subject to the satisfaction of certain customary
conditions and covenants. Borrowings under the Credit Agreement are guaranteed
by each of LDI's and Lacy's significant operating subsidiaries and affiliates,
but is otherwise unsecured. Issuer will not be required to guarantee the
borrowings under the Credit Agreement. A copy of the Credit Agreement is
attached hereto as Exhibit 4.
LDI has retained the services of Smith Barney in relation to the Stock
Purchase.
12 of 15
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following material is filed as exhibits:
1. Agreement, dated as of June 12, 1996, between Lacy, LDI, LDIM and
Andre B. Lacy relating to the joint filing of this Schedule 13D.
2 Schedule of identity and background information on the directors,
executive officers and controlling shareholders of Lacy and LDIM.
3. Stock Purchase Agreement, dated June 5, 1996, between Lacy, LDI
and Seller.
4. Credit Agreement, dated as of March 29, 1996, among LDI, Lacy,
the Lenders and Agent.
13 of 15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
June 12, 1996
LACY DISTRIBUTION, INC.
By: /s/ Andre B. Lacy
---------------------------
Name: Andre B. Lacy
Title: Chairman, President & CEO
LDI, LTD.
By: LDI MANAGEMENT, INC.,
as managing general partner
By: /s/ Andre B. Lacy
---------------------------
Name: Andre B. Lacy
Title: Chairman, President & CEO
LDI MANAGEMENT, INC.
By: /s/ Andre B. Lacy
---------------------------
Name: Andre B. Lacy
Title: Chairman, President & CEO
/s/ Andre B. Lacy
---------------------------
Andre B. Lacy
14 of 15
<PAGE>
13D EXHIBIT INDEX
EXHIBIT DESCRIPTION
1. Agreement, dated as of June 12, 1996, between Lacy, LDI, LDIM and
Andre B. Lacy relating to the joint filing of this Schedule 13D.
2. Schedule of identity and background information on the directors,
executive officers and controlling shareholders of Lacy and LDIM.
3. Stock Purchase Agreement, dated June 5, 1996, between Lacy, LDI and
Seller.
4. Credit Agreement, dated as of March 29, 1996, among LDI, Lacy, the
Lenders and Agent.
15 of 15
EXHIBIT 1
AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into this 12th day of
June, 1996, between Lacy Distribution, Inc., an Indiana corporation ("Lacy"),
LDI, Ltd., an Indiana limited partnership ("LDI"), LDI Management, Inc., an
Indiana corporation ("LDIM"), and Andre B Lacy.
W I T N E S S E T H
WHEREAS, Lacy and LDI have entered into a Stock Purchase Agreement (the
"Purchase Agreement") with Maxco, Inc., a Michigan corporation ("Seller"),
whereby Lacy has agreed to purchase, and Seller has agreed to sell, subject to
the satisfaction of certain conditions, terms and provisions, Four Million Forty
Five Thousand (4,045,000) shares of common stock, no par value (the "Shares"),
of FinishMaster, Inc., a Michigan corporation ("Issuer"), owned by Seller.
WHEREAS, the Shares, which represent Seller's total ownership of Issuer,
constitute approximately 67.4% of the total issued and outstanding shares of
common stock of Issuer.
WHEREAS, Lacy is a wholly-owned subsidiary of LDI.
WHEREAS, LDI has two general partners: (i) LDIM, which serves as the
managing general partner, and (ii) Andre B. Lacy.
NOW, THEREFORE, in consideration of their mutual promises contained herein,
and intending to be legally bound, Lacy, LDI, LDIM and Andre B. Lacy agree as
follows:
1. Pursuant to Rule 13d-1 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), Lacy, LDI, LDIM and Andre B. Lacy agree to
jointly prepare and file a Schedule 13D with the Securities Exchange
Commission ("SEC") and the New York Stock Exchange, and to deliver a copy
of such Schedule 13D to the Issuer.
2. Lacy hereby represents and warrants to LDI, LDIM and Andre B. Lacy
that the information provided in the Schedule 13D concerning Lacy is
complete and accurate to the best knowledge of Lacy.
3. LDI hereby represents and warrants to Lacy, LDIM and Andre B. Lacy
that the information provided in the Schedule 13D concerning LDI is
complete and accurate to the best knowledge of LDI.
4. LDIM hereby represents and warrants to Lacy, LDI and Andre B. Lacy
that the information provided in the Schedule 13D concerning LDIM is
complete and accurate to the best knowledge of LDIM.
<PAGE>
5. Andre B. Lacy hereby represents and warrants to Lacy, LDI and LDIM
that the information provided in the Schedule 13D concerning Andre B. Lacy
is complete and accurate to the best knowledge of Andre B. Lacy.
6. Lacy, LDI, LDIM and Andre B. Lacy agree to file jointly any and all
amendments to the Schedule 13D required by the Exchange Act, and the rules
and regulations thereunder.
EXECUTED and ENTERED as of the date first written above.
LACY DISTRIBUTION, INC.
By: /s/ Andre B. Lacy
---------------------------
Name: Andre B. Lacy
Title: Chairman, President & CEO
LDI, LTD.
By: LDI MANAGEMENT, INC., as managing
general partner
By: /s/ Andre B. Lacy
---------------------------
Name: Andre B. Lacy
Title: Chairman, President & CEO
LDI MANAGEMENT, INC.
By: /s/ Andre B. Lacy
---------------------------
Name: Andre B. Lacy
Title: Chairman, President & CEO
/s/ Andre B. Lacy
---------------------------
Andre B. Lacy
-2-
EXHIBIT 2
ITEM 2: SUPPLEMENTAL SCHEDULE
IDENTITY AND BACKGROUND OF DIRECTORS, EXECUTIVE OFFICERS AND CONTROLLING
SHAREHOLDERS OF REPORTING PERSONS
1. LACY DISTRIBUTION, INC.1
251 North Illinois Street, Suite 1800
Indianapolis, Indiana 46204
Directors and Executive Officers:
Andre B. Lacy, Chairman of the Board of Directors, President and
Chief Executive Officer
Margot L. Eccles, Director, Vice President and Assistant Secretary
William J. Fennessy, Director and Vice President
Robert H. Reynolds, Secretary
2. LDI MANAGEMENT, INC.2
251 North Illinois Street, Suite 1800
Indianapolis, Indiana 46204
Directors and Executive Officers:
Andre B. Lacy, Chairman of the Board of Directors, President and
Chief Executive Officer
Margot L. Eccles, Director, Vice President and Assistant Secretary
William J. Fennessy, Vice President, Treasurer and
Chief Financial Officer
J. Fred Risk, Director
Richard A. Heise, Sr., Director
Ramon L. Humke, Director
Robert A. Nickell, Director
Walter S. Wiseman, Vice President
Frank D. Esposito, Vice President
Joyce M. Schooley, Vice President (Human Resources)
Robert H. Reynolds, Secretary
Certain biographical information of the foregoing individuals is set forth on
the following pages in accordance with the requirements of Item 2 of Schedule
13D.
- --------
1 Lacy Distribution, Inc., an Indiana corporation, is a wholly owned
subsidiary of LDI, Ltd., an Indiana limited partnership. LDI, Ltd. has two
general partners: (i) LDI Management, Inc., an Indiana corporation, which
serves as the managing general partner, and (ii) Andre B. Lacy.
2 LDI Management, Inc., an Indiana corporation, is the managing general
partner of LDI, Ltd. and is wholly owned by Andre B. Lacy.
<PAGE>
<TABLE>
<CAPTION>
Present Principal
Occupation or
Name Address Employment Citizenship
---- ------- ---------- -----------
<S> <C> <C> <C>
Andre B. Lacy 251 North Illinois Street, Chairman of the Board U.S.A.
Suite 1800 of Directors, President
Indianapolis, Indiana and Chief Executive
46204 Officer of LDI
Management, Inc.
Margot L. Eccles 251 North Illinois Street, Director, Vice President U.S.A.
Suite 1800 and Assistant Secretary
Indianapolis, Indiana of LDI Management,
46204 Inc.
William J. Fennessy 251 North Illinois Street, Vice President, U.S.A.
Suite 1800 Treasurer and Chief
Indianapolis, Indiana Financial Officer of LDI
46204 Management, Inc.
J. Fred Risk 7801 N. Pennsylvania Chairman of the Board U.S.A.
Street, Indianapolis, of Directors of
Indiana 46240 Sovereign Group, Inc., a
diversified holding
company located at:
8900 Keystone Crossing,
Indianapolis, Indiana
46240
Richard A. Heise, Sr. 440 South LaSalle Manages personal asset U.S.A.
Street, Suite 2909 portfolio consisting of
Chicago, Illinois 60605 commercial real estate,
financial portfolio, and
passive investments in
private companies and
relationships.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Present Principal
Name Address Occupation or
Employment Citizenship
- --------------- --------------------- ------------------------- -----------
<S> <C> <C> <C>
Ramon L. Humke One Monument Circle, President of Indianapolis U.S.A.
Indianapolis, Indiana Power & Light Co., an
46204 electric utility company,
and Vice Chairman of
IPALCO Enterprises,
Inc., a multi-state energy
company providing a
variety of energy
services through
regulated and
non-regulated
subsidiaries, each located
at: One Monument
Circle, Indianapolis,
Indiana 46204
Robert A. Nickell 2120 Walnut Hill Lane, Chairman of the Board U.S.A.
Suite 222 of Directors of Ed
Irving, Texas 75038 Tucker Distributor, Inc.,
a wholesale distributor
of after-market parts,
apparel and accessories
for motorcycle,
watercraft and
snowmobile enthusiasts
and a wholly-owned
subsidiary of Lacy
Distribution, Inc. located
at: 2120 Walnut Hill,
Suite 222, Irving, Texas
75038
Walter S. Wiseman 7998 Georgetown Road, President of Major U.S.A.
Indianapolis, Indiana Video Concepts, Inc., a
46268 wholesale distributor of
movie cassettes and a
wholly-owned subsidiary
of Lacy Distribution,
Inc. located at: 7998
Georgetown Road,
Indianapolis, Indiana
46268
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Present Principal
Name Address Occupation or
Employment Citizenship
- --------------- --------------------- ------------------------- -----------
<S> <C> <C> <C>
Frank D. Esposito 2120 Walnut Hill Lane, President and Chief U.S.A.
Suite 222 Operating Officer of Ed
Irving, Texas 75038 Tucker Distributor, Inc.,
a wholesale distributor
of after-market parts,
apparel and accessories
for motorcycle,
watercraft and
snowmobile enthusiasts
and a wholly-owned
subsidiary of Lacy
Distribution, Inc. located
at: 2120 Walnut Hill,
Suite 222, Irving, Texas
75038
Joyce M. Schooley 251 North Illinois Street, Vice President (Human U.S.A.
Suite 1800 Resources) of LDI
Indianapolis, Indiana Management, Inc.
46204
Robert H. Reynolds 11 South Meridian Street Attorney, Barnes & U.S.A.
Indianapolis, Indiana Thornburg, a law firm
46204 located at: 11 South
Meridian Street,
Indianapolis, Indiana
46204
</TABLE>
-4-
EXHIBIT 3
STOCK PURCHASE AGREEMENT
by and between
MAXCO, INC.
and
LACY DISTRIBUTION, INC.
and
LDI, LTD., as Guarantor
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into this
5th day of June, 1996, by and among Lacy Distribution, Inc., an Indiana
corporation ("Buyer"), Maxco, Inc., a Michigan corporation ("Maxco"), which is
the owner of four million forty-five thousand (4,045,000) of the issued and
outstanding shares of common stock, no par value, of FinishMaster, Inc., a
Michigan corporation ("FinishMaster"), and LDI, Ltd., an Indiana limited
partnership ("LDI"). FinishMaster and its consolidated subsidiary are sometimes
referred to collectively herein as the "Consolidated Companies."
WHEREAS, Buyer desires to purchase from Maxco, and Maxco desires to
sell to Buyer, all of the issued and outstanding shares of common stock of
FinishMaster owned by Maxco (the "Shares") upon the terms and subject to the
conditions set forth herein and to consummate the other transactions
contemplated hereby (the "Stock Purchase");
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
As used in this Agreement the following terms shall have the meanings
specified:
"Acquisition Proposal" shall have the meaning set forth in Section 4.8
hereof.
"Antitrust Improvements Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended from time to time, and the
rules promulgated thereunder.
"Blue Sky Laws" shall have the meaning set forth in Section 1.3 of
Exhibit A attached hereto. "Closing" shall have the meaning set forth in
Section 2.2 hereof.
<PAGE>
"Closing Date" shall mean July 9, 1996 or, if the required waiting period
under the Antitrust Improvements Act has not yet expired on that date, a date
which is seven (7) days after the expiration of the waiting period under the
Antitrust Improvements Act, subject to the requirement that in no event may the
Closing Date precede the date as of which all of the conditions in Articles V
and VI have been satisfied or waived.
"Code" shall mean the Internal Revenue Code of 1986, as amended. All
citations to the Code or to the regulations promulgated thereunder shall include
any amendments or any substitute or successor provisions thereto.
"Confidentiality Covenant" shall have the meaning set forth in Section 4.10
hereof.
"Consent" shall mean any approval, consent, ratification, permission,
waiver or other required authorization (including any Governmental
Authorization).
"Consolidated Companies" shall mean FinishMaster and its consolidated
subsidiary, which subsidiary is identified on Exhibit C.
"Contract" shall mean any agreement, contract, instrument, indenture,
note, bond, mortgage, lease, permit, concession, franchise, license, guaranty,
power of attorney, commitment, promise, assurance, obligation or undertaking,
whether written or oral.
"Damages" shall have the meaning set forth in Section 8.3 hereof.
"Employee Plans" shall have the meaning set forth in Section 1.10 of
Exhibit A attached hereto.
"Encumbrance" shall mean any lien, pledge, hypothecation, charge, mortgage,
deed of trust, security interest, encumbrance, equity, trust, equitable
interest, right of possession, lease tenancy, license, Order, proxy, option,
right of first refusal or, in the case of any security, any restriction on the
use, voting, transfer, receipt of income or other exercise of any other
attribute of ownership of such security.
"Environmental Laws" include without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C.
-2-
<PAGE>
ss. 9601 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 9601 et seq.; the Clean
Water Act, 33 U.S.C. ss. 1251 et seq.; Federal Insecticide, Fungicide and
Rodentcide Act, 7 U.S.C. ss. 136 et seq.; Solid Waste Disposal Act, 42 U.S.C.
ss. 6901 et seq.; the Clean Air Act, as amended, 42 U.S.C. ss. 7401 et seq., the
Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et seq.; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. ss. 1101 et seq.;
and the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq.; all regulations
promulgated under the foregoing statutes; and all other Legal Requirements
relating to the environment or Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, or any successor law.
"FinishMaster Personnel" shall have the meaning set forth in Section
4.1(b)(iii)(A) hereof. "FinishMaster Officers" means Max A. Coon, Ronald P.
White, Michael J. Siereveld, Christopher R. Banner, Roger A. Sorokin, Eric L.
Cross and Vincent Shunsky.
"Governmental Authorization" shall mean any permit, license, franchise,
approval, consent, ratification, permission, confirmation, endorsement, waiver,
certification, registration, qualification or other authorization issued,
granted, given or otherwise made available by or under the authority of any
governmental body or pursuant to any Legal Requirement.
"Hazardous Materials" shall mean hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases, including but not limited to, substances defined as "hazardous
wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," "radioactive materials" (including, but not limited to,
isotopes), or other similar designations in, or otherwise subject to regulation
-3-
<PAGE>
under, any Environmental Laws, and any other substances, constituents or wastes
subject to environmental regulation under any applicable Legal Requirement.
"Intellectual Property Rights" shall have the meaning set forth in Section
1.14 of Exhibit A attached hereto.
"Intercompany Agreement" shall have the meaning set forth in Section 4.7
hereof.
"Intercompany Debt" shall mean all debt of the Consolidated Companies to
Maxco or any Maxco Affiliate.
"Intercompany Receivables" shall mean all debt of Maxco or any Maxco
Affiliate to the Consolidated Companies.
"Legal Requirement" shall mean any federal, state, local, municipal,
foreign or other law, statute, legislation, bill, act, enactment, constitution,
resolution, proposition, initiative, canon, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive, guideline
or interpretation issued, enacted, adopted, passed, approved, ratified,
endorsed, promulgated, made, entered, rendered, published or implemented by or
under the authority of any governmental body or by the eligible voters of any
jurisdiction.
"Material Adverse Effect" shall mean any change or changes, effect or
effects, event or events, or condition or conditions that, to the extent not
adequately covered by insurance or appropriate reserves previously established
on the books of the Consolidated Companies in the ordinary course of business in
accordance with their normal practice, individually or in the aggregate are or
are reasonably likely to be materially adverse to the business, operations or
financial condition of the Consolidated Companies taken as a whole, by a dollar
amount in excess of $500,000; provided, however, that normal recurring seasonal
variations in operating results, usual and ordinary course of business changes
recorded in a customary
-4-
<PAGE>
manner on the books and records of the Consolidated Companies consistent with
past practice shall not be deemed to be such change(s), effect(s) or
condition(s).
"Material Environmental Event" shall mean an event or events, effect or
effects or condition or conditions that, individually or in the aggregate, are
or are reasonably likely to result in the Consolidated Companies incurring
fines, penalties or Damages in the amount of $50,000.00 or more.
"Maxco Affiliate" shall mean any Person, other than the Consolidated
Companies, which controls, is controlled by, or is under common control with,
Maxco.
"Maxco's knowledge", "to the knowledge of Maxco", "to the best of
Maxco's knowledge", or words of similar import, shall mean the knowledge,
assuming reasonable investigation, of any of the officers of Maxco or any of the
FinishMaster Officers.
"Maxco Guaranties" shall have the meaning set forth in Section 8.5 hereof.
"Maxco Portion" shall have the meaning set forth in Section 8.3 hereof.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" mean the financial statements filed
with the annual report on Form 10-K of FinishMaster for the period ended March
31, 1996.
"Multiple Employer Pension Plan" shall have the meaning set forth in
Section 1.10 of Exhibit A attached hereto.
"Non-Competition Agreement" shall have the meaning set forth in Section
4.12 hereof.
"Order" shall mean any order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, sentence, subpoena, writ or
award issued, made, entered or rendered by any court, administrative agency or
other governmental body or by any arbitrator.
"PBGC" shall have the meaning set forth in Section 1.10 of Exhibit A
attached hereto. "Pension Plan" shall have the meaning set forth in Section 1.10
of Exhibit A attached hereto.
-5-
<PAGE>
"Person" shall mean any individual, corporation or other entity or
governmental body.
"Proceeding" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding or any informal proceeding), prosecution, contest, hearing,
inquiry, inquest, audit, examination or investigation commenced, brought,
conducted or heard by or before, or otherwise involving, any court,
administrative agency or other governmental body or arbitrator.
"Purchase Price" shall have the meaning set forth in Section 2.1 hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, or any successor law.
"Securities Documents" shall have the meaning set forth in Section 1.4 of
Exhibit A attached hereto.
"Shares" shall mean the issued and outstanding shares of common stock, no
par value, of FinishMaster owned beneficially and of record by Maxco.
"Short-Term Payables" shall have the meaning set forth in Section 4.7
hereof.
"Stock Purchase" shall mean the purchase of the Shares at Closing.
"Subsidiary" shall have the meaning set forth in Section 1.1 of Exhibit A
attached hereto.
"Subsidiary Shares" shall have the meaning set forth in Section 1.1 of
Exhibit A attached hereto.
"Takeover Statutes" shall mean the Michigan Control Share Acquisition Law
and the Michigan Business Combination Law, codified at ss.ss. 450.1790 to
450.1799 and ss.ss. 450.1775 to 450.1783, respectively, of the Michigan Business
Corporation Act.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") shall mean (A)
any net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, fuel, third structure, ad valorem, franchise, profits, license,
lease, use, withholding, payroll, employment, excise, severance,
-6-
<PAGE>
property, transfer, documentary, mortgage, registration, stamp, occupation,
environmental, premium, customs, duties, or other tax of any kind whatsoever,
including any estimates thereof, together with any interest or any penalty,
addition to tax or additional amount imposed by any domestic or foreign
governmental body, (B) any penalties, interest, or other additions for the
failure to collect, withhold or pay over any of the foregoing, or to accurately
file any return (including without limitation, any information return,
declaration or estimate) with respect to the foregoing, and (C) liability for
the payment of any Tax of an affiliated, consolidated, combined or unitary
group.
"Tax Return" shall mean any return (including any information return),
report, statement, declaration, schedule, notice, notification, form,
certificate or other document or information filed with or submitted to, or
required to be filed with or submitted to, any governmental body in connection
with the determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
[remainder of page intentionally left blank]
-7-
<PAGE>
ARTICLE II
Sale of Stock; Closing
Section 2.1. Purchase and Sale. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth herein, on the Closing Date, Maxco shall sell and
Buyer shall purchase the Shares. In full payment for the Shares, Buyer will pay
Maxco $11.50 per Share, or an aggregate purchase price of $46,517,500 (the
"Purchase Price"), at the Closing by wire transfer of immediately available
funds to such account as Maxco shall designate in writing on or before the
Closing.
Section 2.2. Time and Place of Closing. The consummation of the Stock
Purchase (the "Closing") shall take place on the Closing Date at 10:00 A.M.,
Indianapolis time, at the offices of Barnes & Thornburg in Indianapolis,
Indiana, or at such other place or time as the parties may agree upon in
writing. The parties agree that if the Closing Date is prior to July 15, 1996,
the consummation of the Stock Purchase will be deemed effective as of July 1,
1996, and if the Closing Date is later than July 15, 1996, the consummation of
the Stock Purchase will be deemed effective as of the end of the month in which
the Closing occurs.
ARTICLE III
Representations and Warranties
Section 3.1. Representations and Warranties of Maxco. Maxco represents
and warrants to Buyer the representations and warranties contained in the
attached Exhibit A, which representations and warranties are incorporated herein
by reference.
-8-
<PAGE>
Section 3.2. Representations and Warranties of Buyer. Buyer represents
and warrants to Maxco the representations and warranties contained in Exhibit B,
which representations and warranties are incorporated herein by reference.
ARTICLE IV
Covenants of the Parties
Section 4.1. Conduct of Maxco and Consolidated Companies. During the period
from the date of the final signing hereof to the Closing Date:
(a) Operations in the Ordinary Course of Business. Maxco shall cause
the Consolidated Companies to conduct their operations in accordance with
their ordinary and usual course of business, in a manner consistent with
past practice, and to pay their respective obligations as they become due.
Maxco shall cause each of the Consolidated Companies to use all reasonable
efforts to preserve intact its business organization and to maintain its
assets and properties, and all insurance and claims reserves, in a manner
consistent with past practice and in accordance with applicable Legal
Requirements.
(b) Forbearances by Maxco and the Consolidated Companies. Except with
the written consent, or at the written request, of Buyer, Maxco shall not
cause or permit either of the Consolidated Companies, directly or
indirectly, to:
(i)(A) amend its Articles of Incorporation or Bylaws; (B)
declare, set aside or pay any dividend or other distribution or
payment in cash, stock or property in respect of shares of its capital
stock; (C) effect any split, combination or other similar change in
the outstanding shares of its capital stock, (D) redeem, purchase or
otherwise acquire any shares of capital stock or other securities, or
(E) settle or compromise any Proceeding for an amount in excess of
$25,000 to which either of the Consolidated Companies or its assets is
a party;
-9-
<PAGE>
(ii)(A) issue or sell any shares of its capital stock or any
securities or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of
capital stock of either of the Consolidated Companies; (B) sell, lease
or otherwise dispose of any assets or properties which are material to
either of the Consolidated Companies, provided, that Buyer shall not,
upon receipt of due notice, unreasonably withhold its consent to the
sale, lease or disposition of assets or properties in connection with
the closing, relocation or consolidation of retail stores by the
Consolidated Companies in the ordinary course of business and
consistent with past practice; (C) waive, release, grant or transfer
any rights of material value under, or otherwise modify or change, any
material Contract; (D) further encumber, mortgage or pledge any assets
or properties of the Consolidated Companies, except for any granting of
a security interest in assets acquired in acquisitions of retail stores
to secure payment under promissory notes or other instruments delivered
in connection therewith, consistent with past practice of the
Consolidated Companies, provided that the amounts so secured do not
exceed the value or purchase price of such assets; (E) foreclose on or
accept a deed in lieu of foreclosure with respect to any real property
of the Consolidated Companies; (F) enter into any sale and leaseback
transaction; (G) serve as a credit provider by extending any credit to
any Person (other than committed advances required under existing
credit facilities or extensions of credit to customers in the ordinary
course of business and consistent with past practice), or enter into
any new credit agreement with any Person (other than special credit
arrangements with suppliers to effect preferred buying arrangements in
the ordinary course of business and consistent with past practice), or
extend or renew any existing credit facility with any Person; or (H)
utilize current assets or any borrowings to prepay or retire any form
of long-term debt except (i) in accordance with scheduled debt
repayment, and (ii) to repay the amounts outstanding on the revolving
credit facility of the Consolidated Companies.
-10-
<PAGE>
(iii)(A) except as provided in Schedule 4.1(b)(iii)(A), grant
any general increase in the compensation of directors or officers of
FinishMaster (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment) or any increase in
the compensation payable to, or to become payable to, any director or
officer of FinishMaster, (B) enter into any collective bargaining
agreement, (C) adopt any new Employee Plan (as defined in Section 1.10
of Exhibit A), whether formal or informal, or increase in any manner
the compensation or benefits (other than compensation increases in
accordance with its customary compensation practices and related
changes in benefits) of any of its present or former directors,
officers or any other persons employed by or otherwise performing
services for either of the Consolidated Companies (the "FinishMaster
Personnel"), or pay or agree to pay any pension or retirement allowance
not required by any existing employment agreement or Employee Plan to
any such present or former directors, officers, or other members of
FinishMaster Personnel (it being understood that FinishMaster may
continue to meet its obligations to James F. White pursuant to the
terms of that certain Deferred Compensation Agreement dated April 1,
1977 and the Retirement Agreement described in Schedule 1.12), or
commit itself to an employment agreement or Employee Plan with or for
the benefit of any present or former director, officer, employee,
consultant or other Person, or alter, amend, terminate in whole or in
part, or curtail or permanently discontinue any Employee Plan, (D) make
or commit to make (x) any expenditure for any capital asset or
equipment in an individual amount equal to or greater than $100,000, or
(y) any capital expenditures in connection with the acquisition of
retail stores, except as disclosed in Schedule 4.1(b)(iii)(D)(y), or
(E) incur or otherwise become liable for any material indebtedness,
other than (i) indebtedness incurred in connection with the acquisition
of retail stores approved pursuant to (D) above and consistent with
past practice of the Consolidated Companies, provided that such
indebtedness does not exceed the purchase price for such
-11-
<PAGE>
acquisition and is secured only by a lien on assets acquired therein or
(ii) indebtedness incurred for working capital requirements if done in
the ordinary course of business and consistent with past practice; or
(iv) enter into any agreement or commitment to do or permit
any of the actions described in clauses (i) through (iii) which are
prohibited by or require the prior written consent of Buyer pursuant to
this Section 4.1.
Section 4.2. Obtaining, Consents and Conditions to Closing.
(a) Obtaining Consents. Between the date of the final signing of this
Agreement and the Closing Date, each party shall use its best efforts, and
shall cooperate with the other party in taking all steps necessary,
promptly to (i) make any filing (including a filing under the Antitrust
Improvements Act which requests early termination of the waiting period
thereunder) and (ii) obtain any required Consents necessary for the
consummation of the Stock Purchase, or that may thereafter be reasonably
necessary to effect the transfer, grant or renewal of any other licenses,
approvals and Government Authorizations. Buyer shall pay all filing fees
required in connection with filings of Maxco and Buyer under the Antitrust
Improvements Act. All other expenses incurred by Maxco in connection with
filings or Consents made or obtained by Maxco or the Consolidated Companies
shall be borne by Maxco. All other expenses incurred by Buyer in connection
with filings or Consents made or obtained by Buyer shall be borne by Buyer.
(b) Conditions to Closing. Each of Maxco and Buyer shall use all
reasonable efforts to cause its representations and warranties in this
Agreement to be true and correct as of the Closing Date, and to cause each
condition to Closing which is reasonably within its control to be
satisfied.
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Section 4.3. Tax Provisions. (a) All Taxes and fees (including any
penalties and interest) incurred by Maxco or the Consolidated Companies in
connection with the sale of the Shares by Maxco shall be paid by Maxco. Maxco
will, at its own expense, file all necessary Tax Returns and other documentation
with respect to all such Taxes and fees.
(b) Buyer and Maxco agree to cause to be furnished to each other, upon
request, as promptly as practicable, such information (including access to
books and records) and assistance relating to the Consolidated Companies as
is reasonably necessary for the filing of any Tax Return, and for the
preparation for any Proceeding relating to any proposed adjustment. Buyer
and Maxco agree to cause to be retained all books and records pertinent to
the Consolidated Companies until the applicable period for assessment under
applicable law (giving effect to any and all extensions or waivers) has
expired, and to abide by or cause the observance of any record retention
agreements entered into with any governmental body. Buyer and Maxco agree
to cause the Consolidated Companies to give each of them reasonable notice
prior to discarding or destroying any such books and records relating to
Tax matters for the Consolidated Companies and to deliver to each of them,
upon request, such books and records. Buyer and Maxco shall cooperate with
each other in the conduct of any Proceedings involving the Consolidated
Companies for any Tax purposes and each shall execute and deliver such
powers of attorney and other documents as are necessary to carry out the
intent of this Section 4.3(b).
Section 4.4. Termination of Existing Tax Sharing Agreements. Any and all
existing Tax sharing agreements between the Consolidated Companies and Maxco
shall be terminated as of the Closing Date. After such date neither the
Consolidated Companies nor Maxco shall have any further rights or liabilities
thereunder.
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Section 4.5. Access and Investigation. During the period from the date
of the final signing of this Agreement to the Closing Date, Maxco shall, and
shall cause each of the Consolidated Companies and its officers, employees,
agents and representatives to, afford Buyer and its representatives (including
legal counsel, financial and other advisors, consultants and independent
accountants) reasonable access during normal business hours to members of
FinishMaster Personnel, properties (including, but not limited to, the ability
to perform environmental assessments), Contracts, books and records and other
documents and data (including, but not limited to, documents and data maintained
by Maxco) in order to confirm the accuracy of the representations and warranties
contained herein.
Section 4.6. Further Assurances. Maxco and Buyer agree that, from time
to time, whether at or after the Closing Date, each of them will execute and
deliver such further instruments of conveyance and transfer and take such other
action as may be reasonably appropriate to carry out the terms of this
Agreement. Maxco and Buyer further agree that they will not take any action that
will materially impede or delay the consummation of the Stock Purchase.
Section 4.7. Intercompany Accounts. Except as otherwise expressly
provided in this Agreement, Maxco covenants to Buyer that all intercompany
transactions between Maxco and any Maxco Affiliates, on the one hand, and the
Consolidated Companies, on the other hand, including without limitation the
Inter-Company Agreement dated December 31, 1993 (the "Inter-Company Agreement")
and all rights and obligations thereunder, shall terminate no later than the
Closing; provided, however, that amounts which are due and owing to Maxco by the
Consolidated Companies for the portion of shared insurance costs and other costs
accrued as of the Closing Date and attributable to the Consolidated Companies in
the ordinary course of business and consistent with past practice (the "Short
Term Payables") shall be paid to Maxco as soon as practicable after the Closing
Date, in the ordinary course
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of business and consistent with past practice. At or immediately prior to the
Closing, Maxco shall cause the Consolidated Companies to repay in full all
indebtedness owed by them to Maxco, and Maxco Affiliates (other than the
Short-Term Payables), and Maxco and Maxco Affiliates shall repay in full all
indebtedness owed to the Consolidated Companies, so that as of the Closing Date
there shall be no Intercompany Receivables or Intercompany Debt (other than the
Short-Term Payables).
Section 4.8. Negotiations with Others. (a) During the period from the
date of the final signing of this Agreement to the Closing Date, or until such
date as this Agreement may be terminated in accordance with Article VII, neither
Maxco nor any of its directors, officers, agents or associates nor any
investment banking firm or financial advisor retained by or acting on behalf of
Maxco shall, directly or indirectly, solicit or initiate discussions with, or
agree with, any Person (other than Buyer) concerning any possible proposal
regarding a sale or purchase of the Shares or a merger, consolidation, sale or
purchase of assets or other similar transaction directly or indirectly involving
either of the Consolidated Companies or any subsidiary, division or major asset
of either of the Consolidated Companies (each, an "Acquisition Proposal").
Further, during such period and subject to the fiduciary duties of the directors
of Maxco as set forth in clause (b) below, neither Maxco nor any of its
subsidiaries nor any of their directors, officers, agents or associates nor any
investment banking firm or financial advisor retained by or acting on behalf of
Maxco or any Maxco Affiliate shall, directly or indirectly, without the prior
written consent of Buyer, engage in negotiations with, or provide any
information (other than publicly available information) to, any Person (other
than Buyer) concerning any Acquisition Proposal. In the event that Maxco
receives any request for information or any unsolicited Acquisition Proposal,
Maxco shall promptly notify Buyer and shall furnish Buyer a copy of any written
communications with respect thereto.
(b) Notwithstanding the foregoing, the Board of Directors of Maxco may
accept a superior Acquisition Proposal which, in its good faith judgment,
in the exercise of its fiduciary duties under
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applicable law and after consultation with qualified advisors, affords
Maxco's shareholders substantially more valuable economic benefit than is
afforded to them in the Stock Purchase.
(c) Nothing contained herein or in the Confidentiality Covenant shall
be construed to prohibit Maxco from making any disclosure which, in the
judgment of its Board of Directors, on advice of its counsel, is required
by law. Nothing contained herein or in the Confidentiality Covenant shall
be construed to prohibit Buyer from making any disclosure which, in the
judgment of its Board of Directors, on advice of its counsel, is required
by law.
Section 4.9. Notification and Remedies. Between the date of the final
signing of this Agreement and the Closing Date, each party hereto shall promptly
notify the other party (a) if it becomes aware of any fact or condition which
makes materially untrue any representation, or materially breaches any warranty,
made by the notifying or the notified party in this Agreement or (b) if it
becomes aware of the occurrence after the date of the final signing of this
Agreement, but prior to Closing, of any fact or condition that would (except as
expressly contemplated by this Agreement) make materially untrue any such
representation or materially breach any such warranty had such representation or
warranty been made as of the time of such occurrence or discovery of such fact
or condition. The party making such representations and warranties shall
promptly commence using its best efforts to remedy any such misrepresentation or
breach as soon as possible, and shall keep the other party apprised of the
progress of all remedial actions.
Section 4.10. Confidentiality. Buyer and Maxco hereby acknowledge that they
are parties to a letter of intent dated as of December 15, 1995, paragraph 6 of
which contains a covenant as to the treatment of certain confidential
information (the "Confidentiality Covenant") and a Confidentiality
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Agreement, dated April 30, 1996. Except as otherwise provided herein, such
covenant remains a binding obligation of each of Buyer and Maxco notwithstanding
the execution of this Agreement.
Section 4.11. Filings and Other Information. Maxco has or shall provide
Buyer with true, correct and complete copies of all of the following documents
which relate to any date following, or any periods ending after, the date of the
final signing of this Agreement, through the earlier of Closing or the date of
termination of this Agreement: (i) all filings made by Maxco with the SEC, (ii)
any monthly, quarterly and annual financial statements (including without
limitation balance sheet, income statement and statement of cash flows) for each
of the Consolidated Companies and for the Consolidated Companies on a
consolidated basis, and (iii) all notices and other documents mailed or
otherwise distributed by Maxco or FinishMaster, respectively, to its
shareholders; all within three (3) days after the date of filing, preparation,
mailing or distribution thereof.
Section 4.12. Non-Competition Agreement. Maxco and certain individuals
identified in Exhibit D hereto shall, in consideration of an aggregate of
$16,500,000, enter into a Non-Competition Agreement with the Consolidated
Companies, in substantially the form attached hereto as Exhibit D, setting forth
such parties' covenant not to compete with the Consolidated Companies for a
period of five (5) years after the Closing Date. This amount will be paid as
follows: (i) $12,000,000 will be due to Maxco at the Closing by wire transfer of
immediately available funds to such account as Maxco shall designate in writing
on or before the Closing, and (ii) an aggregate of $4,500,000 will be paid in
five (5) equal annual installments commencing on the first anniversary of the
Closing Date and on each of the following four anniversaries of the Closing
Date.
Section 14.3. Maxco's Net Worth. Maxco covenants and agrees that from the
date hereof and for a period of four (4) years after the Closing Date (the "Net
Worth Covenant Period"), it shall maintain
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a tangible net worth of at least Ten Million Dollars ($10,000,000). Tangible net
worth for this purpose shall be computed using generally accepted accounting
principles, applied on a consistent basis. Maxco further covenants and agrees
not to enter into any corporate transaction permitting any distribution that
would reduce Maxco's tangible net worth below the required minimum set forth in
this Section 14.3.
ARTICLE V
Conditions of Buyer's Obligation to Close
The obligation of Buyer to consummate the Stock Purchase is subject to
the satisfaction on or prior to the Closing Date of all of the following
conditions (any of which may be waived by Buyer):
Section 5.1. Representations, Warranties and Covenants of Maxco. Each
of the representations and warranties of Maxco contained in this Agreement shall
be true in all material respects on and as of the Closing Date with the same
effect (and taking into account standards of materiality, where applicable) as
though such representations and warranties had been made on and as of such date.
Each of the covenants and agreements of Maxco to be performed on or before the
Closing Date shall have been duly performed in all material respects. Buyer
shall have received at the Closing a certificate to that effect dated the
Closing Date and executed on behalf of Maxco by an authorized officer of Maxco.
Section 5.2. Filings, Consents, Waiting Periods. All Consents, Orders,
filings, applications, notices, transfers, and other actions of any kind
required with or from or any governmental body in connection with the
consummation of the Stock Purchase shall have been filed, made or obtained. All
applicable waiting periods shall have expired or been terminated, including but
not limited to, any applicable waiting period under the Antitrust Improvements
Act.
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Section 5.3. No Pending or Certain Threatened Litigation. At the Closing
Date, there shall be no Order of any nature of any court or governmental body
which restrains or prohibits the consummation of the Stock Purchase, and no
governmental body shall be threatening action of a substantial nature to
restrain or prohibit the Stock Purchase.
Section 5.4. Casualty Loss. There shall not have occurred from the date of
this Agreement to the Closing Date any damage or destruction or other casualty
loss, if uninsured, with respect to the Consolidated Companies exceeding
$500,000 in the aggregate.
Section 5.5. Closing Documents. In addition to any other documents required
by this Agreement, Maxco shall deliver to Buyer at the Closing:
(a) copies of the Articles of Incorporation of each of the
Consolidated Companies certified as of recent date by the elected or
appointed state official responsible for maintaining corporate records in
its jurisdiction of incorporation;
(b) the By-Laws of each of the Consolidated Companies, certified as of
the Closing Date by their respective secretaries to be true and complete in
all material respects;
(c) certificates for the Shares, duly registered in the name of Buyer
or its nominee by the transfer agent for the Shares;
(d) all customer lists, books of account, personnel records, Tax
Returns, computer records and other books and records maintained by Maxco
in connection with the business of the Consolidated Companies to the extent
they relate to the business of the Consolidated Companies;
(e) a legal opinion of Warren, Price, Cameron, Faust & Asciutto, P.C.,
counsel to Maxco, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer and its counsel, to the effect that: Maxco has duly
authorized, executed and delivered the Agreement, which is a legal, valid
and
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binding agreement enforceable in accordance with its terms; and, to its
knowledge, the delivery of the certificate for the Shares to Buyer, against
payment therefor as provided in this Agreement, will pass good and
marketable title to the Shares to Buyer free and clear of all Encumbrances.
(f) the Non-Competition Agreement, duly executed by Maxco and the
certain individuals identified on Exhibit D; and
(g) such documents and other evidence as Buyer shall reasonably
request to verify that the conditions to Closing set forth in this
Agreement have been fulfilled and that the obligations of Maxco required to
be performed on or before the Closing Date have been performed, such
documents or evidence to be reasonably satisfactory to Buyer.
Section 5.6. Termination of Guaranties. Any guaranties of any Contracts
or obligations of Maxco or any Maxco Affiliate by either of the Consolidated
Companies, or letters of credit provided by either of the Consolidated Companies
for the benefit of Maxco or any Maxco Affiliate, shall be terminated and
released as of the Closing Date.
Section 5.7. FinishMaster Board Action. The Board of Directors of
FinishMaster shall have taken all actions as are necessary to exempt
FinishMaster and the Stock Purchase from the provisions of the Takeover Statutes
and to ensure that the Stock Purchase may be consummated on the terms
contemplated hereby.
Section 5.8 Resignation of Certain Directors and Officers. At least a
majority of the members of the board of directors of the Consolidated Companies
shall have executed and delivered their resignation as directors of the
Consolidated Companies, such resignations to be effective immediately upon the
Closing, and Maxco shall have caused the persons designated by Buyer to be
elected to fill the vacancies created by such resignations. In addition, each of
Max A. Coon, Eric L. Cross, Richard G.
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Johns and Vincent Shunsky shall have executed and delivered his resignation as
an officer of the Consolidated Companies, such resignation to be effective
immediately upon the Closing.
ARTICLE VI
Conditions to Maxco's Obligation to Close
The obligation of Maxco to consummate the Stock Purchase is subject to the
satisfaction on or prior to the Closing Date of all of the following conditions
(any of which may be waived by Maxco):
Section 6.1. Representations, Warranties and Covenants. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true in all material respects on and as of the Closing Date with the same effect
(and taking into account standards of materiality, where applicable) as though
such representations and warranties had been made on and as of such date. Each
of the covenants and agreements of Buyer to be performed on or before the
Closing Date shall have been duly performed in all material respects. Maxco
shall have received at the Closing Date a certificate to that effect dated the
Closing Date and executed on behalf of Buyer by an authorized officer of Buyer.
Section 6.2. Filings, Consents, Waiting Periods. All Consents, Orders,
filings, applications, notices, transfers, and other actions of any kind
required with or from any governmental body in connection with the consummation
of the Stock Purchase shall have been filed, made or obtained. All applicable
waiting periods shall have expired or been terminated, including but not limited
to, any applicable waiting period under the Antitrust Improvements Act.
Section 6.3. No Pending or Certain Threatened Litigation. At the Closing
Date, there shall be no Order of any nature of any court or governmental body
which restrains or prohibits the
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consummation of the Stock Purchase, and no governmental body shall be
threatening action of a substantial nature to restrain or prohibit the Stock
Purchase.
Section 6.4. Closing Documents. In addition to any other documents required
by this Agreement, the Buyer shall deliver to Maxco at the Closing:
(a) the receipt of the funds as required by Section 2.1;
(b) a legal opinion from Barnes & Thornburg, counsel to Buyer, dated
the Closing Date, in form and substance reasonably satisfactory to Maxco
and its counsel, to the effect that: both the Buyer and LDI has duly
authorized, executed and delivered the Agreement, which is a legal, valid
and binding agreement enforceable in accordance with the terms; and
(c) such documents and other evidence as Maxco shall reasonably
request to verify that the conditions to Closing set forth in this
Agreement have been fulfilled and that the obligations of Buyer required to
be performed on or before the Closing Date have been performed, such
documents or evidence to be reasonably satisfactory to Maxco.
ARTICLE VII
Termination, Amendment and Extension
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written agreement of Maxco and Buyer;
(b) by either Maxco or Buyer if the Closing shall not have occurred on
or before August 1, 1996, unless the party seeking to terminate has been
responsible for delaying the Closing;
(c) by either Maxco or Buyer if the other breaches any of its
representations and warranties or covenants set forth herein, and such
breach has not been remedied to the reasonable satisfaction of
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non-breaching party within thirty (30) days after written notice of breach is
delivered, or such breach is not capable of remedy even with breaching party's
best efforts;
(d) by Buyer or Maxco, if (i) the Stock Purchase shall violate any
non-appealable final Order of any governmental body having competent
jurisdiction or (ii) there shall be a Legal Requirement which makes the
proposed Stock Purchase illegal or otherwise prohibited;
(e) by Buyer, if there shall have occurred, since March 31, 1996, any
change in or effect on the business of the Consolidated Companies or any
occurrence, development or event of any nature, that has had, or may
reasonably be expected to have, together with all such other changes and
effects and any uncured breaches, a Material Adverse Effect; or
(f) by either party (but if by Maxco, the terms of Section 10.4 shall
be effective) if Maxco or FinishMaster accepts a superior Acquisition
Proposal from any Person (other than Buyer) which in its good faith
judgment, in the exercise of its fiduciary duties under applicable law and
after consultation with qualified advisors, affords Maxco's shareholders
substantially more valuable economic benefit than is afforded to them in
the Stock Purchase.
Section 7.2. Effect of Termination. In the event this Agreement is
validly terminated in accordance with the provisions of Section 7.1 hereof, all
further obligations of the parties hereunder (except as set forth below) shall
terminate; provided, however, that if this Agreement is so terminated by a party
because one or more of the conditions to such party's obligations hereunder is
not satisfied as a result of a misrepresentation or breach of warranty by
another party or another party's failure to comply with its covenants or
obligations under this Agreement, the party's right to pursue all legal remedies
for breach of contract or otherwise, including, without limitation,
indemnification for Damages relating thereto, shall survive such termination
unimpaired. Notwithstanding the foregoing provisions of this Section, the
obligations of the parties hereto under the Confidentiality Covenant and the
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Confidentiality Agreement, this Section 7.2, Article VIII and Article X, shall
survive the termination of this Agreement.
Section 7.3. Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of Maxco and Buyer.
ARTICLE VIII
Indemnification
Section 8.1. Survival. All representations, warranties and agreements
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall survive the Closing notwithstanding any investigation conducted
with respect thereto.
Section 8.2. Time Limitations. If the Closing occurs, Maxco shall have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or agreement to be performed and complied with prior to the Closing
Date, other than those set forth in Sections 1.2, 1.7 and 1.15 of Exhibit A,
unless on or before the second anniversary of the Closing Date, Maxco is given
notice asserting a claim with respect thereto and specifying the factual basis
of that claim in reasonable detail to the extent then known by Buyer; a claim
with respect to Sections 1.2, 1.7 and 1.15 of Exhibit A may be made at any time.
If the Closing occurs, Buyer shall have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or agreement to be
performed and complied with prior to the Closing Date, unless on or before the
second anniversary of the Closing Date, Buyer is given notice of a claim with
respect thereto and specifying the factual basis of that claim in reasonable
detail to the extent then known by Maxco.
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Section 8.3. Indemnification By Maxco. Maxco shall indemnify and hold
harmless Buyer, and shall reimburse Buyer for, the Maxco Portion of any loss,
liability, claim, damage, or expense (including, but not limited to, costs of
investigation and defense and reasonable attorneys' fees), whether or not
involving a third-party claim (collectively, "Damages") arising from or in
connection with (a) any inaccuracy in or breach of any of the representations
and warranties of Maxco in this Agreement or in any certificate delivered by
Maxco pursuant to this agreement, or any actions, omissions or state of facts
inconsistent with any such representation or warranty; or (b) any failure by
Maxco to perform or comply with any agreement in this Agreement. As used in this
Agreement, with respect to any Damages, the "Maxco Portion" of such Damages
shall be the percentage of such Damages equal to the proportion which the number
of Shares bears to the total number of issued and outstanding shares of Common
Stock of FinishMaster on the Closing Date, provided, however, that with respect
to any Damages arising from or in connection with any breach of or inaccuracy in
the representation and warranty contained in Section 1.7 of Exhibit A with
respect to any period for which Maxco and either or both of the Consolidated
Companies filed a consolidated Tax Return, the Maxco Portion shall be the total
amount of such Damages, without regard to Maxco's percentage of Share ownership
on the Closing Date.
Section 8.4. Indemnification By Maxco -- Environmental Matters. Maxco
shall indemnify and hold harmless Buyer, and shall reimburse Buyer for, the
Maxco Portion of any Damages (as defined in Section 8.3, and including, but not
limited to, costs of cleanup or other remediation) arising from or in connection
with:
(a) any and all liabilities imposed under any Environmental
Law relating to the ownership, operation or condition on or prior to
the Closing Date of any properties and assets (real, personal and
mixed, tangible and intangible) in which Maxco or either of the
Consolidated Companies has or had an interest that may result in it
being responsible as an owner or operator
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under any Environmental Law, including but not limited to any cleanup,
removal, containment or other remediation ("Cleanup") required by any
applicable Environmental Law (whether or not such Cleanup has been
required or requested by any governmental body or any other Person);
(b) any and all liabilities imposed under any Environmental
Law arising out of or relating to: (1) the ownership, operation or
condition on or prior to the Closing Date of the properties and assets
(real, personal and mixed, tangible and intangible) in which Maxco or
either of the Consolidated Companies has or had an interest; or (2) any
Hazardous Materials or other contaminants, wherever located, which
were, or were allegedly, generated, transported, stored, treated,
released or otherwise handled on or prior to the Closing Date by Maxco
or either of the Consolidated Companies or by any Person for whose
conduct either of the Consolidated Companies is responsible; and
(c) any bodily injury (including but not limited to illness,
disability or death, and regardless of when any such bodily injury
shall have been incurred or occurred or manifested itself), personal
injury, property damage (including but not limited to trespass,
nuisance, wrongful eviction or deprivation of the use of real property)
or other damage of or to any Person (including without limitation any
employee or former employee of Maxco or either of the Consolidated
Companies or any Person for whose conduct either of the Consolidated
Companies is responsible), which in any way arises from or allegedly
arises from any Hazardous Substance that was (i) present on or before
the Closing Date on or at any facilities owned, leased or operated by
either of the Consolidated Companies (or present on any other property,
if such Hazardous Substance emanated from any of such facilities on or
prior to the Closing Date) or (ii) released by either of the
Consolidated Companies at any time on or prior to the Closing Date (it
being understood that, for purposes of this Agreement, the "release" of
Hazardous Materials shall not include (i) the handling, sale or
delivery to customers of paints, thinners, solvents, sandpaper
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and other products which may contain Hazardous Materials, provided
that such products are handled, sold or delivered in the ordinary
course of business, or (ii) the disposal of: (x) waste generated as a
process of mixing paints or (y) empty paint cans, provided that such
waste and cans are disposed of in the ordinary course of business and
in compliance with all Environmental Laws). Buyer and Maxco shall use
their best efforts to cooperate with respect to any Cleanup, any
related Proceeding, and, except as provided in the following sentence,
any other Proceeding with respect to which indemnity may be sought
under this Section 8.4. The procedure set forth in Section 8.8 shall
apply to any third party claims relating to a matter covered by
Section 8.4. As soon as practicable after Buyer becomes aware of a
condition, violation or other state of facts that Buyer reasonably
expects to result in a claim for indemnity under this Section 8.4
(except as provided in the preceding sentence), Buyer will give notice
to Maxco of such condition, violation or other state of facts;
provided, however, that any failure to so notify Maxco shall not
relieve Maxco of any liability that it may have to Buyer under this
Section 8.4, except to the extent Maxco demonstrates that its
indemnification liability hereunder is materially increased as a
result of such failure to so notify.
Section 8.5. Indemnification By Buyer. Buyer shall indemnify and hold
harmless Maxco, and shall reimburse Maxco for, any Damages arising from or in
connection with (a) any inaccuracy in or breach of any of the representations
and warranties of Buyer in this Agreement or in any certificate delivered by
Buyer pursuant to this Agreement, or any actions, omissions or state of facts
inconsistent with any such representation or warranty, or (b) any failure by
Buyer to perform or comply with any agreement in this Agreement. In addition,
Buyer shall indemnify and hold harmless Maxco from and against any Damages
arising from or in connection with the failure of the Consolidated Companies to
perform their obligations which are guaranteed by Maxco under the guaranties of
debts of the
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Consolidated Companies by Maxco (the "Maxco Guaranties"), which Maxco Guaranties
guarantee a portion of the debts of the Consolidated Companies disclosed in
Schedule 1.6 in the aggregate principal amount of $7,508,637.04 as of March 31,
1996.
Section 8.6. Limitations As To Amount -- Maxco. Maxco shall have no
liability (for indemnification or otherwise) with respect to the matters
described in clause (a) or clause (b) of Section 8.3, until the total of all
Damages with respect thereto exceeds $500,000 and then only to the extent that
such Damages exceed such sum. However, this Section shall not apply to (i) any
misrepresentation or breach of warranty of which Maxco had knowledge or (ii) any
intentional failure to perform or comply with any agreement in this Agreement,
and Maxco shall be liable for all Damages with respect thereto.
Section 8.7. Limitations As To Amount -- Buyer. Buyer shall have no
liability (for indemnification or otherwise) with respect to the matters
described in clause (a) or clause (b) of Section 8.5 until the total of all
Damages with respect thereto exceeds $500,000 and then only to the extent that
such Damages exceed such sum. However, this Section shall not apply to (i) any
intentional misrepresentation or breach of warranty of which Buyer had
knowledge, (ii) any intentional failure to perform or comply with any agreement
in this Agreement, or (iii) any obligation of Buyer to indemnify Maxco with
respect to the Maxco Guaranties pursuant to Section 8.5, and Buyer shall be
liable for all Damages with respect thereto.
Section 8.8. Procedure For Indemnification -- Third Party Claims.
Promptly after receipt by an indemnified party under Section 8.3, Section 8.5
or, to the extent provided in the second to last sentence of Section 8.4,
Section 8.4, of notice of the commencement of any Proceeding against it, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under
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such Section, give notice to the indemnifying party of the commencement thereof,
but the failure so to notify the indemnifying party shall not relieve it of any
liability that it may have to any indemnified party except to the extent the
indemnifying party demonstrates that the defense of such action is prejudiced
thereby. In case any such Proceeding shall be brought against an indemnified
party and it shall give notice to the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish (unless (i) the indemnifying party is also a party
to such Proceeding and the indemnified party determines in good faith that joint
representations would be inappropriate or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect thereto), to
assume the defense thereof with counsel satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such Section for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs incurred with respect to third
parties in connection with such investigation during the period for the time
prior to the assumption of the matter by the indemnifying party. If an
indemnifying party assumes the defense of such a Proceeding, (a) no compromise
or settlement thereof may be effected by the indemnifying party without the
indemnified party's consent unless (i) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the indemnified party and
(ii) the sole relief provided is monetary damages that are paid in full by the
indemnifying party and (b) the indemnifying party shall have no liability with
respect to any compromise or settlement thereof effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and it does not, within fifteen (15) days after the indemnified party's notice
is given, give notice to the indemnified party of its
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election to assume the defense thereof, the indemnifying party shall be bound by
any determination made in such action or any compromise or settlement thereof
effected by the indemnified party. Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages, such indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise or
settle such Proceeding, but the indemnifying party shall not be bound by any
determination of a Proceeding so defended or any compromise or settlement
thereof effected without its consent (which shall not be unreasonably withheld).
Section 8.9. Right of Set-Off. Upon notice to Maxco specifying in
reasonable detail the basis therefor, Buyer may set off, against amounts
otherwise payable to Maxco under the Non-Competition Agreement, the amount of
any Damages to which Buyer may be entitled under this Article VIII, the basis of
which is reasonably established and the amount of which has been actually
incurred by Buyer or is otherwise reasonably ascertainable. Neither the exercise
of nor the failure to exercise such right to give notice of a claim of set-off
shall constitute an election of remedies nor limit Buyer in any manner in the
enforcement of any other remedies that may be available to it.
ARTICLE IX
Alternative Dispute Resolution
Section 9.1. Resolution of Disputes and Arbitration.
(a) In the event of a dispute between or among the parties to this
Agreement, the disputing parties agree to attempt in good faith to resolve
any such dispute promptly by negotiations between senior executives of the
disputing parties who have authority to settle the dispute and, preferably,
who do not have direct involvement in the facts or circumstances of the
dispute. If the dispute has not been resolved by agreement among the
disputing parties within sixty (60) days after written notice of the
dispute was given, any party to the dispute shall have the right to submit
the dispute for arbitration under the then current Commercial Arbitration
Rules
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of the American Arbitration Association (the "AAA Rules") by a single
arbitrator. The AAA Rules are incorporated by reference into this
provision. The arbitrator shall be chosen in accordance with the AAA
Rules. The arbitration shall be conducted in South Bend, Indiana. Any
award of the arbitrator may be enforced by a court of competent
jurisdiction. In deciding the dispute, the arbitrator shall not be
empowered under any circumstances to award consequential, punitive or
treble damages, whether common law or statutory in source. The
arbitrator's award shall include a determination of all the questions
submitted to him or her, the decision of which is necessary in order
to determine the controversy.
(b) Except for litigation brought in the United States District Courts
for the Northern or Southern Districts of Indiana to avoid irreparable harm
prior to the decision of the arbitrator, and except for litigation to
enforce the arbitrator's award or this agreement to arbitrate, the parties
agree not to commence litigation or other proceedings in any court or
before any governmental agency to resolve any dispute under this Agreement
or between or among them.
ARTICLE X
Miscellaneous
Section 10.1. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
Section 10.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana without reference
to the choice of law principles thereof.
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Section 10.3. Entire Agreement. This Agreement and the Schedules and
Exhibits hereto, and the Confidentiality Covenant, contain the entire agreement
between the parties and there are no agreements, understandings, representations
or warranties between the parties other than those set forth or referred to
therein or herein.
Section 10.4. Expenses. Except as otherwise set forth in this
Agreement, all legal and other costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid (a) by
Maxco, if incurred by or on behalf of Maxco, Maxco Affiliates or the
Consolidated Companies, (b) by Buyer, if incurred by Buyer. If this Agreement is
validly terminated by Buyer in accordance with the provisions of Section 7.1(f),
Maxco shall promptly pay to Buyer upon demand, in cash, an amount equal to the
lesser of: (i) $3,000,000, or (ii) the sum of (A) all reasonable documented
out-of-pocket expenses and fees incurred by Buyer and its affiliates in
negotiating, preparing, executing and performing this Agreement and in preparing
for the Stock Purchase, Plus (B) $2,000,000.
Section 10.5. Notices. All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally or sent
by registered mail or certified mail, postage prepaid, to the appropriate
address as set forth below. Notice to Maxco or any Maxco Affiliate shall be
addressed to:
Max A. Coon, Chairman, President and CEO
Maxco, Inc.
1118 Centennial Way
Lansing, Michigan 48917
with a copy to:
J. Michael Warren, Esquire
Warren, Price, Cameron, Faust & Asciutto, P.C.
2161 Commons Parkway
Okemos, Michigan 48864
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or at such other address and to the attention of such other person as Maxco may
designate by written notice to Buyer. Notices to Buyer or LDI or (after Closing)
to the Consolidated Companies shall be addressed to:
Andre B. Lacy, President, Chairman and CEO
Lacy Distribution, Inc.
251 N. Illinois Street, Suite 1800
Indianapolis, Indiana 46204
with a copy to:
Robert H. Reynolds, Esq.
Barnes & Thornburg
1313 Merchants Bank Building
11 South Meridian Street
Indianapolis, Indiana 46204
or to such other address and to the attention of such other person as Buyer may
designate by written notice to Maxco.
Notices shall be deemed given when received, if sent by telegram, telex,
telecopy or similar facsimile means (confirmation of facsimile transmission
being deemed receipt of communication sent by telex, telecopy or other facsimile
means); when delivered and receipted for (or upon the date of attempted delivery
where delivery is refused), if hand delivered; when sent by express courier or
delivery service; or when sent by certified or registered mail, return receipt
requested.
Section 10.6. Successors and Assigns. The rights and obligations of any
party to this Agreement shall not be assignable by such party on or prior to the
Closing Date without the prior written consent of all other parties to this
Agreement. This Agreement shall inure to the benefit of, and shall be binding
upon, the respective successors and permitted assigns of the parties hereto.
Nothing herein expressed or implied is intended to confer upon any person, other
than to the parties hereto or their respective
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successors or permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
Section 10.7. Headings. The headings in this Agreement are solely for
convenience of reference and shall not affect is interpretation.
Section 10.8. Severable. The provisions of this Agreement (its sections and
paragraphs) are severable and the invalidity of any one or more provisions does
not affect or limit the enforceability of the remaining provisions.
Section 10.9. Gender; Number. Whenever in this Agreement any masculine,
feminine or neuter pronoun is used, such pronouns shall also include the other
genders whenever required by the context. Whenever in this Agreement any
singular noun or pronoun is used, such noun or pronoun shall also include the
plural whenever required by the context.
Section 10.10. Public Announcement. Prior to Closing, neither Maxco nor
Buyer shall make any announcement or issue any press release relating to this
Agreement or the transactions contemplated hereby without the consent of the
other party to this Agreement; provided, however, that without such consent,
Maxco or Buyer may make any announcement, press release or filing, which counsel
to Maxco or Buyer advises is reasonably required by law.
Section 10.11. Guaranty. LDI hereby unconditionally and irrevocably
guarantees to Maxco the full and punctual payment, performance and discharge of
all of Buyer's obligations hereunder and under each other agreement contemplated
hereby. It is expressly understood and agreed that LDI has become
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a party to this Agreement solely for the purpose of guarantying the obligations
of Buyer hereunder and under each other agreement contemplated hereby.
(The balance of this page is intentionally left blank.)
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day and year first above written.
MAXCO, INC.
Dated: 6-5-96 By: /s/ Max A. Coon
-------------------------------------
Max A. Coon, Chairman, President and CEO
ATTEST:
By:/s/ Eric L. Cross
Eric L. Cross, Secretary
LACY DISTRIBUTION, INC.
Dated: By:/s/Andre B. Lacy
---------------------------------------
Andre B. Lacy, Chairman, President
and CEO
ATTEST:
By: /s/ Robert H. Reynolds,Secretary
LDI, LTD.
By: LDI Management, Inc.
Its Corporate General Partner
Dated: By: /s/ Andre B. Lacy
-----------------------------------
Andre B. Lacy, Chairman, President
and CEO
ATTEST:
By:/s/Robert H. Reynolds,Secretary
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Exhibit A
Representations and Warranties of Maxco
Section 1.1. Incorporation; Authorization, etc.
(a) FinishMaster is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Michigan. Exhibit C
sets forth, as to each subsidiary of FinishMaster ("Subsidiary"), its name,
jurisdiction of incorporation, other jurisdictions in which it is
authorized to do business, and its capitalization. The Subsidiary is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Each of the Consolidated
Companies (i) has all requisite corporate power and authority to own, lease
and operate all of its properties and assets and to carry on its business
as it is now being conducted; and (ii) is duly qualified to do business as
a foreign corporation, and, if applicable, in good standing, and, except
for certain licenses to do business in certain cities in Maryland and
Virginia as set forth on Schedule 1.1, is duly licensed, authorized or
qualified to transact business in, each jurisdiction in which the ownership
or lease of real property or the conduct of its business requires it to be
so qualified.
(b) Maxco has the corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated on its part
hereby. The execution, delivery and performance by Maxco of this Agreement
and the consummation by Maxco of the transactions contemplated on its part
hereby have been duly authorized and approved by all necessary action of
its Board of Directors. No other corporate or shareholder proceedings on
the part of Maxco or the Consolidated Companies are necessary to authorize
the execution and delivery of this Agreement and the consummation by Maxco
of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Maxco and is a legal, valid and binding agreement
of Maxco, enforceable against Maxco in accordance with its terms, except as
the enforceability thereof may be limited by
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bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally and except as the availability of equitable remedies may be
limited by equitable principles of general applicability. (c) Assuming that all
Consents described in Section 1.3 of this Exhibit A have been obtained and all
filings and obligations described in Section 1.3 have been made, the execution,
delivery and performance of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or
result in the creation of any Encumbrance upon the Shares or upon any of the
properties or assets of either of the Consolidated Companies under, any
provision of (i) the Articles of Incorporation or By-Laws of either of the
Consolidated Companies, (ii) any Contract applicable to either of the
Consolidated Companies or by which either of them is bound, or (iii) any Order
or Legal Requirement applicable to either of the Consolidated Companies or
either of their respective properties or assets. Upon consummation of the Stock
Purchase at the Closing, Buyer will acquire title to the Shares free arid clear
of any Encumbrances or rights of any third parties.
Section 1.2. Capitalization. The authorized capital stock of
FinishMaster consists of (i) ten million (10,000,000) shares of common stock, no
par value, of which six million (6,000,000) shares are issued and outstanding,
and (ii) one million (1,000,000) shares of preferred stock, without par value,
of which none are outstanding. Maxco owns beneficially and of record all four
million forty-five thousand (4,045,000) of the Shares. The Shares (i) are
validly issued, fully paid and nonassessable, and (ii) except for a lien held by
Comerica Bank, which will be paid at Closing and said lien removed, are owned by
Maxco free and clear of any Encumbrances or rights of any third parties. Except
as set forth in the annual report on Form 10-K of FinishMaster for the period
ended March 31, 1996, there are no outstanding obligations, options, warrants or
other rights of any kind to acquire, from Maxco, any Maxco
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Affiliate, or either of the Consolidated Companies, shares of capital stock of
any class or other equity securities of either of the Consolidated Companies, or
securities convertible into or exchangeable for such capital stock or other
equity securities of either of the Consolidated Companies. Except for the
Subsidiary, FinishMaster has no direct or indirect equity investment in any
corporation, association, partnership, joint venture or other entity, and all of
such investments are owned free and clear of any Encumbrances or rights of any
third parties. All of the issued and outstanding shares of capital stock or
other equity interests of the Subsidiary ("Subsidiary Shares") are validly
issued, fully paid and nonassessable. The Subsidiary Shares are owned, directly
or indirectly, by FinishMaster free and clear of any Encumbrances or rights of
any third parties.
Section 1.3. Consents. No filing with any governmental body or
Governmental Authorization is required by or with respect to either of the
Consolidated Companies in connection with the execution and delivery of this
Agreement by Maxco or is necessary for the consummation of the Stock Purchase,
except for (i) in connection, or in compliance, with the provisions of the
Antitrust Improvements Act, the Securities Act or the Exchange Act, (ii) such
filings, Governmental Authorizations or Orders, if any, as may be required to
exempt FinishMaster and the Stock Purchase from the applicability of the
Takeover Statutes, (iii) such filings as may be required in connection with
applicable requirements, if any, of state securities laws ("Blue Sky Laws") and
the Nasdaq Stock Market, and (iv) such other Consents, Orders and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on FinishMaster or prevent the
consummation of the Stock Purchase.
Section 1.4. Securities Documents and Other Reports. FinishMaster has
filed all required documents with the SEC and with appropriate state securities
law authorities since February 24, 1994 (the "Securities Documents"). As of
their respective dates, the Securities Documents complied in all material
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respects with the requirements of the Securities Act, the Exchange Act, or
applicable Blue Sky Laws, as the case may be, and, at the respective times they
were filed, none of the Securities Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Maxco has delivered to Buyer a correct and
complete copy of each Securities Document (together with all exhibits and
schedules thereto and as amended to date). The consolidated financial statements
(including, in each case, any notes thereto) of the Consolidated Companies
included in the Securities Documents (or incorporated therein by reference)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto),
fairly presented in all material respects the consolidated financial condition
of the Consolidated Companies as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein), were
correct and complete in all material respects, and were consistent with the
books and records of the Consolidated Companies. Except as disclosed in the
Securities Documents or as required by generally accepted accounting principles,
FinishMaster has not, since February 24, 1994, made any material change in the
accounting practices or policies applied in the preparation of financial
statements.
Section 1.5. Absence of Certain Changes or Events. Except as disclosed
in the Securities Documents filed with the SEC prior to the date of the final
signing of this Agreement, since March 31, 1996 and in Schedule 1.5, (a) the
Consolidated Companies have not incurred any material liability or
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obligation (indirect, direct or contingent), or entered into any material oral
or written agreement or other transaction, that is not in the ordinary course of
business or that would result in a Material Adverse Effect on FinishMaster,
except for any such changes or effects resulting from this Agreement, the
transactions contemplated hereby or the announcement thereof; (b) the
Consolidated Companies have not sustained any loss or interference with their
business or properties from fire, flood, windstorm, accident or other calamity
(not covered by insurance) that has had a Material Adverse Effect on the either
of the Consolidated Companies; (c) there has been no material change in the
consolidated indebtedness of the Consolidated Companies, and no dividend or
distribution of any kind declared, paid or made by FinishMaster on any class of
its stock; and (d) there has been no event causing a Material Adverse Effect on
the business, financial condition, operations, results of operations or future
prospects of the Consolidated Companies, except for any such changes or effects
resulting from this Agreement, the transactions contemplated hereby or the
announcement thereof.
Section 1.6. Consents and Compliance. Each of the Consolidated
Companies is in possession of all Consents necessary for it to own, lease and
operate its properties or to carry on its business as it is now being conducted,
and, as of the date of this Agreement, no suspension or cancellation of any of
such Consents is pending or threatened. Neither of the Consolidated Companies is
in violation of (A) its Articles of Incorporation, By-Laws or other
organizational documents, (B) to the best of Maxco's knowledge, any applicable
Legal Requirement, or (C) any Order of any governmental body having jurisdiction
over it. Except as disclosed in the Securities Documents filed prior to the date
of this Agreement or as set forth on Schedule 1.6 hereto, as of the date hereof,
there is no Contract entered into on or after March 31, 1995, having a term
extending beyond December 31, 1996 and involving expenditures or sales by the
Consolidated Companies equal to or greater than $100,000 per year that is
material to the business, financial condition or results of operations of the
Consolidated Companies, taken
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as a whole. Except as set forth in the Securities Documents, prior to the date
of this Agreement, no event of default or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of default exists
or, upon the consummation by Maxco of the transactions contemplated by this
Agreement, will exist under any Contract to which either of the Consolidated
Companies is a party or by which either of them is bound or to which any of the
properties, assets or operations of the Consolidated Companies is subject, other
than any defaults that, individually or in the aggregate, would not have a
Material Adverse Effect on FinishMaster.
Section 1.7. Tax Matters. The Consolidated Companies have filed all Tax
Returns required to have been filed (or extensions have been duly obtained) and
have paid all Taxes required to have been paid by them, except where failure to
file such Tax Returns or pay such Taxes would not, in the aggregate, have a
Material Adverse Effect on FinishMaster.
Section 1.8. Actions and Proceedings. Except as set forth in the
Securities Documents, there are no outstanding Orders against or involving
either of the Consolidated Companies, or against or involving any of the present
or former directors, officers, employees, consultants, agents or shareholders of
either of the Consolidated Companies, as such, any of their properties, assets
or business, or any Employee Plan (as hereinafter defined) that, individually or
in the aggregate, would have a Material Adverse Effect on FinishMaster. Except
as set forth in the Securities Documents or as otherwise disclosed in Schedule
1.8, as of the date of this Agreement, there are no Proceedings pending or, to
Maxco's knowledge, threatened against or involving either of the Consolidated
Companies or any of its or their present or former directors, officers,
employees, consultants, agents or shareholders, as such, or any of its or their
properties, assets or business, or any Employee Plan that, individually or in
the aggregate, would have a Material Adverse Effect. As of the date hereof,
there are no Proceedings
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pending or, to Maxco's knowledge, threatened against or affecting either of the
Consolidated Companies or any of its or their present or former officers,
directors, employees, consultants, agents or shareholders, as such, or any of
its or their properties, assets or business relating to the Stock Purchase.
Section 1.9. Certain Agreements. Except as set forth in the Securities
Documents and the Most Recent Financial Statements, as of the final signing of
this Agreement, none of the Consolidated Companies is a party to any oral or
written Employee Plan or Contract relating to rights to acquire shares of
FinishMaster, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of the Stock
Purchase. Neither of the Consolidated Companies is a party to any termination
benefits agreement or severance agreement or employment agreement, one trigger
of which would be the consummation of Stock Purchase. Except as set forth in
Schedule 1.9, neither of the Consolidated Companies is a party to any employment
agreement or arrangement with (i) any officer of the Consolidated Companies or
(ii) any employee of the Consolidated Companies whose annual compensation is
equal to or greater than $60,000 per year.
Section 1.10. Employee Benefit Plans.
(a) All pension, retirement, supplemental retirement, stock option,
stock purchase, stock ownership, savings, stock appreciation right, profit
sharing, deferred compensation, consulting, bonus, medical, disability,
workers' compensation, vacation, group insurance, severance, employee
welfare benefit plans (as defined in ERISA), employee pension benefit plans
(as defined in ERISA) and other material employee benefit, incentive and
welfare policies, contracts, plans and arrangements, and all trust
agreements related thereto, maintained by or contributed to by either of
the Consolidated Companies in respect of any of the present or former
directors, officers, other employees and/or consultants of or to either of
the Consolidated Companies, or in which any of such directors, officers,
employees or consultants participates (each an "Employee Plan") have been
maintained
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and operated substantially in accordance with both their terms and with the
requirements of all applicable statutes, orders, rules and regulations,
including without limitation ERISA and the Code. All contributions required
to be made to Employee Plans have been made. Maxco has furnished Buyer with
the following documents with respect to each Employee Plan: (i) a true and
complete copy of all written documents comprising each such Employee Plan
(including but not limited to amendments, insurance contracts, and
individual agreements relating thereto) or, if there is no such written
document, an accurate and complete description of the Employee Plan; (ii)
the most recent Form 5500 (or such other applicable Form 5500), including
all schedules thereto, if applicable; (iii) the most recent financial
statements and actuarial reports, if any; (iv) the summary plan description
currently in effect and all material modifications thereof, if any; and (v)
the most recent Internal Revenue Service determination letter, if any.
(b) With respect to each of the Employee Plans which is an employee
pension benefit plan (as defined in Section 3(2) of ERISA) (the "Pension
Plans"), to the best of Maxco's knowledge: (i) each Pension Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code
has been determined to be so qualified by the Internal Revenue Service and,
to the best of Maxco's knowledge, such determination letter may still be
relied upon, and each related trust is exempt from Taxation under Section
501 (a) of the Code; provided, however, that no such determination letter
has been received in response to pending requests made under the Tax Reform
Act of 1986; (ii) the present value of all benefits vested and all benefits
accrued under each Pension Plan which is subject to Title IV of ERISA,
valued using the assumptions in the most recent actuarial report, did not,
in each case, as of the last applicable annual valuation date, exceed the
value of the assets of the Pension Plan allocable to such vested or accrued
benefits; (iii) there has been no "prohibited transaction," as such term is
defined in Section 4975 of the Code or Section 406 of ERISA, which could
subject any Pension Plan or associated trust, or either of the Consolidated
Companies, to any Tax or penalty; (iv) no Pension Plan
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or any trust created thereunder has been terminated, nor have there been
any "reportable events" with respect to any Pension Plan, as that term is
defined in Section 4043 of ERISA, which would require the filing of a
notice with the Pension Benefit Guaranty Corporation ("PBGC"); (v) no
Pension Plan or any trust created thereunder has incurred any "accumulated
funding deficiency," as such term is defined in Section 302 of ERISA
(whether or not waived), and (vi) no Consolidated Company has incurred any
liability to the PBGC that has not been satisfied, other than liability for
premiums. With respect to each Pension Plan that is referred to in Section
413(c) of the Code (a "Multiple Employer Pension Plan"): (i) none of the
Consolidated Companies would have any liability or obligation to post a
bond under Section 4063 of ERISA if either of the Consolidated Companies
were to withdraw from such Multiple Employer Pension Plan; and (ii) none of
the Consolidated Companies would have any liability under Section 4064 of
ERISA if such Multiple Employer Pension Plan were to terminate.
(c) No Consolidated Company has any liability for any post-retirement
health, medical or similar benefit of any kind whatsoever, except
obligations to James White or as required by Section 4980B of the Internal
Revenue Code.
(d) With respect to each Pension Plan, all contributions which are due
(including all employer contributions and employee salary reduction
contributions) have been paid to such Pension Plan, all contributions for
prior plan years which are not yet due and with respect to the current plan
year for the period ending on the Closing Date have been (or as of the
Closing Date will be) accrued on the books and records of the Consolidated
Companies. With respect to all other Employee Plans, all premiums and other
payments which are due have been paid.
(e) Neither the execution nor delivery of this Agreement, nor the
consummation of any of the transactions contemplated hereby, will (i)
result in any payment (including without limitation any severance,
unemployment compensation or golden parachute payment) becoming due to any
director or employee of either of the Consolidated Companies from any of
such entities, (ii) increase any benefit
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otherwise payable under any of the Employee Plans or (iii) result in the
acceleration of the time of payment of any such benefit.
(f) To the best knowledge of Maxco, no Consolidated Company has any
current liability, jointly or otherwise, for any withdrawal liability under
Title IV of ERISA for a complete or partial withdrawal from any
Multiemployer Plan as defined in Section 3(37) of ERISA by any member of a
controlled group of employees (as used in ERISA) or which either of the
Consolidated Companies is or was a member, which liability has not been
fully paid as of the date hereof.
(g) To the best knowledge of Maxco, any trust exempt from federal
income Taxation as a Voluntary Employees' Beneficiary Association described
in Section 501(c)(9) of the Code (a "VEBA") has qualified at all times and
continues to qualify for exemption from Taxation under Section 501(a) of
the Code and at no time have the deduction limitations described in Section
419 or Section 419A of the Code been exceeded with respect to the VEBA.
Section 1.11. Continued Compliance. With respect to the properties, assets
and operations of the Consolidated Companies, including any previously owned,
leased or operated properties, assets or operations, to the best of Maxco's
knowledge, there are no past, present or reasonably anticipated future events,
conditions, circumstances, activities, practices, incidents, actions or plans of
either of the Consolidated Companies that may interfere with or prevent
compliance or continued compliance in all material respects with applicable
Legal Requirements, including without limitation all Environmental Laws and
consumer credit laws, other than any such interference or prevention as would
not, individually or in the aggregate with any such other interference or
prevention, have a Material Adverse Effect.
Section 1.12. No Undisclosed Liabilities. To the best of Maxco's knowledge,
neither of the Consolidated Companies has any liability (whether known or
unknown, asserted or unasserted, absolute
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or contingent, accrued or unaccrued, liquidated or unliquidated, or due or
become due), including without limitation any liability for Taxes, except for
(i) liabilities fully reflected or reserved against on the face of the Most
Recent Balance Sheet, (ii) liabilities which have arisen after the most recent
fiscal quarter end of FinishMaster in the ordinary course of business (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by, any breach of Contract, breach of warranty, tort, infringement or
violation of any Legal Requirement) and an obligation to James White described
in Schedule 1.12.
Section 1.13. Labor Matters. Neither of the Consolidated Companies is a
party to any collective bargaining agreement or labor contract. To the best of
Maxco's knowledge, neither of the Consolidated Companies has engaged in any
unfair labor practice with respect to any FinishMaster Personnel. There is no
Proceeding involving an unfair labor practice, complaint or grievance against
either of the Consolidated Companies by the National Labor Relations Board, or
any comparable state agency, pending or threatened in writing with respect to
any FinishMaster Personnel. There is no labor strike, dispute, slowdown or
stoppage pending or, to Maxco's knowledge, threatened against or affecting
either of the Consolidated Companies which may interfere with the respective
business activities of either of the Consolidated Companies.
Section 1.14. Intellectual Property. The Consolidated Companies have
all patents, trademarks, trade names, service marks, trade secrets, copyrights,
and other proprietary intellectual property rights (collectively, the
"Intellectual Property Rights") as are necessary in connection with the business
of the Consolidated Companies, taken as a whole. To the best knowledge of Maxco,
none of the Consolidated Companies has infringed any Intellectual Property
Rights of any third party.
Section 1.15. Environmental Matters.
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(a) (i) The Consolidated Companies are, and at all times prior to the
date hereof have been, in full compliance with all, and have not been and
are not in violation of or liable under any, Environmental Laws applicable
to them or to the ownership or operation of their assets or the operation
of their business, except to the extent any such violations or liabilities
do not, individually or in the aggregate, constitute a Material
Environmental Event, and (ii) Maxco has no knowledge of or any basis to
expect, nor has either of the Consolidated Companies or any Person for
whose conduct either of the Consolidated Companies is responsible,
received, any order, notice or other communication from (x) any
governmental body, including but not limited to those administering or
enforcing any Environmental Law, except as set forth in Schedule 1.15(a),
or (y) the owner of any real property or other facility, of any alleged,
actual or potential violation or failure to comply with any Environmental
Law, or of any alleged, actual or potential obligation to undertake or bear
the cost of any environmental, health or safety liabilities with respect to
any properties or assets (real, personal or mixed, tangible or intangible)
in which either of the Consolidated Companies has or had an interest, or
with respect to any property or facility in which the either of the
Consolidated Companies has or had an interest and to which or in which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled or received.
(b) All Consents required under any Environmental Law to lawfully own,
operate, use and maintain the assets and properties of the Consolidated
Companies and to conduct their business have been obtained, except where
the failure to obtain such Consents does not, individually or in the
aggregate, constitute a Material Environmental Event. The Consolidated
Companies have, at all times prior to Closing, maintained their assets and
properties and conducted their business in full compliance with the terms
and conditions of all Consents issued at any time prior to the Closing by
any governmental body and required under any Environmental Law for the
Consolidated Companies to lawfully own, operate, use and maintain their
respective properties and assets and to conduct their respective
businesses, and all
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required filings and all required applications with respect to or for
renewal thereof have been timely made and filed, except where the failure
to comply with such Consents or to make such filings does not, individually
or in the aggregate, constitute a Material Environmental Event. All such
Consents are in full force and effect and there are no Proceedings pending
or threatened that seek the revocation, cancellation, suspension or adverse
modification thereof.
(c) Neither of the Consolidated Companies, and no Person for whose
conduct either of the Consolidated Companies is responsible, has any
environmental, health or safety liabilities with respect to the assets and
properties of the Consolidated Companies or, with respect to any other
properties or assets (real, personal or mixed, tangible or intangible) in
which Maxco or either of the Consolidated Companies (or any predecessor)
has or had an interest, except for such liabilities which do not,
individually or in the aggregate, constitute a Material Environmental
Event.
(d) Except for inventory purchased for resale by the Consolidated
Companies in the ordinary course of their business, (i) there are no
Hazardous Materials on or in the facilities of the Consolidated Companies;
and (ii) none of Maxco or the Consolidated Companies, and no Person for
whose conduct either of the Consolidated Companies is responsible, has
generated, manufactured, refined, transported, treated, stored, handled,
disposed, transferred, produced, imported, used or processed any Hazardous
Materials.
(e) There has been no release or threat of release of any Hazardous
Materials at or from the facilities of the Consolidated Companies, whether
by Maxco or the Consolidated Companies or by any Person for whose conduct
either of the Consolidated Companies is responsible, during the period of
ownership or operation by the Consolidated Companies, except for such
releases or threat of releases that do not, individually or in the
aggregate, constitute a Material Environmental Event (it being understood
that, for purposes of this Agreement, the "release" of Hazardous Materials
shall not include (i) the handling, sale or delivery to customers of
paints, thinners, solvents, sandpaper and other products which
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may contain Hazardous Materials, provided that such products are handled,
sold or delivered in the ordinary course of business, or (ii) the disposal
of: (x) waste generated as a process of mixing paints or (y) empty paint
cans, provided that such waste and cans are disposed of in the ordinary
course of business and in compliance with all Environmental Laws).
(f) There are no Encumbrances resulting from any environmental, health
or safety liabilities or arising under or pursuant to any Environmental
Law, with respect to or affecting any of the facilities of the Consolidated
Companies or any other properties or assets (real, personal or mixed,
tangible or intangible) in which the Consolidated Companies have an
interest.
Section 1.16. State Takeover Statutes. As of the date hereof, the Board of
Directors of FinishMaster has taken all necessary actions so that the provisions
of the Takeover Laws are not applicable to FinishMaster and the Stock Purchase.
As of the date hereof, no other state takeover statutes, including without
limitation, any control share acquisition act or business combination act, are
applicable to the Stock Purchase.
Section 1.17. Investment Company Status. Maxco is not an "investment
company" or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
Section 1.18. Brokers, Finders, etc. Maxco has not employed, and is not
subject to any claim of, any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission from Buyer or either of the Consolidated
Companies upon the consummation of the transactions contemplated hereby, except
for W.Y. Campbell & Company, for whose fees Maxco will indemnify Buyer.
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Section 1.19. Title to Assets. The Consolidated Companies have good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by them, located on their premises, or shown on the Most Recent Balance
Sheet or acquired after the date thereof, free and clear of all Encumbrances,
except for (i) the properties and assets subject to Encumbrances as disclosed on
Schedule 1.19, and (ii) properties and assets disposed of in the ordinary course
of business since the date of the Most Recent Balance Sheet consistent with the
past practice of the Consolidated Companies.
Section 1.20. Compensation. Schedule 1.20 contains a current list
setting forth the compensation of all directors and officers of the Consolidated
Companies and all employees of the Consolidated Companies whose annual
compensation is equal to or greater than $60,000 per year, including without
limitation any awards or grants of bonuses or stock options, paid or payable in
each of fiscal years 1995 and 1996.
Section 1.21. Disclosure. The representations and warranties contained
in this Exhibit A do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Exhibit A not misleading.
(The balance of this page intentionally left blank.)
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Exhibit B
---------
Representations and Warranties of Buyer and LDI
Section 1.1. Organization and Authorization of Buyer. Buyer (i) is a
corporation duly incorporated and validly existing under the laws of the State
of Indiana, (ii) has all requisite corporate power and authority to own, lease
and operate its property and assets and to carry on its business as it is now
being conducted and (iii) is duly authorized by all necessary corporate action
to execute, deliver and perform its obligations under and to consummate the
transactions contemplated by this Agreement.
Section 1.2. Enforceability of Agreement. This Agreement is a legal,
valid and binding agreement of Buyer, enforceable against Buyer in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally and except as the availability of equitable remedies may be
limited by equitable principles of general applicability.
Section 1.3. Consents; No Violation. No filing with any governmental
body or Governmental Authorization is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement by Buyer or is
necessary for the consummation of the Stock Purchase, except for (i) in
connection, or in compliance, with the provisions of the Antitrust Improvements
Act, and (ii) such other Consents, Orders and filings the failure of which to be
obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer or prevent the consummation of the Stock Purchase.
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Section 1.4. Brokers, Finders, etc. Neither Buyer nor any of its
affiliates has employed any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission from Maxco or any Maxco Affiliate upon the
consummation of the transactions contemplated hereby, except Smith Barney, for
whose fees Buyer will indemnify Maxco.
Section 1.5. Investment Purposes. Buyer is purchasing the Shares for
investment purposes only, for its own account, and not with a view toward
further sale or distribution thereof within the meaning of the Securities Act.
Buyer is an "accredited investor" as such term is defined in Rule 501(a) of
Regulation D promulgated pursuant to the Securities Act. Buyer has been given
the opportunity to ask questions of, and receive answers from, the officers and
personnel of the Consolidated Companies concerning the condition, financial or
otherwise, of the business of the Consolidated Companies, and to obtain any
information it deemed necessary to verify the accuracy of, or better understand,
the information furnished to it by the officers and personnel of the
Consolidated Companies.
Section 1.6. Organization and Authorization of LDI. LDI (i) is a
limited partnership duly organized and validly existing under the laws of the
State of Indiana, (ii) has all requisite power and authority to own, lease and
operate its property and assets and to carry on its business as it is now being
conducted and (iii) is duly authorized by all necessary corporate action to
execute, deliver and perform its obligations under and to consummate the
transactions contemplated by this Agreement.
Section 1.7. Enforceability of Agreement. This Agreement is a legal,
valid and binding agreement of LDI, enforceable against LDI in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors'
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rights generally and except as the availability of equitable remedies may be
limited by equitable principles of general applicability.
Section 1.8. Consents; No Violation. No filing with any governmental
body or Governmental Authorization is required by or with respect to LDI in
connection with the execution and delivery of this Agreement by LDI or is
necessary for the consummation of the Stock Purchase, except for (i) in
connection, or in compliance, with the provisions of the Antitrust Improvements
Act, and (ii) such other Consents, Orders and filings the failure of which to be
obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on LDI or prevent the consummation of the Stock Purchase.
(The balance of this page intentionally left blank.)
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Exhibit C
FINISHMASTER SUBSIDIARY
Refinishers Warehouse, Inc.
A Michigan Corporation
Capitalization $50,000
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Exhibit D
Covenant Not to Compete
This Covenant Not to Compete (the "Covenant"), effective July___, 1996, is
made and entered into by and among Lacy Distribution, Inc., an Indiana
corporation with its principal place of business in Indianapolis, Indiana
("Buyer"), on the one hand, and each of Maxco, Inc. ("Maxco"), a Michigan
corporation with its principal place of business in Lansing, Michigan, Max A.
Coon ("Mr. Coon"), Eric L. Cross ("Mr. Cross"), Richard G. Johns ("Mr. Johns")
and Vincent Shunsky ("Mr. Shunsky") (jointly, the "Non-Competition Parties"), on
the other hand.
WHEREAS, Maxco owns 4,045,000 shares of Common Stock of FinishMaster, Inc.
("FinishMaster"), which shares gave it a controlling interest in FinishMaster;
and
WHEREAS, FinishMaster controls a consolidated subsidiary, Refinishers
Warehouse, Inc., (together with FinishMaster, the "Consolidated Companies"); and
WHEREAS, the Consolidated Companies are engaged, inter alia, in the
wholesale and retail distribution of automotive paints, coatings and
paint-related accessories for use in the paint and body after-market; and
WHEREAS, Mr. Coon has been President and Chairman of the Board of Directors
of Maxco since 1969, and has been Chairman of the Board of Directors of
FinishMaster since 1993; and
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WHEREAS, Mr. Cross has been Maxco's Executive Vice President since 1983
and has been FinishMaster's Secretary and a member of the Board of Director of
FinishMaster since 1993; and
WHEREAS, Mr. Johns has been Vice President and a member of the Board of
Directors of Maxco since 1990, and has been a member of the Board of Directors
of FinishMaster since 1993; and
WHEREAS, Mr. Shunsky has been a member of the Board of Directors of
Maxco since 1983, Vice President-Finance of Maxco since 1984, Treasurer of
FinishMaster since 1979, and member of the Board of Directors of FinishMaster
since 1990; and
WHEREAS, the Non-Competition Parties, jointly and individually, possess
trade secret information of the Consolidated Companies and have created goodwill
between the Consolidated Companies and their suppliers and customers, which
trade secrets and goodwill are the property of the Consolidated Companies; and
WHEREAS, Buyer and Maxco have entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement') whereby Buyer has agreed to purchase all
4,045,000 shares of Common Stock of FinishMaster which are owned by Maxco (the
"Transaction"); and
WHEREAS, the execution and receipt of the covenants not to compete
contained herein is a condition precedent to consummation of the Transaction and
is an integral and valuable part of the consideration bargained for by Buyer in
respect of the Transaction and is necessary to protect the value of the business
of the Consolidated Companies.
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NOW, THEREFORE, in consideration of the premises, the Non-Competition
Parties agree as follows:
1. Beginning this date (the "Closing Date") and for a period of five (5)
years, to and including July ___, 2001, Maxco will not, directly or indirectly,
through its officers, directors, employees or agents:
(a) Compete with the Consolidated Companies in the following
territories:
(i) the United States of America;
(ii) the States of Indiana, Michigan, Illinois, California,
Delaware, Florida, Maryland, New Jersey, Ohio, Oklahoma, Pennsylvania,
Texas, Virginia or Wisconsin; and
(iii) an area within 100 miles of the location of any location at
which the Consolidated Companies currently do business as of the date
hereof.
(b) Engage in, or acquire any interest in, or advise, any business
that sells or distributes automotive paint or other products which are
similar to or which compete with the products sold by the Consolidated
Companies, which business operates, in whole or in part, in the following
territories:
(i) the United States of America;
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(ii) within the States of Indiana, Michigan, Illinois,
California, Delaware, Florida, Maryland, New Jersey, Ohio, Oklahoma,
Pennsylvania, Texas, Virginia or Wisconsin; and
(iii) an area within 100 miles of the location of any location at
which the Consolidated Companies currently do business as of the date
hereof.
(c) Solicit the business of, sell to or offer to sell to any
individual or entity which was a customer of either of the Consolidated
Companies on the Closing Date any automotive paint or other products which
are similar to or which compete with the products sold by the Consolidated
Companies;
(d) Hire, employ or endeavor to employ any person who was, on the
Closing Date or within six (6) months prior to the Closing Date, an
employee of the Consolidated Companies, unless that employee received pay
from either of the Consolidated Companies of no more than $30,000 in
calendar year 1995; or
(e) Request, encourage or cause any person, firm, partnership,
association, corporation or business entity to withdraw, curtail or cancel
a business relationship with either of the Consolidated Companies.
2. Beginning on the Closing Date and for a period of five (5) years, to and
including July ___, 2001, Mr. Coon, Mr. Cross, Mr. Johns, and Mr. Shunsky will
not, directly or indirectly, individually or as a group:
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(a) Compete with the Consolidated Companies in the following
territories:
(i) the United States of America;
(ii) the States of Indiana, Michigan, Illinois, California,
Delaware, Florida, Maryland, New Jersey, Ohio, Oklahoma, Pennsylvania,
Texas, Virginia or Wisconsin; and
(iii) an area within 100 miles of the location of any location at
which the Consolidated Companies currently do business as of the date
hereof.
(b) Engage in, or acquire any interest in, or advise, any business
that sells or distributes automotive paint or other products which are
similar to or which compete with the products sold by the Consolidated
Companies, which business operates, in whole or in part, in the following
territories:
(i) the United States of America;
(ii) the States of Indiana, Michigan, Illinois, California,
Delaware, Florida, Maryland, New Jersey, Ohio, Oklahoma, Pennsylvania,
Texas, Virginia or Wisconsin; and
(iii) an area within 100 miles of the location of any store at
which the Consolidated Companies currently do business as of the date
hereof.
(c) Solicit the business of, sell to or offer to sell to any
individual or entity which was a customer of either of the Consolidated
Companies on the Closing Date any
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automotive paint or other products which are similar to or which compete
with the products sold by the Consolidated Companies;
(d) Hire, employ or endeavor to employ any person who was, on the
Closing Date or within six (6) months prior to the Closing Date, an
employee of the Consolidated Companies, unless that employee received pay
from either of the Consolidated Companies of no more than $30,000 in
calendar year 1995; or
(e) Request, encourage or cause any person, firm, partnership,
association, corporation or business entity to withdraw, curtail or cancel
a business relationship with either of the Consolidated Companies.
3. Notwithstanding Paragraphs 1 and 2, each Non-Competition Party may,
individually, own or acquire up to five percent (5%) of the stock of any public
company that competes with the Consolidated Companies without violating
Paragraphs 1 or 2 of this Covenant.
4. The Non-Competing Parties each agree that the restrictions contained in
this Covenant are fair and reasonable and are reasonably required for the
protection of Buyer and the Consolidated Companies. To this extent, any portion
of this Covenant, or any portion of any provision of this Covenant, is held to
be invalid or unenforceable, it shall be deleted and the remainder of the
provisions or provisions of this Covenant shall be unaffected and shall continue
in full force and effect.
5. The Non-Competing Parties each agree that any violation of this Covenant
will cause Buyer and the Consolidated Companies irreparable harm which cannot
adequately be compensated by an
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award of money damages. As a result, the Non-Competing Parties each agree that,
in addition to any other remedy which Buyer may have, a violation of this
Covenant may be restrained by issuance of an injunction by any court of
competent jurisdiction. The Non-Competing Parties each further agree to accept
service of process by first class or certified United States mail.
6. As consideration for the covenants contained herein, the Buyer
hereby agrees to pay the Non-Competition Parties an aggregate of $16,500,000, of
which amount (i) $12,000,000 is to be paid to Maxco on the Closing Date by wire
transfer or other immediately available funds, and (ii) $4,500,000 is to be paid
to the Non-Competition Parties by wire transfer or other immediately available
funds in five annual installments of $900,000 commencing on July ____, 1997 and
on each of the following July ____ to and including July ____, 2001, with each
such annual installment to be allocated among the Non- Competition Parties as
follows: (A) $20,000.00 of each annual installment is to be paid to each Non-
Competition Party who is an individual and (B) the balance of each annual
installment is to be paid to Maxco (collectively, the "Covenant Consideration").
7. The Non-Competing Parties each agree that if one or more of the
Non-Competing Parties violates this Covenant, Buyer is thereafter released from
paying any unpaid installments of the Covenant Consideration. If Buyer chooses
not to pay these further installments, none of the Non-Competing Parties are
released from their obligations under this Covenant, regardless of whether those
Non-Competing Parties violated the Covenant. Moreover, Buyer's choice not to pay
these further installments will not prejudice any other rights which Buyer may
have upon violation of this Covenant, including pursuit of the injunctive relief
identified in Paragraph 5.
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8. Upon notice to Maxco specifying in reasonable detail the basis
therefor, Buyer may set off, against amounts otherwise payable to Maxco under
this Non-Competition Agreement, the amount of any Damages to which Buyer may be
entitled under Article VIII of the Stock Purchase Agreement, the basis of which
is reasonably established and the amount of which has been actually incurred by
Buyer or is otherwise reasonably ascertainable. Neither the exercise of nor the
failure to exercise such right to give notice of a claim of set-off shall
constitute an election of remedies nor limit Buyer in any manner in the
enforcement of any other remedies that may be available to it.
9. The Non-Competing Parties each agree that this Covenant may be
assigned by Buyer to any person, firm or corporation acquiring all or
substantially all of the Common Stock of FinishMaster transferred to Buyer by
Maxco, and shall be effective as between the Non-Competing Parties and that
assignee with respect to all rights and duties under this Covenant.
10. The parties agree that this Covenant supersedes any previous
agreement, oral or written, concerning the subject matter of this Covenant.
11. The Non-Competing Parties each agree that this Covenant will become
effective when executed by Buyer at its principal place of business in
Indianapolis, Indiana. The laws of the State of Indiana, excluding its conflicts
of laws rules which may redirect the adjudication of disputes to another
jurisdiction, will govern the interpretation, validity and effect of this
Covenant. Venue of any disputes arising hereunder shall be in Marion County,
Indiana.
12. The Non-Competing Parties each agree that, in the event of any
proceeding arising out of or related to this Covenant is brought by Buyer, and
Buyer is the prevailing party in that proceeding (whether or not the proceeding
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is prosecuted to judgment), Buyer shall be entitled to recover from the
Non-Competing Parties which were sued all of its costs and expenses incurred in
connection with such proceeding, including court costs and reasonable attorneys
fees.
Acknowledged and Agreed, this ____ day of July, 1996.
LACY DISTRIBUTION, INC.
By:
Its:
MAXCO, INC.
By:
Its:
Max A. Coon
Eric L. Cross
Richard G. Johns
Vincent Shunsky
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EXHIBIT 4
CREDIT AGREEMENT
dated as of March 29, 1996
among
LDI, LTD. (LIMITED PARTNERSHIP) and
LACY DISTRIBUTION, INC.,
as Borrowers,
VARIOUS FINANCIAL INSTITUTIONS,
and
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Agent
Arranged by
BA SECURITIES, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS.....................................................1
1.1 Definitions.....................................................1
1.2 Other Interpretive Provisions..................................12
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES............................12
2.1 Commitments....................................................12
2.2 Various Types of Loans.........................................13
2.3 Borrowing Procedures...........................................13
2.4 Conversion and Continuation Procedures.........................13
2.5 Warranty upon Conversion or Continuation.......................15
2.6 Conditions.....................................................15
2.7 Pro Rata Treatment.............................................15
2.8 Commitments Several............................................15
2.9 Payments by the Banks to the Agent.............................15
SECTION 3 NOTES EVIDENCING LOANS.........................................16
3.1 Notes..........................................................16
3.2 Recordkeeping..................................................16
SECTION 4 INTEREST.......................................................16
4.1 Interest Rates.................................................16
4.2 Interest Payment Dates.........................................17
4.3 Setting and Notice of Eurodollar Rates.........................17
4.4 Computation of Interest........................................17
SECTION 5 FEES...........................................................17
5.1 Non-Use Fee....................................................17
5.2 Participation Fee..............................................19
5.3 Agent's and Arranger's Fees....................................19
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS....................................................19
6.1 Reduction or Termination of the Commitments....................19
6.1.1 Mandatory Reductions....................................19
6.1.2 Voluntary Reduction or Termination......................19
6.1.3 Reductions Pro Rata.....................................20
6.2 Prepayments....................................................20
6.2.1 Mandatory Prepayments...................................20
6.2.2 Voluntary Prepayments...................................20
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES................20
7.1 Making of Payments.............................................20
7.2 Application of Certain Payments................................21
7.3 Due Date Extension.............................................21
7.4 Setoff.........................................................21
7.5 Proration of Payments..........................................21
<PAGE>
PAGE
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS...............................................22
8.1 Increased Costs................................................22
8.2 Basis for Determining Interest Rate Inadequate
or Unfair.................................................23
8.3 Changes in Law Rendering Eurodollar Loans Unlawful.............24
8.4 Funding Losses.................................................24
8.5 Right of Banks to Fund through Other Offices...................25
8.6 Discretion of Banks as to Manner of Funding....................25
8.7 Mitigation of Circumstances; Replacement of
Affected Bank.............................................25
8.8 Conclusiveness of Statements; Survival of
Provisions................................................26
SECTION 9 WARRANTIES.....................................................26
9.1 Organization, etc..............................................26
9.2 Authorization; No Conflict.....................................26
9.3 Validity and Binding Nature....................................27
9.4 Financial Information..........................................27
9.5 No Material Adverse Change.....................................27
9.6 Litigation and Contingent Liabilities..........................27
9.7 Ownership of Properties; Liens.................................27
9.8 Subsidiaries...................................................28
9.9 Pension and Welfare Plans......................................28
9.10 Investment Company Act.........................................28
9.11 Public Utility Holding Company Act.............................28
9.12 Regulation U...................................................28
9.13 Taxes..........................................................28
9.14 Environmental and Safety and Health Matters....................29
9.15 Information....................................................29
SECTION 10 COVENANTS.........................................................30
10.1 Reports, Certificates and Other Information....................30
10.1.1 Audit Report...........................................30
10.1.2 Interim Reports........................................30
10.1.3 Compliance Certificate.................................30
10.1.4 Reports to SEC.........................................31
10.1.5 Notice of Default, Litigation and ERISA
Matters...............................................31
10.1.6 Subsidiaries...........................................31
10.1.7 Management Reports.....................................31
10.1.8 Other Information......................................32
10.2 Books, Records and Inspections.................................32
10.3 Insurance......................................................32
10.4 Taxes and Liabilities..........................................32
10.5 Maintenance of Existence, etc..................................32
10.6 Financial Ratios and Restrictions..............................32
10.6.1 Leverage Ratio.........................................32
10.6.2 Interest Coverage Ratio................................33
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PAGE
10.6.3 Tangible Partnership Equity............................33
10.6.4 Liabilities to Equity Ratio............................33
10.6.5 Cash, Cash Equivalents and Marketable
Securities....................................33
10.7 Mergers, Consolidations, Sales.................................33
10.8 Debt...........................................................35
10.9 Liens..........................................................35
10.10 Loans, Advances and Investments................................37
10.11 Restricted Payments............................................37
10.12 Use of Proceeds................................................37
10.13 Maintenance of Property........................................38
10.14 Employee Benefit Plans.........................................38
10.15 Environmental Covenants........................................38
10.15.1 Environmental Response Obligation.....................38
10.15.2 Environmental Liabilities.............................39
10.16 Unconditional Purchase Obligations.............................39
10.17 Inconsistent Agreements........................................39
10.18 Negative Pledges...............................................39
10.19 Transactions with Affiliates...................................39
10.20 Guaranty.......................................................40
10.21 Investments in Margin Stock....................................40
SECTION 11 CONDITIONS OF LENDING.............................................40
11.1 Initial Loan...................................................40
11.1.1 Notes..................................................40
11.1.2 Resolutions............................................40
11.1.3 Consents, etc..........................................41
11.1.4 Incumbency and Signature Certificates..................41
11.1.5 Guaranties.............................................41
11.1.6 Opinion of Counsel for the Borrowers
and the Guarantors..............................41
11.1.7 Opinion of Counsel for the Agent.......................41
11.1.8 Other..................................................41
11.1.9 Certificate............................................41
11.2 All Loans......................................................42
11.2.1 No Default.............................................42
11.2.2 Confirmatory Certificate...............................42
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT................................42
12.1 Events of Default..............................................42
12.1.1 Non-Payment of the Loans, etc..........................42
12.1.2 Non-Payment of Other Debt..............................42
12.1.3 Other Material Obligations.............................42
12.1.4 Bankruptcy, Insolvency, etc............................43
12.1.5 Non-Compliance with Provisions of
This Agreement..................................43
12.1.6 Warranties.............................................43
12.1.7 Pension Plans..........................................43
12.1.8 Judgments..............................................44
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PAGE
12.1.9 Invalidity of Guaranty, etc...........................44
12.1.10 Ownership of Lacy....................................44
12.2 Effect of Event of Default....................................44
SECTION 13 THE AGENT.........................................................45
13.1 Appointment and Authorization.................................45
13.2 Delegation of Duties..........................................45
13.3 Liability of Agent............................................45
13.4 Reliance by Agent.............................................46
13.5 Notice of Default.............................................46
13.6 Credit Decision...............................................47
13.7 Indemnification...............................................47
13.8 Agent in Individual Capacity..................................49
13.9 Successor Agent...............................................49
SECTION 14 GENERAL...........................................................49
14.1 Waiver; Amendments............................................49
14.2 Confirmations.................................................50
14.3 Notices.......................................................50
14.4 Computations..................................................51
14.5 Regulation U..................................................51
14.6 Costs, Expenses and Taxes.....................................51
14.7 Subsidiary References.........................................51
14.8 Captions......................................................52
14.9 Assignments; Participations...................................52
14.9.1 Assignments...........................................52
14.9.2 Participations........................................53
14.10 Governing Law.................................................54
14.11 Counterparts..................................................54
14.12 Successors and Assigns........................................54
14.13 Indemnification by the Borrowers..............................55
14.14 Payments Set Aside............................................55
14.15 No Third Parties Benefited....................................56
14.16 Forum Selection and Consent to Jurisdiction...................56
14.17 Waiver of Jury Trial..........................................56
14.18 Entire Agreement..............................................57
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SCHEDULE I Commitments and Percentages
EXHIBIT A Form of Notice of Borrowing (Section 2.3)
EXHIBIT B Form of Notice of Conversion/Continuation
(Section 2.4)
EXHIBIT C Form of Note (Section 3.1)
EXHIBIT D Subsidiaries (Section 9.8)
EXHIBIT E Environmental Matters (Section 9.14)
EXHIBIT F Liens (Section 10.9)
EXHIBIT G-1 Form of Guaranty of Obligations of the
Company (Section 11.1.5)
EXHIBIT G-2 Form of Guaranty of Obligations of Lacy
(Section 11.1.5
EXHIBIT H Form of Opinion of Counsel for the
Borrowers and the Guarantors (Section
11.1.6)
EXHIBIT I Form of Opinion of Counsel for the Agent
(Section 11.1.7)
EXHIBIT J Form of Assignment Agreement
(Section 14.9)
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CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of March 29, 1996 (as amended or
otherwise modified from time to time, this "Agreement"), is entered into among
LDI, LTD. (LIMITED PARTNERSHIP), an Indiana limited partnership (the "Company"),
LACY DISTRIBUTION, INC., an Indiana corporation ("Lacy") (the Company and Lacy
collectively the "Borrowers" and individually sometimes each a "Borrower"), the
undersigned financial institutions (collectively the "Banks" and individually
each a "Bank"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (in
its individual capacity, "BofA"), as agent for the Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):
Affected Bank means any Bank that has given notice to either Borrower
(which has not been rescinded) of (i) any obligation of such Borrower to pay any
amount pursuant to Section 8.1 or (ii) the occurrence of any circumstances of
the nature described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
Affiliate means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" (together with the
correlative meanings of "controlled by" and "under common control with") means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
Agent means BofA in its capacity as agent for the Banks hereunder and
any successor thereto in such capacity.
Agent-Related Persons means BofA and any successor agent arising under
Section 13.9, together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
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Agreement - see the Preamble.
Arranger - means BA Securities, Inc.
Asset Sale means any sale, conveyance, transfer, lease or other
disposition by the Company or any of its Subsidiaries, in one transaction or a
series of related transactions, of any property (including the capital stock of
any Subsidiary) of the Company or any of its Subsidiaries to any Person, except
for:
(a) any sale, conveyance, transfer, lease or other
disposition by the Company or any of its Subsidiaries
in the ordinary course of its business;
(b) the sale of the assets of Jessup Door, a division of
Lacy Diversified Industries, Ltd.;
(c) the sale of any Cash Equivalents or Marketable
Securities; and
(d) any sale or other disposition between (i) the Company
and any Guarantor or between Guarantors and (ii) Non-
Guarantor Subsidiaries.
Attorney Costs means and includes all reasonable fees and disbursements
of any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
BAI means Bank of America Illinois, an Illinois banking corporation.
Bank - see the Preamble.
Base Rate means at any time the greater of (a) the Federal Funds Rate
plus 1/2 of 1% and (b) the rate per annum then most recently announced by BofA
as its reference rate. (The "reference rate" is a rate set by BofA based upon
various factors, including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
BofA - see the Preamble.
Borrower - see the Preamble.
Business Day means any day on which commercial banks are open for
commercial banking business in Chicago, Illinois, New York, New York and San
Francisco, California and, in the case of
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a Business Day which relates to a Eurodollar Loan, on which dealings are carried
on in the offshore dollar interbank market.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property which, in
conformity with generally accepted accounting principles, is accounted for as a
capital lease on the balance sheet of such Person.
Cash Equivalent means, at any time, (a) any evidence of Debt, maturing
not more than one year after such time, issued or guaranteed by the United
States Government or any agency thereof, (b) commercial paper, maturing not more
than nine months from the date of issue, or corporate demand notes, in each case
(unless issued by a Bank or its holding company) rated at least A-l by Standard
& Poor's Ratings Group or P-l by Moody's Investors Service, Inc., (c) any
certificate of deposit (or time deposits represented by such certificates of
deposit) or bankers acceptance, maturing not more than one year after such time,
that are issued or sold by a Bank or a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, (d) any repurchase agreement
entered into with any Bank (or other commercial banking institution of the
stature referred to in clause (c)) which (i) is secured by a fully perfected
security interest in any obligation of the type described in any of clauses (a)
through (c) and (ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of such Bank (or
other commercial banking institution) thereunder and (e) investments in
short-term asset management accounts offered by any Bank for the purpose of
investing in loans to any corporation (other than an Affiliate of the Company)
or municipality, in each case organized under the laws of any state of the
United States or of the District of Columbia.
Closing Date means March 29, 1996.
Code means the Internal Revenue Code of 1986.
Commitment as to any Bank means the commitment of such Bank to make
Loans hereunder (subject to the terms and conditions hereof). The amount of the
initial Commitment of each Bank is set forth on Schedule I.
Company - see the Preamble.
Contingent Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment,
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to supply funds to or otherwise to invest in a debtor, or otherwise to assure a
creditor against loss) any indebtedness, obligation or other liability
(including accounts payable) of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the
indebtedness, obligation or other liability guaranteed thereby.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been recorded as liabilities on a balance sheet of
such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than current accounts payable in the
ordinary course of business), (d) all indebtedness secured by a Lien on the
property of such Person, whether or not such indebtedness shall have been
assumed by such Person (it being understood that if such Person has not assumed
or otherwise become personally liable for any such indebtedness, the amount of
the Debt of such Person in connection therewith shall be limited to the lesser
of the face amount of such indebtedness or the fair market value of all property
of such Person securing such indebtedness), (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit (whether or
not drawn) and banker's acceptances issued for the account of such Person and
(f) all Contingent Liabilities of such Person.
Dollar and the sign "$" mean lawful money of the United States of
America.
EBITDA means, for any period, consolidated net income before deducting
Interest Expense, taxes, minority interests in other Persons, depreciation and
amortization.
Effective Date - see Section 11.1.
ERISA means the Employee Retirement Income Security Act of 1974, and
any successor statute of similar import. References to sections of ERISA also
refer to any successor sections.
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means, with respect to the Agent or any Bank, the
office or offices of such Person which shall be making
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or maintaining the Eurodollar Loans of such Person hereunder or such other
office or offices through which such Person determines its Eurodollar Rate. A
Eurodollar Office of any Person may be, at the option of such Person, either a
domestic or foreign office.
Eurodollar Rate means, for any Interest Period, with respect to
Eurodollar Loans, the rate of interest per annum determined by the Agent as the
rate at which dollar deposits in the approximate amount of the Eurodollar Loan
of BofA (or, if BofA is the Agent but not a Bank, of the Affiliate of BofA
having the largest Percentage) for such Interest Period would be offered by BofA
(or the applicable Affiliate) to major banks in the offshore dollar interbank
market at their request at approximately 11:00 a.m. (New York City time) two
Business Days prior to the commencement of such Interest Period.
Eurodollar Rate (Reserve Adjusted) means the rate of interest per annum
(rounded upward, if necessary, to the next 1/100th of 1%) determined by the
Agent as follows:
Eurodollar Rate = Eurodollar Rate
--------------------------------------
(Reserve Adjusted) 1.00 - Eurodollar Reserve Percentage
The Eurodollar Rate (Reserve Adjusted) shall be adjusted automatically
as to all Eurodollar Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
Eurodollar Reserve Percentage means for any day for any Interest Period
the maximum reserve percentage (expressed as a decimal, rounded upward, if
necessary, to the next 1/100th of 1%) in effect on such day (whether or not
applicable to any Bank) under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as "Eurocurrency liabilities").
Event of Default means any of the events described in Section 12.1.
Existing Agreements means (x) the Long-Term Credit Agreement, dated as
of September 30, 1993, among the Company, various financial institutions, NBD
Bank, N.A., as Co-Agent, and BAI (then known as Continental Bank N.A.), as
agent, and (y) the Short-Term Credit Agreement dated as of September 30, 1993
among the Company, various financial institutions, NBD Bank, N.A., as co-agent,
and BAI (then known as Continental Bank N.A.), as agent.
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Existing Term Loans means (a) the $25,000,000 term loan from NBD Bank, N.A.
to the Company expiring June 3, 1998 and (b) the $5,000,000 term loan from NBD
Bank, N.A. to Major Video Concepts, Inc. and the Company expiring June 1, 1997.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m.( New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City,
selected by the Agent.
Fiscal Quarter means any fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
Floating Rate Loan means any Loan which bears interest at or by
reference to the Base Rate.
Funded Debt of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, whether or not evidenced by
bonds, debentures, notes or similar instruments, (b) all obligations of such
Person as lessee under Capital Leases which have been recorded as liabilities on
a balance sheet such Person and (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than current accounts
payable in the ordinary course of business).
Governmental Authority means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, 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.
Group - see Section 2.2.
Guarantor means (a) as of the Effective Date, Lacy (with respect to the
obligations of the Company pursuant to this Agreement), the Company (with
respect to the obligations of Lacy pursuant to this Agreement), Major Video
Concepts, Inc., Ed Tucker Distributor, Inc., Answer Products, Inc., Lacy
Diversified
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Industries, Ltd. and Tucker Rocky Distributing, Canada, Inc. and (b)
thereafter, the Persons identified in clause (a) and each other Person which
from time to time executes and delivers a counterpart of either Guaranty (except
to the extent any such Person is released from its obligations under either
Guaranty pursuant to Section 10.7).
Guaranty - see Section 11.1.5.
Hazardous Material means any hazardous, toxic or dangerous substance or
material defined as such in (or for purposes of) the Comprehensive Environmental
Response, Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law or any other Federal, state or local statute, law, ordinance,
code, regulation or order, or any other requirement of any governmental
authority regulating, relating to, or imposing liability for, or standards of
conduct concerning, any hazardous, toxic or dangerous waste, substance or
material as now or any time hereafter in effect.
Interest Coverage Ratio means, as of the last day of any Fiscal
Quarter, the ratio for the Company and its Subsidiaries of (a) consolidated net
income before deducting Interest Expense, taxes and minority interests in other
Persons for the four Fiscal Quarter period ending on such day to (b) Interest
Expense for such period.
Interest Expense means for any period the consolidated interest expense
of the Company and its Subsidiaries for such period (including all imputed
interest on Capital Leases).
Interest Period means, as to any Eurodollar Loan, the period commencing
on the date such Loan is borrowed or on the date on which such Loan is converted
into or continued as a Eurodollar Loan, and ending on the date one, two, three
or six months thereafter as selected by the applicable Borrower pursuant to
Section 2.3 or 2.4, as applicable; provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
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(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
Lacy - see the Preamble.
Leverage Ratio means, as of any date, the ratio for the Company and its
Subsidiaries on a consolidated basis of (a) Funded Debt on such date to (b)
EBITDA for the period of four consecutive Fiscal Quarters most recently ended on
or immediately prior to such date.
Liabilities to Equity Ratio means the ratio of (a) all obligations
which are or should be classified as liabilities on a consolidated balance sheet
of the Company and its Subsidiaries to (b) Tangible Partnership Equity.
Lien means, when used with respect to any Person, any interest in any
real or personal property, asset or other right owned or being purchased or
acquired by such Person which secures payment or performance of any obligation
and shall include any mortgage, lien, encumbrance, charge or other security
interest of any kind, whether arising by contract, as a matter of law, by
judicial process or otherwise.
Loan - see Section 2.1.
Loan Documents means this Agreement, the Notes and each Guaranty.
Margin means (a) initially, 0.450% and (b) on and after any date
specified below on which the Margin is to be adjusted, the rate per annum set
forth below opposite the applicable Leverage Ratio:
Leverage Ratio Margin
Equal to or greater 0.750%
than 3.5 to 1
Equal to or greater 0.600%
than 3.00 to 1
but less than 3.50 to 1
Equal to or greater 0.450%
than 2.0 to 1
but less than 3.0 to 1
Less than 2.0 0.350%
to 1
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The Margin shall be adjusted, to the extent applicable, 45 days (or, in
the case of the last Fiscal Quarter of any Fiscal Year, 90 days) after the end
of each Fiscal Quarter (beginning with the fiscal quarter ending June 30,1996)
based on the Leverage Ratio as of the last day of such Fiscal Quarter; it being
understood that if the Company fails to deliver the financial statements
required by Section 10.1.1 or 10.1.2, as applicable, and the certificate
required by Section 10.1.3, by the 45th day (or, if applicable, the 90th day)
after any Fiscal Quarter, the Margin shall be 0.750% until such financial
statements are delivered.
Margin Stock means any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
Marketable Security means any stock, bond or mutual fund, in each case,
that is publicly traded in the United States and investments in Blackstone
Partners Investment Fund L.P.; provided, however, that the securities of any
Subsidiary of the Company shall not be considered a Marketable Security.
Material Adverse Effect means a material adverse effect on (a) the
financial condition, operations, business, assets or assets of the Company and
its Subsidiaries taken as a whole or (b) the ability of the Borrowers or any
Guarantor to timely and fully perform any of its obligations under any Loan
Document to which it is a party.
Net Cash Proceeds means the cash proceeds (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment or otherwise, but only as
and when received) of any Asset Sale, net of all attorney's fees, accountants'
fees, investment banking fees, survey costs, title insurance premiums and
required debt payments (other than pursuant to this Agreement), any income,
franchise, transfer or other tax liability arising directly from such
transaction and all other fees and charges arising directly from such
transaction.
Non-Guarantor Subsidiary - see Section 10.7.
Note - see Section 3.1.
Non-Reportable Environmental Event means any event described in Section
9.14 or 10.15 with respect to which the amount for which the Company or any
Subsidiary may reasonably be expected to be obligated is less than $500,000
(excluding any amount which is covered by insurance and with respect to which
the insurer has accepted a tender of defense and indemnification without
reservation of rights); provided that no such event shall be
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considered a Non-Reportable Environmental Event if the amount for which the
Company or any Subsidiary may reasonably be expected to be obligated would cause
the aggregate amount of all such obligations of the Company and its Subsidiaries
with respect to all Non-Reportable Environmental Events to exceed $2,500,000.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Company or any
corporation, trade or business that is, along with the Company, a member of a
controlled group of corporations or a controlled group of trades or businesses,
as described in sections 414(b) and 414(c), respectively, of the Code or section
4001 of ERISA, may have any liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
Percentage means as to any Bank the percentage which such Bank's
Commitment is of the aggregate Commitments (or, if the Commitments have
terminated, which the principal amount of such Bank's outstanding Loans is of
the principal amount of all outstanding Loans). The Percentages of the Banks as
of the Effective Date are set forth on Schedule I.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, or any other entity, whether acting
in an individual, fiduciary or other capacity.
Required Banks means Banks having an aggregate Percentage of 66-2/3% or
more.
Responsible Officer means the chief executive officer or the president
of the Company, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants, the
chief financial officer of the Company or any other officer having substantially
the same authority and responsibility.
Restricted Margin Stock means, at any time, all of the Margin Stock
owned by the Company and its Subsidiaries to the extent the value of such Margin
Stock does not exceed 25% of the value of the total assets of the Company and
its Subsidiaries (determined on a consolidated basis) which are subject to the
provisions of Section 10.7 or 10.9.
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SEC means the Securities and Exchange Commission.
Steego means that portion of the business operations of Parts Depot
Company L.P., a Delaware limited partnership, which is known as "Steego Auto
Paints" and which is involved in the marketing and selling of automotive paints
and related products and services through wholesale and retail locations in
Florida.
Steego Acquisition means the acquisition of substantially all of the
assets of Steego by the Company or any Subsidiary.
Subsidiary means, with respect to any Person, (a) any corporation of
which such Person and/or its other Subsidiaries own, directly or indirectly,
such number of outstanding shares as have more than 50% of the ordinary voting
power for the election of directors and (b) any partnership (or similar entity)
of which such Person and/or the other Subsidiaries own, directly or indirectly,
more than 50% of the equity interests. Unless the context otherwise requires,
each reference to Subsidiaries herein shall be a reference to Subsidiaries of
the Company.
Tangible Partnership Equity means the sum of (i) the Company's total
partnership equity, (ii) the total minority interests of other Persons owned by
the Company and its Subsidiaries and (iii) to the extent not included in the
calculation of the Company's total partnership equity, any unrecognized gains
with respect to Marketable Securities owned by the Company and its Subsidiaries
minus the sum of (i) to the extent not included in the calculation of the
Company's total partnership equity, any unrecognized losses with respect to
Marketable Securities owned by the Company and its Subsidiaries and (ii) to the
extent included on the Company's consolidated balance sheet, (a) goodwill, (b)
the cost of acquired assets in excess of their book value, (c) covenants not to
compete, (d) organization and experimental expense, (e) patents, trademarks,
tradenames and copyrights, (f) treasury stock, (g) franchises, licenses and
permits, (h) deferred charges (except deferred taxes) and (i) all assets (other
than any of the foregoing) which are deemed intangible in accordance with
generally accepted accounting principles.
Termination Date means March 29, 2001 or such other date on which the
Commitments shall terminate pursuant to Section 6 or 12.
Type of Loan or Borrowing - see Section 1.2. The Types of Loans or
borrowings under this Agreement are as follows: Floating Rate Loans or
borrowings and Eurodollar Loans or borrowings.
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Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
Unrestricted Margin Stock means all Margin Stock owned by the Company
and its Subsidiaries other than Restricted Margin Stock.
Welfare Plan means a "welfare plan", as such term is defined in section
3(1) of ERISA.
1.2 Other Interpretive Provisions. (a) The meanings of
defined terms are equally applicable to the singular and plural
forms of the defined terms.
(b) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES.
2.1 Commitments. Subject to the terms and conditions of this Agreement,
each of the Banks, severally and for itself alone, agrees to make loans to the
Borrowers on a revolving basis (collectively the "Loans" and individually each a
"Loan") from time to time before the Termination Date in such Bank's
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Percentage of such aggregate amounts as the Borrowers may from time to time
request from all Banks; provided, however, that (i) the aggregate principal
amount which any Bank shall be committed to have outstanding hereunder on loan
to the Borrowers shall not at any one time exceed the amount of such Bank's
Commitment; and (ii) the aggregate principal amount which all Banks shall be
committed to have outstanding hereunder on loan to the Borrowers shall not at
any one time exceed $200,000,000 (as such amount is reduced from time to time
pursuant to Section 6.1).
2.2 Various Types of Loans. Each Loan shall be either a Floating Rate
Loan or a Eurodollar Loan (each a "Type" of Loan), as the applicable Borrower
shall specify in the related notice of borrowing, conversion or continuation
pursuant to Section 2.3 or 2.4. Eurodollar Loans having the same Interest Period
are sometimes called a "Group" or collectively "Groups". Floating Rate Loans and
Eurodollar Loans may be outstanding at the same time, provided that (i) not more
than fifteen different Interest Periods shall be outstanding at any one time for
all Eurodollar Loans and (ii) the aggregate principal amount of each Group of
Eurodollar Loans shall at all times (including after giving effect to any
continuation or conversion) be at least $4,000,000 and an integral multiple of
$1,000,000.
2.3 Borrowing Procedures. The applicable Borrower shall give written
notice to the Agent of each proposed borrowing not later than (a) in the case of
a Floating Rate borrowing, 9:30 A.M., Chicago time, on the proposed date of such
borrowing, and (b) in the case of a Eurodollar borrowing, 10:00 A.M., Chicago
time, at least three Business Days prior to the proposed date of such borrowing.
Each such notice shall be in the form of Exhibit A, shall be effective upon
receipt by the Agent and shall specify the date, amount and Type of borrowing
and, in the case of a Eurodollar borrowing, the initial Interest Period
therefor. Promptly upon receipt of such notice, the Agent shall advise each Bank
thereof. Not later than noon, Chicago time, on the date of a proposed borrowing,
each Bank shall provide the Agent at its address set forth below its signature
hereto (or any other office designated by the Agent in written notice to the
Banks) with immediately available funds covering such Bank's Percentage of such
borrowing and, subject to the satisfaction of the conditions precedent set forth
in Section 11 with respect to such borrowing, the Agent shall pay over the
requested amount to the applicable Borrower on the requested borrowing date.
Each borrowing shall be on a Business Day. Each borrowing of Floating Rate Loans
shall be in an aggregate amount of at least $1,000,000 and an integral multiple
of $100,000.
2.4 Conversion and Continuation Procedures. (a) The Borrowers may, upon
irrevocable written notice to the Agent in accordance with subsection 2.4(b):
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(i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable Interest
Period, in the case of Eurodollar Loans, to convert any such Loans (or
any part thereof in an aggregate amount not less than $4,000,000, in
the case of Eurodollar Loans, and $1,000,000 in the case of Base Rate
Loans, or in either case a higher integral multiple of $100,000) into
Loans of the other Type; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Eurodollar Loans having Interest
Periods expiring on such day (or any part thereof in an amount not less
than $4,000,000, or a higher integral multiple of $100,000);
provided that if at any time the aggregate amount of any Group of Eurodollar
Loans is reduced, by payment, prepayment, or conversion of part thereof, to be
less than $4,000,000, such Eurodollar Loans shall automatically convert into
Base Rate Loans.
(b) The applicable Borrower shall deliver a notice of
conversion or continuation in the form of Exhibit B to be received by the Agent
not later than 10:00 a.m. (Chicago time) at least (i) three Business Days in
advance of the date of conversion or continuation, if the Loans are to be
converted into or continued as Eurodollar Loans; and (ii) one Business Day in
advance of the date of conversion or continuation, if the Loans are to be
converted into Base Rate Loans, specifying:
(A) the proposed date of conversion or
continuation;
(B) the aggregate amount of Loans to be
converted or continued;
(C) the Type of Loans resulting from the
proposed conversion or continuation; and
(D) in the case of a continuation of, or
conversion, into Eurodollar Loans, the duration of the
requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to Eurodollar Loans, the applicable Borrower has failed to select timely a new
Interest Period to be applicable to such Eurodollar Loans, the applicable
Borrower shall be deemed to have elected to convert such Eurodollar Loans into
Base Rate Loans effective as of the expiration date of such Interest Period.
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(d) The Agent will promptly notify each Bank of its receipt of
a notice of conversion or continuation pursuant to Section 2.4, or, if no timely
notice is provided by the applicable Borrower, the Agent will promptly notify
each Bank of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Bank.
(e) Unless the Required Banks otherwise consent, during the
existence of an Event of Default or Unmatured Event of Default, neither Borrower
may elect to have a Loan converted into or continued as a Eurodollar Loan.
2.5 Warranty upon Conversion or Continuation. Each notice of conversion
or continuation pursuant to Section 2.4 shall automatically constitute a
warranty by the Borrowers to the Agent and each Bank to the effect that, on the
date of such requested conversion or continuation, no Event of Default or
Unmatured Event of Default shall have then occurred and be continuing.
2.6 Conditions. Notwithstanding any other provision of this Agreement,
no Bank shall be obligated to make any Loan, or to convert into or permit the
continuation at the end of the applicable Interest Period of any Eurodollar
Loan, if an Event of Default or Unmatured Event of Default exists or would
result therefrom.
2.7 Pro Rata Treatment. All borrowings, conversions and repayments
shall be effected so that, after giving effect thereto, each Bank will have a
pro rata share (according to its Percentage) of all Types and Groups of Loans.
2.8 Commitments Several. The failure of any Bank to make a requested
Loan on any date shall not relieve any other Bank of its obligation (if any) to
make a Loan on such date, but no Bank shall be responsible for the failure of
any other Bank to make any Loan to be made by such other Bank.
2.9 Payments by the Banks to the Agent. Unless the Agent receives notice
from a Bank on or prior to the Effective Date or, with respect to any Loan after
the Effective Date, at least one Business Day prior to the date of such Loan,
that such Bank will not make available as and when required hereunder to the
Agent for the account of the applicable Borrower the amount of that Bank's pro
rata share (according to its Percentage) of the borrowing, the Agent may assume
that such Bank has made such amount available to the Agent in immediately
available funds on the date of such borrowing and the Agent may (but shall not
be so required), in reliance upon such assumption, make available to the
applicable Borrower on such date a corresponding amount. If
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and to the extent any Bank shall not have made its full amount available to the
Agent in immediately available funds and the Agent in such circumstances has
made available to the applicable Borrower such amount, such Bank shall on the
Business Day following such date make such amount available to the Agent,
together with interest at the Federal Funds Rate for each day during such
period. A notice of the Agent submitted to any Bank with respect to amounts
owing under this Section 2.9 shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent shall constitute such
Bank's Loan on the date of borrowing for all purposes of this Agreement. If such
amount is not made available to the Agent on the Business Day following such
date, the Agent will notify the applicable Borrower of such failure to fund and,
upon demand by the Agent, the applicable Borrower shall pay such amount to the
Agent for the Agent's account, together with interest thereon for each day
elapsed since the date of such borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such borrowing.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank to each Borrower shall be evidenced
by a promissory note from each Borrower (as amended, supplemented, replaced or
otherwise modified from time to time, individually each a "Note" and
collectively for all Banks the "Notes") substantially in the form set forth in
Exhibit C, with appropriate insertions, dated the Effective Date (or such
earlier date as shall be satisfactory to the Agent), payable to the order of
such Bank in the principal amount of the Commitment of such Bank (or, if less,
in the aggregate unpaid principal amount of such Bank's Loans) on the Effective
Date.
3.2 Recordkeeping. Each Bank shall record in its records, or at its
option on the schedule attached to the applicable Note, the date and amount of
each Loan made by such Bank to such Borrower, each repayment or conversion
thereof and, in the case of each Eurodollar Loan, the dates on which each
Interest Period for such Loan shall begin and end. The aggregate unpaid
principal amount so recorded shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on such Note. The failure to so record any
such amount or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of the Borrowers hereunder or under
any Note to repay the principal amount of the Loans evidenced by such Note
together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Borrowers promise to pay interest on the unpaid
principal amount of each Loan for the period
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commencing on the date of such Loan until such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at a
rate per annum equal to the Base Rate from time to time in effect; and
(b) at all times while such Loan is a Eurodollar Loan, at a
rate per annum equal to the Eurodollar Rate (Reserve Adjusted)
applicable to each Interest Period for such Loan plus the Margin from
time to time in effect;
provided, however, that the interest rate applicable to each Loan shall be
increased by 2% (i) at any time that an Event of Default exists under Section
12.1.1 or 12.1.4 and (ii) upon notice from the Required Banks at any time any
other Event of Default exists.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate Loan
shall be payable on the last day of each calendar quarter and at maturity,
commencing with the first of such dates to occur after the date of such Loan.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
each Interest Period relating to such Loan (and, in the case of each Eurodollar
Loan with an Interest Period in excess of three months, on each three-month
anniversary of the first day of such Interest Period) and at maturity. After
maturity, accrued interest on all Loans shall be payable on demand.
4.3 Setting and Notice of Eurodollar Rates. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Agent and notice
thereof shall be given by the Agent promptly to the applicable Borrower and each
Bank. Each determination of the applicable Eurodollar Rate by the Agent shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error. The Agent shall, upon written request of the applicable Borrower or any
Bank, deliver to the applicable Borrower or such Bank a statement showing the
computations used by the Agent in determining any applicable Eurodollar Rate
hereunder.
4.4 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The applicable
interest rate for each Floating Rate Loan shall change simultaneously with each
change in the Base Rate.
SECTION 5 FEES.
5.1 Non-Use Fee. (a) The Borrowers jointly and severally agree to pay to
each Bank, a fee equal to the sum of the fees set
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forth in the next sentence, which fee shall be payable in arrears on the Closing
Date; provided that if such Bank is a lender under the Existing Agreements, the
fee payable to such Bank shall equal the remainder of (A) the sum of the fees
set forth below minus (B) the aggregate amount of the non-use fees such Bank
receives pursuant to the Existing Agreements for the period from February 15,
1996 through the day prior to the Closing Date. The fees payable to the Banks
are (i) for the period from February 15, 1996 through March 3, 1996, a fee equal
to 0.30% per annum of the amount of the proposed facility for the Borrowers
allocated to such Bank pursuant to the allocation memorandum dated February 15,
1996 sent via facsimile from BA Securities to each Bank and (ii) for the period
from March 4, 1996 through the day prior to the Closing Date, a fee equal to
0.15% per annum of the amount of the total Commitment under this Agreement
allocated to such Bank.
(b) The Borrowers jointly and severally agree to pay to each Bank a
non-use fee for the period from the Closing Date to the Termination Date in an
amount equal to the Commitment Fee Percentage (as defined below) per annum of
the daily average of the unused amount of such Bank's Commitment. Such non-use
fee shall be payable in arrears on the last day of each calendar quarter and on
the Termination Date for any period then ending for which such non-use fee shall
not have been theretofore paid. For purposes of the foregoing, Commitment Fee
Percentage means (a) until the Company delivers to the Agent and the Banks the
financial reports required by Section 10.1.2 and the certificate required by
Section 10.1.3 for the fiscal quarter ended June 30, 1996, 0.175% and (b) on and
after any date specified below on which the Commitment Fee Percentage is to be
adjusted, the rate per annum set forth below opposite the applicable Leverage
Ratio:
Commitment Fee
Leverage Ratio Percentage
Equal to or greater 0.250%
than 3.5 to 1
Equal to or greater 0.200%
than 3.0 to 1
but less than 3.5 to 1
Equal to or greater 0.175%
than 2.0 to 1
but less than 3.0 to 1
Less than 2.0 to 1 0.150%
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The Commitment Fee Percentage shall be adjusted, to the extent
applicable, 45 days (or, in the case of the last Fiscal Quarter of any Fiscal
Year, 90 days) after the end of each Fiscal Quarter based on the Leverage Ratio
as of the last day of such Fiscal Quarter; it being understood that if the
Company fails to deliver the financial statements required by Section 10.1.1 or
10.1.2, as applicable, and the certificate required by Section 10.1.3, by the
45th day (or, if applicable, the 90th day) after any Fiscal Quarter, the
Commitment Fee Percentage shall be 0.250% until such financial statements are
delivered.
(c) The fees described in the foregoing provisions of this Section 5.1
shall be computed for the actual number of days elapsed on the basis of a year
of 360 days.
5.2 Participation Fee. The Borrowers agree to pay to each
Bank on the Effective Date a participation fee in the amount
previously agreed by the Borrowers and such Bank.
5.3 Agent's and Arranger's Fees. The Borrowers agree to pay to the
Agent and the Arranger such fees at such times and in such amounts as are
mutually agreed upon from time to time by the Borrowers and the Agent and the
Arranger, respectively.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS.
6.1 Reduction or Termination of the Commitments.
6.1.1 Mandatory Reductions. Concurrently with the receipt by the
Company or any Subsidiary of any Net Cash Proceeds from any Asset Sale which
results in the total Net Cash Proceeds received in any fiscal year being in
excess of $20,000,000, the Commitments shall be automatically reduced by an
amount equal to the excess of (a) 75% of the Net Cash Proceeds received by the
Company and its Subsidiaries in such fiscal year over (b) $20,000,000 (which
amount shall be rounded to the nearest, or if there is no nearest, the next
highest, integral multiple of $1,000,000).
6.1.2 Voluntary Reduction or Termination. The Borrowers may from time
to time on at least 30 Business Days' prior written notice received by the Agent
(which shall promptly advise each Bank thereof) permanently reduce the amount of
the Commitments to an amount not less than the aggregate unpaid principal amount
of the Loans. Any such reduction shall be in an amount that is an integral
multiple of $5,000,000. The Borrowers may at any time on like notice terminate
the Commitments upon payment in full of all Loans and all other obligations of
the Borrowers hereunder.
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6.1.3 Reductions Pro Rata. All reductions of the Commitments shall
be pro rata among the Banks according to their respective Percentages.
6.2 Prepayments.
6.2.1 Mandatory Prepayments. If as a result of any mandatory reduction
of the Commitments pursuant to Section 6.1.1 the aggregate principal amount of
the outstanding Loans exceeds the aggregate amount of the Commitments (as so
reduced), the Borrowers will immediately make a prepayment of the Loans in the
amount necessary to eliminate such excess. Any such prepayment shall be applied,
first, to Floating Rate Loans of the applicable Borrower and, then, to such
Eurodollar Loans of the applicable Borrower as the applicable Borrower shall
direct (or, in the absence of such direction, as the Agent shall determine in
its discretion).
6.2.2 Voluntary Prepayments. The Borrowers may from time to time prepay
the Loans in whole or in part, provided that (a) the applicable Borrower shall
give the Agent (which shall promptly advise each Bank) not less than one
Business Day's prior written notice thereof, in the case of Floating Rate Loans,
and three (or, if such prepayment is to be made on a day other than the last day
of an Interest Period five) Business Days' prior written notice thereof, in the
case of Eurodollar Loans, in each case specifying the Loans to be prepaid and
the date and amount of prepayment, (b) Eurodollar Loans may only be prepaid on
the last day of the Interest Period therefor and (c) each partial prepayment of
Loans shall be in an aggregate principal amount of at least $1,000,000 and an
integral multiple of $100,000. After giving effect to any prepayment of
Eurodollar Loans, each Group of Eurodollar Loans shall be at least $4,000,000
and an integral multiple of $1,000,000.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all fees, shall be made by the applicable Borrower to the Agent in
immediately available funds at its office in Chicago not later than noon,
Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the next following Business Day.
The Agent shall promptly remit to each Bank its share of all such payments
received in collected funds by the Agent for the account of such Bank.
All payments under Sections 8.1 and 8.4 shall be made by the applicable
Borrower directly to the Bank or Banks entitled thereto.
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7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the applicable Borrower shall direct by notice to be
received by the Agent on or before the date of such payment, or in the absence
of such notice, as the Agent shall determine in its discretion. Concurrently
with each remittance to any Bank of its share of any such payment, the Agent
shall advise such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes, or of fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a Eurodollar Loan, such immediately
following Business Day is the first Business Day of a calendar month, in which
case such due date shall be the immediately preceding Business Day) and, in the
case of principal, additional interest shall accrue and be payable for the
period of any such extension.
7.4 Setoff. Subject to any contrary agreement between the applicable
Borrower and the Agent or any Bank with respect to any particular account, each
Borrower agrees that the Agent and each Bank have all rights of set-off and
bankers' lien provided by applicable law, and in addition thereto, each Borrower
agrees that at any time (i) any payment or other amount owing by such Borrower
under this Agreement is then due to the Agent or any Bank or (ii) any Event of
Default exists, the Agent and each Bank may apply to the payment of such payment
or other amount (or, in the case of clause (ii), to any obligation of such
Borrower hereunder, whether or not then due) any and all balances, credits,
deposits, accounts or moneys of such Borrower then or thereafter with the Agent
or such Bank.
7.5 Proration of Payments. If any Bank shall obtain by payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of or interest on any Loan in excess of its pro rata
share of payments and other recoveries obtained by all Banks on account of
principal of and interest on all Loans (other than any non-pro rata interest
payment resulting from a Loan being an Affected Loan or any payment resulting
from replacement of a Bank pursuant to Section 8.7), such Bank shall purchase
from the other Banks such participation in the Loans held by them as shall be
necessary to cause such purchasing Bank to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Bank, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
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SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If (i) Regulation D of the Board of Governors
of the Federal Reserve System, or (ii) after the date hereof, the adoption of
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Bank (or any Eurodollar Office of such Bank) with any request or directive
(whether or not having the force of law) of any such Governmental Authority
(A) shall subject any Bank (or any Eurodollar Office of such
Bank) to any tax, duty or other charge with respect to its Eurodollar
Loans, its Note or its obligation to make Eurodollar Loans, or shall
change the basis of taxation of payments to any Bank of the principal
of or interest on its Eurodollar Loans or any other amounts due under
this Agreement in respect of its Eurodollar Loans or its obligation to
make Eurodollar Loans (except for changes in the rate of tax on the
overall net income of such Bank or its Eurodollar Office imposed by the
jurisdiction in which such Bank's principal executive office or
Eurodollar Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including any reserve imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve included in the determination
of interest rates pursuant to Section 4), special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by any Bank (or any Eurodollar Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office) any
other condition affecting its Eurodollar Loans, its Note or its
obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D referred to above, to impose a cost on) such Bank (or any
Eurodollar Office of such Bank) of making or maintaining any Eurodollar Loan, or
to reduce the amount of any sum received or receivable by such Bank (or its
Eurodollar Office) under this Agreement or under its Note with respect thereto,
then within 10 days after demand by such Bank (which demand shall be accompanied
by a statement setting forth the basis of such demand, a copy of which shall be
furnished to the Agent), the applicable Borrower shall pay directly to such Bank
such additional amount or amounts as will compensate such Bank for such
increased cost or such reduction.
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(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Eurodollar Office) or any Person controlling such Bank with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, has or would have the effect of reducing the
rate of return on such Bank's or such controlling Person's capital as a
consequence of such Bank's obligations hereunder (including such Bank's
Commitment) to a level below that which such Bank or such controlling Person
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or such controlling Person's policies with respect to
capital adequacy) by an amount deemed by such Bank or such controlling Person to
be material, then from time to time, within 10 days after demand by such Bank
(which demand shall be accompanied by a statement setting forth the basis of
such demand, a copy of which shall be furnished to the Agent), the Borrowers
shall pay to such Bank such additional amount or amounts as will compensate such
Bank or such controlling Person for such reduction. The liability of the
Borrowers under this clause (b) shall be joint and several.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to one or more Banks in the relevant market for such Interest Period, or
the Agent otherwise reasonably determines (which determination shall be binding
and conclusive on the Borrowers) that by reason of circumstances affecting the
offshore dollar interbank market adequate and reasonable means do not exist for
ascertaining the applicable Eurodollar Rate; or
(b) Banks having an aggregate Percentage of 35% or more advise the
Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the Agent
will not adequately and fairly reflect the cost to such Banks of maintaining or
funding such Loans for such Interest Period, or that the making or funding of
Eurodollar Loans has become impracticable as a result of an event occurring
after the date of this Agreement which in the opinion of such Banks materially
affects such Loans,
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for
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each Eurodollar Loan, such Loan shall, unless then repaid in full, automatically
convert to a Floating Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event that
any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any Governmental Authority or other regulatory body charged with
the administration thereof, should make it (or in the good faith judgment of any
Bank cause a substantial question as to whether it is) unlawful for any Bank to
make, maintain or fund Eurodollar Loans, then such Bank shall promptly notify
each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Bank shall have no obligation to make or convert into
Eurodollar Loans (but shall make Floating Rate Loans concurrently with the
making of or conversion into Eurodollar Loans by the Banks which are not so
affected, in each case in an amount equal to such Bank's Percentage of all
Eurodollar Loans which would be made or converted into at such time in the
absence of such circumstances) and (b) on the last day of the current Interest
Period for each Eurodollar Loan of such Bank (or, in any event, if such Bank so
requests, on such earlier date as may be required by the relevant law,
regulation or interpretation), such Eurodollar Loan shall, unless then repaid in
full, automatically convert to a Floating Rate Loan. Each Floating Rate Loan
made by a Bank which, but for the circumstances described in the foregoing
sentence, would be a Eurodollar Loan (an "Affected Loan") shall, notwithstanding
any other provision of this Agreement, remain outstanding for the same period as
the Group of Eurodollar Loans of which such Affected Loan would be a part absent
such circumstances.
8.4 Funding Losses. Each Borrower hereby agrees that upon demand by any
Bank (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed, a copy of which shall be
furnished to the Agent) such Borrower will indemnify such Bank against any net
loss or expense which such Bank may sustain or incur (including any net loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund or maintain any Eurodollar Loan), as
reasonably determined by such Bank, as a result of (a) any payment or prepayment
or conversion of any Eurodollar Loan of such Bank to such Borrower on a date
other than the last day of an Interest Period for such Loan (including any
conversion pursuant to Section 8.3) or (b) any failure of such Borrower to
borrow or convert any Loan on a date specified therefor in a notice of borrowing
or conversion pursuant to this Agreement. For this purpose, all notices to the
Agent pursuant to this Agreement shall be deemed to be irrevocable.
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8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it
so elects, fulfill its commitment as to any Eurodollar Loan by causing a foreign
branch or affiliate of such Bank to make such Loan, provided that in such event
for the purposes of this Agreement such Loan shall be deemed to have been made
by such Bank and the obligation of the applicable Borrower to repay such Loan
shall nevertheless be to such Bank and shall be deemed held by it, to the extent
of such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank. (a) Each
Bank shall promptly notify the Borrowers and the Agent of any event of which it
has knowledge which will result in, and will use reasonable commercial efforts
available to it (and not, in such Bank's sole judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Borrowers to pay any amount pursuant to Section 8.1 and (ii) the occurrence of
any circumstance of the nature described in Section 8.2 or 8.3 (and, if any Bank
has given notice of any such event described in clause (i) or (ii) above and
thereafter such event ceases to exist, such Bank shall promptly so notify the
Borrowers and the Agent). Without limiting the foregoing, each Bank will
designate a different funding office if such designation will avoid (or reduce
the cost to the Borrowers of) any event described in clause (i) or (ii) of the
preceding sentence and such designation will not, in such Bank's sole judgment,
be otherwise disadvantageous to such Bank.
(b) At any time any Bank is an Affected Bank, the Borrowers may replace
such Affected Bank as a party to this Agreement with one or more other bank(s)
or financial institution(s) reasonably satisfactory to the Agent, such bank(s)
or financial institution(s) to have a Commitment or Commitments, as the case may
be, in such amounts as shall be reasonably satisfactory to the Agent (and upon
notice from the Borrowers such Affected Bank shall assign, without recourse or
warranty, its Commitment, its Loans, its Note and all of its other rights and
obligations hereunder to such replacement bank(s) or other financial
institution(s) for a purchase price equal to the sum of the
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principal amount of the Loans so assigned, all accrued and unpaid interest
thereon, its ratable share of all accrued and unpaid non-use fees, any amounts
payable under Section 8.4 as a result of such Bank receiving payment of any
Eurodollar Loan prior to the end of an Interest Period therefor and all other
obligations owed to such Affected Bank hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Banks may use reasonable
averaging and attribution methods in determining compensation under Sections 8.1
and 8.4, and the provisions of such Sections shall survive the expiration or
termination of the Commitments, the repayment of the Loans and the other
liabilities of the Borrowers hereunder and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans hereunder, the Borrowers warrant to the Agent and
the Banks that:
9.1 Organization, etc. The Company is a limited partnership duly
organized and validly existing under the laws of the State of Indiana; Lacy is a
corporation duly organized and validly existing under the laws of the State of
Indiana; each Guarantor is duly organized and validly existing under the laws of
the jurisdiction of its incorporation or organization; and the Company, Lacy and
each Guarantor is duly qualified to do business in each other jurisdiction where
the nature of its business makes such qualification necessary, except where such
failure to so qualify would not have a Material Adverse Effect.
9.2 Authorization; No Conflict. The execution and delivery by each
Borrower of this Agreement, the applicable Notes and each other Loan Document to
which it is a party, the borrowings hereunder, the execution and delivery by
each Guarantor of each Guaranty, and the performance by each Borrower and each
Guarantor of its obligations under each Loan Document to which it is a party are
within the corporate or partnership powers of each Borrower and each Guarantor,
have been duly authorized by all necessary corporate or partnership action on
the part of each Borrower and each Guarantor (including any necessary
shareholder or partner action), have received all necessary governmental
approval (if any shall be required), and do not and will not (a) violate any
provision of law or any order, decree or judgment of any court or other
government agency which is binding on either Borrower or any Guarantor, (b)
contravene or conflict with, or result in a breach of, any provision of the
partnership agreement, certificate of incorporation, by-laws or other
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organizational documents of either Borrower or any Guarantor or of any
agreement, indenture, instrument or other document which is binding on either
Borrower or any Guarantor or (c) result in, or require, the creation or
imposition of any Lien on any property of either Borrower or any Guarantor or
any of their respective Subsidiaries.
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each other Loan Document to which either Borrower
is a party will be, the legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms; and upon the
execution and delivery thereof by any Guarantor, each Guaranty will be the
legal, valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms.
9.4 Financial Information. The Company has delivered to the Banks the
following financial statements: (i) the combined statements of assets,
liabilities and partners' equity of the Company and the combined statements of
income and loss and changes in assets, liabilities and partners' equity of the
Company for the 1995 Fiscal Year, certified by Coopers & Lybrand; (ii) the
audited consolidated balance sheet of the Company and its Subsidiaries as of
December 31, 1995, certified by Coopers & Lybrand; and (iii) the audited
consolidated balance sheet of Lacy as of December 31, 1995; and (iv) the audited
consolidated statements of earnings and cash flow for Lacy for the fiscal year
then ended, certified by Coopers & Lybrand. All of such financial statements
have been prepared in accordance with generally accepted accounting principles
and fairly present the financial position and results of operations of the
applicable entity as of the dates thereof and for the periods then ended.
9.5 No Material Adverse Change. Since the date of the audited financial
statements described in Section 9.4, there has been no event or occurrence which
has had or is reasonably likely to have a Material Adverse Effect.
9.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental proceeding is
pending or, to the Company's knowledge, threatened against the Company or any
Subsidiary which, if adversely decided, is anticipated to result, either
individually or collectively, in a Material Adverse Effect (and, to the best of
the Company's knowledge, there is no basis for any such action). Neither the
Company nor any Subsidiary has any material contingent liabilities not provided
for or disclosed in the financial statements referred to in Section 9.4.
9.7 Ownership of Properties; Liens. Each of the Company
and each Subsidiary owns good and marketable title to all of its
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properties and assets which are material to its business, real and personal,
tangible and intangible, of any nature whatsoever, free and clear of all Liens,
except as permitted pursuant to Section 10.9.
9.8 Subsidiaries. Set forth on Exhibit D is a complete and accurate
list of partnership and corporate names and jurisdiction of organization of each
Subsidiary of the Company and the percentage ownership interest of the Company
and its other Subsidiaries in each such Subsidiary.
9.9 Pension and Welfare Plans. During the twelve-consecutive-month
period prior to the date of the execution and delivery of this Agreement or the
making of any Loan hereunder, no steps have been taken to terminate any Pension
Plan which was not fully funded, unless adequate reserves have been set aside
for the funding thereof, and no contribution failure has occurred with respect
to any Pension Plan sufficient to give rise to a lien under Section 302(f) of
ERISA. No condition exists or event or transaction has occurred with respect to
any Pension Plan which could result in the incurrence by the Company of any
material liability, fine or penalty. The Company has no contingent liability
with respect to any post-retirement benefit under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of subtitle B of title I
of ERISA.
9.10 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.
9.12 Regulation U. Neither the Company nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no proceeds
of any Loan will be used for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock or maintaining or extending
credit to others for such purpose.
9.13 Taxes. Each of the Company and (to the best of the Company's
knowledge for any Subsidiary acquired after the Effective Date with respect to
periods prior to the date of such acquisition) each Subsidiary has filed all tax
returns and reports required by law to have been filed by it and has paid all
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taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted accounting principles shall have been set aside on its books.
9.14 Environmental and Safety and Health Matters. Except as disclosed
on Exhibit E (to the best of the Company's knowledge for any Subsidiary acquired
after the Effective Date with respect to periods prior to the date of such
acquisition), (i) the operations of the Company and each Subsidiary comply in
all material respects with (A) all applicable environmental laws and (B) all
applicable occupational safety and health laws; (ii) none of the operations of
the Company or any Subsidiary are subject to any judicial, governmental,
regulatory or administrative proceeding alleging the material violation of any
environmental law or occupational safety and health law; (iii) none of the
operations of the Company or any Subsidiary is the subject of any Federal or
state investigation evaluating whether any remedial action is needed to respond
to (A) any spillage, disposal or release into the environment of any Hazardous
Material, or (B) any unsafe or unhealthful condition at any premises of the
Company or such Subsidiary; except (in each case) with respect to any such event
which constitutes a Non-Reportable Environmental Event; (iv) neither the Company
nor any Subsidiary has filed any notice under any environmental law or
occupational safety and health law indicating or reporting (A) any past or
present spillage, disposal or release into the environment of, or treatment,
storage or disposal of, any Hazardous Material or (B) any unsafe or unhealthful
condition at any premises of the Company or such Subsidiary, except (in each
case) with respect to any such event which constitutes a Non-Reportable
Environmental Event; and (v) neither the Company nor any Subsidiary has any
known contingent liability in connection with (A) any spillage, disposal or
release into the environment of, or otherwise with respect to, any Hazardous
Material or (B) any unsafe or unhealthful condition at any premises of the
Company or such Subsidiary except (in each case) with respect to any such event
which constitutes a Non-Reportable Environmental Event.
9.15 Information. All information heretofore or contemporaneously
herewith furnished by the Company or any Subsidiary to the Agent or any Bank for
purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all information hereafter furnished by or on behalf
of the Company or any Subsidiary to the Agent or any Bank pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading.
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SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations hereunder and under the other Loan Documents are paid in
full, the Company agrees that, unless at any time the Required Banks shall
otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the Agent and
each Bank:
10.1.1 Audit Report. Promptly when available and in any event within 90
days after the close of each Fiscal Year, (a) a copy of the annual audit report
of the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such Fiscal Year and consolidated statements of earnings and cash flow of the
Company and its Subsidiaries for such Fiscal Year certified, without
qualification unacceptable to the Required Banks, by Coopers & Lybrand or other
independent auditors of recognized standing selected by the Company and
reasonably acceptable to the Required Banks, together with a written statement
from such accountants to the effect that in making the examination necessary for
the signing of such annual audit report by such accountants, they have not
become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if they have become aware of any such event,
describing it in reasonable detail; and (b) consolidating balance sheets of the
Company and its Subsidiaries as of the end of such Fiscal Year and consolidating
statements of earnings and cash flows for the Company and its Subsidiaries for
such Fiscal Year, certified by the Chief Financial Officer or the Chief
Executive Officer of the Company.
10.1.2 Interim Reports. Promptly when available and in any event within
45 days after the end of each Fiscal Quarter (except the last Fiscal Quarter of
each Fiscal Year), consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the end of such quarter, consolidated and
consolidating statements of earnings and a consolidated statement of cash flow
for such quarter and for the period beginning with the first day of such Fiscal
Year and ending on the last day of such quarter, certified by the Chief
Financial Officer or the Chief Executive Officer of the Company.
10.1.3 Compliance Certificate. Concurrently with each set of financial
statements delivered pursuant to Section 10.1.1 and 10.1.2, a certificate of the
Chief Financial Officer or the Chief Executive Officer of the Company (a) to the
effect that no Event of Default or Unmatured Event of Default has occurred and
is continuing or, if there is any such event, describing it in
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reasonable detail, (b) containing a computation of each of the financial ratios
and restrictions set forth in Section 10.6 and detailing the Company's
compliance with Sections 10.8, 10.10 and 10.11 and (c) setting forth in
reasonable detail a list of Cash Equivalents and Marketable Securities owned by
the Company and its Subsidiaries (including information as to the cost basis and
market value thereof).
10.1.4 Reports to SEC. Promptly upon the filing or sending thereof, a
copy of any annual, periodic or special report or registration statement
(inclusive of exhibits thereto) filed by the Company or any Subsidiary with the
SEC or any securities exchange.
10.1.5 Notice of Default, Litigation and ERISA Matters. Immediately
upon a Responsible Officer becoming aware of any of the following, written
notice describing the same and the steps being taken by the Company or the
Subsidiary affected thereby with respect thereto: (a) the occurrence of an Event
of Default or an Unmatured Event of Default; (b) any litigation, arbitration or
governmental investigation or proceeding not previously disclosed by the Company
to the Agent and the Banks which has been instituted or, to the knowledge of the
Company, is threatened against the Company or any Subsidiary or to which any of
the properties of any thereof is subject which, if adversely determined, is
reasonably likely to have a Material Adverse Effect; (c) the institution of any
steps by the Company, any of its Subsidiaries or any other Person to terminate
any Pension Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a lien under Section 302(f)
of ERISA, or the taking of any action with respect to a Pension Plan which could
result in the requirement that the Company furnish a bond or other security to
the PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the Company of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Company with respect to any post-retirement Welfare Plan
benefit; and (d) any other event or occurrence which has had or is reasonably
likely to have a Material Adverse Effect.
10.1.6 Subsidiaries. Promptly from time to time a written report of any
change in the list of its Subsidiaries.
10.1.7 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company.
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10.1.8 Other Information. From time to time such other information
concerning the Company and its Subsidiaries as any Bank or the Agent may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records reflecting all of its business affairs and
transactions in accordance with sound business practices sufficient to allow the
preparation of financial statements in accordance with generally accepted
accounting principles; and permit, and cause each Subsidiary to permit, any Bank
or the Agent or any representative thereof, at reasonable times and on
reasonable notice, to visit any or all of its offices, to discuss its financial
matters with its officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial matters with any
Bank or the Agent or any representative thereof), and to examine any of its
books or other corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
responsible and reputable insurance companies or associations, insurance in such
amounts and covering such risks as is usually maintained by companies engaged in
similar businesses and owning similar properties similarly situated.
10.4 Taxes and Liabilities. Pay, and cause each Subsidiary to pay,
prior to delinquency, all taxes and other governmental charges against it or any
of its property; provided, however, that the foregoing shall not require the
Company or any Subsidiary to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books adequate reserves with respect thereto in accordance with
generally accepted accounting principles.
10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject
to Section 10.7) cause each Subsidiary to maintain and preserve, (a) its
existence and good standing in the jurisdiction of its organization and (b) its
foreign qualification in each other jurisdiction where the nature of its
business makes such qualification necessary (except in those instances in which
the failure to be qualified or in good standing will not have a Material Adverse
Effect).
10.6 Financial Ratios and Restrictions.
10.6.1 Leverage Ratio. Not at any time permit the Leverage Ratio to be
greater than the applicable ratio set forth below at any time during any period
set forth below:
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Period Maximum Ratio
------ -------------
06/30/96 to 06/29/97 4.00:1
06/30/97 to 06/29/99 3.50:1
On and after 06/30/99 3.00:1
10.6.2 Interest Coverage Ratio. Not permit the Interest Coverage Ratio as
of the last day of any Fiscal Quarter to be less than 2.25 to 1.
10.6.3 Tangible Partnership Equity. Not at any time permit Tangible
Partnership Equity to be less than the sum of (a) $75,000,000 plus (b) on and
after the end of each Fiscal Quarter beginning with the Fiscal Quarter ended
March 31, 1996, an additional amount equal to 50% of the Company's positive
consolidated net income for each such Fiscal Quarter, if any.
10.6.4 Liabilities to Equity Ratio. Not at any time permit the
Liabilities to Equity Ratio be greater than the applicable ratio set forth below
at any time during any period set forth below:
Period Maximum Ratio
------ -------------
06/30/96 to 06/29/97 4.00:1
06/30/97 to 06/29/99 3.50:1
On and after 06/30/99 3.00:1
10.6.5 Cash, Cash Equivalents and Marketable Securities. Not at any
time permit the aggregate amount of all cash, Cash Equivalents and Marketable
Securities of the Company to be less than 50% of the Company's partnership
equity (determined as of the last day of the most recent Fiscal Quarter); and
not at any time permit the value of the cash, Cash Equivalents and Marketable
Securities owned by the Company and Lacy to be less than 80% of all cash, Cash
Equivalents and Marketable Securities owned by the Company and its Subsidiaries.
10.7 Mergers, Consolidations, Sales. Not and not permit any Subsidiary
to, be a party to any merger or consolidation, or purchase or otherwise acquire
all or a substantial part of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or, except in the
ordinary course of its business, sell, transfer, convey or lease all or any
substantial part of its assets (other than Unrestricted Margin Stock), or sell
or assign with or without recourse any receivables, except for:
(a) any such merger or consolidation, sale, transfer,
conveyance, lease or assignment of or by any Subsidiary into or to the
Company or into, with or to any Guarantor
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(provided that the Company shall be the survivor of any such
transaction involving the Company and a Guarantor shall be the survivor
of any other such transaction);
(b) any such purchase or other acquisition by the Company or any Guarantor
of the assets or stock of any wholly-owned Subsidiary;
(c) any sale by the Company of any stock of any Guarantor, or
any sale by any Guarantor of all or substantially all of its assets, so
long as both before and after giving effect to such sale, no Event of
Default or Unmatured Event of Default has occurred and is continuing
(it being understood that concurrently with any such sale (x) the
Commitments shall be reduced to the extent, and the Company shall make
any prepayment, required by Section 6 and (y) in the case of the sale
of the stock of a Guarantor, the Agent shall execute and deliver such
documents as such Guarantor may reasonably request to release such
Guarantor from its obligations under either Guaranty);
(d) the Steego Acquisition; and
(e) any such merger, consolidation, purchase or other
acquisition by the Company, Lacy or any other Subsidiary so long as:
(i) the surviving (in the case of a merger or
consolidation) or acquiring (in the case of a purchase or
other acquisition) entity is the Company, Lacy or a Guarantor
(provided that the Company or Lacy shall be the survivor of
any merger or consolidation involving the Company or Lacy and
no Non-Guarantor Subsidiary may purchase or otherwise acquire
any assets of the Company or any Guarantor, and provided
further that the Company or any Subsidiary may purchase or
otherwise acquire an entity which becomes a Subsidiary but
does not become a Guarantor (a "Non-Guarantor Subsidiary") if
the Company designates (by written notice to the Agent) such
Subsidiary as a Non-Guarantor Subsidiary not later than 10
days after such purchase or acquisition);
(ii) both before and after giving effect to such
transaction, no Event of Default or Unmatured Event of Default
shall have occurred and be continuing; and
(iii) in the case of any such transaction where the
total consideration (including assumed liabilities) exceeds
$25,000,000, the Company delivers to the Agent and each Bank,
prior to consummation of such transaction, (I) a pro-forma
balance sheet as of the
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end of the most recent Fiscal Quarter demonstrating compliance
with Sections 10.6.1, 10.6.3, 10.6.4, 10.6.5, 10.8 and 10.10
after giving effect to such acquisition and (II) a calculation
demonstrating pro forma compliance with the Leverage Ratio for
the most recently ended period of four consecutive Fiscal
Quarters assuming that such transaction had occurred on the
first day of such period.
Notwithstanding the foregoing or any other provision of this Agreement,
(i) the Company may reorganize as a limited liability company so long as (A) no
Event of Default or Unmatured Event of Default has occurred and is continuing,
(B) the reorganized entity retains substantially the same ownership, assets and
liabilities as the Company had immediately prior to the reorganization and (C)
the reorganized entity assumes all of the obligations of the Company hereunder
pursuant to documentation reasonably satisfactory to the Banks; and (ii) the
Company shall not make any purchase or other acquisition otherwise permitted by
the first sentence of this Section 10.7 if the aggregate amount of all foreign
assets (which shall mean any assets not located in the United States of America)
acquired by the Company in all such transactions after the Effective Date would
exceed 15% of the total consolidated assets of the Company and its Subsidiaries.
10.8 Debt. Not, and not permit any Subsidiary to, create, incur, assume
or suffer to exist any Debt, except (i) Debt hereunder; (ii) Debt in respect of
commercial letters of credit not at any time exceeding $30,000,000; (iii)
guarantees of trade payables of the Company and its Subsidiaries not at any time
exceeding $60,000,000; (iv) Debt of the Company and its Subsidiaries permitted
by Section 10.10; provided that no such Debt incurred by a Non-Guarantor
Subsidiary shall be subordinate to any other obligations of such Non-Guarantor
Subsidiary and all such Debt shall be evidenced by promissory notes; and (v)
additional Debt which does not exceed in the aggregate $75,000,000.
Notwithstanding anything to the contrary in the preceding sentence, at no time
shall the Debt of Non-Guarantor Subsidiaries exceed in the aggregate
$37,000,000.
10.9 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (other than Unrestricted Margin Stock), whether now owned or
hereafter acquired, except:
(a) Liens for taxes or other governmental charges not at the
time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and, in each case,
for which it maintains adequate reserves;
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(b) Liens arising in the ordinary course of business (such as
(i) Liens of carriers, warehousemen, mechanics and materialmen and
other similar Liens imposed by law and (ii) Liens incurred in
connection with worker's compensation, unemployment compensation and
other types of social security (excluding Liens arising under ERISA) or
in connection with surety and appeal bonds, bids, performance bonds and
similar obligations) for sums not overdue or being contested in good
faith by appropriate proceedings and not involving any deposits or
advances or borrowed money or the deferred purchase price of property
or services, and, in each case, for which it maintains adequate
reserves;
(c) Liens identified on Exhibit F;
(d) Liens in connection with Capital Leases (to the
extent permitted hereunder);
(e) any Lien arising in connection with the acquisition of
property after the date hereof, and attaching only to the property
being acquired, if the Debt secured thereby does not exceed $5,000,000
in the aggregate for the Company and all Subsidiaries at any one time
outstanding;
(f) attachments, judgments and other similar Liens, for sums
not exceeding $5,000,000, arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(g) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the
Company or any Subsidiary;
(h) Liens of any Person created or incurred prior to (and not
in contemplation of) any merger or consolidation of such Person with
the Company or any Subsidiary which is permitted hereunder;
(i) Liens securing commercial letters of credit issued in
favor of a vendor to the Company or any Subsidiary which attach only to
the property being supplied by such vendor as described in such letter
of credit, provided that such letter of credit is payable upon drawing
(and not pursuant to any time draft) and is reimbursed within five days
after any such drawing;
(j) Liens securing Debt of Non-Guarantor Subsidiaries
not at any time exceeding $20,000,000; and
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(k) other Liens securing obligations not at any time
exceeding $12,000,000.
10.10 Loans, Advances and Investments. Not, and not permit any
Subsidiary to, make any investment in, or make or permit to exist any loan or
advance to, any other Person, except (a) investments in Cash Equivalents and
Marketable Securities, provided that (i) at no time shall the book value of all
Marketable Securities owned by the Company and its Subsidiaries issued by
entities organized under the laws of any foreign Governmental Entity exceed 10%
of the book value of all Marketable Securities owned by the Company and its
Subsidiaries, (ii) at no time shall the book value of all Marketable Securities
of any one Person and its Affiliates exceed 10% of the book value of all
Marketable Securities owned by the Company and its Subsidiaries (it being
understood that, notwithstanding this clause (ii), the Company may make
investments in Ethyl Corp and Blackstone Partners Investment Fund L.P.); (b)
loans and advances to, and investments in, Lacy or any Guarantor; (c) loans and
advances to, and investments in, Subsidiaries other than Lacy or any Guarantor
not at any time exceeding 60% of the Company's partnership equity; (d)
investments, loans and advances permitted by Section 10.7; and (e) other
investments, loans and advances not at any time exceeding an amount equal to 20%
of the Company's partnership equity.
10.11 Restricted Payments. Not, and not permit any Subsidiary to, (a)
declare or pay any dividend or distribution on any of its capital stock or
partnership interests, as applicable, (b) purchase or redeem any capital stock
or partnership interests of the Company or any Subsidiary (or any warrants,
options or other rights in respect thereof), (c) make any other distribution to
shareholders or partners of the Company or any Subsidiary or (d) set aside funds
for any of the foregoing; provided that (i) any Subsidiary may declare and pay
dividends, or make other distributions, to the Company or any Guarantor and (ii)
so long as no Event of Default or Unmatured Event of Default has occurred and is
continuing or would result therefrom, the Company may make distributions to its
partners (or, if applicable, its shareholders) and any Subsidiary may make
distributions to any shareholder other than the Company or a Guarantor; provided
that the aggregate amount of all such distributions in any Fiscal Year shall not
exceed 3.5% of the Company's partnership equity plus 30% of the Company's
consolidated net income for such Fiscal Year.
10.12 Use of Proceeds. Use the proceeds of the Loans to refinance the
Debt incurred pursuant to the Existing Agreements, for acquisitions, for working
capital and for other general corporate purposes; and not use or permit any
proceeds of any Loan to be used, either directly or indirectly, for the purpose,
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whether immediate, incidental or ultimate, of (a) "purchasing or carrying" any
Margin Stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, or (b) purchasing or otherwise acquiring any stock of
any Person if such Person (or its board of directors) has (i) announced that it
will oppose such purchase or other acquisition or (ii) commenced any litigation
which alleges that such purchase or other acquisition violates, or will violate,
any applicable law; and not, directly or indirectly, use any portion of the
proceeds of any Loan (i) knowingly to purchase Ineligible Securities from the
Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of the Company or any Affiliate of the Company. The Arranger is a
registered broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities; and "Ineligible Securities" means securities which may
not be underwritten or dealt in by member banks of the Federal Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C.
ss. 24, Seventh).
10.13 Maintenance of Property. Maintain, and cause each Subsidiary to
maintain, its properties which are material to the conduct of its business in
good working order and condition (ordinary wear and tear excepted).
10.14 Employee Benefit Plans. Maintain, and cause each
Subsidiary to maintain, each Pension Plan in material compliance
with all applicable requirements of law and regulations.
10.15 Environmental Covenants.
10.15.1 Environmental Response Obligation. (a) Comply, and cause each
Subsidiary to comply, in a reasonable manner with any applicable Federal or
state judicial or administrative order requiring the performance at any real
property owned, operated, or leased by the Company or any Subsidiary of
activities in response to the release or threatened release of a Hazardous
Material, except for the period of time that the Company or such Subsidiary is
diligently in good faith contesting such order; (b) except to the extent that
any release, threatened release or disposal described below constitutes a
Non-Reportable Environmental Event, (i) immediately upon a Responsible Officer
becoming aware of any of the following, notify the Agent of any written claim,
demand, proceeding, action or notice of liability by any Person arising out of
or relating to the release or threatened release of a Hazardous Material and
(ii) immediately upon a Responsible Officer becoming aware of any of the
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following, notify the Agent of any release, threat of release, or disposal of
Hazardous Material reported to any governmental regulatory authority at any real
property owned, operated, or leased by the Company or any Subsidiary.
10.15.2 Environmental Liabilities. Not violate in any material respect
any requirement of law regarding Hazardous Materials; and, without limiting the
foregoing, not commence disposal of any Hazardous Material into or onto any real
property owned, operated, or leased by the Company or any Subsidiary, except
with respect to any such disposal which constitutes a Non-Reportable
Environmental Event, nor allow any lien imposed pursuant to any law, regulation
or order relating to Hazardous Materials or the disposal thereof to remain on
such real property.
10.16 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services, except to the extent
that the aggregate amount of all obligations of the Company and its Subsidiaries
arising under such contracts at any one time does not exceed $100,000.
10.17 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any agreement containing any provision which would be violated or
breached by any borrowing by the Borrowers hereunder or by the performance by
the Borrowers or any Subsidiary of the Company of any of its obligations
hereunder or under any other Loan Document.
10.18 Negative Pledges. Not, and not permit any Subsidiary to, enter
into any agreement (other than this Agreement and the Existing Term Loans)
containing any provision which would prohibit the Company or such Subsidiary
from granting a Lien on any of its assets, except with respect to such
agreements of Non-Guarantor Subsidiaries to the extent that (x) each such
agreement was entered into prior to the time that a Non-Guarantor Subsidiary
became a Subsidiary of the Company, (y) each such agreement was entered into in
connection with a financing agreement that was not and is not material to such
Non-Guarantor Subsidiary and (z) the aggregate amount of all obligations of
Non-Guarantor Subsidiaries arising under such agreements at any one time does
not exceed $1,000,000.
10.19 Transactions with Affiliates. Not, and not permit any Guarantor to,
enter into or permit to exist any transaction, arrangement or contract with any
of its Affiliates (other than
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the Company or any Guarantor) which is on terms less favorable than are
available from a Person which is not an Affiliate.
10.20 Guaranty. Cause all Subsidiaries (other than inactive
Subsidiaries and Non-Guarantor Subsidiaries) to guaranty the obligations of the
Borrowers hereunder pursuant to the Guaranties; and in furtherance of the
foregoing, immediately upon the creation or acquisition of any Subsidiary (other
than a Non-Guarantor Subsidiary) cause such Subsidiary to execute and deliver a
counterpart of each Guaranty.
10.21 Investments in Margin Stock. Not permit all Margin Stock owned by the
Company and its Subsidiaries to exceed 35% of the total assets of the Company
and its Subsidiaries.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Bank to make its Loans is subject to the
following conditions precedent:
11.1 Initial Loan. The obligation of each Bank to make its initial Loan
is, in addition to the conditions precedent specified in Section 11.2, subject
to the conditions precedent (and the date on which the Agent determines that all
such conditions precedent have been satisfied or waived in writing by the Banks
is herein called the "Effective Date") that (a) no event shall have occurred or
condition shall exist which has had or is reasonably likely to have a Material
Adverse Effect, (b) the Agent shall have received evidence that the
"Commitments" under and as defined in each of the Existing Agreements have been
terminated and that all Obligations of the Company thereunder have been (or
concurrently with the initial Loans will be) paid in full and (c) the Agent
shall have received all of the following, each duly executed and dated the
Effective Date (or such earlier date as shall be satisfactory to the Agent), in
form and substance satisfactory to the Agent and the Banks, and each (except for
the Notes, of which only the originals shall be signed) in sufficient number of
signed counterparts to provide one for the Agent and each Bank:
11.1.1 Notes. The Notes of each Borrower payable to the order of the
Banks.
11.1.2 Resolutions. Certified copies of all documents evidencing all
corporate or partnership action (including resolutions of the board of directors
of the managing general partner of the Company) required for the due execution,
delivery and performance by the Borrowers of this Agreement, the Notes and the
other documents to be executed by the Borrowers pursuant hereto; and certified
copies of resolutions of the board of directors or other documents evidencing
all corporate or
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partnership action required for the due execution, delivery and performance by
each Guarantor of each Guaranty and the other documents to be executed by each
Guarantor pursuant hereto.
11.1.3 Consents, etc. Certified copies of all documents evidencing any
consents and governmental approvals (if any) required for the execution,
delivery and performance of the Loan Documents by the Borrowers and the
Guarantors.
11.1.4 Incumbency and Signature Certificates. An incumbency and
signature certificate of each Borrower and each Guarantor certifying the names
of the officer or officers of such entity (or, in the case of a partnership, of
the general partner of such entity) authorized to sign the Loan Documents to
which such entity is a party, together with a sample of the true signature of
each such officer (it being understood that the Agent and each Bank may
conclusively rely on each such certificate until formally advised by a like
certificate of any changes therein).
11.1.5 Guaranties. Guaranties of the obligations of each Borrower,
substantially in the forms of Exhibit G-1 and G-2, executed by all of the
applicable initial Guarantors (as amended, supplemented or otherwise modified
from time to time, each a "Guaranty").
11.1.6 Opinion of Counsel for the Borrowers and the Guarantors. The
opinions of Barnes & Thornburg, counsel to the Borrowers and the Guarantors,
substantially in the form of Exhibit H.
11.1.7 Opinion of Counsel for the Agent. The opinion of Mayer, Brown &
Platt, counsel for the Agent, substantially in the form of Exhibit I.
11.1.8 Other. Such other documents as the Agent or any Bank may reasonably
request.
11.1.9 Certificate. A certificate signed by a Responsible Officer, dated as
of the Effective Date, stating that:
(a) the representations and warranties contained in Section 9
(excluding (i) the second sentence of Section 9.6 and (ii) Section 9.8)
are true and correct on and as of such date, as though made on and as
of such date;
(b) no Event of Default or Unmatured Event of Default
exists or would result from the initial Loans; and
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(c) since December 31, 1995, no event or circumstance has
occurred that has resulted or could reasonably be expected to result in
a Material Adverse Effect.
11.2 All Loans. The obligation of each Bank to make each Loan is
subject to the following further conditions precedent that:
11.2.1 No Default. (a) No Event of Default or Unmatured Event of
Default has occurred and is continuing or will result from the making of such
Loan and (b) the warranties of the Borrowers contained in Section 9 (excluding
(i) the second sentence of Section 9.6 and (ii) Section 9.8) are true and
correct in all material respects as of the date of such requested Loan, with the
same effect as though made on such date.
11.2.2 Confirmatory Certificate. If requested by the Agent or any Bank,
the Agent shall have received (in sufficient counterparts to provide one to each
Bank) a certificate dated the date of such requested Loan and signed by a duly
authorized representative of the applicable Borrower as to the matters set out
in Section 11.2.1 (it being understood that each request by a Borrower for the
making of a Loan shall be deemed to constitute a warranty by such Borrower that
the conditions precedent set forth in Section 11.2.1 will be satisfied at the
time of the making of such Loan), together with such other documents as the
Agent or any Bank may reasonably request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of any principal of or interest on any Loan, any fees or any other amount
payable by either Borrower hereunder or under any other Loan Document.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
amount (for all Debt so affected) exceeding $2,000,000 and such default shall
(a) consist of the failure to pay such Debt when due (subject to any applicable
grace period), whether by acceleration or otherwise, or (b) accelerate the
maturity of such Debt or permit the holder or holders thereof, or any trustee or
agent for such holder or holders, to cause such Debt to become due and payable
prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment
when due, or in the performance or observance of, any material
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obligation of, or condition agreed to by, the Company or any Subsidiary with
respect to any material purchase or lease of goods or services (except only to
the extent that the existence of any such default is being contested by the
Company or such Subsidiary in good faith and by appropriate proceedings and
appropriate reserves have been made in respect of such default).
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of a Subsidiary), is commenced in respect of the
Company or any Subsidiary, and if such case or proceeding is not commenced by
the Company or such Subsidiary, it is consented to or acquiesced in by the
Company or such Subsidiary, or remains for 60 days undismissed; or the Company
or any Subsidiary takes any corporate or partnership action to authorize, or in
furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. Failure by the
Borrowers to comply with or to perform any covenant set forth in Section 10.6,
10.7, 10.9, 10.10 or 10.11; or failure by either Borrower to comply with or to
perform any other provision of this Agreement (and not constituting an Event of
Default under any of the other provisions of this Section 12) and continuance of
such failure for 30 days after notice thereof to the Borrowers from the Agent or
any Bank.
12.1.6 Warranties. Any warranty made by either Borrower herein is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
either Borrower to the Agent or any Bank is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified.
12.1.7 Pension Plans. (i) Institution of any steps by the Company or any
other Person to terminate a Pension Plan if as a result of such termination the
Company could be required to make a contribution to such Pension Plan, or could
incur a liability
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or obligation to such Pension Plan, in excess of $1,000,000, or (ii) a
contribution failure occurs with respect to any Pension Plan sufficient to give
rise to a Lien under section 302(f) of ERISA.
12.1.8 Judgments. Final judgments which exceed an aggregate of
$5,000,000 (excluding any portion thereof which is covered by insurance so long
as the insurer is reasonably likely to be able to pay and has accepted a tender
of defense and indemnification without reservation of rights) shall be rendered
against the Company or any Subsidiary and shall not have been discharged or
vacated or had execution thereof stayed pending appeal within 30 days after
entry or filing of such judgments.
12.1.9 Invalidity of Guaranty, etc. Either Guaranty shall cease to be
in full force and effect with respect to any applicable Guarantor (other than as
a result of the sale of the stock of a Guarantor permitted by, and in accordance
with the terms of, this Agreement), any Guarantor shall fail (subject to any
applicable grace period) to comply with or to perform any applicable provision
of either Guaranty, or any Guarantor (or any Person by, through or on behalf of
such Guarantor) shall contest in any manner the validity, binding nature or
enforceability of either Guaranty to which such Guarantor is a party.
12.1.10 Ownership of Lacy. The Company shall fail to own,
beneficially and of record, all of the capital stock of Lacy.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable, all without presentment,
demand, protest or notice of any kind; and in the case of any other Event of
Default, the Agent shall, upon written request of the Required Banks, declare
the Commitments (if they have not theretofore terminated) to be terminated
and/or declare all Notes and all other obligations hereunder to be due and
payable, whereupon the Commitments (if they have not theretofore terminated)
shall immediately terminate and/or all Notes and all other obligations hereunder
shall become immediately due and payable, all without presentment, demand,
protest or notice of any kind. The Agent shall promptly advise the Borrowers of
any such declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default of
any event described in Section 12.1.1 or Section 12.1.4 may be waived by the
written concurrence of all of the Banks, and the effect as an Event of Default
of any other event described in this Section 12 may be waived by the written
concurrence of the Required Banks.
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SECTION 13 THE AGENT.
13.1 Appointment and Authorization. Each Bank hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement, each other
Loan Document and each other document executed by either Borrower or any
Guarantor in connection with this Agreement and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement, any other Loan Document or any other document executed by either
Borrower or any Guarantor in connection with this Agreement, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement, any other Loan Document or
any other document executed by either Borrower or any Guarantor in connection
with this Agreement, the Agent shall not have any duties or responsibilities
except those expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement, any other Loan Document or any other document executed by
either Borrower or any Guarantor in connection with this Agreement or otherwise
exist against the Agent.
13.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement, any other Loan Document or any other document executed by
either Borrower or any Guarantor in connection with this Agreement by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement, any other Loan Document or any other document
executed by either Borrower or any Guarantor in connection with this Agreement
or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement, any other Loan Document or
any other document executed by either Borrower or any Guarantor in connection
with this Agreement, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, any
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other Loan Document or any other document executed by either Borrower or any
Guarantor in connection with this Agreement, or for any failure of either
Borrower or any other party to any such document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Company or any of the Company's Subsidiaries or Affiliates.
13.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement 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 counsel
to the Borrowers), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement, any other Loan Document, or any other document
executed by either Borrower or any Guarantor in connection with this Agreement
unless it shall first receive such advice or concurrence of the Required Banks
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement, any other Loan Document or any other document
executed by either Borrower or any other Guarantor in connection with this
Agreement in accordance with a request or consent of the Required Banks and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 11, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted, or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to such Bank.
13.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default or Unmatured Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Agent for the account of the Banks, unless
the
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Agent shall have received written notice from a Bank or the Borrowers referring
to this Agreement, describing such Event of Default or Unmatured Event of
Default and stating that such notice is a "notice of default". The Agent will
promptly notify the Banks of its receipt of any such notice. The Agent shall
take such action with respect to such Event of Default or Unmatured Event of
Default as may be requested by the Required Banks in accordance with Section 12;
provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest of
the Banks.
13.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrowers and their Subsidiaries, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrowers hereunder. Each
Bank also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
the other Loan Documents and any other documents executed by either Borrower or
any Guarantor in connection with this Agreement, and to make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrowers. Except for notices, reports and other documents expressly herein
required to be furnished to the Banks by the Agent, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrowers which may come into the
possession of any of the Agent-Related Persons.
13.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Borrowers and without
limiting
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the obligation of the Borrowers to do so), pro rata according to its Percentage,
from and against any and all Indemnified Liabilities; provided, however, that no
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each Bank
shall reimburse the Agent upon demand for its ratable share of all reasonable
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, negotiation, execution, closing, delivery,
ongoing administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, any
other documents executed by either Borrower or any Guarantor in connection with
this Agreement, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the expiration or
termination of the Commitments, the repayment of the Loans and the other
liabilities of the Borrowers hereunder, the resignation or replacement of the
Agent and the termination of this Agreement.
For the purposes of this Section 13.7, "Indemnified Liabilities" shall
mean any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the Loans and the termination, resignation or
replacement of the Agent or replacement of any Bank) be imposed on, incurred by
or asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including (a) any case, action
or proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code or appellate proceeding) related to or arising out
of this Agreement or the Loans or the use of the proceeds thereof, whether or
not any Agent-Related Person, any Bank or any of their respective officers,
directors, employees, counsel, agents or attorneys-in-fact is a party thereto.
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13.8 Agent in Individual Capacity. The Agent and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though the Agent were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, the Agent or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to their respective Loans (if
any), the Agent and its Affiliates shall have the same rights and powers under
this Agreement as any other Bank and may exercise the same as though BofA were
not the Agent, and the terms "Bank" and "Banks" include BofA and any Affiliate
thereof, to the extent applicable, in its individual capacity.
13.9 Successor Agent. The Agent may, and at the request of the Required
Banks shall, resign as Agent upon 30 days' notice to the Banks and the
Borrowers. If the Agent resigns under this Agreement, the Required Banks shall
appoint from among the Banks a successor agent for the Banks. If no successor
agent is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Banks and the Borrowers, a
successor agent from among the Banks. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Section 13, Section 14.6 and Section 14.13 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the Required Banks appoint a successor
agent as provided for above.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any Bank
in the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
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right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the Notes shall in any event be
effective unless the same shall be in writing and signed and delivered by the
Agent and signed and delivered by Banks having an aggregate Percentage of not
less than the aggregate Percentage expressly designated herein with respect
thereto or, in the absence of such designation as to any provision of this
Agreement or the Notes, by the Required Banks, and then any such amendment,
modification, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment, modification, waiver
or consent shall (i) extend or increase the amount of the Commitments, (ii)
extend the date for payment of any principal of or interest on the Loans or any
fees payable hereunder, (iii) reduce the principal amount of any Loan, the rate
of interest thereon or any fees payable hereunder, (iv) release either Guaranty,
(v) change the definition of Required Banks or otherwise reduce the aggregate
Percentage required to effect an amendment, modification, waiver or consent or
(vi) amend this sentence without, in each case, the consent of all Banks. No
provisions of Section 13 shall be amended, modified or waived without the
written consent of the Agent.
14.2 Confirmations. The Borrowers and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such Note.
14.3 Notices. All notices hereunder shall be in writing (including
facsimile transmission) and shall be sent to the applicable party at its address
shown below its signature hereto or at such other address as such party may, by
written notice received by the other party, have designated as its address for
such purpose. Notices sent by facsimile transmission shall be deemed to have
been given when sent; notices sent by mail shall be deemed to have been given
three Business Days after the date when sent by registered or certified mail,
postage prepaid; and notices sent by hand delivery shall be deemed to have been
given when received. Any Agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrowers. The Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by either
Borrower to give such notice and the Agent and the Banks shall not have any
liability to such Borrower or other Person on account of any action taken or not
taken by the Agent or the Banks in reliance upon such telephone or facsimile
notice. The obligation of the Borrowers to repay the Loans shall not be affected
in any way or to any extent by any failure by the Agent and the Banks to receive
written confirmation of any telephone or
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facsimile notice or the receipt by the Agent and the Banks of a confirmation
which is at variance with the terms understood by the Agent and the Banks to be
contained in the telephone or facsimile notice.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 9.4.
14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
14.6 Costs, Expenses and Taxes. The Borrowers agree to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent and the Arranger
(including Attorney Costs) in connection with the preparation, negotiation,
execution, closing, delivery and administration of this Agreement, the other
Loan Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), and all reasonable out-of-pocket
costs and expenses (including Attorney Costs) incurred by the Agent and each
Bank after an Event of Default in connection with the enforcement of this
Agreement, the other Loan Documents or any such other documents. Each Bank
agrees to reimburse the Agent for such Bank's pro rata share (based on its
respective Percentage) of any such costs and expenses of the Agent not paid by
the Borrowers. In addition, the Borrowers agree to pay, and to save the Agent,
the Arranger and the Banks harmless from all liability for, any stamp or other
taxes which may be payable in connection with the execution and delivery of this
Agreement, the borrowings hereunder, the issuance of the Notes or the execution
and delivery of any other Loan Document or any other document provided for
herein or delivered or to be delivered hereunder or in connection herewith. All
obligations provided for in this Section 14.6 shall survive the expiration or
termination of the commitments, the repayment of the Loans and the other
liabilities of the Borrowers hereunder and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as the Company has one or more
Subsidiaries.
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14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of
the Borrowers and the Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee"), all or any fraction of such Bank's
Loans and Commitment (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Bank's Loans and Commitment)
in a minimum aggregate amount equal to the lesser of (i) the assigning Bank's
remaining Commitment and (ii) $5,000,000; provided, however, that (a) no
assignment and delegation may be made to any Person if, at the time of such
assignment and delegation, the Borrowers would be obligated to pay any greater
amount under Section 8 to the Assignee than the Borrowers are then obligated to
pay to the assigning Bank under such Section, (b) the consent of the Borrowers
shall not be required in the case of an assignment from a Bank to an Affiliate
of such Bank and (c) the Borrowers and the Agent shall be entitled to continue
to deal solely and directly with such Bank in connection with the interests so
assigned and delegated to an Assignee until the date when all of the following
conditions shall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Bank shall agree) shall have passed after
written notice of such assignment and delegation, together with payment
instructions, addresses and related information with respect to such
Assignee, shall have been given to the Borrowers and the Agent by such
assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have executed
and delivered to the Borrowers and the Agent an assignment agreement
substantially in the form of Exhibit J (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent and the
Company, and
(z) the assigning Bank or the Assignee shall have paid
the Agent a processing fee of $4,000.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and
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obligations hereunder have been assigned and delegated to such Assignee pursuant
to such Assignment Agreement, shall have the rights and obligations of a Bank
hereunder, and (y) the assigning Bank, to the extent that rights and obligations
hereunder have been assigned and delegated by it pursuant to such Assignment
Agreement, shall be released from its obligations hereunder. Within five
Business Days after effectiveness of any assignment and delegation, the
Borrowers shall execute and deliver to the Agent (for delivery to the Assignee
and the Assignor, as applicable) a new Note in the principal amount of the
Assignee's Commitment and, if the assigning Bank has retained a Commitment
hereunder, a replacement Note in the principal amount of the Commitment retained
by the assigning Bank (such Note to be in exchange for, but not in payment of,
the predecessor Note held by such assigning Bank). Each such Note shall be dated
the effective date of such assignment. The assigning Bank shall mark the
predecessor Note "exchanged" and deliver it to the Company. Accrued interest on
that part of the predecessor Note being assigned shall be paid as provided in
the Assignment Agreement. Accrued interest and fees on that part of the
predecessor Note not being assigned shall be paid to the assigning Bank. Accrued
interest and accrued fees shall be paid at the same time or times provided in
the predecessor Note and in this Agreement. Any attempted assignment and
delegation not made in accordance with this Section 14.9.1 shall be null and
void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, (x) any Bank may at any time assign all or
any portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder) and (y)
no Bank may make any assignment hereunder unless such Bank concurrently assigns
a corresponding portion of the Loans and Commitment under the Short-Term Credit
Agreement to the same Assignee.
14.9.2 Participations. Any Bank may, with the prior written consent of
the Borrowers (provided that no written consent of the Borrowers shall be
required in connection with any such sale by a Bank to a Person that is an
Affiliate of such Bank), which consent shall not be unreasonably delayed or
withheld, at any time sell to one or more commercial banks or other Persons
participating interests in any Loan owing to such Bank, the Note held by such
Bank, the Commitment of such Bank or any other interest of such Bank hereunder
(any Person purchasing any such participating interest being herein called a
"Participant"). In the event of a sale by a Bank of a participating interest to
a Participant, (x) such Bank shall remain the holder of its Note for all
purposes of this Agreement and (y) the Borrowers and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations hereunder. No Participant shall have any direct
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or indirect voting rights hereunder except with respect to any release of either
Guaranty or any of the events described in the penultimate sentence of Section
14.1. Each Bank agrees to incorporate the requirements of the preceding sentence
into each participation agreement which such Bank enters into with any
Participant. Each Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement and
any Note to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement or such Note; provided that
such right of setoff shall be subject to the obligation of each Participant to
share with the Banks, and the Banks agree to share with each Participant, as
provided in Section 7.5. Each Borrower also agrees that each Participant shall
be entitled to the benefits of Section 8 as if it were a Bank (provided that no
Participant shall receive any greater compensation pursuant to Section 8 than
would have been paid to the participating Bank if no participation had been
sold).
14.10 Governing Law. This Agreement and each Note shall be a contract
made under and governed by the internal laws of the State of Illinois. Whenever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Borrowers and rights of the Agent and the
Banks expressed herein or in any other Loan Document shall be in addition to and
not in limitation of those provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. When
counterparts executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Bank as to which an executed counterpart shall
not have been so lodged, the Agent shall have received confirmation from such
Bank of execution of a counterpart hereof by such Bank), this Agreement shall
become effective as of the date hereof, and at such time the Agent shall notify
the Borrowers and each Bank.
14.12 Successors and Assigns. This Agreement shall be binding upon the
Borrowers, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit
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of the Borrowers, the Banks and the Agent and the successors and assigns of the
Banks and the Agent. The Borrowers may not assign their rights or obligations
hereunder without the prior written consent of all Banks.
14.13 Indemnification by the Borrowers.
(a) In consideration of the execution and delivery of this Agreement by
the Agent and the Banks and the agreement to extend the Commitments provided
hereunder, the Borrowers hereby agree to indemnify, exonerate and hold the
Agent-Related Persons, each Bank and each of their respective officers,
directors, employees and agents (collectively the "Bank Parties" and
individually each a "Bank Party") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities, damages and expenses,
including Attorney Costs (collectively called the "Indemnified Liabilities"),
incurred by the Bank Parties or any of them as a result of, or arising out of,
or relating to, (i) any tender offer, merger, purchase of stock, purchase of
assets or other similar transaction financed or proposed to be financed in whole
or in part, directly or indirectly, with the proceeds of any of the Loans or
(ii) the enforcement of this Agreement or any other Loan Document by any of the
Bank Parties, except for any such Indemnified Liabilities arising on account of
any such Bank Party's gross negligence or willful misconduct. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrowers hereby agree to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
(b) Without limiting clause (a) above, the Borrowers agree to reimburse
each Bank Party for, and indemnify each Bank Party against, any and all losses,
claims, damages, penalties, judgments, liabilities and expenses (including
reasonable attorneys' and consultant's fees and allocated costs of staff
counsel) which any Bank Party may pay, incur or become subject to arising out of
or relating to the use, handling, release, emission, discharge, transportation,
storage, treatment or disposal of any Hazardous Material at any real property
owned or leased by the Company or any Subsidiary or used by the Company or any
Subsidiary in its business or operations, except to the extent caused by the
acts or omissions of such Bank Party.
(c) All obligations provided for in this Section 14.13 shall survive
the expiration or termination of the Commitments, the repayment of the Loans and
the other liabilities of the Borrowers hereunder and any termination of this
Agreement.
14.14 Payments Set Aside. To the extent that a Borrower
makes a payment to the Agent or the Banks, or the Agent or the
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Banks exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent or such Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
insolvency proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred and (b) each Bank severally agrees to pay to the
Agent upon demand its pro rata share of any amount so recovered from or repaid
by the Agent.
14.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrowers, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
14.16 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE BORROWERS FURTHER IRREVOCABLY CONSENT TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE BORROWERS HEREBY EXPRESSLY AND
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
EITHER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
14.17 Waiver of Jury Trial. EACH OF THE BORROWERS, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
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14.18 Entire Agreement. This Agreement, together with the other Loan
Documents (and any document executed pursuant to Section 5.2 or 5.3 hereof),
embodies the entire agreement and understanding among the Borrowers, the Banks
and the Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
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Delivered at Chicago, Illinois, as of the day and year first above written.
LDI, LTD. (LIMITED PARTNERSHIP)
By LDI Management, Inc., its managing
general partner
By /s/ Andre B. Lacy
-----------------------------------
Title: President
---------------------------------
Address: 251 North Illinois Street
Suite 1800
Indianapolis, Indiana 46204
Facsimile: 317-237-2280
LACY DISTRIBUTION, INC., an
Indiana corporation
By /s/ Andre B. Lacy
-----------------------------------
Title: President
---------------------------------
Address:
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By /s/ Alice Zane
---------------------------------
Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Michael G. Healy
Facsimile: 312-828-4203
BANK OF AMERICA ILLINOIS
By /s/ Michael G. Healy
---------------------------------
Vice President
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: Michael G. Healy
Facsimile: 312-828-4203
NBD BANK, N.A.
By /s/ Scott C. Morrison
---------------------------------
Title Second Vice President
---------------------------------
Address: 1 Indiana Square
Indianapolis, Indiana 46266
Attention: Scott C. Morrison
Facsimile: 317-266-6042
NATIONAL CITY BANK, INDIANA
By /s/ Kent Abernathy
---------------------------------
Title Vice President
---------------------------------
Address: 101 W. Washington Street
Suite 200E
Indianapolis, Indiana 46255
Attention: Kent Abernathy
Facsimile: 317-267-8899
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MERCANTILE BANK OF ST. LOUIS NATIONAL
ASSOCIATION
By /s/ Joseph Sooter, Jr.
---------------------------------
Title Vice President
---------------------------------
Address: Corporate Banking Tram 12-3
7th and Washington
St. Louis, Missouri
63101-1643
Attention: Mark A. Herman
Facsimile: 314-425-2162
SOCIETY NATIONAL BANK, INDIANA
By /s/ Frank J. Jancar
---------------------------------
Title Vice President
---------------------------------
Address: Society National Bank
127 Public Square
Cleveland, Ohio 44114-1306
Attention: Frank J. Jancar
Facsimile: 216-689-4981
HARRIS TRUST AND SAVINGS BANK
By /s/ Peter Krawchuk
---------------------------------
Title Vice President
---------------------------------
Address: 111 W. Monroe
Chicago, Illinois 60690
Attention: Peter Krawchuk
Facsimile: 312-461-2591
PNC BANK, OHIO, NATIONAL ASSOCIATION
By /s/ David Knuth
---------------------------------
Title Vice President
---------------------------------
Address: 201 East Fifth Street
26th Floor
Cincinnati, Ohio 45202-4117
Attention: David F. Knuth
Facsimile: 513-651-8952
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LASALLE NATIONAL BANK
By /s/ Mary Owens
---------------------------------
Title Vice President
---------------------------------
Address: One American Square
Suite 2215
Indianapolis, Indiana 46282
Attention: Mary Owens
Facsimile: 317-756-7021
NORTHERN TRUST BANK
By /s/ Candelano Martinez
---------------------------------
Title Second Vice President
---------------------------------
Address: 50 S. LaSalle Street
Floor B-2
Chicago, Illinois 60675
Attention: Candelaro Martinez
Facsimile: 312-444-7021
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SCHEDULE I
Bank Commitment Percentage
Bank of America Illinois $30,000,000 15.00%
Harris Trust and Savings Bank 25,000,000 12.50%
LaSalle National Bank 18,500,000 9.25%
Mercantile Bank of St. Louis 14,500,000 7.25%
National Association
National City Bank, Indiana 18,500,000 9.25%
NBD Bank, N.A. 25,000,000 12.50%
Northern Trust Bank 18,500,000 9.25%
PNC Bank, Ohio, National 25,000,000 12.50%
Association
Society National Bank, Indiana 25,000,000 12.50%
------------ ------
$200,000,000 100.00%
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