<PAGE>
As filed with the Securities and Exchange Commission on March 5, 1998
Registration No. 333-36299
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-1 ON
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MIAMI COMPUTER SUPPLY CORPORATION
(Exact name of registrant as specified in its articles of incorporation)
OHIO 5110 31-1001529
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
4750 HEMPSTEAD STATION DRIVE
DAYTON, OHIO 45429
(937) 291-8282
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MICHAEL E. PEPPEL
PRESIDENT
MIAMI COMPUTER SUPPLY CORPORATION
4750 HEMPSTEAD STATION DRIVE
DAYTON, OHIO 45429
(937) 291-8282
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a copy to:
TIMOTHY B. MATZ, ESQ.
JEFFREY A. KOEPPEL, ESQ.
FIORELLO J. VICENCIO, ESQ.
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
734 15TH STREET, N.W., 12TH FLOOR
WASHINGTON, D.C. 20005
(202) 347-0300
COUNSEL TO THE REGISTRANT
<PAGE>
Approximate date of commencement of proposed sale to public: From time to
time after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum Amount of
Amount to be Offering Price Aggregate Registration
Title of Each Class of Securities to be Registered Registered Per Share (1) Offering Price (1) Fee (2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value per share 391,109 shares $13.313 $5,206,834 $1,580
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933 ("Securities Act") and
computed pursuant to Rule 457(c) under the Securities Act based upon the average
of the high and low prices of the Common Stock on September 19, 1997, as
reported on the Nasdaq National Market.
(2) Registration fee of $1,580 previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 5, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS
391,109 SHARES
[LOGO] MIAMI COMPUTER SUPPLY CORPORATION
COMMON STOCK
This prospectus ("Prospectus") covers 391,109 shares of common stock,
without par value (the "Common Stock"), of Miami Computer Supply Corporation
(the "Company"), which may be offered by the selling stockholders identified
herein (the "Selling Stockholders") from time to time in the public market for
their own benefit (the "Offering"). The Company will not receive any proceeds
from this Offering. Certain expenses of this Offering which are estimated to be
approximately $70,000 will be paid by the Company.
The Common Stock currently trades on the Nasdaq National Market ("NNM")
under the symbol "MCSC." As of January 30, 1998, the Company had 5,295,812
shares of Common Stock issued and outstanding. On March 2, 1998, the last
reported closing sale price of the Common Stock on the NNM was $20.50 per share.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 10.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH 5, 1998
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the U.S. Securities and Exchange Commission
("Commission") a Registration Statement on Form S-3 (which includes all
amendments thereto) under the Securities Act of 1933, as amended ("Securities
Act") with respect to the Common Stock offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain items of which are omitted from the Prospectus as
permitted by the rules and regulations promulgated by the Commission. For
further information pertaining to the Company and the Common Stock, reference is
made to the Registration Statement, as amended, and the exhibits and schedules
thereto, which may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission, Washington, D.C. 20549.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete and, in each instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act") and in accordance therewith
files reports and other information with the Commission. Such reports and other
information (including proxy and information statements) filed by the Company
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following Regional Offices of the Commission: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10007; and Chicago Regional
Office, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
prescribed rates. In addition, the Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company. As long as the Company remains listed on the
NNM after the Offering, such information may also be inspected at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C., 20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company filed with the Commission (File No.
0-21561) are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, filed on March 31, 1997;
2
<PAGE>
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1997, June 30, 1997 and March 31, 1997, filed
on November 14, 1997, August 14, 1997 and May 14, 1997,
respectively;
(3) The Company's Current Reports on Form 8-K filed on January 30,
1998; January 15, 1998, as amended on February 3, 1998; January 2,
1998; and December 15, 1997, as amended December 17, 1997;
(4) The Company's Proxy Statement for its Annual Meeting of
Stockholders held on May 29, 1997, filed on April 29, 1997; and
(5) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, filed with the Commission on
October 15, 1996.
In addition, all reports and other documents subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus and prior to the termination of this Offering shall
be deemed to be incorporated by reference into this Prospectus. Any statement
contained in a document incorporated by reference into this Prospectus shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated by reference into this Prospectus (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to Mary Stewart, Vice President-Operations, Miami
Computer Supply Corporation, 4750 Hempstead Station Drive, Dayton, Ohio 45429 or
by telephone at (937) 291-8282.
------------------------
The Company has obtained Federal service mark registration of the names
"Miami Computer Supply Corporation-Registered Trademark-," "Miami Computer
Supply International-Registered Trademark-," "MCSI-Registered Trademark-" and
the associated Company logo. All other trademarks or registered trademarks or
service marks appearing herein are trademarks or registered trademarks or
service marks of the respective companies that utilize them.
------------------------
The Company currently furnishes, and intends to continue to furnish, its
stockholders with annual reports containing consolidated financial statements
audited by its independent accountants, together with an opinion thereon
expressed by such accountants, and quarterly reports containing unaudited
interim consolidated financial statements for each of the first three quarters
of each fiscal year.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL
STATEMENTS AND THE NOTES THERETO CONTAINED IN THE DOCUMENTS INCORPORATED HEREIN
BY REFERENCE. THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE CONTAIN FORWARD-LOOKING STATEMENTS THAT ARE BASED ON CURRENT
EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY'S INDUSTRY,
MANAGEMENT'S BELIEFS AND ASSUMPTIONS MADE BY MANAGEMENT. WORDS SUCH AS
"ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES,"
VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT
ARE DIFFICULT TO PREDICT. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. SUCH
RISKS AND UNCERTAINTIES INCLUDE THOSE RISK FACTORS AND SUCH OTHER UNCERTAINTIES
NOTED HEREIN AND IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. UNLESS THE
CONTEXT OTHERWISE REQUIRES, REFERENCES TO MIAMI COMPUTER SUPPLY CORPORATION
INCLUDE ITS WHOLLY OWNED SUBSIDIARIES.
THE COMPANY
Miami Computer Supply Corporation, which commenced its business operations
in 1981, is a distributor of computer and office automation supplies and
accessories, including computer projection presentation products, throughout the
United States and in certain foreign countries. The Company distributes over
1,800 different core products primarily to middle market and smaller companies
and to governmental, educational and institutional customers, including federal,
state and local governmental agencies, universities and hospitals and, to a
lesser extent, to computer supply dealers. The Company's net sales increased
from $24.0 million in fiscal year 1992 to $71.4 million for the nine months
ended September 30, 1997 while operating income has increased from $0.7 million
to $2.6 million over the same period.
The Company's growth in sales as of the nine months ended September 30,
1997 was due primarily to the acquisition of five computer and office automation
supply companies and the assets of two such other businesses from 1991 through
September 1997 as well as the high level of customer satisfaction which the
Company attributes to the following factors: personal service using a highly
knowledgeable and motivated sales force; fulfillment of customer orders on an
overnight basis; use of the most economic and expeditious shipping routes; and
automated procedures for inventory control, order picking and billing. The
Company plans to continue to focus on achieving a high level of customer
satisfaction and intends to emphasize the acquisition of other end-user computer
and office automation supply and projection presentation product companies to
increase its sales growth and expand its presence in other markets. Based upon
annual revenues, management believes
4
<PAGE>
that the Company is the largest independent end-user computer, office automation
supply and projection presentation product distributor in the country.
The Company sells primarily nationally known, name-brand products
manufactured by approximately 500 original equipment manufacturers, including
Hewlett-Packard Company ("Hewlett-Packard"), Lexmark International, Inc.
("Lexmark") and Imation Corp. (formerly a division of 3M Corporation) for
computer supplies, and Proxima Corporation, Epson America, Inc. ("Epson") and
LightWare, Inc. for projection presentation products. The Company's products
include consumable supplies such as laser toner, copier toner, facsimile machine
supplies, ink jet cartridges, printer ribbons, paper, diskettes, computer tape
cartridges and accessories, including cleaning kits and media storage files, as
well as computer projection presentation hardware which permits the large-scale,
high resolution projection of computer generated slides for presentation at
meetings, seminars, lectures, training rooms and other similar multiple person
gatherings. The Company's products are used in, or in conjunction with, a broad
range of computer and office automation products such as mainframes, intranets,
mini, personal, laptop and notebook computers, laser and ink jet printers,
photocopiers, facsimile (fax) machines and data storage products.
The Company operates one centralized distribution center in Dayton, Ohio
and thirteen smaller regional distribution centers in Rochester, New York,
Louisville, Kentucky, Chicago, Illinois, Salt Lake City, Utah, Ann Arbor,
Michigan, Spokane, Washington, Atlanta, Georgia, Portland, Oregon, Houston,
Texas, Berkeley, California, Fremont, California, Manchester, New Hampshire and
Leeds, England. Each of the Company's other 50 sales offices also maintain a
limited inventory of frequently ordered products in order to facilitate same day
delivery.
The Company estimates that the U.S. computer and office automation supply
market totaled approximately $26.8 billion (at retail) in 1996. Industry
sources indicate that the U.S. computer supply market will grow at a compound
annual rate of approximately 6.8% over the next two years. The Company believes
that the current size of the industry and its potential for future growth can be
attributed, in part, to the increasing automation of the workplace and the
corresponding increase in the demand for computer and office automation
supplies. In addition, newer laser and ink jet printing technologies,
particularly color printers, require significantly more consumable supplies than
older, impact printing technologies.
Unlike the computer hardware or office equipment industry, the Company
believes that the computer and office automation supplies industry generally is
not subject to the risk of rapid technological advances and subsequent product
obsolescence. The demand for consumable goods is not dependent on the level or
type of computer hardware or office equipment sales in any particular year, but
rather reflects the amount and type of equipment already in use. As a result,
the consumable needs for any particular computer or item of office equipment
will often continue for an extended period of time, even after the manufacture
of such computer or office equipment is discontinued. Moreover, computer
5
<PAGE>
hardware is relatively homogeneous, except for different power sources; computer
printers sold in the U.S. are substantially similar to, and use the same
supplies as, printers sold elsewhere in the world. Thus, the Company's products
typically may be sold transnationally without modification.
The Company's business strategy is to increase sales and earnings growth
by:
- With more than 15 years of experience serving the large and expanding
niche computer and office automation supply market, the Company has garnered
specific knowledge regarding the customer base, its competitors and its
suppliers. Accordingly, the Company believes that the domestic and certain
foreign computer supply markets are highly fragmented and consist primarily of
relatively smaller companies which typically sell within limited geographical
areas. The Company has acquired the stock or assets of eleven regional computer
and office automation supply companies, of which seven of such acquisitions
occurred between April 1997 and January 1998 including three material
acquisitions. The Company believes that there is a significant consolidation
opportunity within the industry and, thus, intends to continue to aggressively
pursue acquisitions of other end-user computer and office automation supply and
projection presentation product companies in the future. The Company has
identified potential acquisition candidates and has had preliminary discussions
with several of such candidates. Except for non-binding letters of intent by
and between the Company and certain other computer supply or projection
presentation product distributors for the acquisition of the assets and
liabilities or the stock of such other distributors which are currently in place
and which may be entered into from time to time in the future, there are, as of
the date of this Prospectus, no understandings, agreements or arrangements
between the Company and any other entity with respect to such an acquisition.
Although other larger, better financed companies are currently engaged in a
rapid consolidation of the office supply industry, and to a lesser extent,
computer supply distributors, the Company believes that it can effectively
compete for acquisitions due to its niche market strategy, its knowledge of, and
existing relationships with, many of the potential acquisition targets and its
ability to offer such targets growth potential and a management philosophy which
is clearly different from the large contract stationer consolidators. The
Company believes that it is currently the only company focusing strictly on
acquiring computer and office automation supply and projection presentation
product distribution companies and that such focus offers it the ability to
increase revenues through such acquisitions at a faster rate than that of the
large consolidators. In addition, the Company believes that it will be able to
consolidate acquired companies into its business by, among other things,
retaining existing senior management whenever possible while expanding the
Company's revenue base and realizing certain cost savings in inventory,
communications and shipping to achieve economies of scale. See "Risk Factors --
Integration of Acquisitions" and " -- Ability to Manage Growth."
6
<PAGE>
- Increasing revenues by initiating relationships with new customers,
increasing international sales, emphasizing sales of additional products to
existing customers and selling higher margin, state-of-the-art liquid crystal
display ("LCD") projection presentation products.
- Improving operating efficiencies with its in-house computer programming
staff through the use of its advanced computerized inventory system, electronic
data interchange ("EDI") and continued management information system ("MIS")
enhancements to its order processing and financial management systems.
- Adding value to its customer relationships by providing personal
customer contact with its direct sales force and customer service
representatives, special priority and customized service to its very important
customers (those who purchase $40,000 or more of the Company's products in any
year), precise picking and packaging of customer orders, prompt next-day
delivery with reputable couriers at the most economical price, EDI, order
tracking and free technical advice from its highly trained and knowledgeable
sales force and customer service representatives.
- Strengthening its relationships with manufacturers by increasing sales
and related product offerings which, to date, has resulted, and is expected to
result, in larger discounts and rebates and more cooperative advertising
support.
The Company's principal executive offices are located at 4750 Hempstead
Station, Dayton, Ohio, 45429 and its telephone number is (937) 291-8282.
RECENT DEVELOPMENTS
SIGNIFICANT ACQUISITION ACTIVITY
On December 5, 1997, the Company acquired BRITCO, Inc. ("BRITCO") of
Houston, Texas, for $1.8 million, in the form of a non-interest bearing
promissory note which was paid on January 2, 1998, and 183,333 shares of Common
Stock. The 183,333 shares may not be sold before September 2, 1998. The
Company has agreed to register such shares for public resale; none of said
shares are registered pursuant to this prospectus. In addition, the Company
entered into two year employment agreements with BRITCO's President and Vice
President. As a result of the transaction, the Company acquired assets of
approximately $3.0 million and liabilities of approximately $2.3 million, as of
November 30, 1997. Revenues of BRITCO for the twelve months ended April 30,
1997 were approximately $15.7 million. BRITCO will continue to distribute
computer supply and office automation products in the Houston and San Antonio,
Texas areas as a wholly-owned subsidiary of the Company.
On December 31, 1997, the Company acquired TBS Printware Corporation
("TBS") of Fremont, California for $991,000 in cash and 210,000 shares of Common
Stock, which
7
<PAGE>
hares may not be sold before September 28, 1998. In addition, the Company may
become obligated to pay certain amounts of additional deferred consideration (up
to $2.2 million)(the "Deferred Purchase Price") if the pre-tax earnings of TBS
exceed specified amounts ($2.0 million or more) over the thirty-three months
following the closing of the acquisition. The Company also loaned $438,000 to
two former shareholders of TBS, which loans mature on December 31, 1998 and bear
interest at the rate of 5.68% per annum, and are secured by the Common Stock
issued to such shareholders in the acquisition. Three year employment
agreements with the Chief Executive Officer and President of TBS were also
entered into by the Company. As a result of the transaction, the Company
acquired assets of approximately $6.0 million and liabilities of approximately
$4.5 million, as of December 31, 1997. Revenues of TBS for the nine months
ended September 30, 1997 and the twelve months ended January 3, 1997 were
approximately $14.8 million and $21.8 million, respectively. TBS will continue
to distribute computer supplies and develop, manufacture and distribute printer
ribbons, toner and developers for data processing peripheral equipment as a
wholly-owned subsidiary of the Company.
On January 16, 1998, the Company completed its largest acquisition to date
when it purchased all of the outstanding stock of the California-based Minnesota
Western/Creative Office Products, Inc. ("Minnesota Western") for $12.0 million
in cash and 881,703 shares of Common Stock. The 881,703 shares may not be sold
before October 14, 1998. The Company agreed to register such shares for public
resale; none of said shares are registered pursuant to this Prospectus. In
addition, the Company entered into three year employment agreements with the
President and each of the two Vice Presidents of Minnesota Western. As a result
of the transaction, the Company acquired approximately $13.9 million in assets
and approximately $10.0 million in liabilities, as of December 31, 1997.
Minnesota Western's revenue for the eleven months ended September 30, 1997 and
the twelve months ended October 31, 1996 were approximately $46.0 million and
$40.1 million, respectively. Minnesota Western will continue to distribute
projection presentation systems and products as a wholly-owned subsidiary of the
Company.
Cash payments required to be made under the terms of the above
transactions were made or will be made with funds available under the Company's
bank line of credit with National City Bank, Dayton, Ohio.
RELEASE OF EARNINGS RESULTS FOR FISCAL 1997
The Company released its fourth quarter and year-ended fiscal 1997 results
of operations (unaudited) on February 23, 1998. For the three months ended
December 31, 1997 operating income and net income was $1.2 million and $0.7
million, respectively, on net sales of $36.1 million. Earnings per share (basic
and diluted) for the quarter equaled $0.17 based on a weighted average number of
Common Stock outstanding of 4,070,885 at December 31, 1997.
8
<PAGE>
For the year ended December 31, 1997, operating income and net income
amounted to $3.7 million and $2.2 million, respectively, on net sales of $107.5
million. Earnings per share (basic and diluted) for the period was $0.58, which
represented a 31.8% increase from the $0.44 per share for fiscal 1996.
OTHER RECENT DEVELOPMENTS
On January 1, 1998, Michael E. Peppel, who formerly served as the
Company's Chief Financial Officer, succeeded Albert L. Schwarz as the Company's
President and Chief Executive Officer. Mr. Schwarz resigned from the Company
and its Board of Directors due to personal/health reasons and entered into a
severance agreement in this regard.
Effective as of January 8, 1998, the Company entered into a credit
agreement with National City Bank, Dayton, Ohio and two other lenders (PNC Bank,
N.A. and Key Corporate Capital, Inc. (a subsidiary of KeyBank)) for a revolving
line of credit and term loans up to $50.0 million (the "Credit Facility"),
increasing he Company's credit facility by $35.0 million.
Effective February 24,1998, Mr. Peppel was elected to serve on the
Company's Board of Directors, thereby filling the vacancy created by Mr.
Schwarz's resignation. Mr. Peppel's initial term as a director will expire at
the 1998 Annual Meeting of Shareholders.
RESTATED EARNINGS PER SHARE PURSUANT TO SFAS NO. 128
The following table presents selected financial data of the Company which
has been included herein to restate the Company's earnings per share in
accordance with Statement of Financial Accounting Standard ("SFAS") No. 128,
"Earnings Per Share."
<TABLE>
Nine Months Ended
September 30, Year Ended December 31,
--------------------- ------------------------------------------------------------
1997(3) 1996(1) 1996(1)(2) 1995 1994 1993 1992
------- ------- ---------- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net sales. . . . . . . . . . . . . . . $ 71,351 $ 44,070 $ 63,428 $ 43,321 $ 35,690 $ 29,045 $ 23,982
Cost of sales. . . . . . . . . . . . . 58,616 35,944 52,061 34,642 28,250 23,308 19,128
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross Profit. . . . . . . . . . . 12,735 8,126 11,367 8,679 7,440 5,737 4,854
Selling, general and
administrative expenses. . . . . . . 10,122 6,341 8,891 7,125 6,219 5,221 4,199
Non-cash compensation
expense. . . . . . . . . . . . . . . -- -- 280 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income. . . . . . . . . 2,613 1,785 2,196 1,554 1,221 516 655
Interest expense . . . . . . . . . . . 76 243 312 274 204 141 101
Other (expense)/income . . . . . . . . 29 18 (11) 22 11 12 6
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes. . . . . . . . . . . . . 2,566 1,560 1,873 1,302 1,028 387 560
Provision for income taxes . . . . . . . 1,049 647 756 509 418 165 243
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income. . . . . . . . . . . . $ 1,517 $ 913 $ 1,117 $ 793 $ 610 $ 222 $ 317
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings per share of Common
Stock (basic and diluted)(4) . . . . . $ 0.41 $ 0.38 $ 0.44 $ 0.33 $ 0.26 $ 0.09 $ 0.13
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Weighted average number of
common shares
outstanding . . . . . . . . . . . 3,693,573 2,388,000 2,532,399 2,388,000 2,320,000 2,356,000 2,400,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Weighted average number of
common shares outstanding
assuming dilution(4). . . . . . . 3,722,574 2,388,000 2,542,759 2,388,000 2,320,000 2,356,000 2,400,000
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance Sheet Data (at end of period):
Working capital . . . . . . . . . . . 9,871 $ 2,261 $ 10,211 $ 1,510 $ 944 $ 621 $ 660
Total assets. . . . . . . . . . . . . 31,233 15,118 17,775 9,544 8,782 6,033 4,975
Long-term debt. . . . . . . . . . . . 60 -- 65 -- 6 72 124
Total debt. . . . . . . . . . . . . . 3,672 6,630 100 3,537 3,005 2,831 1,828
Stockholders' equity. . . . . . . . . $ 17,694 $ 3,544 $ 12,073 $ 2,632 $ 1,839 $ 1,174 $ 1,023
</TABLE>
________________
(1) Includes the results of operations of Diversified Data Products, Inc.
("DDP") subsequent to its acquisition on May 30, 1996.
(2) The balance sheet data includes the acquisition of DDP on May 30, 1996
and the Company's initial public offering on November 12, 1996.
(3) Includes the results of operations of Imperial Data Supply Corporation
subsequent to its acquisition on April 30, 1997, Data Associates, Inc.
subsequent to its acquisition on July 1, 1997, and Force 4 D.P. Supplies,
Inc. subsequent to its acquisition on July 15, 1997.
(4) Earnings per share of common stock data is restated in accordance with
SFAS No. 128, "Earnings Per Share."
THE OFFERING
Common Stock offered by Selling
Stockholders . . . . . . . . . . . . 391,109 shares
Common Stock to be Offered
by the Company . . . . . . . . . . . 0 shares
Common Stock to be outstanding
after the Offering(1). . . . . . . . 5,295,812 shares
Use of Proceeds . . . . . . . . . . . All of the shares offered hereby from
time to time are being offered by the
Selling Stockholders. The Company will
not receive any proceeds therefrom.
Nasdaq National Market symbol . . . . "MCSC"
(1) Based on shares outstanding as of January 30, 1998. Excludes 350,000
shares of Common Stock reserved for future issuance under the Company's stock
option plans.
9
<PAGE>
RISK FACTORS
In addition to other information in this Prospectus, the following factors
should be considered carefully by prospective investors before purchasing any of
the Common Stock offered by this Prospectus.
FINANCING FOR ACQUISITIONS; ADDITIONAL DILUTION
If future acquisitions are funded by the issuance of additional Common
Stock, such issuance could be without stockholder approval and will dilute
current stockholders and stockholders who purchase shares of Common Stock in
this Offering. Stockholders have no preemptive rights and, therefore, no
stockholder has the right to acquire additional Common Stock in such a
circumstance in order to prevent such dilution. The Company presently intends
to register shares of its Common Stock with the Securities and Exchange
Commission (the "Commission") under Rule 415 of the Securities Act of 1933, as
amended (the "Securities Act"), after the completion of other acquisitions to
permit public resales of the Common Stock by the stockholders of the acquired
companies and may register additional shares (up to 6,000,000) with the
Commission for use by the Company as all or a portion of the consideration to be
paid in future acquisitions or for other purposes. Shares may also be sold in
the future by the Company to pay down debt incurred in connection with its
acquisition strategy. These shares generally will be freely tradeable after
their registration, unless the sale thereof is contractually restricted. There
can be no assurance that holders of the Common Stock will not be significantly
diluted by future issuances of Common Stock as a result of the Company's
acquisition strategy. Moreover, the issuance of additional shares of Common
Stock may have a negative impact on earnings per share and may negatively impact
the market price of the Common Stock.
FINANCING FOR ACQUISITIONS; LEVERAGE
If acquisitions are consummated for cash, it is likely that the Company
will borrow the necessary funds and, accordingly, the Company may become highly
leveraged as a result thereof. If it becomes highly leveraged, the Company may
be more vulnerable to extended economic downturns and its flexibility in
responding to changing economic and industry conditions may be limited. The
degree to which the Company is leveraged could have important consequences to
purchasers of the Common Stock, including the impairment of the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions and general corporate purposes. The Company's
ability to make principal and interest payments on its current and future
indebtedness and to repay its current and future indebtedness at maturity will
be dependent on the Company's future operating performance, which is itself
dependent on a number of factors, many of which are beyond the Company's
control, and may be dependent on the availability of borrowings under the Credit
Facility or other financings. A substantial portion of the Company's current
borrowing capacity under the Credit Facility could be consumed by increased
working capital needs, including future acquisitions.
10
<PAGE>
POSSIBLE NEED FOR ADDITIONAL FINANCING TO IMPLEMENT ACQUISITION STRATEGY
The Company may require additional funds to implement its acquisition
strategy. While the Company's Credit Facility may be utilized to finance
acquisitions, the amount which may be drawn upon by the Company may be limited.
Accordingly, the Company may require additional debt or equity financing for
future acquisitions. There can be no assurance that the Company will be able to
obtain additional debt or equity financing on terms favorable to the Company, or
at all, or if obtained, there can be no assurance that such debt or equity
financing will be sufficient for the financing needs of the Company.
RESTRICTIONS IMPOSED BY DEBT ARRANGEMENTS
The Company's outstanding indebtedness consists primarily of borrowings
under the $50.0 million secured Credit Facility provided by National City Bank
of Dayton and two other banks (the "Banks"). The Credit Facility consists of a
$35.0 million revolving line of credit and a $15.0 million term loan
arrangement. The Credit Facility contains restrictive covenants which may have
an adverse effect on the Company's operations in the future. These covenants
include, among other restrictions: (i) the maintenance of certain financial
ratios; (ii) restrictions on (a) the purchase or sale of assets, (b) any merger,
sale or consolidation activity, (c) loans, investments and guaranties made by
the Company, (d) lease and sale and leaseback transactions, and (e) capital
expenditures; and (iii) certain limitations on the incurrence of other
indebtedness. These provisions may constrain the Company's acquisition
strategy, may delay, deter, or prevent a takeover attempt that a shareholder
might consider in its best interests and may have an adverse effect on the
market price of the Company's Common Stock. In addition, the Credit Facility
prohibits the payment of dividends and the repurchase of the Common Stock.
FAILURE TO IMPLEMENT ACQUISITION STRATEGY
Competition for desirable new acquisitions in attractive major
metropolitan markets is expected to increase. No assurance can be given that
the Company will be able to find attractive acquisition candidates or that such
acquisitions can be effected at reasonable prices or in a timely manner, or that
once acquired, the Company will be able to effectively integrate or profitably
manage such companies. The failure to complete acquisitions and continue the
Company's expansion could have a material adverse effect on its financial
performance.
RISKS RELATING TO INTERNATIONAL ACQUISITIONS
Expansion into international markets may involve additional risks relating
to such things as currency exchange rates, new and different legal and
regulatory requirements, political and economic risks relating to the stability
of foreign governments and their trading relationship with the United States,
difficulties in staffing and managing foreign operations,
11
<PAGE>
differences in financial reporting, differences in the manner in which different
cultures do business, operating difficulties and other factors.
INTEGRATION OF ACQUISITIONS
The Company has acquired the stock or assets of eleven computer and office
automation supply companies in the past six years and intends to continue to
actively pursue additional acquisitions. No assurance can be given that the
Company will be able to successfully integrate its recent or future acquisitions
with the Company's existing systems and operations. The integration of acquired
businesses may also lead to the resignation of key employees of the acquired
companies and diversion of management attention from other ongoing business
concerns. The costs of integration could have an adverse effect on short-term
operating results. Any or all of these factors could have a material adverse
effect on the Company's results of operations and financial condition in the
future.
ABILITY TO MANAGE GROWTH
The Company expects to experience rapid growth that will likely result in
new and increased responsibilities for management personnel and which will
challenge the Company's management, operating and financial systems and
resources. To compete effectively and manage future growth, if any, the Company
will be required to continue to implement and improve its operational, financial
and management information systems, procedures and internal controls on a timely
basis and to expand, train, motivate and manage its work force. There can be no
assurance that the Company's personnel, systems, procedures and controls will be
adequate to support the Company's future operations. Any failure to implement
and improve the Company's operational, financial and management systems or to
expand, train motivate or manage employees could have a material adverse effect
on the Company's operating results and financial condition.
DEPENDENCE ON KEY PERSONNEL
The Company relies on certain key executives, including its President and
Chief Executive Officer and other senior management, with whom it has entered
into employment agreements which expire on December 31, 1999, subject to
renewal, and which contain non-competition provisions which expire 12 months
after such executive's employment is terminated. The agreement with the
President and Chief Executive Officer entitle such individual to receive a cash
bonus based on the Company's annual income before taxes, employee profit sharing
or any other bonuses, limited, however, to no more than 100.0% of his base
salary. The loss of services of one or more of the Company's key executives
could disrupt and have a material adverse effect on the operations of the
Company. As the Company continues to grow, it will continue to hire, appoint or
otherwise retain and/or change senior managers and other key executives. There
can be no assurance that the Company will be able to retain its executive
officers and key personnel or attract additional qualified management in the
future. In addition, the success of certain of the Company's
12
<PAGE>
acquisitions may depend, in part, on the Company's ability to retain management
personnel of the acquired companies. The Company intends to offer certain
individuals who manage the acquired companies written employment agreement which
could contain post employment agreements not to compete. The loss of services
of senior executive officers could have a material adverse effect upon the
Company's business.
The Company has recently hired and intends to continue to hire, certain
sales professionals who have worked for other computer and office supply
companies immediately prior to their hiring by the Company. In this regard, the
Company and two such sales employees, have been named as defendants in a lawsuit
filed by one such former employer. The Company believes, however, that the
resolution of the lawsuit will not have a material adverse impact on the
financial condition of the Company.
EXCHANGE RATE FLUCTUATIONS
Although the Company's operations are not currently subject to material
operational risks associated with fluctuations in exchange rates, because the
Company intends to expand the size and scope of its international operations,
its exposure to fluctuations in exchange rates will be increased. Accordingly,
no assurance can be given that the Company's results of operations will not be
adversely affected in the future by fluctuations in foreign currency exchange
rates. The Company has, at times, entered into forward foreign currency
exchange contracts in order to hedge the Company's accounts receivable and
accounts payable. At September 30, 1997, the Company had no foreign currency
exchange contracts outstanding. In the future, the Company may, from time to
time, consider entering into other forward foreign currency exchange contracts,
although no assurances can be given that the Company will do so, or will be able
to do so, or that such arrangements will adequately protect the Company from
fluctuations in foreign currency exchange rates.
DEPENDENCE ON CERTAIN KEY SUPPLIERS
Although the Company regularly carries products and accessories
manufactured by approximately 500 original equipment manufacturers, 46.7%, 50.6%
and 58.6% of the Company's net sales in the nine months ended September 30, 1997
and in fiscal years 1996 and 1995, respectively, were derived from products
supplied by the Company's ten largest suppliers, with the sale of products
supplied by Hewlett-Packard, Lexmark and Canon accounting for approximately
13.9%, 7.1% and 11.6% of total net sales, respectively, for the nine months
ended September 30, 1997. In addition, the Company's business is dependent upon
terms provided by its key suppliers, including pricing and related provisions,
product availability and dealer authorizations. While the Company considers its
relationships with its key suppliers, including Hewlett-Packard and Lexmark, to
be good, there can be no assurance that these relationships will not be
terminated or that such relationships will continue as presently in effect. In
addition, changes by one or more of such key suppliers of their policies
regarding distributors or volume discount schedules or other marketing programs
applicable to the Company may have a material adverse effect on the Company's
13
<PAGE>
business. Certain distribution agreements require the Company to make minimum
annual purchases. Under its distribution agreements with Hewlett-Packard and
Lexmark, the Company is required to make minimum annual purchases of $5.0
million and $250,000, respectively.
HIGHLY COMPETITIVE INDUSTRY
The computer and office automation product supply industry is highly
competitive. The Company competes with major full-service office products
distributors, other national and regional computer supply distributors, office
products superstores, direct mail order companies, and, to a lesser extent,
non-specialized retailers. Certain of the Company's competitors, such as office
products superstores and major full-service office products distributors, are
larger and have substantially greater financial and other resources and
purchasing power than the Company. The Company believes that the computer
supply industry will consolidate further in the future and consequently become
more competitive. Increasing competition will result in greater price
discounting which will continue to have a negative impact on the industry's
gross margins. There can be no assurance that the Company will not encounter
increased competition in the future, which could have a material adverse effect
on the Company's business.
CONTROL OF EXISTING MANAGEMENT AND CERTAIN STOCKHOLDERS
As of January 30, 1998, management of the Company owned 887,730 shares of
Common Stock representing approximately 16.8% of the outstanding shares of
Common Stock and Pittsburgh Investment Group LLC ("LLC"), a limited liability
company whose members include the Chairman of the Board, Vice Chairman, a
director and the President and Chief Executive Officer of the Company, an
investment fund affiliated with the investment banking firm that was the
managing underwriter in the Company's initial public offering and a general
partnership composed of certain members of the law firm that acts as special
counsel to the Company, owned 509,013 shares of Common Stock representing
approximately 9.6% of the outstanding shares of Common Stock. Accordingly,
management or LLC, acting together or independently, will be in a position to
exert significant influence over all matters relating to the Company's business,
including decisions regarding the election of the Company's Board of Directors,
the acquisition or disposition of assets (in the ordinary course of the
Company's business or otherwise), future issuances of Common Stock or other
securities of the Company, and the declaration and payment of dividends on the
Common Stock. Management or LLC, acting together or independently, also may be
able to delay, make more difficult or prevent any business combination involving
the Company not approved by them.
14
<PAGE>
DEPENDENCE ON COMPUTER SYSTEMS
The Company's operations are generally dependent on its proprietary
software applications. Modifications to the Company's computer systems and
applications software will be necessary as the Company executes its expansion
plans and responds to customer needs, technological developments, electronic
commerce requirements and other factors. Such modifications may cause
disruptions in the operations of the Company, delay the schedule for
implementing the integration of newly acquired companies, or cost more to
design, implement or operate than currently budgeted. Such disruptions, delays
or costs could have a material adverse effect on the Company's operations and
financial performance.
The Company does not currently have redundant computer systems or
redundant dedicated communication lines linking its computers to its warehouses,
although all data is stored on two separate hard drives on a continual basis.
The Company has taken precautions to protect itself from events that could
interrupt its operations, including back-up power supplies that allow the
Company's computer system to function in the event of a power outage, off-site
storage of back-up data, fire protection, physical security systems and an early
warning detection and fire extinguishing system. The occurrence of any of these
events could have a material adverse effect on the Company's operations and
financial performance.
POTENTIAL VOLATILITY OF STOCK PRICE
Stock prices of many growth companies fluctuate widely, often for reasons
that are unrelated to their actual operating performance. Announcement of new
acquisitions by the Company or its competitors, variations in quarterly
operating results, litigation involving the Company, general conditions
affecting all participants in the computer supply industry, regulatory
developments, and economic or other external factors, may have a significant
impact on the market price and liquidity of the Common Stock.
NO DIVIDENDS
The Company has never paid a dividend on its capital stock and currently
expects to retain its future earnings, if any, for use in the operation and
expansion of its business and does not anticipate paying any such cash dividends
in the foreseeable future. See also "--Restrictions Imposed by Debt
Arrangements."
15
<PAGE>
AVAILABILITY OF COMMON STOCK AND PREFERRED STOCK FOR ISSUANCE
The Company's Board of Directors has the authority to issue up to
5,000,000 shares of the Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions thereof, including voting rights of the
Preferred Stock, without any further vote or action by the Company's
stockholders. The voting and other rights of the holders of Common Stock will
be subject to, and may be adversely affected by, the rights of the holders of
any Preferred Stock that may be issued in the future. The Company's Board may
similarly issue additional shares of Common Stock without any further vote or
action by stockholders. Such an issuance has occurred, and could occur in the
context of other public or private offerings of shares of Common Stock or
Preferred Stock or in a situation where the Common Stock or Preferred Stock is
used to acquire the assets or stock of another company. The issuance of Common
Stock or Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of delaying, deferring or preventing a change in control of the Company. The
Company has no current plans to issue any shares of Common Stock or Preferred
Stock other than as described herein.
ANTITAKEOVER PROVISIONS
The Amended and Restated Articles of Incorporation ("Articles") and
Amended and Restated Code of Regulations ("Code of Regulations") of the Company
contain certain provisions which, among other things, permit the establishment
of a "staggered" Board of Directors, limit the personal liability of, and
provide indemnification for, the directors of the Company, require that
stockholders comply with certain requirements before they can nominate someone
for director or submit a proposal before a meeting of stockholders, limit the
ability of stockholders to act by written consent and require a supermajority
vote of stockholders in the event that a "related person" (as defined) attempts
to engage in a business combination with the Company. The Ohio General
Corporation Law, which is applicable to the Company, has certain other
provisions which may be deemed to have antitakeover effects, including statutes
which deal with control share acquisitions, transactions involving interested
stockholders, control bids and the disgorgement of trading profits.
16
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the Offering. All proceeds
will be received and retained solely by the Selling Stockholders.
SELLING STOCKHOLDERS
The shares of Common Stock to be sold by the Selling Stockholders pursuant
to this Prospectus represent shares issued to the Selling Stockholders by the
Company (the "Acquisition Shares") in connection with its acquisitions of
Imperial Data Supply Corporation, Spokane, Washington; Data Associates, Inc.,
Roswell, Georgia; and Force 4 D.P. Supplies, Inc., Portland, Oregon ("Force 4").
No Selling Stockholder beneficially owns any shares of Common Stock other than
the Acquisition Shares. Except as indicated, none of the Selling Stockholders
has held any position or office or had a material relationship with the Company
or any of its affiliates within the past three years other than as a result of
the ownership of the Company's Common Stock. The following tables set forth the
aggregate number of Acquisition Shares issued to each Selling Stockholder and
offered by each Selling Stockholder hereunder. See "Plan of Distribution."
<TABLE>
<CAPTION>
Shares Beneficially Number of Shares Shares Beneficially Owned
Name of Selling Stockholder Owned Prior to Offering Being Offered After Offering
----------------------------- --------------------------------- -------------------- ----------------------------
Number Percent Number Percent
---------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C>
John Keegan(1) . . . . . . . . 2,000 * 2,000 + *
John Keegan and
Valerie Keegan . . . . . . . . 57,510 1.1 57,510 + *
Melva Potter . . . . . . . . . 25,217 * 25,217 + *
William H. Potter
Testamentary Trust(2). . . . . 21,656 * 21,656 + *
Gerald G. Gould(1) . . . . . . 64,865 1.2 64,865 + *
J. Phillip Crone(1) . . . . . . 64,865 1.2 64,865 + *
Daniel W. Wisdom(3) . . . . . . 154,996 2.9 154,996 + *
Total . . . . . . . 391,109 7.4 391,109 + *
</TABLE>
- ---------------------------
(*) Less than 1% of the total shares of Common Stock issued and outstanding as
of January 30, 1998.
(+) The Selling Stockholder may sell some or all of the Acquisition Shares
during the period of time this Prospectus is effective.
(1) Messrs. Keegan, Gould and Crone are employees of the Company.
(2) Melva Potter is the trustee of the William H. Potter Testamentary Trust.
(3) Mr. Wisdom is the President of Force 4, a wholly-owned subsidiary of the
Company.
17
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they or
their pledgees, donees, transferees or other successors in interest intend to
sell all or a portion of the shares offered hereby from time to time on the
Nasdaq National Market and that sales will be made at prices prevailing at the
times of such sales. Such persons may also make private sales directly or
through a broker or brokers, who may act as agent or as principal. The Company
will receive no part of the proceeds of sales made hereunder.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders and/or purchasers of the shares
offered hereby. Usual and customary brokerage fees will be paid by the Selling
Stockholders. Broker-dealers may agree with the Selling Stockholders to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for the Selling
Stockholders, to purchase as principal any unsold shares at the price required
to fulfill the broker-dealer commitment to the Selling Stockholders.
Broker-dealers who acquire shares as principal may thereafter resell such shares
from time to time in transactions (which may involve cross and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) on the Nasdaq National
Market, in negotiated transactions or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.
Upon the Company's being notified by the Selling Stockholders that any
material arrangement has been entered into with a broker or dealer for the sale
of shares through a secondary distribution, or a purchase by a broker or dealer,
a supplemented Prospectus will be filed, if required, pursuant to Rule 424(c)
under the Securities Act, disclosing (a) the name of each such broker-dealer(s),
(b) the number of shares involved, (c) the price at which such shares were sold,
(d) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (e) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, as supplemented, and (f) other facts material to
the transaction.
The Company has advised the Selling Stockholders that Regulation M
promulgated under the Exchange Act may apply to their sales in the market, has
furnished the Selling Stockholders with a copy of this regulation and has
informed them of the need for delivery of copies of this Prospectus. The
Selling Stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal.
18
<PAGE>
Any securities covered by this Prospectus that qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will sell any or
all of the shares of Common Stock offered by them hereunder.
19
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C. As of
the date of this Prospectus, a general partnership composed of certain members
of Elias, Matz, Tiernan & Herrick L.L.P. beneficially owned 18.5% of LLC.
EXPERTS
The consolidated financial statements of Miami Computer Supply
Corporation as of December 31, 1996 and 1995 and for each of the three years
in the period ended December 31, 1996, incorporated in this prospectus by
reference to the annual report on Form 10-K of Miami Computer Supply
Corporation for the year ended December 31, 1996, have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The financial statements of Minnesota Western as of and for the
eleven months ended September 30, 1997 and as of October 31, 1996 and for
each of the two years in the period then ended, incorporated in this
prospectus by reference to the Form 8-K of Miami Computer Supply Corporation
dated January 30, 1998, have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of TBS as of and for the year ended January
3, 1997 and as of and for the nine months ended September 30, 1997,
incorporated in this prospectus by reference to the Form 8-K of Miami
Computer Supply Corporation dated January 15, 1998, have been so incorporated
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The financial statements of BRITCO as of and for the year ended
April 30, 1997, incorporated in this prospectus by reference to the Form 8-K
of Miami Computer Supply Corporation dated December 15, 1997, have been so
incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
391,109 Shares
[LOGO]
MIAMI COMPUTER SUPPLY
CORPORATION
COMMON STOCK
--------------------------
PROSPECTUS
__________ __, 1998
---------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except the
Securities and Exchange Commission filing fee are estimates.
<TABLE>
<CAPTION>
<S> <C>
SEC filing fees . . . . . . . . . . . . . . . . $ 1,580
Printing, postage and mailing . . . . . . . . . 15,000
Legal fees and expenses . . . . . . . . . . . . 42,000
Blue Sky fees and expenses . . . . . . . . . . 5,000
Accounting fees and expenses . . . . . . . . . 5,000
Miscellaneous fees and expenses . . . . . . . . 2,000
------
Total . . . . . . . . . . . . . . . . $70,580
------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is an Ohio corporation. Section 1701.59 of the Ohio General
Corporation law states:
"(B) A director shall perform his duties as a director, including his
duties as a member of any committee of the directors upon which he may serve, in
good faith, in a manner he reasonably believes to be in or not opposed to the
best interests of the corporation, and with the care that an ordinarily prudent
person in a like position would use under similar circumstances. In performing
his duties, a director is entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, that are
prepared or presented by:
(1) One or more directors, officers, or employees of the corporation who
the director reasonably believes are reliable and competent in the matters
prepared or presented;
(2) Counsel, public accountants, or other persons as to matters that the
director reasonably believes are within the person's professional or expert
competence;
(3) A committee of the directors upon which he does not serve, duly
established in accordance with a provision of the articles or the regulations,
as to matters within its designated authority, which committee the director
reasonably believes to merit confidence.
II-1
<PAGE>
(C) For purposes of division (B) of this section:
(1) A director shall not be found to have violated his duties under
division (B) of this section unless it is proved by clear and convincing
evidence that the director has not acted in good faith, in a manner he
reasonably believes to be in or not opposed to the best interests of the
corporation, or with the care that an ordinarily prudent person in a like
position would use under similar circumstances, in any action brought against a
director, including actions involving or affecting any of the following:
(a) A change or potential change in control of the corporation, including
a determination to resist a change or potential change in control made pursuant
to division (F)(7) of section 1701.13 of the Revised Code.
(b) A termination or potential termination of his service to the
corporation as a director;
(c) His service in any other position or relationship with the
corporation.
(2) A director shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause reliance on
information, opinions, reports, or statements that are prepared or presented by
the persons described in divisions (B)(1) to (3) of this section to be
unwarranted.
(3) Nothing contained in this division limits relief available under
section 1701.60 of the Revised Code.
(D) A director shall be liable in damages for any action he takes or fails
to take as a director only if it is proved by clear and convincing evidence in a
court of competent jurisdiction that his action or failure to act involved an
act or omission undertaken with deliberate intent to cause injury to the
corporation or undertaken with reckless disregard for the best interests of the
corporation. Nothing contained in this division affects the liability of
directors under section 1701.95 of the Revised Code or limits relief available
under section 1701.60 of the Revised Code. This division does not apply if, and
only to the extent that, at the time of a director's act or omission that is the
subject of complaint, the articles or the regulations of the corporation state
by specific reference to this division that the provisions of this division do
not apply to the corporation.
(E) For purposes of this section, a director, in determining what he
reasonably believes to be in the best interests of the corporation, shall
consider the interests of the corporation's shareholders and, in his discretion,
may consider any of the following:
(1) The interests of the corporation's employees, suppliers, creditors,
and customers;
(2) The economy of the state and nation;
II-2
<PAGE>
(3) Community and societal considerations;
(4) The long-term as well as short-term interests of the corporation and
its shareholders, including the possibility that these interests may be best
served by the continued independence of the corporation.
(F) Nothing contained in division (C) or (D) of this section affects the
duties of either of the following:
(1) A director who acts in any capacity other than his capacity as a
director;
(2) A director of a corporation that does not have issued and outstanding
shares that are listed on a national securities exchange or are regularly quoted
in an over-the-counter market by one or more members of a national or affiliated
securities association, who votes for or assents to any action taken by the
directors of the corporation that, in connection with a change in control of the
corporation, directly results in the holder or holders or a majority of the
outstanding shares of the corporation receiving a greater consideration for
their shares than other shareholders."
Section 1701.13(E) of the OGCL states:
"(E)(1) A corporation may indemnify or agree to indemnify any person who
was or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, other than an action by or in the right of the
corporation, by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, trustee, officer, employee, member, manager, or
agent of another corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of it self, create
a presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending,
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor, by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or
II-3
<PAGE>
was serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, or a partnership, joint
venture, trust, or other enterprise, against expenses, including attorney's
fees, actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any of
the following:
(a) Any claim, issue, or matter as to which such person is adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that, the court of common pleas of
the court in which such action or suit was brought determines, upon application,
that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court of common pleas or such other court
shall deem proper;
(b) Any action or suit in which the only liability asserted against a
director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, member,
manager, or agent has been successful on the merits or otherwise in defense of
any action, suit, or proceeding referred to in division (E)(1) or (2) of this
section, or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses, including attorney's fees, actually and reasonably
incurred by him in connection with the action, suit, or proceeding.
(4) Any indemnification under division (E)(1) or (2) of this section,
unless ordered by a court, shall be made by the corporation only as authorized
in the specific case, upon a determination that indemnification of the director,
trustee, officer, employee, member, manager, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
division (E)(1) or (2) of this section. Such determination shall be made as
follows:
(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or threatened with
the action, suit, or proceeding referred to in division (E)(1) or (2) of this
section;
(b) If the quorum described in division (E)(4)(a) of this section is not
obtainable or if a majority vote of a quorum of disinterested directors so
directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been retained
by or who has performed services for the corporation or any person to be
indemnified within the past five years;
(c) By the shareholders;
II-4
<PAGE>
(d) By the court of common pleas or the court in which the action, suit,
or proceeding referred to in division (E)(1) or (2) of this section was brought.
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and, within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which such action or suit was brought to review the reasonableness of such
determination.
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in division (E)(1) or (2)
of this section, the articles or the regulations of a corporation state, by
specific reference to this division, that the provisions of this division do not
apply to the corporation and unless the only liability asserted against a
director in an action, suit, or proceeding referred to in division (E)(1) or (2)
of this section, the articles or the regulations of a corporation state, by
specific reference to this division, that the provisions of this division do not
apply to the corporation and unless the only liability asserted against a
director in an action, suit, or proceeding referred to in division (E)(1) or (2)
of this section is pursuant to section 1701.95 of the Revised Code, expenses,
including attorney's fees, incurred by a director in defending the action, suit,
or proceeding shall be paid by the corporation as they are incurred, in advance
of the final disposition of the action, suit, or proceeding, upon receipt of an
undertaking by or on behalf of the director in which he agrees to do both of the
following:
(i) Repay such amount if it is provided by clear and convincing evidence
in a court of competent jurisdiction that his action or failure to act involved
an act or omission undertaken with deliberate intent to cause injury to the
corporation or undertaken with reckless disregard for the best interests of the
corporation;
(ii) Reasonably cooperate with the corporation concerning the action,
suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director, trustee,
officer, employee, member, manager, or agent in defending any action, suit, or
proceeding referred to in division (E)(1) or (2) of this section, may be paid by
the corporation as they are incurred, in advance of the final disposition of the
action, suit, or proceeding, as authorized by the directors in the specific
case, upon the receipt of an undertaking by or on behalf of the director,
trustee, officer, employee, member, manager, or agent to repay such amount, if
it ultimately is determined that he is not entitled to be indemnified by the
corporation.
(6) The indemnification authorized by this section shall not be exclusive
of, and shall be in addition to, any other rights granted to those seeking
indemnification under the articles, the regulations, any agreement, a vote of
shareholders or disinterested directors, or
II-5
<PAGE>
otherwise, both as to action in their official capacities and as to action in
another capacity while holding their offices or positions, and shall continue as
to a person who has ceased to be a director, trustee, officer, employee, member,
manager, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish similar
protection, including, but not limited to, trust funds, letters of credit, or
self-insurance, on behalf of or for any person who is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee, member,
manager, or agent of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company, or a partnership, joint venture, trust, or
other enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
this section. Insurance may be purchased from or maintained with a person in
which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of expenses as
they are incurred, indemnification, insurance, or other protection that may be
provided pursuant to divisions (E)(5), (6), and (7) of this section. Divisions
(E)(1) and (2) of this section do not create any obligation to repay or return
payments made by the corporation pursuant to division (E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" includes all
constituent entities in a consolidation or merger and the new or surviving
corporation, so that any person who is or was a director, officer, employee,
trustee, member, manager, or agent of such a constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee, member, manager, or agent or another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a partnership,
joint venture, trust, or other enterprise, shall stand in the same position
under this section with respect to the new or surviving corporation as he would
if he had served the new or surviving corporation in the same capacity."
The Amended and Restated Articles of Incorporation of the Company also
limit the liability of, and provide indemnification to, directors and officers
of the Company. Article VIII of the Company's Articles states:
"A. LIMITATION OF LIABILITY. No director shall be personally liable to
the Corporation or its stockholders for monetary damages for any act or omission
by such director as a director; provided that a director's liability shall not
be limited or eliminated to the extent that it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to
the Corporation, or was undertaken with reckless disregard for the best
interests of the Corporation. No amendment to or repeal of this Article VIII.A.
shall apply
II-6
<PAGE>
to or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
B. INDEMNIFICATION. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, by reason of the fact that such person is or was a
director, trustee, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee, officer,
employee, member, manager or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, partnership, joint
venture, trust or other enterprise or employee benefit plan, against liability
and expenses (including court costs and attorney's fees), judgments, fines,
excise taxes and amounts paid in satisfaction, settlement or compromise actually
and reasonably incurred by such person in connection with such action, suit or
proceeding to the full extent authorized by Section 1701.13 of the OGCL or any
successor provision thereto.
C. ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by a director,
officer, employee or agent of the Corporation in defending an action, suit or
proceeding described in Article VIII.B. shall be paid by the Corporation as they
are incurred, in advance of the final disposition of such action, suit or
proceeding, as authorized by the Board of Directors only upon receipt of written
affirmation by or on behalf of such person in which he agrees to do both of the
following: (i) repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with the deliberate intent to cause
injury to the Corporation or undertaken with reckless disregard for the best
interests of the Corporation, and (ii) reasonably cooperate with the Corporation
concerning the action, suit or proceeding.
D. OTHER RIGHTS AND REMEDIES. The indemnification provided by this
Article VIII shall not be deemed to exclude any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the
Corporation's Articles of Amendment, any insurance or other agreement, trust
fund, letter of credit, surety bond, vote of stockholders or disinterested
directors or otherwise, both as to actions in their official capacity and as to
actions in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, member, manager or
agent and shall inure to the benefit of the heirs, executors and administrators
of such person; provided that no indemnification shall be made to or on behalf
of an individual in respect of any of the following: (i) any claim, issue, or
matter as to which such person is adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless, and only to
the extent that, a court of competent jurisdiction determines that, despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
the court shall deem proper; or (ii) any action or suit in which the only
liability asserted against a director is pursuant to Section 1701.95 of the OGCL
or any successor thereto.
II-7
<PAGE>
E. INSURANCE. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of the Corporation, or was
serving at the request of the Corporation as a director, officer, employee,
member, manager or agent of another corporation, domestic or foreign, nonprofit
or for profit, a limited liability company, partnership, joint venture, trust or
another enterprise or employee benefit plan, against any liability asserted
against him or incurred by him in any such capacity, or arising out of his
status, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article or the OGCL.
F. MODIFICATION. The duties of the Corporation to indemnify and to
advance expenses to a director, officer, employee or agent provided in this
Article VIII shall be in the nature of a contract between the Corporation and
each such director, officer, employee or agent and no amendment or repeal of any
provision of this Article VIII shall alter, to the detriment of such director,
officer, employee or agent, the right of such person to the advance of expenses
or indemnification related to a claim based on an act or failure to act which
took place prior to such amendment or repeal."
Article X of the Company's Code of Regulations states:
"(a) A director of the Corporation shall not be personally liable
for monetary damages for action taken, or any failure to take action, as a
director, to the extent set forth in the Corporation's Amended and Restated
Articles of Incorporation, which provisions are incorporated herein with the
same affect as if they were set forth herein.
(b) The Corporation shall indemnify any person who is a director,
officer, employee or agent of the Corporation to the extent set forth in the
Corporation's Amended and Restated Articles of Incorporation, which provisions
are incorporated herein with the same affect as if they were set forth herein."
In addition, the Company has obtained a directors and officers liability
insurance policy relating to certain actions or omissions which may be taken, or
omitted to be taken, by the directors and officers of the Company, as well as a
policy which insures against errors and omissions in the offering documents
relating to the offer and sale of the Common Stock to the public.
II-8
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following provides information with respect to all securities of the
Registrant sold by the Registrant within the past three years that were not
registered under the Securities Act:
(a) - (b) The Registrant sold Common Stock as follows:
<TABLE>
<CAPTION>
Amount of Common
Date of Sale Stock Sold Identity of Purchaser(s)
------------ ---------- ------------------------
<S> <C> <C>
April 30, 1997 106,383 Imperial Data Supply
Corporation ("IDSC")
July 1, 1997 129,730 Two Stockholders of Data
Associates, Inc. ("DATA")
July 15, 1997 154,996 One Stockholder of Force 4
D.P. Supplies, Inc. ("FORCE
4")
October 7, 1997 91,667 Two Stockholders of NTI
Data Products, Inc. ("NTI")
December 5, 1997 183,333 Two Stockholders of BRITCO,
Inc. ("BRITCO")
December 31, 1997 210,000 Three Stockholders of TBS
Printware Corporation
("TBS")
January 16, 1998 881,703 Three Stockholders of
Minnesota Western/Creative
Office Products, Inc.
("Minnesota Western")
</TABLE>
(c) Each transaction was separately negotiated with IDSC and with the
stockholders of DATA, Force 4, NTI, BRITCO, TBS and Minnesota Western, and
resulted in the acquisition of substantially all of the assets and the
assumption of certain liabilities
II-9
<PAGE>
of IDSC and all of the outstanding capital stock of DATA, Force 4, NTI,
BRITCO, TBS and Minnesota Western, respectively.
(d) Each of the transactions were "transactions by an issuer not
involving any public offering" within the meaning of Section 4(2) and
Regulation D, promulgated thereunder. Form D's and amendments thereto
were filed as a result of each transaction; reference is made thereto.
(e) Not applicable.
II-10
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits and financial statement schedules are filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits
3.1 Amended and Restated Articles of Incorporation of Miami Computer Supply
Corporation.*
3.2 Amended and Restated Code of Regulations of Miami Computer Supply
Corporation.*
4.0 Form of Stock Certificate of Miami Computer Supply Corporation.*
5.0 Legal opinion of Elias, Matz, Tiernan & Herrick L.L.P.**
10.1 Lease by and between Draft Partnership and Miami Computer Supply, Inc.
dated October 26, 1995.*
10.2 Lease by and between John Schwarz, Sr., Marcella Schwarz, John Schwarz,
Jr. and Robert T. Schwarz and Miami Computer Supply, Inc. dated June 30,
1994.*
10.3 Miami Computer Supply, Inc. Profit Sharing Plan.*
10.4 Miami Computer Supply, Inc. Section 125C Cafeteria Plan.*
10.5 Credit Agreement between Miami Computer Supply, Inc. and National City
Bank, as Administrative Agent, and the Named Lending Institutions, dated
January 8, 1998.
10.6 Epson Authorized Reseller Agreement dated June 28, 1995.*
10.7 Proxima Reseller Agreement dated May 29, 1996.*
10.8 Hewlett Packard U.S. Reseller Channel Agreement as amended January 1,
1996.*
10.9 Lexmark Dealer Agreement dated November 1986.*
10.10 3M Authorized Distributor Agreement dated January 27, 1987.*
10.11 Employment Agreement by and between Miami Computer Supply, Inc. and Thomas
C. Winstel dated May 30, 1996.*
II-11
<PAGE>
10.12 Employment Agreement by and between Miami Computer Supply, Inc. and
Richard A. Newkold dated May 30, 1996.*
10.13 Employment Agreement by and between Miami Computer Supply, Inc. and Roger
E. Turvy dated May 30, 1996.*
10.14 Employment Agreement by and between Miami Computer Supply, Inc. and
Michael E. Peppel dated May 30, 1996.*
10.15 Employment Agreement by and between Miami Computer Supply, Inc. and John
Huffman, III dated May 30, 1996.*
10.16 Split Dollar Agreement by and between Miami Computer Supply, Inc. and
Thomas C. Winstel dated December 1, 1995.*
10.17 Split Dollar Agreement by and between Miami Computer Supply, Inc. and
Richard A. Newkold dated December 1, 1995.*
10.18 Split Dollar Agreement by and between Miami Computer Supply, Inc. and
Roger E. Turvy dated December 1, 1995.*
10.19 Miami Computer Supply Corporation 1996 Stock Option Plan.*
10.20 Miami Computer Supply Corporation Non-employee Director Stock Option
Plan.*
21.0 Subsidiaries of the registrant.**
23.1 Consent of Elias, Matz, Tiernan & Herrick L.L.P.
23.2 Consent of Price Waterhouse LLP.
27.0 Financial Data Schedule.
- ----------
* Incorporated by reference from the Company's initial public offering
registered on Form S-1, SEC File No. 333-12689.
** Previously filed
(b) Financial Statement Schedules
All schedules have been omitted as not applicable or not required under
the rules of Regulation S-X.
II-12
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
and of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering;
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee
II-13
<PAGE>
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE
offering thereof;
(5) That, for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and
(6) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be anew registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Form S-3 Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Dayton, Ohio on
March 5, 1998.
MIAMI COMPUTER SUPPLY CORPORATION
By:/s/ Michael E. Peppel
---------------------------------
Michael E. Peppel, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ------ -----
<S> <C> <C> <C>
/s/ Anthony W. Liberati March 5, 1998
- ------------------------
Anthony W. Liberati Chairman of the Board
/s/ Michael E. Peppel March 5, 1998
- ------------------------
Michael E. Peppel Director, President and Chief Executive
Officer (principal executive officer)
/s/ Robert G. Hecht March 5, 1998
- ------------------------
Robert G. Hecht Director and Vice Chairman of the Board
/s/ Harry F. Radcliffe March 5, 1998
- ------------------------
Harry F. Radcliffe Director and Treasurer
</TABLE>
II-15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/s/ Thomas C. Winstel March 5, 1998
- ------------------------
Thomas C. Winstel Director, Secretary and Vice President
/s/ Mary A. Stewart March 5, 1998
- ------------------------
Mary A. Stewart Vice President -- Operations (principal
financial officer and principal
accounting officer)
</TABLE>
II-16
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF
JANUARY 8, 1998
AMONG
MIAMI COMPUTER SUPPLY CORPORATION
AS BORROWER
THE LENDING INSTITUTIONS NAMED THEREIN
AS LENDERS
NATIONAL CITY BANK
AS ADMINISTRATIVE AGENT
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS AND TERMS..........................................1
1.1. CERTAIN DEFINED TERMS..........................................1
1.2. COMPUTATION OF TIME PERIODS...................................19
1.3. ACCOUNTING TERMS..............................................19
1.4. TERMS GENERALLY...............................................19
1.5. BORROWER MAY RELY ON ADMINISTRATIVE AGENT.....................19
SECTION 2. AMOUNT AND TERMS OF LOANS.....................................19
2.1. COMMITMENTS FOR LOANS.........................................19
2.2. PROCEDURES FOR BORROWING......................................20
2.3. DISBURSEMENT OF FUNDS.........................................21
2.4. NOTES.........................................................22
2.5. CONVERSIONS OF GENERAL REVOLVING LOANS AND TERM LOANS.........22
2.6. REFUNDING OF, OR PARTICIPATION IN, SWING LINE REVOLVING LOANS.23
2.7. INTEREST......................................................24
2.8. INTEREST PERIODS..............................................26
2.9. INCREASED COSTS, ILLEGALITY, ETC..............................26
2.10. COMPENSATION..................................................28
2.11. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS..............28
SECTION 3. LETTERS OF CREDIT.............................................29
3.1. LETTERS OF CREDIT.............................................29
3.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE................30
3.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS..................30
3.4. LETTER OF CREDIT PARTICIPATIONS...............................31
3.5. INCREASED COSTS...............................................32
3.6. GUARANTY OF SUBSIDIARY LETTER OF CREDIT OBLIGATIONS...........33
SECTION 4. FEES; COMMITMENTS.............................................34
4.1. FEES..........................................................34
4.2. VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS................36
4.3. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC.....................36
SECTION 5. PAYMENTS......................................................37
5.1. VOLUNTARY PREPAYMENTS.........................................37
5.2. MANDATORY PREPAYMENTS.........................................38
5.3. METHOD AND PLACE OF PAYMENT...................................40
5.4. NET PAYMENTS..................................................40
SECTION 6. CONDITIONS PRECEDENT..........................................41
6.1. CONDITIONS PRECEDENT AT CLOSING DATE..........................41
6.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS.....................43
SECTION 7. REPRESENTATIONS AND WARRANTIES................................43
7.1. CORPORATE STATUS, ETC.........................................43
7.2. SUBSIDIARIES..................................................43
7.3. CORPORATE POWER AND AUTHORITY, ETC............................43
7.4. NO VIOLATION..................................................44
7.5. GOVERNMENTAL APPROVALS........................................44
<PAGE>
PAGE
----
7.6. LITIGATION....................................................44
7.7. USE OF PROCEEDS; MARGIN REGULATIONS...........................44
7.8. FINANCIAL STATEMENTS, ETC.....................................44
7.9. NO MATERIAL ADVERSE CHANGE....................................45
7.10. TAX RETURNS AND PAYMENTS......................................45
7.11. TITLE TO PROPERTIES, ETC......................................46
7.12. LAWFUL OPERATIONS, ETC........................................46
7.13. ENVIRONMENTAL MATTERS.........................................46
7.14. COMPLIANCE WITH ERISA.........................................47
7.15. INTELLECTUAL PROPERTY, ETC....................................47
7.16. INVESTMENT COMPANY............................................47
7.17. BURDENSOME CONTRACTS; LABOR RELATIONS.........................47
7.18. EXISTING INDEBTEDNESS.........................................47
7.19. SECURITY INTERESTS............................................48
7.20. TRUE AND COMPLETE DISCLOSURE..................................48
SECTION 8. AFFIRMATIVE COVENANTS.........................................48
8.1. REPORTING REQUIREMENTS........................................48
8.2. BOOKS, RECORDS AND INSPECTIONS................................51
8.3. INSURANCE.....................................................51
8.4. PAYMENT OF TAXES AND CLAIMS...................................52
8.5. CORPORATE FRANCHISES..........................................52
8.6. GOOD REPAIR...................................................52
8.7. COMPLIANCE WITH STATUTES, ETC.................................52
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS............................52
8.9. FISCAL YEARS, FISCAL QUARTERS.................................53
8.10. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY...........54
8.11. ADDITIONAL SECURITY; FURTHER ASSURANCES.......................54
8.12. CASUALTY AND CONDEMNATION.....................................55
8.13. HEDGE AGREEMENTS, ETC.........................................56
8.14. SENIOR DEBT...................................................56
SECTION 9. NEGATIVE COVENANTS............................................56
9.1. CHANGES IN BUSINESS...........................................56
9.2. CONSOLIDATION, MERGER, ACQUISITIONS, SALE OF ASSETS, ETC......56
9.3. LIENS.........................................................58
9.4. INDEBTEDNESS..................................................59
9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS.........60
9.6. DIVIDENDS, ETC................................................61
9.7. CONSOLIDATED TOTAL INDEBTEDNESS/CONSOLIDATED EBITDA RATIO.....61
9.8. FIXED CHARGE COVERAGE RATIO...................................61
9.9. CAPITAL EXPENDITURES..........................................61
9.10. CERTAIN LEASES................................................61
9.11. MINIMUM CONSOLIDATED NET WORTH................................62
9.12. PREPAYMENTS AND REFINANCINGS OF OTHER DEBT, ETC...............62
9.13. TRANSACTIONS WITH AFFILIATES..................................62
9.14. LIMITATION ON CERTAIN RESTRICTIVE AGREEMENTS..................62
9.15. LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS................63
ii
<PAGE>
PAGE
----
SECTION 10. EVENTS OF DEFAULT.............................................63
10.1. EVENTS OF DEFAULT.............................................63
10.2. ACCELERATION, ETC.............................................65
10.3. APPLICATION OF LIQUIDATION PROCEEDS...........................65
SECTION 11. THE ADMINISTRATIVE AGENT......................................66
11.1. APPOINTMENT...................................................66
11.2. DELEGATION OF DUTIES..........................................66
11.3. EXCULPATORY PROVISIONS........................................66
11.4. RELIANCE BY ADMINISTRATIVE AGENT..............................67
11.5. NOTICE OF DEFAULT.............................................67
11.6. NON-RELIANCE..................................................67
11.7. INDEMNIFICATION...............................................68
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY...............68
11.9. SUCCESSOR ADMINISTRATIVE AGENT................................68
11.10. OTHER AGENTS..................................................68
SECTION 12. MISCELLANEOUS.................................................68
12.1. PAYMENT OF EXPENSES ETC.......................................68
12.2. RIGHT OF SETOFF...............................................70
12.3. NOTICES.......................................................70
12.4. BENEFIT OF AGREEMENT..........................................70
12.5. NO WAIVER: REMEDIES CUMULATIVE................................72
12.6. PAYMENTS PRO RATA.............................................72
12.7. CALCULATIONS: COMPUTATIONS....................................72
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL...................................72
12.9. COUNTERPARTS..................................................73
12.10. EFFECTIVENESS.................................................73
12.11. HEADINGS DESCRIPTIVE..........................................73
12.12. AMENDMENT OR WAIVER...........................................73
12.13. SURVIVAL OF INDEMNITIES.......................................74
12.14. DOMICILE OF LOANS.............................................74
12.15. CONFIDENTIALITY...............................................74
12.16. LENDER REGISTER...............................................74
12.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS......75
12.18. GENERAL LIMITATION OF LIABILITY...............................75
12.19. NO DUTY.......................................................75
12.20. LENDERS AND AGENT NOT FIDUCIARY TO BORROWER, ETC..............75
12.21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................75
iii
<PAGE>
ANNEX I - INFORMATION AS TO LENDERS
ANNEX II - INFORMATION AS TO SUBSIDIARIES
ANNEX III - DESCRIPTION OF EXISTING INDEBTEDNESS
ANNEX IV - DESCRIPTION OF EXISTING LIENS
ANNEX V - DESCRIPTION OF EXISTING ADVANCES, LOANS,
INVESTMENTS AND GUARANTEES
ANNEX VI - DESCRIPTION OF LETTERS OF CREDIT DEEMED ISSUED
UNDER THE CREDIT AGREEMENT
EXHIBIT A-1 - FORM OF TERM NOTE
EXHIBIT A-2 - FORM OF GENERAL REVOLVING NOTE
EXHIBIT A-3 - FORM OF SWING LINE REVOLVING NOTE
EXHIBIT B-1 - FORM OF NOTICE OF BORROWING
EXHIBIT B-2 - FORM OF NOTICE OF CONVERSION
EXHIBIT B-3 - FORM OF LETTER OF CREDIT REQUEST
EXHIBIT C - FORM OF SUBSIDIARY GUARANTY
EXHIBIT D - FORM OF SECURITY AGREEMENT
EXHIBIT E-1 - FORM OF PLEDGE AGREEMENT
EXHIBIT E-2 - FORM OF MORTGAGE OF SHARES OF
DIVERSIFIED DATA PRODUCTS LIMITED
EXHIBIT F - FORM OF OPINION OF SPECIAL COUNSEL TO THE BORROWER
EXHIBIT G - FORM OF ASSIGNMENT AGREEMENT
EXHIBIT H - FORM OF SECTION 5.4(b)(ii) CERTIFICATE
iv
<PAGE>
CREDIT AGREEMENT, dated as of January 8, 1998, among the following:
(i) MIAMI COMPUTER SUPPLY CORPORATION, an Ohio
corporation (herein, together with its successors and assigns, the
"BORROWER");
(ii) the lending institutions listed in Annex I hereto (each a
"LENDER" and collectively, the "LENDERS"); and
(iii) NATIONAL CITY BANK, a national banking association, as
administrative agent (the "ADMINISTRATIVE AGENT"):
PRELIMINARY STATEMENTS:
(1) Unless otherwise defined herein, all capitalized terms used herein
and defined in section 1 are used herein as so defined.
(2) The Borrower has applied to the Lenders for credit facilities in
order to (i) refinance certain indebtedness of the Borrower, (ii) provide
financing for acquisitions, and (iii) provide working capital and funds for
other lawful purposes.
(3) Subject to and upon the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrower the credit facilities
provided for herein.
NOW, THEREFORE, it is agreed:
SECTION 1. DEFINITIONS AND TERMS.
1.1. CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires:
"ACQUISITION" shall mean and include (i) any acquisition on a going
concern basis (whether by purchase, lease or otherwise) of any facility and/or
business operated by any person who is not a Subsidiary of the Borrower, and
(ii) acquisitions of a majority of the outstanding equity or other similar
interests in any such person (whether by merger, stock purchase or otherwise).
"ADDITIONAL SECURITY DOCUMENT" shall have the meaning provided in
section 8.11(a).
"ADMINISTRATIVE AGENT" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to section 11.9.
"AFFILIATE" shall mean, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such person. A person shall be deemed to control a second
person if such first person possesses, directly or indirectly, the power (i) to
vote 20% or more of the securities having ordinary voting power for the election
of directors or managers of such second person or (ii) to direct or cause the
direction of the management and policies of such second person, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, (x) a director, officer or employee of a person shall not, solely
by reason of such status, be considered an Affiliate of such person; and (y)
neither the Administrative
1
<PAGE>
Agent nor any Lender shall in any event be considered an Affiliate of the
Borrower or any other Credit Party or any of their respective Subsidiaries.
"AGREEMENT" shall mean this Credit Agreement, as the same may be from
time to time further modified, amended and/or supplemented.
"APPLICABLE EURODOLLAR MARGIN" shall have the meaning provided in
section 2.7(g).
"APPLICABLE COMMITMENT FEE RATE" shall have the meaning provided in
section 4.1(a).
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender,
(i) such Lender's Domestic Lending Office in the case of Borrowings consisting
of Prime Rate Loans and (ii) such Lender's Eurodollar Lending Office in the case
of Borrowings consisting of Eurodollar Loans.
"ASSET SALE" shall mean the sale, transfer or other disposition
(including by means of Sale and Lease-Back Transaction, and by means of mergers,
consolidations, and liquidations of a corporation, partnership or limited
liability company of the interests therein of the Borrower or any Subsidiary) by
the Borrower or any Subsidiary to any person other than the Borrower or any
Subsidiary of any of their respective assets (other than sales, transfers or
other dispositions of inventory, or obsolete or excess furniture, fixtures,
equipment or other property, tangible or intangible, in the ordinary course of
business).
"ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement substantially
in the form of Exhibit G hereto.
"AUTHORIZED OFFICER" shall mean any officer or employee of the Borrower
designated as such in writing to the Administrative Agent by the Borrower.
"BANKRUPTCY CODE" shall have the meaning provided in section 10.1(h).
"BORROWER" shall have the meaning provided in the first paragraph of
this Agreement.
"BORROWING" shall mean a General Revolving Borrowing, a Term Loan
Borrowing or a Swing Line Borrowing, as the case may be.
"BUSINESS DAY" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the city in which the Payment Office is located a legal holiday or a day on
which banking institutions are authorized by law or other governmental actions
to close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day which
is a Business Day described in clause (i) and which is also a day for trading by
and between banks in U.S. dollar deposits in the interbank Eurodollar market.
"CAPITAL LEASE" as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that person.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities identified as "capital lease
obligations" (or any similar words) on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP.
2
<PAGE>
"CASH EQUIVALENTS" shall mean any of the following:
(i) securities issued or directly and fully guaranteed or
insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the
United States of America is pledged in support thereof) having
maturities of not more than one year from the date of acquisition;
(ii) U.S. dollar denominated time deposits, certificates of
deposit and bankers' acceptances of (x) any Lender or (y) any bank
whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank, an "APPROVED BANK"), in each case
with maturities of not more than 90 days from the date of acquisition;
(iii) commercial paper issued by any Lender or Approved Bank
or by the parent company of any Lender or Approved Bank and commercial
paper issued by, or guaranteed by, any industrial or financial company
with a short- term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each
thereof, from S&P or Moody's, as the case may be, and in each case
maturing within 90 days after the date of acquisition;
(iv) investments in money market funds substantially all the
assets of which are comprised of securities of the types described in
clauses (i) through (iii) above;
(v) investments in money market funds access to which is
provided as part of "sweep" accounts maintained with a Lender or an
Approved Bank; and
(vi) in the case of any Foreign Subsidiary only, short term
deposits, certificates of deposit, repurchase agreements and similar
financial instruments, in any currency, with or issued by any local or
international financial institution with undivided capital and surplus
of at least $250,000,000 (or the equivalent in any applicable
currency), not exceeding $100,000 (or the equivalent in any other
currency) in the case of any single financial institution.
"CASH PROCEEDS" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Borrower and/or any Subsidiary from such Asset
Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 ET SEQ.
"CHANGE OF CONTROL" shall mean and include any of the following:
(i) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the
Borrower's Board of Directors (together with any new directors whose
election by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors then in office;
(ii) any person or group (as such term is defined in section
13(d)(3) of the 1934 Act), other than the Borrower, any trustee or
other fiduciary holding securities under an employee benefit plan of
the Borrower and the Current Holder Group, shall acquire, directly or
indirectly, beneficial ownership (within the meaning of Rule 13d-3 and
13d-5 of the 1934 Act) of more than 45%, on a fully diluted basis, of
the economic or voting interest in the Borrower's capital stock;
3
<PAGE>
(iii) the Current Holder Group shall, for any reason, cease to
have, directly or indirectly, beneficial ownership (within the meaning
of Rule 13d-3 and 13d-5 of the 1934 Act) of at least 25%, on a fully
diluted basis, of the economic or voting interest in the Borrower's
capital stock;
(iv) the full time active employment of Michael E. Peppel as
chief executive officer (or other significant position as a senior
executive officer with management authority) of the Borrower shall be
voluntarily terminated by the Borrower or Mr. Peppel, or shall
otherwise cease, other than by reason of death or disability, unless a
successor acceptable to the Required Lenders shall have been appointed
or elected and actually taken office on a full time basis within three
months following any such termination or cessation, in which case the
name of such successor shall be substituted for the name of the person
he or she replaces for purposes of this clause (iv);
(v) the shareholders of the Borrower approve a merger or
consolidation of the Borrower with any other person, other than a
merger or consolidation which would result in the voting securities of
the Borrower outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted or
exchanged for voting securities of the surviving or resulting entity)
more than 60% of the combined voting power of the voting securities of
the Borrower or such surviving or resulting entity outstanding after
such merger or consolidation; and/or
(vi) the shareholders of the Borrower approve a plan of
complete liquidation of the Borrower or an agreement or agreements for
the sale or disposition by the Borrower of all or substantially all of
the Borrower's assets.
"CLOSING DATE" shall mean the date, on or after the Effective Date,
upon which the conditions specified in section 6.1 are satisfied.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Effective
Date and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"COLLATERAL" shall mean any collateral covered by any Security
Document.
"COLLATERAL AGENT" shall mean the Administrative Agent acting as
Collateral Agent for the Lenders pursuant to the Security Documents.
"COMMITMENT" shall mean, with respect to each Lender, its Term Loan
Commitment, its General Revolving Commitment, and/or its Swing Line Revolving
Commitment, as applicable.
"COMMITMENT FEES" shall have the meaning provided in section 4.1(a).
"CONFIDENTIAL INFORMATION MEMORANDUM" shall have the meaning provided
in section 7.8(c).
"CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, all
amortization expenses of the Borrower and its Subsidiaries, all as determined
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events amounts expended or capitalized under Capital Leases
but excluding any amount representing capitalized interest) by the Borrower and
its Subsidiaries during that period that, in conformity with GAAP, are or are
required to be included in the property, plant or equipment reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries.
4
<PAGE>
"CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, all
depreciation expenses of the Borrower and its Subsidiaries, all as determined
for the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED EBIT" shall mean, for any period, Consolidated Net Income
for such period; PLUS (A) the sum of the amounts for such period included in
determining such Consolidated Net Income of (i) Total Interest Expense, (ii)
Total Income Tax Expense, (iii) amortization or write-off of deferred financing
costs, and (iv) extraordinary (and other one-time) non-cash losses and charges;
LESS (B) gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains and other one-time non-cash gains; all
as determined for the Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) Consolidated Depreciation
Expense, and (iii) Consolidated Amortization Expense, all as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP;
PROVIDED that, notwithstanding anything to the contrary contained herein, the
Borrower's Consolidated EBITDA for any Testing Period shall (x) include the
appropriate financial items for any person or business unit which has been
acquired by the Borrower for any portion of such Testing Period prior to the
date of acquisition (but without giving effect to any credit for unobtained or
unrealized gains or any adjustments to overhead in connection with such
acquisition), and (y) exclude the appropriate financial items for any person or
business unit which has been disposed of by the Borrower, for the portion of
such Testing Period prior to the date of disposition.
"CONSOLIDATED INCOME TAX EXPENSE" shall mean, for any period, all
provisions for taxes based on the net income of the Borrower or any of its
Subsidiaries (including, without limitation, any additions to such taxes, and
any penalties and interest with respect thereto), all as determined for the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, total
interest expense (including that which is capitalized and that which is
attributable to Capital Leases, in accordance with GAAP) of the Borrower and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries including, without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and net costs under Hedge Agreements, but excluding, however,
any amortization of deferred financing costs, all as determined in accordance
with GAAP.
"CONSOLIDATED NET INCOME" shall mean for any period, the net income (or
loss), without deduction for minority interests, of the Borrower and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, PROVIDED that there shall
be excluded therefrom (i) the income, (or loss) of any entity (other than
Subsidiaries of the Borrower) in which the Borrower or any of its Subsidiaries
has a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of its Subsidiaries during
such period, and (ii) the income of any Subsidiary of the Borrower to the extent
that the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary.
"CONSOLIDATED RENTAL EXPENSE" shall mean, for any period, total rental
expense of the Borrower and its Subsidiaries, including the interest portion of
all Capitalized Leases if such amount is not reflected in Consolidated Interest
Expense, all as determined for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED NET WORTH" shall mean at any time for the determination
thereof (i) all amounts which, in conformity with GAAP, would be included under
the caption "total stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Borrower as at such date.
"CONSOLIDATED TOTAL INDEBTEDNESS" shall mean the sum (without
duplication) of all Indebtedness of the Borrower and of each of its
Subsidiaries, all as determined on a consolidated basis.
5
<PAGE>
"CREDIT DOCUMENTS" shall mean this Agreement, the Notes, the Subsidiary
Guaranty, the Security Documents and any Letter of Credit Document.
"CREDIT EVENT" shall mean the making of any Loans and/or the issuance
of any Letter of Credit.
"CREDIT PARTY" shall mean the Borrower and each of its Subsidiaries
which is a party to any Credit Document.
"CURRENT HOLDER GROUP" shall mean (i) those persons who are officers
and directors of the Borrower at the Effective Date, (ii) the spouses, heirs,
legatees, descendants and blood relatives to the third degree of consanguinity
of any such person, (iii) the executors and administrators of the estate of any
such person, and any court appointed guardian of any such person, (iv) any trust
for the benefit of any such person referred to in the foregoing clauses (i) and
(ii) or any other persons, so long as one or more members of the Current Holder
Group has the exclusive right to control the voting and disposition of
securities held by such trust, and (v) the Pittsburgh Investment Group LLC.
"DEFAULT" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" shall mean any Lender with, respect to which a
Lender Default is in effect.
"DESIGNATED HEDGE AGREEMENT" shall mean any Hedge Agreement to which
the Borrower or any of its Subsidiaries is a party which, pursuant to a written
instrument signed by the Administrative Agent, has been designated as a
Designated Hedge Agreement so that the Borrower's or Subsidiaries's
counterparty's credit exposure thereunder will be entitled to share in the
benefits of the Subsidiary Guaranty and the Security Documents to the extent the
Subsidiary Guaranty and such Security Documents provide guarantees or security
for creditors of the Borrower or any Subsidiary under Designated Hedge
Agreements. The Administrative Agent may, without the approval or consent of the
Lenders, designate a Hedge Agreement as a Designated Hedge Agreement if the
counterparty is a Lender or an Affiliate of a Lender and the maximum credit
exposure of such counterparty under such Hedge Agreement to the Borrower and its
Subsidiaries, when taken together with the maximum credit exposure under all
other Hedge Agreements which are Designated Hedge Agreements, is reasonably
determined by the Administrative Agent, in accordance with its own customary
valuation practices, not to exceed $4,000,000 in the aggregate; however, if the
counterparty is not a Lender or an Affiliate of a Lender, or such credit
exposure is so determined by the Administrative Agent to be such that the
aggregate credit exposure under all Designated Hedge Agreements would be greater
than $4,000,000 if such Hedge Agreement were to be a Designated Hedge Agreement,
the Administrative Agent shall only designate the Hedge Agreement involving such
counterparty as a Designated Hedge Agreement if the Administrative Agent is
instructed to do so by the Required Lenders. The Administrative Agent may impose
as a condition to any designation of a Designated Hedge Agreement a requirement
that the counterparty enter into an intercreditor or similar agreement with the
Administrative Agent under which recoveries from the Borrower and its
Subsidiaries with respect to such Designated Hedge Agreement will be shared in a
manner consistent with the provisions of section 10.3 hereof.
"DOLLARS", "U.S. DOLLARS" and the sign "$" each means lawful money of
the United States.
"DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its Domestic Lending Office in Annex I or in
the Assignment Agreement pursuant to which it became a Lender, or such other
office of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"DOMESTIC SUBSIDIARY" shall mean any Subsidiary organized under the
laws of the United States of America, any State thereof, the District of
Columbia, or any United States possession, the chief executive office and
principal place of business of which is located in, and which conducts the
majority of its business within, the United States of America and its
territories and possessions.
"EFFECTIVE DATE" shall have the meaning provided in section 12.10.
6
<PAGE>
"ELIGIBLE TRANSFEREE" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in SEC
Regulation D), in each case which (i) is not disapproved in writing by the
Borrower in a notice given to a requesting Lender and the Administrative Agent,
specifying the reasons for such disapproval, within five Business Days following
the giving of notice to the Borrower of the identity of any proposed transferee
(any such disapproval by the Borrower must be reasonable), PROVIDED that the
Borrower shall not be entitled to exercise the foregoing right of disapproval if
and so long as (x) any Event of Default shall have occurred and be continuing,
or (y) any of the financial covenants contained in this Agreement shall have
been waived or modified following a deterioration in the financial condition or
results of operations of the Borrower and its Subsidiaries; and (ii) is not a
direct competitor of the Borrower or engaged in the same or similar business as
the Borrower, or any of its respective Subsidiaries or is not an Affiliate of
any such competitors of the Borrower or any of its respective Subsidiaries.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued under any such law
(hereafter "CLAIMS"), including, without limitation, (i) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the storage, treatment or Release (as defined
in CERCLA) of any Hazardous Materials or arising from alleged injury or threat
of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of common
law now or hereafter in effect and in each case as amended, and any binding and
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment issued to or
rendered against the Borrower or any of its Subsidiaries relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. ss. 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. ss. 7401 ET SEQ.; the Safe
Drinking Water Act, 42 U.S.C. ss. 3803 ET SEQ.; the Oil Pollution Act of 1990,
33 U.S.C. ss. 2701 ET SEQ.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 ET SEQ., the Hazardous Material
Transportation Act, 49 U.S.C. ss. 1801 ET SEQ. and the Occupational Safety and
Health Act, 29 U.S.C. ss. 651 ET SEQ. (to the extent it regulates occupational
exposure to Hazardous Materials); and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the
Effective Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA AFFILIATE" shall mean each person (as defined in section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of section 414(b),(c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
"EURODOLLAR LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its Eurodollar Lending Office in Annex I or
in the Assignment Agreement pursuant to which it became a Lender, or such other
office or offices for Eurodollar Loans of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"EURODOLLAR LOANS" shall mean each Loan bearing interest at the rates
provided in section 2.7(b).
"EURODOLLAR RATE" shall mean with respect to each Interest Period for a
Eurodollar Loan, (A) either (i) the rate per annum for deposits in Dollars of
amounts in same day funds comparable to the outstanding principal amount of the
Eurodollar Loan for which an interest rate is then being determined for a
maturity most nearly comparable to
7
<PAGE>
such Interest Period which appears on page 3750 of the Dow Jones Telerate Screen
as of 11:00 A.M. (local time at the Notice Office) on the date which is two
Business Days prior to the commencement of such Interest Period, or (ii) if such
a rate does not appear on such page, an interest rate per annum equal to the
average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum,
if such average is not such a multiple) of the rate per annum at which deposits
in Dollars are offered to each of the Reference Banks by prime banks in the
London interbank Eurodollar market for deposits of amounts in Dollars in same
day funds comparable to the outstanding principal amount of the Eurodollar Loan
for which an interest rate is then being determined with maturities comparable
to the Interest Period to be applicable to such Eurodollar Loan, determined as
of 11:00 A.M. (London time) on the date which is two Business Days prior to the
commencement of such Interest Period, in each case divided (and rounded upward
to the nearest whole multiple of 1/16th of 1%) by (B) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves and without benefit of credits for proration, exceptions or offsets
which may be available from time to time) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"EVENT OF DEFAULT" shall have the meaning provided in section 10.1.
"EXISTING INDEBTEDNESS" shall have the meaning provided in
section 7.18.
"EXISTING INDEBTEDNESS AGREEMENTS" shall have the meaning provided in
section 7.18.
"EXISTING LETTER OF CREDIT" shall have the meaning provided in
section 3.1(d).
"FACING FEE" shall have the meaning provided in section 4.1(c).
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"FEES" shall mean all amounts payable pursuant to, or referred to in,
section 4.1.
"FINANCIAL PROJECTIONS" shall have the meaning provided in
section 7.8(c).
"FIXED CHARGE COVERAGE RATIO" shall mean, for any Testing Period, the
ratio of
(i) Consolidated EBITDA plus Consolidated Rental Expense
for such Testing Period,
to
(ii) the sum of (A) Consolidated Interest Expense, (B)
Consolidated Rental Expense, (C) Consolidated Tax Expense, (D)
Consolidated Capital Expenditures, (E) scheduled or mandatory
repayments, prepayments or redemptions of the principal of Indebtedness
(including required reductions in committed credit facilities), (F)
without duplication of any amount included under the preceding clause
(E), scheduled payments representing the principal portion of
Capitalized Lease Obligations, and (G) the sum of all payments for
dividends, stock repurchases or other retirements, and other purposes
described in section 9.6, if any, in each case on a consolidated basis
for the Borrower and its Subsidiaries for such Testing Period
; PROVIDED that, notwithstanding anything to the contrary contained herein, the
Borrower's Fixed Charge Coverage Ratio for any Testing Period shall (x) include
the appropriate financial items for any person or business unit which has been
acquired by the Borrower for any portion of such Testing Period prior to the
date of acquisition, and (y)
8
<PAGE>
exclude the appropriate financial items for any person or business unit which
has been disposed of by the Borrower, for the portion of such Testing Period
prior to the date of disposition.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary (i) which is not
incorporated in the United States and substantially all of whose assets and
properties are located, or substantially all of whose business is carried on,
outside the United States, or (ii) substantially all of whose assets consist of
Subsidiaries that are Foreign Subsidiaries as defined in clause (i) of this
definition.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of section 9,
including defined terms as used therein, are subject (to the extent provided
therein) to section 1.3 and 12.7(a).
"GENERAL REVOLVING BORROWING" shall mean the incurrence of General
Revolving Loans consisting of one Type of Loan, by the Borrower from all of the
Lenders having Commitments in respect thereof on a PRO RATA basis on a given
date (or resulting from conversions on a given date), having in the case of
Eurodollar Loans the same Interest Period.
"GENERAL REVOLVING COMMITMENT" shall mean, with respect to each Lender,
the amount, if any, set forth opposite such Lender's name in Annex I as its
"General Revolving Commitment" as the same may be reduced from time to time
pursuant to section 4.2, 4.3 and/or 10 or adjusted from time to time as a result
of assignments to or from such Lender pursuant to section 12.4.
"GENERAL REVOLVING FACILITY" shall mean the credit facility evidenced
by the Total General Revolving Commitment.
"GENERAL REVOLVING FACILITY PERCENTAGE" shall mean at any time for any
Lender with a General Revolving Commitment, the percentage obtained by dividing
such Lender's General Revolving Commitment by the Total General Revolving
Commitment, PROVIDED, that if the Total General Revolving Commitment has been
terminated, the General Revolving Facility Percentage for each Lender with a
General Revolving Commitment shall be determined by dividing such Lender's
General Revolving Commitment immediately prior to such termination by the Total
General Revolving Commitment immediately prior to such termination.
"GENERAL REVOLVING LOAN" shall have the meaning provided in
section 2.1(b).
"GENERAL REVOLVING NOTE" shall have the meaning provided in
section 2.4(a).
"GRF COMMITMENT FEE" shall have the meaning provided in section 4.1(a).
"GUARANTY OBLIGATIONS" shall mean as to any person (without
duplication) any obligation of such person guaranteeing any Indebtedness
("PRIMARY INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such person, whether or not contingent, (a) to purchase any such
primary Indebtedness or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary Indebtedness or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary Indebtedness of the
ability of the primary obligor to make payment of such primary Indebtedness, or
(d) otherwise to assure or hold harmless the owner of such primary Indebtedness
against loss in respect thereof, PROVIDED, HOWEVER, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary Indebtedness in respect of which such Guaranty Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such person in good faith.
9
<PAGE>
"HEDGE AGREEMENT" shall mean (i) any interest rate swap agreement, any
interest rate cap agreement, any interest rate collar agreement or other similar
agreement or arrangement designed to protect against fluctuations in interest
rates, and (ii) any currency swap agreement, forward currency purchase agreement
or similar agreement or arrangement designed to protect against fluctuations in
currency exchange rates.
"HAZARDOUS MATERIALS" shall mean (i) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (ii) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "restricted hazardous materials", "extremely hazardous
wastes", "restrictive hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words of similar meaning and regulatory
effect, under any applicable Environmental Law.
"INDEBTEDNESS" of any person shall mean without duplication:
(i) all indebtedness of such person for borrowed money,
(ii) all bonds, notes, debentures and similar debt securities
of such person,
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such person,
(iv) the face amount of all letters of credit issued for the
account of such person and, without duplication, all drafts drawn
thereunder,
(v) all Indebtedness of a second person secured by any Lien on
any property owned by such first person, whether or not such
indebtedness has been assumed, but only to the extent of the fair value
of such property if such Indebtedness has not been assumed,
(vi) all Capitalized Lease Obligations of such person,
(vii) the present value, determined on the basis of the
implicit interest rate, of all basic rental obligations under all
"synthetic" leases (I.E. leases accounted for by the lessee as
operating leases under which the lessee is the "owner" of the leased
property for Federal income tax purposes),
(viii) all obligations of such person to pay a specified
purchase price for goods or services whether or not delivered or
accepted, I.E., take-or-pay and similar obligations,
(ix) all net obligations of such person under Hedge
Agreements and
(x) the full outstanding balance of trade receivables, notes
or other instruments sold with full or limited recourse (to the extent
of such recourse), other than solely for purposes of collection of
delinquent accounts, and
(xi) all Guaranty Obligations of such person,
PROVIDED that neither trade payables and accrued expenses, in each case arising
in the ordinary course of business, nor obligations in respect of insurance
policies or performance or surety bonds which themselves are not guarantees of
Indebtedness (nor drafts, acceptances or similar instruments evidencing the same
nor obligations in respect of letters of credit supporting the payment of the
same), shall constitute Indebtedness.
"INITIAL ACQUISITION" shall mean each of the three separate
acquisitions of BRITCO, Inc., TBS Printware Corporation, and Minnesota
Western/Creative Office Products, Inc., respectively, contemplated by the
Initial Acquisition Documents relating thereto.
10
<PAGE>
"INITIAL ACQUISITION DOCUMENTS" shall mean (i) the Agreement and
Plan of Reorganization, dated as of November 26, 1997, among the Borrower,
MCSC Texas Acquisition Corporation, BRITCO, Inc., Gretchen K. Ferguson, and
Charles L. Ferguson, all ancillary agreements between or among any of such
parties related thereto, including, without limitation, any "side letters",
and the "disclosure schedule" or similar document furnished to the Borrower
pursuant to such Agreement; (ii) the Agreement and Plan of Reorganization,
among the Borrower, MCSC California Acquisition Corporation, Minnesota
Western/Creative Office Products, Inc. and the Stockholders named therein,
all ancillary agreements between or among any of such parties related
thereto, including, without limitation, any "side letters", and the
"disclosure schedule" or similar document furnished to the Borrower pursuant
to such Agreement; and (iii) the Agreement and Plan of Reorganization, among
the Borrower, MCSC Fremont Acquisition Corporation, TBS Computer Printware
Corporation and the Stockholders named therein, all ancillary agreements
between or among any of such parties related thereto, including, without
limitation, any "side letters", and the "disclosure schedule" or similar
document furnished to the Borrower pursuant to such Agreement.
"INTEREST PERIOD" with respect to any Eurodollar Loan shall mean the
interest period applicable thereto, as determined pursuant to section 2.8.
"LEASEHOLDS" of any person means all the right, title and interest
of such person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"LENDER" shall have the meaning provided in the first paragraph of
this Agreement.
"LENDER DEFAULT" shall mean (i) the refusal (which has not been
retracted) of a Lender in violation of the requirements of this Agreement to
make available its portion of any incurrence of Loans, to fund its portion of
any Swing Line Participation Amount under section 2.6(b), or to fund its
portion of any unreimbursed payment under section 3.4(c); or (ii) a Lender
having notified the Administrative Agent and/or the Borrower that it does not
intend to comply with the obligations under section 2.1, section 2.6(a)
and/or section 3.4(c), in the case of either (i) or (ii) as a result of the
appointment of a receiver or conservator with respect to such Lender at the
direction or request of any regulatory agency or authority.
"LENDER REGISTER" shall have the meaning provided in section 12.16.
"LETTER OF CREDIT" shall have the meaning provided in section 3.1(a).
"LETTER OF CREDIT DOCUMENTS" shall have the meaning specified in
section 3.2(a).
"LETTER OF CREDIT FEE" shall have the meaning provided in section
4.1(b).
"LETTER OF CREDIT ISSUER" shall mean (i) in respect of each Existing
Letter of Credit, the Lender that has issued same as of the Effective Date;
and (ii) in respect of any other Letter of Credit, (1) NCB, and/or (2) such
other Lender that is requested, and agrees, to so act by the Borrower, and is
approved by the Administrative Agent.
"LETTER OF CREDIT OUTSTANDINGS" shall mean, at any time, the sum,
without duplication, of (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings.
"LETTER OF CREDIT REQUEST" shall have the meaning provided in
section 3.2(a).
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement or
any lease in the nature thereof).
"LOAN" shall mean a Term Loan, a General Revolving Loan or a Swing
Line Revolving Loan, as applicable..
"MARGIN STOCK" shall have the meaning provided in Regulation U.
11
<PAGE>
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of, when used with reference to the Borrower
and/or any of its Subsidiaries, the Borrower and its Subsidiaries, taken as a
whole, or when used with reference to any other person, such person and its
Subsidiaries, taken as a whole, as the case may be.
"MATERIAL SUBSIDIARY" shall mean,, at any time, with reference to
any person, any Subsidiary of such person (i) that has assets at such time
comprising 10% or more of the consolidated assets of such person and its
Subsidiaries, or (ii) whose operations in the current fiscal year are
expected to, or whose operations in the most recent fiscal year did (or would
have if such person had been a Subsidiary for such entire fiscal year),
represent 10% or more of the consolidated earnings before interest, taxes,
depreciation and amortization of such person and its Subsidiaries for such
fiscal year.
"MATURITY DATE" shall mean the Business Day in December 2000 which
occurs immediately prior to the third anniversary of the Closing Date, unless
earlier terminated.
"MINIMUM BORROWING AMOUNT" shall mean
(i) for General Revolving Loans which are (A) Prime Rate
Loans, $500,000, with minimum increments thereafter of $100,000, or (B)
Eurodollar Loans, $3,000,000, with minimum increments thereafter of
$1,000,000;
(ii) for Term Loans which are (A) Prime Rate Loans, $500,000,
with minimum increments thereafter of $100,000, or (B) Eurodollar
Loans, $3,000,000, with minimum increments thereafter of $1,000,000;
and
(iii) for Swing Line Revolving Loans, $100,000, with
minimum increments thereafter of $50,000.
"MOODY'S" shall mean Moody's Investors Service, Inc. and its
successors.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan, as defined in
section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" shall mean an employee benefit plan, other
than a Multiemployer Plan, to which the Borrower or any ERISA Affiliate, and
one or more employers other than the Borrower or an ERISA Affiliate, is
making or accruing an obligation to make contributions or, in the event that
any such plan has been terminated, to which the Borrower or an ERISA
Affiliate made or accrued an obligation to make contributions during any of
the five plan years preceding the date of termination of such plan.
"NCB" shall mean National City Bank, a national banking association,
together with its successors and assigns.
"NET CASH PROCEEDS" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of (i) reasonable and customary
expenses of sale incurred in connection with such Asset Sale, and other
reasonable and customary fees and expenses incurred, and all state, and local
taxes paid or reasonably estimated to be payable by such person, as a
consequence of such Asset Sale and the payment of principal, premium and
interest of Indebtedness secured by the asset which is the subject of the
Asset Sale and required to be, and which is, repaid under the terms thereof
as a result of such Asset Sale, (ii) amounts of any distributions payable to
holders of minority interests in the relevant person or in the relevant
property or assets and (iii) incremental income taxes paid or payable as a
result thereof.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
12
<PAGE>
"NON-DEFAULTING LENDER" shall mean each Lender other than a Defaulting
Lender.
"NOTE" shall mean a Term Note, a General Revolving Note or a Swing Line
Revolving Note, as applicable.
"NOTICE OF BORROWING" shall have the meaning provided in section
2.2(a).
"NOTICE OF CONVERSION" shall have the meaning provided in section 2.5.
"NOTICE OFFICE" shall mean the office of the Administrative Agent at
National City Center, 1900 East Ninth Street, Cleveland, Ohio 44114,
Attention: Agency Services (telephone: (216) 575-2398; facsimile: (216)
575-9396), or such other office, located in a city in the United States
Eastern Time Zone, as the Administrative Agent may designate to the Borrower
from time to time.
"OBLIGATIONS" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent or any Lender pursuant to the terms of this
Agreement or any other Credit Document.
"PARTICIPANT" shall have the meaning provided in section 3.4(a).
"PAYMENT OFFICE" shall mean the office of the Administrative Agent
at National City Center, 1900 East Ninth Street, Cleveland, Ohio 44114,
Attention: Agency Services/Money Desk Manager (telephone: (216) 575-2578;
facsimile: (216) 575-2481), or such other office, located in a city in the
United States Eastern Time Zone, as the Administrative Agent may designate to
the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"PERCENTAGE" shall mean at the Term Loan Percentage, the General
Revolving Percentage or the Swing Line Revolving Percentage, as applicable.
"PERMITTED ACQUISITION" shall mean and include any Acquisition as to
which all of the following conditions are satisfied:
(A) if it involves the acquisition of a person whose primary
business lines include computer consumables, LCD presentation products,
and/or the provision of video conferencing equipment, or the
acquisition of assets comprising any such lines of business (it being
understood that secondary lines of business may be included in any such
acquisition):
(1) at least 40% of the aggregate consideration for
such transaction consists of common stock of the Borrower (it
being understood that the measurement of the aggregate
consideration for a transaction includes the principal amount
of any assumed Indebtedness and (without duplication) any
Indebtedness of any acquired person or persons);
(2) the PRO FORMA ratio of
(x) the Consolidated Total Indebtedness of
the Borrower and the Indebtedness which is to be
incurred to acquire, or which is being directly or
indirectly assumed in connection with the acquisition
of, such acquired business, on a combined basis, to
(y) the Borrower's Consolidated EBITDA and
the earnings before interest, taxes, depreciation and
amortization of the acquired business, on a combined
basis (but without giving effect to any credit for
unobtained or unrealized gains or any adjustments to
overhead in connection with such acquisition),
13
<PAGE>
is less than 3.25 to 1.00, such ratio being determined on a
pro forma basis, as if such acquisition had been completed at
the beginning of the most recent period of four consecutive
fiscal quarters of the Borrower for which financial
information is available and has been delivered to the
Lenders, and any such Indebtedness had been outstanding for
such period; and
(3) at least five Business Days prior to the
completion of such transaction the Borrower has delivered to
the Lenders a certificate of a responsible financial or
accounting officer of the Borrower demonstrating, in
reasonable detail, the computation of such pro forma ratio; or
(B) if such transaction does not meet the requirements of
clause (A) above, the cumulative aggregate consideration for such
transaction and all other Permitted Acquisitions effected by the
Borrower and its Subsidiaries after the Effective Date pursuant to this
clause (B) would exceed $5,000,000 (it being understood that the
measurement of the aggregate consideration for a transaction includes
all payments and/or exchanges of stock, cash, securities and/or other
property and the principal amount of any assumed Indebtedness and
(without duplication) any Indebtedness of any acquired person or
persons), UNLESS the Required Lenders specifically approve or consent
to such transaction in writing; and
(C) such transaction is not actively opposed by the Board of
Directors (or similar governing body) of the selling person or the
person whose equity interests are to be acquired, UNLESS all of the
Lenders consent to such transaction;
PROVIDED, that the term Permitted Acquisition specifically excludes (x) the
Initial Acquisitions and (y) any loans, advances or minority investments
otherwise permitted pursuant to section 9.5.
"PERMITTED LIENS" shall mean Liens permitted by section 9.3.
"PERSON" shall mean any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"PLAN" shall mean any multiemployer or single-employer plan as
defined in section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute by) the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the
five year period immediately following the latest date on which the Borrower,
or a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed
to or had an obligation to contribute to such plan.
"PLEDGE AGREEMENT" shall have the meaning provided in section 6.1(c).
"PRIME RATE" shall mean, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum shall
at all times be equal to the greater of (i) the rate of interest established
by NCB in Cleveland, Ohio, from time to time, as its prime rate, whether or
not publicly announced, which interest rate may or may not be the lowest rate
charged by it for commercial loans or other extensions of credit; and (ii)
the Federal Funds Effective Rate in effect from time to time PLUS 1/2 of 1%
per annum.
"PRIME RATE LOAN" shall mean each Loan bearing interest at the rate
provided in section 2.7(a).
"PROHIBITED TRANSACTION" shall mean a transaction with respect to a
Plan that is prohibited under section 4975 of the Code or section 406 of
ERISA and not exempt under section 4975 of the Code or section 408 of ERISA.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. sections 6901 ET SEQ.
"REAL PROPERTY" of any person shall mean all of the right, title and
interest of such person in and to land, improvements and fixtures, including
Leaseholds.
14
<PAGE>
"REFERENCE BANKS" shall mean (i) NCB and (ii) any other Lender or
Lenders selected as a Reference Bank by the Administrative Agent and the
Required Lenders, PROVIDED, that if any of such Reference Banks is no longer
a Lender, such other Lender or Lenders as may be selected by the
Administrative Agent acting on instructions from the Required Lenders.
"REGULATION D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"REGULATION U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.
"REPORTABLE EVENT" shall mean an event described in section 4043(c)
of ERISA with respect to a Plan other than those events as to which the
30-day notice period is waived under subsection .13, .14, .16, .18, .19 or
.20 of PBGC Regulation section 2615.
"REQUIRED LENDERS" shall mean Non-Defaulting Lenders whose
outstanding General Revolving Loans and Term Loans and Unutilized General
Revolving Commitments and Unutilized Term Loan Commitments constitute at
least 66+2/3% of the sum of the total outstanding General Revolving Loans and
Term Loans and Unutilized General Revolving Commitments and Unutilized Term
Loan Commitments of Non-Defaulting Lenders (PROVIDED that, for purposes
hereof, neither the Borrower, nor any of its Affiliates, shall be included in
(i) the Lenders holding such amount of such Loans or having such amount of
such Unutilized Commitments, or (ii) determining the aggregate unpaid
principal amount of such Loans or such Unutilized Commitments).
"REVOLVING BORROWING" shall mean a General Revolving Borrowing or a
Swing Line Revolving Borrowing, as applicable.
"REVOLVING LOAN" shall mean a General Revolving Loan and/or a Swing
Line Revolving Loan.
"SALE AND LEASE-BACK TRANSACTION" shall mean any arrangement with
any person providing for the leasing by the Borrower or any Subsidiary of the
Borrower of any property (except for temporary leases for a term, including
any renewal thereof, of not more than one year and except for leases between
the Borrower and a Subsidiary or between Subsidiaries), which property has
been or is to be sold or transferred by the Borrower or such Subsidiary to
such person.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., and its successors.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC REGULATION D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"SECTION 5.4(b)(ii) CERTIFICATE" shall have the meaning provided in
section 5.4(b)(ii).
"SECURITY AGREEMENT" shall have the meaning provided in section
6.1(c).
"SECURITY DOCUMENTS" shall mean the Security Agreement, the Pledge
Agreement and each other document pursuant to which any Lien or security
interest is granted by any Credit Party to the Collateral Agent as security
for any of the Obligations.
"STANDARD PERMITTED LIENS" shall mean the following:
(i) Liens for taxes not yet delinquent or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
15
<PAGE>
(ii) Liens in respect of property or assets imposed by law
which were incurred in the ordinary course of business, such as
carriers', warehousemen's, landlord's, materialmen's and mechanics'
Liens ,and other similar Liens arising in the ordinary course of
business, which do not in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof
in the operation of the business of the Borrower or any Subsidiary;
(iii) Liens created by this Agreement or the other Credit
Documents;
(iv) Liens (x) in existence on the Closing Date which are
listed, and the Indebtedness secured thereby and the property subject
thereto on the Closing Date described, in Annex IV, or (y) arising out
of the refinancing, extension, renewal or refunding of any Indebtedness
secured by any such Liens, PROVIDED that the principal amount of such
Indebtedness is not increased and such Indebtedness is not secured by
any additional assets;
(v) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under section
10.1(g);
(vi) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; and mechanic's Liens, carrier's Liens, and other Liens to
secure the performance of tenders, statutory obligations, contract
bids, government contracts, performance and return-of-money bonds and
other similar obligations, incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed
money), whether pursuant to statutory requirements, common law or
consensual arrangements;
(vii) Leases or subleases granted to others not interfering in
any material respect with the business of the Borrower or any of its
Subsidiaries and any interest or title of a lessor under any lease not
in violation of this Agreement;
(viii) easements, rights-of-way, zoning or deed restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries
considered as an entirety; and
(ix) Liens arising from financing statements regarding
property subject to leases not in violation of the requirements of this
Agreement, PROVIDED that such Liens are only in respect of the property
subject to, and secure only, the respective lease (and any other lease
with the same or an affiliated lessor);
"STATED AMOUNT" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions or
other requirements for drawing could then be met).
"SUBSIDIARY" of any person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the directors
of such corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
person directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity in which such person directly or
indirectly through Subsidiaries, has more than a 50% equity interest at the
time. Unless otherwise expressly provided, all references herein to
"Subsidiary" shall mean a Subsidiary of the Borrower.
"SUBSIDIARY GUARANTOR" shall mean any Subsidiary which is a party to
the Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" shall have the meaning provided in section
6.1(c).
16
<PAGE>
"SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness which has
been subordinated to the Obligations in such manner and to such extent as the
Administrative Agent (acting on instructions from the Required Lenders) may
require.
"SWING LINE PARTICIPATION AMOUNT" shall have the meaning provided in
section 2.6(b).
"SWING LINE REVOLVING LOAN" shall have the meaning provided in
section 2.1.
"SWING LINE REVOLVING BORROWING" shall mean the incurrence of Swing
Line Revolving Loans by the Borrower from all of the Lenders having
Commitments in respect thereof on a PRO RATA basis on a given date.
"SWING LINE REVOLVING COMMITMENT" shall mean, with respect to each
Lender, the amount, if any, set forth opposite such Lender's name in Annex I
as its "Swing Line Revolving Commitment" as the same may be reduced from time
to time pursuant to sections 4.2, 4.3 and/or 10 or adjusted from time to time
as a result of assignments to or from such Lender pursuant to section 12.4.
"SWING LINE REVOLVING FACILITY" shall mean the credit facility
evidenced by the Total Swing Line Revolving Commitment.
"SWING LINE REVOLVING PERCENTAGE" shall mean at any time for any
Lender with a Swing Line Revolving Commitment, the percentage obtained by
dividing such Lender's Swing Line Revolving Commitment by the Total Swing
Line Revolving Commitment, PROVIDED, that if the Total Swing Line Revolving
Commitment has been terminated, the Swing Line Revolving Percentage for each
Lender with a Swing Line Revolving Commitment shall be determined by dividing
such Lender's Swing Line Revolving Commitment immediately prior to such
termination by the Total Swing Line Revolving Commitment immediately prior to
such termination.
"SWING LINE REVOLVING NOTE" shall have the meaning provided in
section 2.5(a).
"TERM LOAN" shall have the meaning provided in section 2.1.
"TERM LOAN BORROWING" shall mean the incurrence of Term Loans
consisting of one Type of Loan, by the Borrower from all of the Lenders
having Commitments in respect thereof on a PRO RATA basis on a given date (or
resulting from conversions on a given date), having in the case of Eurodollar
Loans the same Interest Period.
"TERM LOAN COMMITMENT" shall mean, with respect to each Lender, the
amount, if any, set forth opposite such Lender's name in Annex I as its "Term
Loan Commitment" as the same may be reduced from time to time pursuant to
sections 4.2, 4.3 and/or 10 or adjusted from time to time as a result of
assignments to or from such Lender pursuant to section 12.4.
"TERM LOAN FACILITY" shall mean the credit facility evidenced by the
Total Term Loan Commitment.
"TERM LOAN PERCENTAGE" shall mean at any time for any Lender with a
Term Commitment, the percentage obtained by dividing such Lender's Term
Commitment by the Total Term Loan Commitment, PROVIDED, that if the Total
Term Loan Commitment has been terminated, the Term Loan Percentage for each
Lender with a Term Loan Commitment shall be determined by dividing such
Lender's Term Loan Commitment immediately prior to such termination by the
Total Term Loan Commitment immediately prior to such termination.
"TERM NOTE" shall have the meaning provided in section 2.5(a).
"TESTING PERIOD" shall mean (i) for determinations made prior to
September 30, 1998, amounts determined on an annualized basis based on the
fiscal year to date through the fiscal quarter then last ended, and (ii) for
any determinations made thereafter a single period consisting of the four
consecutive fiscal quarters of the Borrower then last ended (whether or not
such quarters are all within the same fiscal year).
17
<PAGE>
"TF COMMITMENT FEE" shall have the meaning provided in section
4.1(a).
"TOTAL COMMITMENT" shall mean the sum of the Total General Revolving
Commitment, the Total Swing Line Revolving Commitment and the Total Term Loan
Commitment.
"TOTAL GENERAL REVOLVING COMMITMENT" shall mean the sum of the
General Revolving Commitments of the Lenders.
"TOTAL SWING LINE REVOLVING COMMITMENT" shall mean the sum of the
Swing Line Revolving Commitments of the Lenders.
"TOTAL TERM LOAN COMMITMENT" shall mean the sum of the Term Loan
Commitments of the Lenders.
"TYPE" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Prime Rate Loan or Eurodollar
Loan.
"UCC" shall mean the Uniform Commercial Code.
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits
under the Plan as of the close of its most recent plan year exceeds the fair
market value of the assets allocable thereto, each determined in accordance
with Statement of Financial Accounting Standards No. 87, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan.
"UNITED STATES" and "U.S." each means United States of America.
"UNPAID DRAWING" shall have the meaning provided in section 3.3(a).
"UNUTILIZED COMMITMENT" for any Lender at any time shall mean the
excess of (i) such Lender's Commitment at such time over (ii) the sum of the
principal amount of Loans made by such Lender and outstanding at such time
and (y) if such Lender has a General Revolving Commitment, such Lender's
General Revolving Facility Percentage of Letter of Credit Outstandings at
such time.
"UNUTILIZED TOTAL COMMITMENT" shall mean, at any time, the excess of
(i) the Total Commitment at such time over (ii) the sum of (x) the aggregate
principal amount of all Loans then outstanding plus (y) the aggregate Letter
of Credit Outstandings at such time.
"UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT" shall mean, at any
time, the excess of (i) the Total General Revolving Commitment at such time
over (ii) the sum of (x) the aggregate principal amount of all General
Revolving Loans then outstanding plus (y) the aggregate Letter of Credit
Outstandings at such time.
"UNUTILIZED TOTAL SWING LINE REVOLVING COMMITMENT" shall mean, at
any time, the excess of (i) the Total Swing Line Revolving Commitment at such
time over (ii) the aggregate principal amount of all Swing Line Revolving
Loans then outstanding.
"UNUTILIZED TOTAL TERM LOAN COMMITMENT" shall mean, at any time, the
excess of (i) the Total Term Loan Commitment at such time over (ii) the
aggregate principal amount of all Term Loans then outstanding.
"VALUE" shall mean, with respect to a Sale and Lease-Back
Transaction, as of any particular time, the amount equal to the greater of
(i) the net proceeds of the sale or transfer of the property sold or
transferred and then leased pursuant to such Sale and Lease-Back Transaction
or (ii) the fair value in the opinion of the Borrower, acting in good faith,
of such property at the time of entering into such Sale and Lease-Back
Transaction.
18
<PAGE>
"WHOLLY-OWNED SUBSIDIARY" shall mean each Subsidiary of the Borrower
at least 95% of whose capital stock, equity interests and partnership
interests, other than director's qualifying shares or similar interests, are
owned directly or indirectly by the Borrower.
"WRITTEN", "WRITTEN" or "IN WRITING" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding".
1.3. ACCOUNTING TERMS. Except as otherwise specifically provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; PROVIDED that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision of section 8 or 9 hereof to eliminate the effect
of any change occurring after the Effective Date in GAAP or in the
application thereof to such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
such provision hereof for such purposes), regardless of whether any such
notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance with the requirements of this Agreement.
1.4. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise, (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any person shall be construed to include
such person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to sections, Annexes and Exhibits shall be construed to
refer to sections of, and Annexes and Exhibits to, this Agreement, and (e)
the words "asset" and "property" shall be construed to have the same meaning
and effect and to refer to any and all real property, tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights, and interests in any of the foregoing.
1.5. BORROWER MAY RELY ON ADMINISTRATIVE AGENT. Whenever the
Borrower receives a written notice or other written communication from the
Administrative Agent which purports to be on behalf of the Required Lenders
or all Lenders, the Borrower may rely upon such notice or other communication
as being authorized by the Required Lenders or all Lenders, as the case may
be.
SECTION 2. AMOUNT AND TERMS OF LOANS.
2.1. COMMITMENTS FOR LOANS. Subject to and upon the terms and
conditions herein set forth, each Lender severally agrees to make a loan or
loans (each a "LOAN" and, collectively, the "LOANS") to the Borrower, which
Loans shall be drawn, to the extent such Lender has a commitment under a
Facility, under the applicable Facility, as set forth below:
(a) TERM LOAN FACILITY. Loans under the Term Loan Facility
(each a "TERM LOAN" and, collectively, the "TERM LOANS"): (i) may be
incurred by the Borrower at any time and from time to time on and after
the Closing Date and prior to the Maturity Date; (ii) may only be
incurred to finance Permitted Acquisitions; (iii) in the case of Term
Loans incurred to finance a particular Permitted Acquisition, such Term
Loans shall be incurred at the time of (or within 10 days following)
the completion of the Permitted
19
<PAGE>
Acquisition, and may not exceed 100% of the cash consideration involved
in such Permitted Acquisition (including cash used to retire assumed
Indebtedness or Indebtedness of any acquired person); (iv) except as
otherwise provided, may, at the option of the Borrower, be incurred and
maintained as, or converted into, Term Loans which are Prime Rate Loans
or Eurodollar Loans, in each case denominated in Dollars, PROVIDED that
all Term Loans made as part of the same Borrowing shall, unless
otherwise specifically provided herein, consist of Term Loans of the
same Type; and (v) shall not exceed for any Lender at any time
outstanding such Lender's Term Loan Commitment, if any, at such time.
Once prepaid or repaid, Term Loans may not be reborrowed, except that
Term Loans which are prepaid in accordance with section 5.2(e) may be
reborrowed if, at the time of and in connection with any such
prepayment, the Borrower so elects as provided in section 5.2(e).
(b) GENERAL REVOLVING FACILITY. Loans under the General
Revolving Facility (each a "GENERAL REVOLVING LOAN" and, collectively,
the "GENERAL REVOLVING LOANS"): (i) may be incurred by the Borrower at
any time and from time to time on and after the Closing Date and prior
to the Maturity Date; (ii) if incurred to finance a particular Initial
Acquisition, must be incurred at (or within 45 days following) the time
such Initial Acquisition is completed in accordance with section 9.2
and/or the date or dates any deferred portion of the consideration
payable for such Initial Acquisition is payable, and may not exceed
100% of the cash consideration (including deferred portions thereof)
involved in such Initial Acquisition (including cash used to retire
assumed Indebtedness or Indebtedness of any acquired person); (iii)
except as otherwise provided, may, at the option of the Borrower, be
incurred and maintained as, or converted into, General Revolving Loans
which are Prime Rate Loans or Eurodollar Loans, in each case
denominated in Dollars, PROVIDED that all General Revolving Loans made
as part of the same Borrowing shall, unless otherwise specifically
provided herein, consist of General Revolving Loans of the same Type;
(iv) may be repaid or prepaid and reborrowed in accordance with the
provisions hereof; (v) may only be made if after giving effect thereto
the Unutilized Total General Revolving Commitment exceeds the
outstanding Swing Line Revolving Loans; and (vi) shall not exceed for
any Lender at any time outstanding that aggregate principal amount
which, when added to the product at such time of (A) such Lender's
General Revolving Facility Percentage, TIMES (B) the aggregate Letter
of Credit Outstandings, equals the General Revolving Commitment of such
Lender at such time.
(c) SWING LINE REVOLVING FACILITY. Loans under the Swing Line
Revolving Facility (each a "SWING LINE REVOLVING LOAN" and,
collectively, the "SWING LINE REVOLVING LOANS"): (i) may be incurred by
the Borrower at any time and from time to time on and after the Closing
Date and prior to the Maturity Date; (ii) shall be incurred only for
working capital requirements of the Borrower and its Subsidiaries;
(iii) may only be incurred and maintained Swing Line Revolving Loans
which are Prime Rate Loans denominated in Dollars; (iv) may be repaid
or prepaid and reborrowed in accordance with the provisions hereof; (v)
may only be made if after giving effect thereto the Unutilized Total
General Revolving Commitment exceeds the outstanding Swing Line
Revolving Loans; and (vi) shall not exceed for any Lender at any time
outstanding such Lender's Swing Line Revolving Commitment, if any, at
such time.
2.2. PROCEDURES FOR BORROWING. (a) NOTICE OF BORROWING.
Whenever the Borrower desires to incur Loans, it shall give the
Administrative Agent at its Notice Office,
(A) BORROWINGS OF EURODOLLAR LOANS: prior to 11:00 A.M. (local
time at its Notice Office), at least three Business Days' prior written
or telephonic notice (in the case of telephonic notice, promptly
confirmed in writing if so requested by the Administrative Agent) of
each Borrowing of Eurodollar Loans to be made hereunder, or
(B) BORROWINGS OF PRIME RATE LOANS: prior to 11:00 A.M. (local
time at its Notice Office) on the proposed date thereof written or
telephonic notice (in the case of telephonic notice, promptly confirmed
in writing if so requested by the Administrative Agent) of each
Borrowing of Prime Rate Loans to be made hereunder.
20
<PAGE>
Each such notice (each such notice, a "NOTICE OF BORROWING") shall (if
requested by the Administrative Agent to be confirmed in writing), be
substantially in the form of Exhibit B-1, and in any event shall be
irrevocable and shall specify: (i) the Facility under which such Borrowing is
to be incurred; (ii) the aggregate principal amount of the Loans to be made
pursuant to such Borrowing; (iii) the date of the Borrowing (which shall be a
Business Day); (iv) whether the Borrowing shall consist of Prime Rate Loans
or Eurodollar Loans; and (v) if the requested Borrowing consists of
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall promptly give each Lender which has a Commitment
under any applicable Facility written notice (or telephonic notice promptly
confirmed in writing) of each proposed Borrowing under such Facility, of such
Lender's proportionate share thereof and of the other matters covered by the
Notice of Borrowing relating thereto.
(b) ACTIONS BY ADMINISTRATIVE AGENT ON TELEPHONE NOTICE. Without in
any way limiting the obligation of the Borrower to confirm in writing any
telephonic notice permitted to be given hereunder, the Administrative Agent
may act prior to receipt of written confirmation without liability upon the
basis of such telephonic notice believed by the Administrative Agent in good
faith to be from an Authorized Officer of the Borrower entitled to give
telephonic notices under this Agreement on behalf of the Borrower. In each
such case, the Administrative Agent's record of the terms of such telephonic
notice shall be conclusive absent manifest error.
(c) MINIMUM BORROWING AMOUNTS, ETC. The aggregate principal amount
of each Borrowing by the Borrower shall not be less than the Minimum
Borrowing Amount. More than one Borrowing may be incurred by the Borrower on
any day under the same and/or any different Facility, PROVIDED that (i) if
there are two or more Borrowings on a single day by the Borrower under the
same Facility which consist of Eurodollar Loans, each such Borrowing shall
have a different initial Interest Period, and (ii) at no time shall there be
more than 5 Borrowings of Eurodollar Loans outstanding hereunder.
(d) PRO RATA BORROWINGS. All Borrowings under a Facility shall be
made by the Lenders having Commitments under such Facility PRO RATA on the
basis of their respective Commitments under such Facility. It is understood
that no Lender shall be responsible for any default by any other Lender in
its obligation to make Loans hereunder and that each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless
of the failure of any other Lender to fulfill its Commitment hereunder.
2.3. DISBURSEMENT OF FUNDS. (a) No later than 2:00 P.M. (local time
at the Payment Office) on the date specified in each Notice of Borrowing
relating to Eurodollar Loans, and no later than 2:00 P.M. (local time at the
Payment Office) on the date specified in each Notice of Borrowing relating to
Prime Rate Loans, each Lender will make available its PRO RATA share, if any,
of each Borrowing requested to be made on such date in the manner provided
below. All amounts shall be made available to the Administrative Agent in
U.S. dollars and immediately available funds at the Payment Office and the
Administrative Agent promptly will make available to the Borrower by
depositing to its account at the Payment Office the aggregate of the amounts
so made available in the type of funds received. Unless the Administrative
Agent shall have been notified by any Lender prior to the date of Borrowing
that such Lender does not intend to make available to the Administrative
Agent its portion of the Borrowing or Borrowings to be made on such date, the
Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on such date of Borrowing, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender and the
Administrative Agent has made available same to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount
from such Lender. If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent shall promptly notify the Borrower, and the Borrower shall immediately
pay such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover from such Lender or the Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (x) if
paid by such Lender, the overnight Federal Funds Effective Rate or (y) if
paid by the Borrower, the then applicable rate of interest, calculated in
accordance with section 2.7,
21
<PAGE>
for the respective Loans (but without any requirement to pay any amounts in
respect thereof pursuant to section 2.10).
(b) Nothing herein and no subsequent termination of the Commitments
pursuant to section 4.2 or 4.3 shall be deemed to relieve any Lender from its
obligation to fulfill its Commitments hereunder and in existence from time to
time or to prejudice any rights which the Borrower may have against any
Lender as a result of any default by such Lender hereunder.
2.4. NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made to it by each Lender shall be evidenced (i)
if a Term Loan, by a promissory note of the Borrower substantially in the
form of Exhibit A-1 (each a "TERM NOTE" and, collectively, the "TERM NOTES"),
(ii) if a General Revolving Loan, by a promissory note of the Borrower
substantially in the form of Exhibit A-2 with blanks appropriately completed
in conformity herewith (each a "GENERAL REVOLVING NOTE" and, collectively,
the "GENERAL REVOLVING NOTES"), and (iii) if a Swing Line Revolving Loan, by
a promissory note of the Borrower substantially in the form of Exhibit A-3
with blanks appropriately completed in conformity herewith (each a "SWING
LINE REVOLVING NOTE" and, collectively, the "SWING LINE REVOLVING NOTES").
(b) The Term Note issued by the Borrower to a Lender with a Term
Loan Commitment shall: (i) be executed by the Borrower; (ii) be payable to
the order of such Lender and be dated on or prior to the Closing Date (or if
later, the date the of the first Term Loan which is outstanding thereunder);
(iii) be payable in the principal amount of Term Loans evidenced thereby;
(iv) mature on the Maturity Date; (v) bear interest as provided in section
2.7 in respect of the Prime Rate Loans or Eurodollar Loans, as the case may
be, evidenced thereby; (vi) be subject to mandatory prepayment as provided in
section 5.2; and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(c) The General Revolving Note issued by the Borrower to a Lender
with a General Revolving Commitment shall: (i) be executed by the Borrower;
(ii) be payable to the order of such Lender and be dated on or prior to the
Closing Date (or if later, the date the of the first General Revolving Loan
which is outstanding thereunder); (iii) be payable in the principal amount of
General Revolving Loans evidenced thereby; (iv) mature on the Maturity Date;
(v) bear interest as provided in section 2.7 in respect of the Prime Rate
Loans or Eurodollar Loans, as the case may be, evidenced thereby; (vi) be
subject to mandatory prepayment as provided in section 5.2; and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(d) The Swing Line Revolving Note issued by the Borrower to a Lender
with a Swing Line Revolving Commitment shall: (i) be executed by the
Borrower; (ii) be payable to the order of such Lender and be dated on or
prior to the Closing Date (or if later, the date the of the first Swing Line
Revolving Loan which is outstanding thereunder); (iii) be payable in the
principal amount of Swing Line Revolving Loans evidenced thereby; (iv) mature
on the Maturity Date; (v) bear interest as provided in section 2.7 in respect
of the Prime Rate Loans evidenced thereby; (vi) be subject to mandatory
prepayment as provided in section 5.2; and (vii) be entitled to the benefits
of this Agreement and the other Credit Documents.
(e) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of its Note, endorse on the reverse side thereof or the grid
attached thereto the outstanding principal amount of Loans evidenced thereby.
Failure to make any such notation or any error in any such notation shall not
affect the Borrower's obligations in respect of such Loans.
2.5. CONVERSIONS OF GENERAL REVOLVING LOANS AND TERM LOANS. The
Borrower shall have the option to convert on any Business Day all or a
portion at least equal to the applicable Minimum Borrowing Amount of the
outstanding principal amount of its General Revolving Loans and/or Term Loans
of one Type owing by it pursuant to a single Facility into a Borrowing or
Borrowings pursuant to the same Facility of another Type of Loans which can
be made pursuant to such Facility, PROVIDED that: (i) no partial conversion
of a Borrowing of Eurodollar Loans shall reduce the outstanding principal
amount of the Eurodollar Loans made pursuant to such Borrowing to less than
the Minimum Borrowing Amount applicable thereto; (ii) any conversion of
Eurodollar Loans into Prime Rate Loans shall be made on, and only on, the
last day of an Interest Period for such Eurodollar Loans; (iii) Prime Rate
Loans
22
<PAGE>
may only be converted into Eurodollar Loans if no Default under section
10.1(a) or Event of Default is in existence on the date of the conversion
unless the Required Lenders otherwise agree; and (iv) Borrowings of
Eurodollar Loans resulting from this section 2.5 shall conform to the
requirements of section 2.2(c). Each such conversion shall be effected by the
Borrower giving the Administrative Agent at its Notice Office, prior to 11:00
A.M. (local time at such Notice Office), at least three Business Days' (or
prior to 11:00 A.M. (local time at such Notice Office) same Business Day's,
in the case of a conversion into Prime Rate Loans) prior written notice (or
telephonic notice promptly confirmed in writing if so requested by the
Administrative Agent) (each a "NOTICE OF CONVERSION"), substantially in the
form of Exhibit B-2, specifying the Loans to be so converted, the Type of
Loans to be converted into and, if to be converted into a Borrowing of
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Lender prompt notice of any such
proposed conversion affecting any of its Loans. For the avoidance of doubt,
the prepayment or repayment of any General Revolving Loans out of the
proceeds of other General Revolving Loans by the Borrower is not considered a
conversion of General Revolving Loans into other General Revolving Loans.
2.6. REFUNDING OF, OR PARTICIPATION IN, SWING LINE REVOLVING LOANS.
(a) If any Event of Default exists, any Lender which has any Swing Line
Revolving Loans owing to it (a "SWING LINE LENDER") may, in its sole and
absolute discretion, direct that the Swing Line Revolving Loans owing to it
be refunded by delivering a notice to such effect to the Administrative
Agent, specifying the aggregate principal amount thereof (a "NOTICE OF SWING
LINE REFUNDING"). Promptly upon receipt of a Notice of Swing Line Refunding,
the Administrative Agent shall give notice of the contents thereof to the
Lenders with General Revolving Commitments and, unless an Event of Default
specified in section 10.1(h) in respect of the Borrower has occurred, the
Borrower. Each such Notice of Swing Line Refunding shall be deemed to
constitute delivery by the Borrower of a Notice of Borrowing requesting
General Revolving Loans consisting of Prime Rate Loans in the amount of the
Swing Line Revolving Loans to which it relates. Each Lender with a General
Revolving Commitment (including the Swing Line Lender giving the Notice of
Swing Line Refunding) hereby unconditionally agrees (notwithstanding that any
of the conditions specified in section 6.2 hereof or elsewhere in this
Agreement shall not have been satisfied, but subject to the provisions of
paragraph (b) and (d) below) to make a General Revolving Loan to the Borrower
in an amount equal to such Lender's General Revolving Facility Percentage of
the aggregate amount of the Swing Line Revolving Loans to which such Notice
of Swing Line Refunding relates. Each such Lender shall make the amount of
such General Revolving Loan available to the Administrative Agent in
immediately available funds at the Payment Office not later than 2:00 P.M.
(local time at the Payment Office), if such notice is received by such Lender
prior to 11:00 A.M. (local time at its Domestic Lending Office), or not later
than 2:00 P.M. (local time at the Payment Office) on the next Business Day,
if such notice is received by such Lender after such time. The proceeds of
such General Revolving Loans shall be made immediately available to the Swing
Line Lender giving such Notice of Swing Line Refunding and applied by it to
repay the principal amount of the Swing Line Revolving Loans to which such
Notice of Swing Line Refunding related. The Borrower irrevocably and
unconditionally agrees that, notwithstanding anything to the contrary
contained in this Agreement, General Revolving Loans made as herein provided
in response to a Notice of Swing Line Refunding shall constitute General
Revolving Loans hereunder consisting of Prime Rate Loans.
(b) If prior to the time a General Revolving Loan would otherwise
have been made as provided above as a consequence of a Notice of Swing Line
Refunding, any of the events specified in section 10.1(h) shall have occurred
in respect of the Borrower or one or more of the Lenders with General
Revolving Commitments shall determine that it is legally prohibited from
making a General Revolving Loan under such circumstances, each Lender (other
than the Swing Line Lender giving the Notice of Swing Line Refunding), or
each Lender (other than such Swing Line Lender) so prohibited, as the case
may be, shall, on the date such General Revolving Loan would have been made
by it (the "PURCHASE DATE"), purchase an undivided participating interest in
the outstanding Swing Line Revolving Loans to which such Notice of Swing Line
Refunding related, in an amount (the "SWING LINE PARTICIPATION AMOUNT") equal
to such Lender's General Revolving Facility Percentage of such Swing Line
Revolving Loans. On the Purchase Date, each such Lender or each such Lender
so prohibited, as the case may be, shall pay to the Swing Line Lender, in
immediately available funds, such Lender's Swing Line Participation Amount,
and promptly upon receipt thereof the Swing Line Lender shall, if requested
by such other Lender, deliver to such Lender a participation certificate,
dated the date of the Swing Line Lender's receipt of the funds from, and
evidencing such Lender's participating interest in such Swing Line Revolving
Loans and its Swing Line Participation Amount in respect thereof. If any
amount required to be paid by a Lender to the Swing Line Lender pursuant to
the above provisions in respect
23
<PAGE>
of any Swing Line Participation Amount is not paid on the date such payment
is due, such Lender shall pay to the Swing Line Lender on demand interest on
the amount not so paid at the overnight Federal Funds Effective Rate from the
due date until such amount is paid in full.
(c) Whenever, at any time after the Swing Line Lender has received
from any other Lender such Lender's Swing Line Participation Amount, the
Swing Line Lender receives any payment from or on behalf of the Borrower on
account of the related Swing Line Revolving Loans, the Swing Line Lender will
promptly distribute to such Lender its General Revolving Facility Percentage
of such payment on account of its Swing Line Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was
outstanding and funded); PROVIDED, HOWEVER, that in the event such payment
received by the Swing Line Lender is required to be returned, such Lender
will return to the Swing Line Lender any portion thereof previously
distributed to it by the Swing Line Lender.
(d) Each Lender's obligation to make General Revolving Loans and/or
to purchase participations in connection with a Notice of Swing Line
Refunding (which shall in all events be within such Lender's Unutilized
General Revolving Commitment, taking into account all outstanding
participations in connection with Swing Line Refundings) shall be subject to
the conditions that
(i) such Lender shall have received a Notice of Swing Line
Refunding complying with the provisions hereof; and
(ii) at the time the Swing Line Revolving Loans which are the
subject of such Notice of Swing Line Refunding were made, the Swing
Line Lender making the same had no actual written notice from another
Lender that an Event of Default had occurred and was continuing);
but otherwise shall be absolute and unconditional, shall be solely for the
benefit of the Swing Line Lender which gives such Notice of Swing Line
Refunding, and shall not be affected by any circumstance, including, without
limitation, (A) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against any other Lender, any Credit Party, or any
other person, or any Credit Party may have against any Lender or other
person, as the case may be, for any reason whatsoever; (B) the occurrence or
continuance of a Default or Event of Default; (C) any event or circumstance
involving a Material Adverse Effect upon the Borrower; (D) any breach of any
Credit Document by any party thereto; or (E) any other circumstance,
happening or event, whether or not similar to any of the foregoing.
2.7. INTEREST. (a) The unpaid principal amount of each Loan which is
a Prime Rate Loan shall bear interest from the date of the Borrowing thereof
until maturity (whether by acceleration or otherwise) at a fluctuating rate
per annum which shall at all times be equal to the Prime Rate in effect from
time to time.
(b) The unpaid principal amount of each Loan which is a Eurodollar
Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which
shall at all times be the Applicable Eurodollar Margin (as defined below) for
such Loan PLUS the relevant Eurodollar Rate.
(c) Notwithstanding the above provisions, if a Default under section
10.1(a) or Event of Default is in existence, all outstanding amounts of
principal and, to the extent permitted by law, all overdue interest, in
respect of each Loan shall bear interest, payable on demand, at a fluctuating
rate per annum equal to 2% per annum above the Prime Rate in effect from time
to time. If any amount (other than the principal of and interest on the
Loans) payable by the Borrower under the Credit Documents is not paid when
due, such amount shall bear interest, payable on demand, at a rate per annum
equal to the Prime Rate in effect from time to time PLUS 2% per annum.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any prepayment or repayment thereof
and shall be payable (i) in respect of each Prime Rate Loan, monthly in
arrears on the last Business Day of each calendar month, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable
thereto (and in the event section 2.8(a) is hereafter amended to permit the
selection of any Interest Period longer than three months, in the case of an
Interest Period in excess of three months, on the dates
24
<PAGE>
which are successively three months after the commencement of such Interest
Period), and (iii) in respect of each Loan, on any prepayment or conversion
(on the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with section 12.7(b).
(f) Each Reference Bank agrees to furnish the Administrative Agent
timely information for the purpose of determining the Eurodollar Rate for any
Borrowing consisting of Eurodollar Loans. If any one or more of the Reference
Banks shall not timely furnish such information, the Administrative Agent
shall determine the Eurodollar Rate on the basis of timely information
furnished by the remaining Reference Banks. The Administrative Agent upon
determining the interest rate for any Borrowing shall promptly notify the
Borrower (on behalf of any applicable Borrower) and the Lenders thereof.
(g) As used herein, the term "APPLICABLE EURODOLLAR MARGIN", as
applied to any Loan which is a Eurodollar Loan, means the rate per annum
determined by the Administrative Agent in accordance with the Pricing Grid
Table which appears below, based on the Borrower's ratio of Consolidated
Total Indebtedness to Consolidated EBITDA as referred to in section 9.7, and
following provisions. Initially, until changed hereunder in accordance with
the following provisions, the Applicable Eurodollar Margin will be 187.50
basis points per annum. Subsequent to the fiscal quarter of the Borrower
ended on or nearest to March 31, 1998, the Administrative Agent will
determine the Applicable Eurodollar Margin for any Loan in accordance with
the Pricing Grid Table, based on the Borrower's ratio of Consolidated Total
Indebtedness to Consolidated EBITDA as referred to in section 9.7 and
identified in such Table. Changes in the Applicable Eurodollar Margin based
upon changes in such ratio shall become effective on the first day of the
month following the receipt by the Administrative Agent pursuant to section
8.1(a) or (b) of the financial statements of the Borrower, accompanied by the
certificate referred to in section 8.1(c), demonstrating the computation of
such ratio, based upon the ratio in effect at the end of the applicable
period covered (in whole or in part) by such financial statements; PROVIDED
that if any financial statements referred to in section 8.1(a) or (b), or the
related certificate referred to in section 8.1(c), are not timely delivered,
the Administrative Agent may determine the Applicable Eurodollar Margin based
upon a good faith estimate by the Borrower of such ratio as in effect at the
end of the applicable period to be covered (in whole or in part) by such
financial statements, PROVIDED, FURTHER, that if upon delivery of such
delinquent financial statements and related certificate, such financial
statements indicate that such good faith estimate was incorrect and, as a
result thereof, the Applicable Eurodollar Margin for any Loans was too low at
such determination, the Applicable Eurodollar Margin for such Loans shall be
increased, as appropriate, with retroactive effect to the date of the change
made on the basis of such determination, and the Borrower will immediately
pay to the Administrative Agent, for the account of the Lenders having
Commitments in respect of the Facility under which such Loans were incurred
all additional interest due by reason of such increased Applicable Eurodollar
Margin. Any changes in the Applicable Eurodollar Margin shall be determined
by the Administrative Agent in accordance with the above provisions and the
Administrative Agent will promptly provide notice of such determinations to
the Borrower and the Lenders. Any such determination by the Administrative
Agent pursuant to this section 2.7(g) shall be conclusive and binding absent
manifest error.
25
<PAGE>
PRICING GRID TABLE
(EXPRESSED IN BASIS POINTS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
RATIO OF Applicable Applicable
CONSOLIDATED TOTAL INDEBTEDNESS/ Eurodollar Margin Commitment Fee Rate
CONSOLIDATED EBITDA
<S> <C> <C>
>2.75 to 1.00 225.00 37.50
- --------------------------------------------------------------------------------------
>2.00 to 1.00 and < 2.75 to 187.50 25.00
1.00 -
- --------------------------------------------------------------------------------------
< 2.00 to 1.00 150.00 20.00
- -
- --------------------------------------------------------------------------------------
</TABLE>
2.8. INTEREST PERIODS. (a) At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 11:00 A.M. (local time at the applicable
Notice Office) on the third Business Day prior to the expiration of an Interest
Period applicable to a Borrowing of Eurodollar Loans, it shall have the right to
elect by giving the Administrative Agent written or telephonic notice (in the
case of telephonic notice, promptly confirmed in writing if so requested by the
Administrative Agent) of the Interest Period applicable to such Borrowing, which
Interest Period shall, at the option of the Borrower, be a one, two or three
month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Prime Rate
Loans) and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the next preceding
Interest Period expires;
(ii) if any Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month at the end
of such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day;
(iv) no Interest Period for any Loan may be selected which
would end after the Maturity Date; and
(v) no Interest Period may be elected at any time when a
Default under section 10.1(a) or an Event of Default is then in
existence unless the Required Lenders otherwise agree.
(b) If upon the expiration of any Interest Period the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing to Prime Rate Loans
effective as of the expiration date of such current Interest Period.
2.9. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that
(x) in the case of clause (i) below, the Administrative Agent or (y) in the
case of clauses (ii) and (iii) below, any Lender, shall have determined on a
26
<PAGE>
reasonable basis (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising after the
Effective Date affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the applicable interest rate
on the basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased
costs or reductions in the amounts received or receivable hereunder
in an amount which such Lender deems material with respect to any
Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a
change in the rate of taxes or similar charges) because of (x) any
change since the Effective Date in any applicable law, governmental
rule, regulation, guideline, order or request (whether or not having
the force of law), or in the interpretation or administration thereof
and including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves includable in the Eurodollar Rate pursuant
to the definition thereof) and/or (y) other circumstances adversely
affecting the interbank Eurodollar market or the position of such
Lender in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Lender in
good faith with any change since the Effective Date in any law,
governmental rule, regulation, guideline or order, or the
interpretation or application thereof, or would conflict with any
thereof not having the force of law but with which such Lender
customarily complies or has become impracticable as a result of a
contingency occurring after the Effective Date which materially
adversely affects the interbank Eurodollar market;
THEN, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on or promptly following such date or time
and (y) within 10 Business Days of the date on which such event no longer exists
give notice (by telephone confirmed in writing) to the Borrower and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice by the Administrative
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given
by the Borrower with respect to Eurodollar Loans which have not yet been
incurred or converted shall be deemed rescinded by the Borrower or, in the case
of a Notice of Borrowing, shall, at the option of the Borrower, be deemed
converted into a Notice of Borrowing for Prime Rate Loans to be made on the date
of Borrowing contained in such Notice of Borrowing, (y) in the case of clause
(ii) above, the Borrower shall pay to such Lender, upon written demand therefor,
such additional amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as such Lender shall determine) as
shall be required to compensate such Lender, for such increased costs or
reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Lender, showing the basis for the calculation
thereof, which basis must be reasonable, submitted to the Borrower by such
Lender shall, absent manifest error, be final and conclusive and binding upon
all parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in section 2.9(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in section 2.9(a)(ii) or (iii), the Borrower may (and in
the case of a Eurodollar Loan affected pursuant to section 2.9(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, by giving the Administrative Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that the Borrower was
notified by a Lender pursuant to section 2.9(a)(ii) or (iii), cancel said
Borrowing, convert the related Notice of Borrowing into one requesting a
Borrowing of Prime Rate Loans or require the affected Lender to make its
requested Loan as a Prime Rate Loan, or (ii) if the affected Eurodollar Loan is
then outstanding, upon at least one Business Day's notice to the Administrative
Agent, require the affected Lender to convert each such Eurodollar Loan into a
27
<PAGE>
Prime Rate Loan, PROVIDED that if more than one Lender is affected at any time,
then all affected Lenders must be treated the same pursuant to this section
2.9(b).
(c) If any Lender shall have determined that after the Effective
Date, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged by law with the interpretation or administration
thereof, or compliance by such Lender or its parent corporation with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank, or comparable agency, in
each case made subsequent to the Effective Date, has or would have the effect
of reducing by an amount reasonably deemed by such Lender to be material the
rate of return on such Lender's or its parent corporation's capital or assets
as a consequence of such Lender's commitments or obligations hereunder to a
level below that which such Lender or its parent corporation could have
achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Lender's or its parent corporation's policies with
respect to capital adequacy), then from time to time, within 15 days after
demand by such Lender (with a copy to the Administrative Agent), the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender or its parent corporation for such reduction. Each Lender, upon
determining in good faith that any additional amounts will be payable
pursuant to this section 2.9(c), will give prompt written notice thereof to
the Borrower, which notice shall set forth, in reasonable detail, the basis
of the calculation of such additional amounts, which basis must be
reasonable, although the failure to give any such notice shall not release or
diminish any of the Borrower's obligations to pay additional amounts pursuant
to this section 2.9(c) upon the subsequent receipt of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, (i)
no Lender shall be entitled to compensation or payment or reimbursement of
other amounts under section 2.9 or 3.5 for any amounts incurred or accruing
more than 180 days prior to the giving of notice to the Borrower of
additional costs or other amounts of the nature described in such sections,
and (ii) no Lender shall demand compensation for any reduction referred to in
section 2.9(c) or payment or reimbursement of other amounts under section 3.5
if it shall not at the time be the general policy or practice of such Lender
to demand such compensation, payment or reimbursement in similar
circumstances under comparable provisions of other credit agreements.
2.10. COMPENSATION. The Borrower shall compensate each applicable
Lender, upon its written request (which request shall set forth the detailed
basis for requesting and the method of calculating such compensation), for
all reasonable losses, expenses and liabilities (including, without
limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such
Lender to fund its Eurodollar Loans) which such Lender may sustain: (i) if
for any reason (other than a default by such Lender or the Administrative
Agent) a Borrowing of Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to section 2.9(a));
(ii) if any repayment, prepayment or conversion of any of its Eurodollar
Loans occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any of its Eurodollar Loans is
not made on any date specified in a notice of prepayment given by the
Borrower; or (iv) as a consequence of (x) any other default by the Borrower
to repay its Eurodollar Loans when required by the terms of this Agreement or
(y) an election made pursuant to section 2.9(b).
2.11. CHANGE OF LENDING OFFICE; REPLACEMENT OF LENDERS. (a) Each
Lender agrees that, upon the occurrence of any event giving rise to the
operation of section 2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such
Lender, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate
another Applicable Lending Office for any Loans or Commitment affected by
such event, PROVIDED that such designation is made on such terms that such
Lender and its Applicable Lending Office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of any such section.
(b) If any Lender requests any compensation, reimbursement or other
payment under section 2.9(a)(ii) or (iii), 2.9(c) or 3.5 with respect to such
Lender, or if any Lender is a Defaulting Lender, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to
28
<PAGE>
assign and delegate, without recourse (in accordance with the restrictions
contained in section 12.4(b)), all its interests, rights and obligations
under this Agreement to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment);
PROVIDED that (i) the Borrower shall have received the prior written consent
of the Administrative Agent, which consent shall not be unreasonably withheld
or delayed, (ii) such Lender shall have received payment of an amount equal
to the outstanding principal of its Loans, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts), and (iii) in the case of any
such assignment resulting from a claim for compensation, reimbursement or
other payments required to be made under section 2.9(a)(ii) or (iii), 2.9(c)
or 3.5 with respect to such Lender, such assignment will result in a
reduction in such compensation, reimbursement or payments. A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrower to require such assignment and delegation cease to apply.
(c) Nothing in this section 2.11 shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in section
2.9 or 3.5.
SECTION 3. LETTERS OF CREDIT.
3.1. LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request a Letter of Credit
Issuer at any time and from time to time on or after the Closing Date and
prior to the date that is 15 Business Days prior to the Maturity Date to
issue, for the account of the Borrower or any of its Subsidiaries and in
support of
(i) trade obligations incurred in the ordinary course of
business, or
(ii) worker compensation, liability insurance, releases of
contract retention obligations, contract performance guarantee
requirements and other bonding obligations of the Borrower or any such
Subsidiary incurred in the ordinary course of its business, and such
other standby obligations of the Borrower and its Subsidiaries that are
acceptable to the Letter of Credit Issuer,
and subject to and upon the terms and conditions herein set forth, such Letter
of Credit Issuer agrees to issue from time to time, irrevocable documentary or
standby letters of credit denominated and payable in Dollars in such form as may
be approved by such Letter of Credit Issuer and the Administrative Agent (each
such letter of credit (and each Existing Letter of Credit described in section
3.1(d)), a "LETTER OF CREDIT" and collectively, the "LETTERS OF CREDIT").
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings at such time, would exceed either (x) $3,500,000, or (y) when added
to the aggregate principal amount of all Revolving Loans then outstanding, an
amount equal to the Total General Revolving Commitment at such time; (ii) no
individual Letter of Credit (other than any Existing Letter of Credit) shall be
issued which has an initial Stated Amount less than $100,000 unless such lesser
Stated Amount is acceptable to the Letter of Credit Issuer; and (iii) each
Letter of Credit shall have an expiry date (including any renewal periods)
occurring not later than the earlier of (A) one year from the date of issuance
thereof, unless a longer period is approved by the relevant Letter of Credit
Issuer and Lenders (other than any Defaulting Lender) holding a majority of the
Total General Revolving Commitment, and (B) 15 Business Days prior to the
Maturity Date, in each case on terms acceptable to the Administrative Agent and
the relevant Letter of Credit Issuer.
(c) Notwithstanding the foregoing, in the event a Lender Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless either (i) such Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Lender or Lenders, including by cash collateralizing such
Defaulting Lender's or Lenders' General Revolving Facility Percentage of the
Letter of Credit Outstandings; or (ii) the issuance of such Letter of Credit,
taking into account the potential failure of the Defaulting Lender or Lenders to
risk participate therein, will not cause the Letter of Credit Issuer to incur
aggregate credit exposure hereunder with respect to General
29
<PAGE>
Revolving Loans and Letter of Credit Outstandings in excess of its General
Revolving Commitment, and the Borrower has undertaken, for the benefit of such
Letter of Credit Issuer, pursuant to an instrument satisfactory in form and
substance to such Letter of Credit Issuer, not to thereafter incur Revolving
Loans or Letter of Credit Outstandings hereunder which would cause the Letter of
Credit Issuer to incur aggregate credit exposure hereunder with respect to
General Revolving Loans and Letter of Credit Outstandings in excess of its
General Revolving Commitment.
(d) Annex VI hereto contains a description of all letters of credit
outstanding on, and to continue in effect after, the Closing Date. Each such
letter of credit issued by a bank that is or becomes a Lender under this
Agreement on the Effective Date (each, an "EXISTING LETTER OF CREDIT") shall
constitute a "Letter of Credit" for all purposes of this Agreement, issued, for
purposes of section 3.4(a), on the Closing Date, and the Borrower, the
Administrative Agent and the applicable Lenders hereby agree that, from and
after such date, the terms of this Agreement shall apply to such Letters of
Credit, superseding any other agreement theretofore applicable to them to the
extent inconsistent with the terms hereof.
3.2. LETTER OF CREDIT REQUESTS: NOTICES OF ISSUANCE. (a) Whenever it
desires that a Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written or telephonic
notice (in the case of telephonic notice, promptly confirmed in writing if so
requested by the Administrative Agent) which, if in the form of written notice
shall be substantially in the form of Exhibit B-3, or transmit by electronic
communication (if arrangements for doing so have been approved by the Letter of
Credit Issuer), prior to 11:00 A.M. (local time at its Notice Office) at least
three Business Days (or such shorter period as may be acceptable to the relevant
Letter of Credit Issuer) prior to the proposed date of issuance (which shall be
a Business Day) (each a "LETTER OF CREDIT REQUEST"), which Letter of Credit
Request shall include such supporting documents that such Letter of Credit
Issuer customarily requires in connection therewith (including, in the case of a
Letter of Credit for an account party other than the Borrower, an application
for, and if applicable a reimbursement agreement with respect to, such Letter of
Credit). Any such documents executed in connection with the issuance of a Letter
of Credit, including the Letter of Credit itself, are herein referred to as
"LETTER OF CREDIT DOCUMENTS". In the event of any inconsistency between any of
the terms or provisions of any Letter of Credit Document and the terms and
provisions of this Agreement respecting Letters of Credit, the terms and
provisions of this Agreement shall control. The Administrative Agent shall
promptly notify each Lender of each Letter of Credit Request.
(b) Each Letter of Credit Issuer shall provide to the Administrative
Agent and each other Lender a quarterly (or monthly if requested by the
Administrative Agent or any applicable Lender) summary describing each Letter
of Credit issued by such Letter of Credit Issuer and then outstanding and an
identification for the relevant period of the daily aggregate Letter of
Credit Outstandings represented by Letters of Credit issued by such Letter of
Credit Issuer. Each Letter of Credit Issuer shall, if requested by the
Administrative Agent or any other Lender, provide a copy of each Letter of
Credit issued by it.
3.3. AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse (or cause any Subsidiary for whose account a
Letter of Credit was issued to reimburse) each Letter of Credit Issuer, by
making payment directly to such Letter of Credit Issuer in immediately
available funds at the payment office of such Letter of Credit Issuer, for
any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit (each such amount so paid or disbursed until reimbursed, an
"UNPAID DRAWING") immediately after, and in any event on the date on which,
such Letter of Credit Issuer notifies the Borrower (or any such Subsidiary
for whose account such Letter of Credit was issued) of such payment or
disbursement (which notice to the Borrower (or such Subsidiary) shall be
delivered reasonably promptly after any such payment or disbursement), such
payment to be made in Dollars, with interest on the amount so paid or
disbursed by such Letter of Credit Issuer, to the extent not reimbursed prior
to 1:00 P.M. (local time at the payment office of the Letter of Credit
Issuer) on the date of such payment or disbursement, from and including the
date paid or disbursed to but not including the date such Letter of Credit
Issuer is reimbursed therefor at a rate per annum which shall be the rate
then applicable to Loans which are Prime Rate Loans (plus an additional 2%
per annum if not reimbursed by the third Business Day after the date of such
payment or disbursement), any such interest also to be payable on demand.
30
<PAGE>
(b) The Borrower's obligation under this section 3.3 to reimburse, or
cause a Subsidiary to reimburse, each Letter of Credit Issuer with respect to
Unpaid Drawings (including, in each case, interest thereon) shall be absolute
and unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which the Borrower may have or have
had against such Letter of Credit Issuer, the Administrative Agent, any other
Letter of Credit Issuer or any Lender, including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or
misapplication by the beneficiary of the proceeds of such drawing, PROVIDED,
HOWEVER that the Borrower shall not be obligated to reimburse, or cause a
Subsidiary to reimburse, a Letter of Credit Issuer for any wrongful payment made
by such Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of
such Letter of Credit Issuer.
3.4. LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the issuance
by a Letter of Credit Issuer of any Letter of Credit (and on the Closing Date
with respect to any Existing Letter of Credit), such Letter of Credit Issuer
shall be deemed to have sold and transferred to each Lender with a General
Revolving Commitment, and each such Lender (each a "PARTICIPANT") shall be
deemed irrevocably and unconditionally to have purchased and received from such
Letter of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Lender's General Revolving Facility
Percentage, in such Letter of Credit, each substitute letter of credit, each
drawing made thereunder, the obligations of the Borrower under this Agreement
with respect thereto (although Letter of Credit Fees shall be payable directly
to the Administrative Agent for the account of the Lenders as provided in
section 4.1(b) and the Participants shall have no right to receive any portion
of any fees of the nature contemplated by section 4.1(c)), the obligations of
any Subsidiary of the Borrower under any Letter of Credit Documents pertaining
thereto, and any security for, or guaranty pertaining to, any of the foregoing.
Upon any change in the General Revolving Commitments of the Lenders pursuant to
section 12.4(b), it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations pursuant to this section 3.4 to reflect the new General
Revolving Facility Percentages of the assigning and assignee Lender.
(b) In determining whether to pay under any Letter of Credit, a Letter
of Credit Issuer shall not have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by a Letter of Credit Issuer under or in connection with any Letter
of Credit if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Letter of Credit Issuer any resulting
liability.
(c) In the event that a Letter of Credit Issuer makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed (or caused any
applicable Subsidiary to reimburse) such amount in full to such Letter of Credit
Issuer pursuant to section 3.3(a), such Letter of Credit Issuer shall promptly
notify the Administrative Agent, and the Administrative Agent shall promptly
notify each Participant of such failure, and each Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Letter
of Credit Issuer, the amount of such Participant's General Revolving Facility
Percentage of such payment in U.S. Dollars and in same day funds, PROVIDED,
HOWEVER, that no Participant shall be obligated to pay to the Administrative
Agent its General Revolving Facility Percentage of such unreimbursed amount for
any wrongful payment made by such Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of such Letter of Credit Issuer. If the Administrative
Agent so notifies any Participant required to fund a payment under a Letter of
Credit prior to 11:00 A.M. (local time at its Notice Office) on any Business
Day, such Participant shall make available to the Administrative Agent for the
account of the relevant Letter of Credit Issuer such Participant's General
Revolving Facility Percentage of the amount of such payment on such Business Day
in same day funds. If and to the extent such Participant shall not have so made
its General Revolving Facility Percentage of the amount of such payment
available to the Administrative Agent for the account of the relevant Letter of
Credit Issuer, such Participant agrees to pay to the Administrative Agent for
the account of such Letter of Credit Issuer, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent for the account of such Letter of
Credit Issuer at the Federal Funds Effective Rate. The failure of any
Participant to make available to the Administrative Agent for the account of the
relevant Letter of Credit Issuer its General Revolving Facility Percentage of
any payment under any Letter of Credit
31
<PAGE>
shall not relieve any other Participant of its obligation hereunder to make
available to the Administrative Agent for the account of such Letter of Credit
Issuer its General Revolving Facility Percentage of any payment under any Letter
of Credit on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Administrative Agent for the account of such Letter of Credit Issuer such other
Participant's General Revolving Facility Percentage of any such payment.
(d) Whenever a Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of such Letter of Credit Issuer any payments from the Participants
pursuant to section 3.4(c) above, such Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its General Revolving Facility Percentage thereof, in
U.S. dollars and in same day funds, an amount equal to such Participant's
General Revolving Facility Percentage of the principal amount thereof and
interest thereon accruing after the purchase of the respective participations,
as and to the extent so received.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of each Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off defense or other
right which the Borrower (or any Subsidiary) may have at any time
against a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any person for whom any such transferee may be
acting), the Administrative Agent, any Letter of Credit Issuer, any
Lender, or other person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
(or any Subsidiary) and the beneficiary named in any such Letter of
Credit), other than any claim which the Borrower (or any Subsidiary
which is the account party with respect to a Letter of Credit) may have
against any applicable Letter of Credit Issuer for gross negligence or
wilful misconduct of such Letter of Credit Issuer in making payment
under any applicable Letter of Credit;
(iii) any draft, certificate or other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents: or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by the
Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective General Revolving Facility
Percentages, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Letter of Credit Issuer in performing its respective duties in
any way related to or arising out of its issuance of Letters of Credit, PROVIDED
that no Participants shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements resulting from the Letter of Credit Issuer's gross
negligence or willful misconduct.
3.5. INCREASED COSTS. If after the Effective Date, 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, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance
32
<PAGE>
by any Letter of Credit Issuer or any Lender with any request or directive
(whether or not having the force of law) by any such authority, central bank
or comparable agency (in each case made subsequent to the Effective Date)
shall either (i) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against Letters of Credit issued by
such Letter of Credit Issuer or such Lender's participation therein, or (ii)
shall impose on such Letter of Credit Issuer or any Lender any other
conditions affecting this Agreement, any Letter of Credit or such Lender's
participation therein; and the result of any of the foregoing is to increase
the cost to such Letter of Credit Issuer or such Lender of issuing,
maintaining or participating in any Letter of Credit, or to reduce the amount
of any sum received or receivable by such Letter of Credit Issuer or such
Lender hereunder (other than any increased cost or reduction in the amount
received or receivable resulting from the imposition of or a change in the
rate of taxes or similar charges), then, upon demand to the Borrower by such
Letter of Credit Issuer or such Lender (a copy of which notice shall be sent
by such Letter of Credit Issuer or such Lender to the Administrative Agent),
the Borrower shall pay to such Letter of Credit Issuer or such Lender such
additional amount or amounts as will compensate any such Letter of Credit
Issuer or such Lender for such increased cost or reduction. A certificate
submitted to the Borrower by any Letter of Credit Issuer or any Lender, as
the case may be (a copy of which certificate shall be sent by such Letter of
Credit Issuer or such Lender to the Administrative Agent), setting forth, in
reasonable detail, the basis for the determination of such additional amount
or amounts necessary to compensate any Letter of Credit Issuer or such Lender
as aforesaid shall be conclusive and binding on the Borrower absent manifest
error, although the failure to deliver any such certificate shall not release
or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this section 3.5. Reference is hereby made to the provisions of
section 2.9(d) for certain limitations upon the rights of a Letter of Credit
Issuer or Lender under this section.
3.6. GUARANTY OF SUBSIDIARY LETTER OF CREDIT OBLIGATIONS. (a) The
Borrower hereby unconditionally guarantees, for the benefit of the
Administrative Agent and the Lenders, the full and punctual payment of the
Obligations of each Subsidiary under each Letter of Credit Document to which
such Subsidiary is now or hereafter becomes a party. Upon failure by any such
Subsidiary to pay punctually any such amount, the Borrower shall forthwith on
demand by the Administrative Agent pay the amount not so paid at the place and
in the currency and otherwise in the manner specified in this Agreement or any
applicable Letter of Credit Document.
(b) As a separate, additional and continuing obligation, the Borrower
unconditionally and irrevocably undertakes and agrees, for the benefit of the
Administrative Agent and the Lenders, that, should any amounts not be
recoverable from the Borrower under section 3.6(a) for any reason whatsoever
(including, without limitation, by reason of any provision of any Credit
Document or any other agreement or instrument executed in connection therewith
being or becoming void, unenforceable, or otherwise invalid under any applicable
law) then, notwithstanding any notice or knowledge thereof by any Lender, the
Administrative Agent, any of their respective Affiliates, or any other person,
at any time, the Borrower as sole, original and independent obligor, upon demand
by the Administrative Agent, will make payment to the Administrative Agent, for
the account of the Lenders and the Administrative Agent, of all such obligations
not so recoverable by way of full indemnity, in such currency and otherwise in
such manner as is provided in the Credit Documents.
(c) The obligations of the Borrower under this section shall be
unconditional and absolute and, without limiting the generality of the foregoing
shall not be released, discharged or otherwise affected by the occurrence, one
or more times, of any of the following:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect to any obligation of any Subsidiary under any Letter
of Credit Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, any Note or any other Credit Document;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for any obligation of the Borrower under this
Agreement, any Note or any other Credit Document or of any Subsidiary
under any Letter of Credit Document;
33
<PAGE>
(iv) any change in the corporate existence, structure or
ownership of any Subsidiary or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Subsidiary or
its assets or any resulting release or discharge of any obligation of
any Subsidiary contained in any Letter of Credit Document;
(v) the existence of any claim, set-off or other rights which
the Borrower may have at any time against any Subsidiary, the
Administrative Agent, any Lender or any other person, whether in
connection herewith or any unrelated transactions;
(vi) any invalidity or unenforceability relating to or against
any Subsidiary for any reason of any Letter of Credit Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by any Subsidiary of any Obligations in respect of any Letter
of Credit; or
(vii) any other act or omission to act or delay of any kind by
any Subsidiary, the Administrative Agent, any Lender or any other
person or any other circumstance whatsoever which might, but for the
provisions of this section, constitute a legal or equitable discharge
of the Borrower's obligations under this section.
(d) The Borrower's obligations under this section shall remain in full
force and effect until the Commitments shall have terminated and the principal
of and interest on the Notes and all other amounts payable by the Borrower under
the Credit Documents and by any Subsidiary under the Letter of Credit Documents
shall have been paid in full. If at any time any payment of any of the
Obligations of any Subsidiary in respect of any Letter of Credit Documents is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Subsidiary, the Borrower's obligations
under this section with respect to such payment shall be reinstated at such time
as though such payment had been due but not made at such time.
(e) The Borrower irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against any
Subsidiary or any other person, or against any collateral or guaranty of any
other person.
(f) Until the indefeasible payment in full of all of the Obligations
and the termination of the Commitments of the Lenders hereunder, the Borrower
shall have no rights, by operation of law or otherwise, upon making any payment
under this section to be subrogated to the rights of the payee against any
Subsidiary with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by any Subsidiary in respect thereof.
(g) In the event that acceleration of the time for payment of any
amount payable by any Subsidiary under any Letter of Credit Document is stayed
upon insolvency, bankruptcy or reorganization of such Subsidiary, all such
amounts otherwise subject to acceleration under the terms of any applicable
Letter of Credit Document shall nonetheless be payable by the Borrower under
this section forthwith on demand by the Administrative Agent.
SECTION 4. FEES; COMMITMENTS.
4.1. FEES. (a) The Borrower agrees to pay to the
Administrative Agent the following (collectively, "COMMITMENT FEES"):
(i) a commitment fee ("GRF COMMITMENT FEE") for the account of
each Non-Defaulting Lender which has a General Revolving Commitment for
the period from and including the Effective Date to, but not including,
the Maturity Date or, if earlier, the date upon which the Total General
Revolving Commitment has been terminated, computed for each day at a
rate per annum equal to the Applicable Commitment Fee Rate for such day
on such Lender's Unutilized General Revolving Commitment for such day;
such GRF Commitment Fee shall be due and payable in arrears on the last
Business Day of each June, September, December and March and on the
Maturity Date or, if earlier, the date upon which the Total General
Revolving Commitment has been terminated.
34
<PAGE>
(ii) a commitment fee ("TF COMMITMENT FEE") for the account of
each Non-Defaulting Lender which has a Term Loan Commitment for the
period from and including the Effective Date to, but not including, the
Maturity Date or, if earlier, the date upon which the Total Term Loan
Commitment has been terminated, computed for each day at a rate per
annum equal to the Applicable Commitment Fee Rate for such day on such
Lender's Unutilized Term Loan Commitment for such day; such TF
Commitment Fee shall be due and payable in arrears on the last Business
Day of each June, September, December and March and on the Maturity
Date or, if earlier, the date upon which the Total Term Loan Commitment
has been terminated.
As used herein, the term "APPLICABLE COMMITMENT FEE RATE" means the rate per
annum determined by the Administrative Agent in accordance with the Pricing Grid
Table which appears in section 2.7(g), based on the Borrower's ratio of
Consolidated Total Indebtedness to Consolidated EBITDA as referred to in section
9.7, and following provisions; PROVIDED, that, notwithstanding anything to the
contrary contained herein, during any period in which a Default under section
10.1(a) or Event of Default shall have occurred and be continuing, the
Applicable Commitment Fee Rate will be the highest rate per annum indicated for
the Applicable Commitment Rate in such Pricing Grid Table. Initially, until
changed hereunder in accordance with the following provisions, the Applicable
Commitment Fee Rate will be 25.00 basis points per annum. Subsequent to the
fiscal quarter of the Borrower ended on or nearest to March 31, 1998, the
Administrative Agent will determine the Applicable Commitment Fee Rate in
accordance with the Pricing Grid Table, based on the Borrower's ratio of
Consolidated Total Indebtedness to Consolidated EBITDA as referred to in section
9.7 and identified in such Table. Changes in the Applicable Commitment Fee Rate
based upon changes in such ratio shall become effective on the first day of the
month following the receipt by the Administrative Agent pursuant to section
8.1(a) or (b) of the financial statements of the Borrower, accompanied by the
certificate referred to in section 8.1(c), demonstrating the computation of such
ratio, based upon the ratio in effect at the end of the applicable period
covered (in whole or in part) by such financial statements; PROVIDED that if any
financial statements referred to in section 8.1(a) or (b), or the related
certificate referred to in section 8.1(c), are not timely delivered, the
Administrative Agent may determine the Applicable Commitment Fee Rate based upon
a good faith estimate by the Borrower of such ratio as in effect at the end of
the applicable period to be covered (in whole or in part) by such financial
statements, PROVIDED, FURTHER, that if upon delivery of such delinquent
financial statements and related certificate, such financial statements indicate
that such good faith estimate was incorrect and, as a result thereof, the
Applicable Commitment Fee Rate was too low at such determination, the Applicable
Commitment Fee Rate shall be increased, as appropriate, with retroactive effect
to the date of the change made on the basis of such determination, and the
Borrower will immediately pay to the Administrative Agent for the account of the
affected Lenders all additional Commitment Fees due by reason of such increased
Applicable Commitment Fee Rate. Any changes in the Applicable Commitment Fee
Rate shall be determined by the Administrative Agent in accordance with the
above provisions and the Administrative Agent will promptly provide notice of
such determinations to the Borrower and the Lenders. Any such determination by
the Administrative Agent pursuant to this section 4.1(a) shall be conclusive and
binding absent manifest error.
(b) The Borrower agrees to pay to the Administrative Agent, for the
account of each Non-Defaulting Lender, PRO RATA on the basis of its General
Revolving Facility Percentage, a fee in respect of each Letter of Credit (the
"LETTER OF CREDIT FEE"), payable on the date of issuance (or any increase in the
amount, or renewal or extension) thereof, computed at the rate per annum equal
to the Applicable Eurodollar Margin then in effect on the Stated Amount thereof
for the period from the date of issuance (or increase, renewal or extension) to
the expiration date thereof (including any extensions of such expiration date
which may be made at the election of the beneficiary thereof).
(c) The Borrower agrees to pay directly to each Letter of Credit
Issuer, for its own account, a fee in respect of each Letter of Credit issued by
it (a "FACING FEE"), payable on the date of issuance (or any increase in the
amount, or renewal or extension) thereof, computed at the rate of 1/8 of 1% per
annum on the Stated Amount thereof for the period from the date of issuance (or
increase, renewal or extension) to the expiration date thereof (including any
extensions of such expiration date which may be made at the election of the
beneficiary thereof).
(d) The Borrower agrees to pay directly to each Letter of Credit Issuer
upon each issuance of, drawing under, and/or amendment, extension, renewal or
transfer of, a Letter of Credit issued by it such amount as shall at
35
<PAGE>
the time of such issuance, drawing, amendment, extension, renewal or transfer be
the administrative or processing charge which such Letter of Credit Issuer is
customarily charging for issuances of, drawings under or amendments, extensions,
renewals or transfers of, letters of credit issued by it.
(e) The Borrower shall pay to the Administrative Agent on the Effective
Date and thereafter for its own account and/or for distribution to the Lenders
such fees as heretofore agreed by the Borrower and the Administrative Agent.
(f) All computations of Fees shall be made in accordance with section
12.7(b).
4.2. VOLUNTARY TERMINATION/REDUCTION OF COMMITMENTS. Upon at least
three Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, to:
(a) terminate the Total General Revolving Commitment, PROVIDED
that (i) the Total Term Loan Commitment and the Total Swing Line
Revolving Commitment are each simultaneously terminated; and (ii) all
outstanding Revolving Loans and all outstanding Term Loans are
contemporaneously prepaid in accordance with section 5.1;
(b) terminate the Total Swing Line Revolving Commitment,
PROVIDED that (i) the Total Term Loan Commitment and the Total General
Revolving Commitment are each simultaneously terminated; and (ii) all
outstanding Revolving Loans and all outstanding Term Loans are
contemporaneously prepaid in accordance with section 5.1;
(c) terminate the Total Term Loan Commitment, PROVIDED that
(i) the Total General Revolving Commitment and the Total Swing Line
Revolving Commitment are each simultaneously terminated; and (ii) all
outstanding Revolving Loans and all outstanding Term Loans are
contemporaneously prepaid in accordance with section 5.1;
(d) partially and permanently reduce the Unutilized Total
General Revolving Commitment, PROVIDED that (i) any such reduction
shall apply to proportionately and permanently reduce the General
Revolving Commitment of each of the affected Lenders; and (ii) any
partial reduction of the Unutilized Total General Revolving Commitment
pursuant to this section 4.2(d) shall be in the amount of at least
$1,000,000 (or, if greater, in integral multiples of $1,000,000);
and/or
(e) partially and permanently reduce the Unutilized Total
Swing Line Revolving Commitment, PROVIDED that (i) any such reduction
shall apply to proportionately and permanently reduce the Swing Line
Revolving Commitment of each of the affected Lenders; (ii) any partial
reduction of the Unutilized Total Swing Line Revolving Commitment
pursuant to this section 4.2(e) shall be in the amount of at least
$500,000 (or, if greater, in integral multiples of $100,000).
The Borrower does not have any right under this Agreement to partially reduce
the Unutilized Total Term Loan Commitment without the prior written consent of
the Administrative Agent and the Required Lenders.
4.3. MANDATORY ADJUSTMENTS OF COMMITMENTS, ETC. (a) The Total
Commitment (and the Commitment of each Lender) shall terminate on January 31,
1998, unless the Closing Date has occurred on or prior to such date.
(b) The Total Term Loan Commitment shall terminate (and the Term Loan
Commitment of each Lender shall terminate) on the earlier of (x) the Maturity
Date and (y) the date on which a Change of Control occurs.
(c) The Total General Revolving Commitment (and the General Revolving
Commitment of each Lender) shall terminate on the earlier of (x) the Maturity
Date and (y) the date on which a Change of Control occurs.
36
<PAGE>
The Total Swing Line Revolving Commitment (and the Swing Line Revolving
Commitment of each Lender) shall terminate on the earlier of (x) the Maturity
Date and (y) the date on which a Change of Control occurs.
(d) The Total Term Loan Commitment shall be permanently reduced ,
without premium or penalty, at the time of each voluntary prepayment of Term
Loans pursuant to section 5.1 and at the time of each mandatory prepayment of
Term Loans pursuant to section 5.2(e), in an amount equal to the aggregate
principal amount of the Term Loans so prepaid, EXCEPT that if any such
prepayment of Term Loans is made pursuant to section 5.2(e) and the Borrower
makes the election provided therein to have all or a portion of such principal
amount so prepaid available for reborrowing as additional Term Loans, the Total
Term Loan Commitment shall not be reduced as to the amount which the Borrower so
specifies in such election is to be available for reborrowing as additional Term
Loans.
(e) The Total Term Loan Commitment shall be permanently reduced,
without premium or penalty, at the time that any mandatory prepayment of Term
Loans would be made pursuant to section 5.2(f) if Term Loans were then
outstanding in the full amount of the Total Term Loan Commitment then in effect,
in an amount equal to the required prepayment of principal of Term Loans which
would be required to be made in such circumstance. Any such reduction shall
apply to proportionately and permanently reduce the Term Loan Commitment of each
of the affected Lenders. The Borrower will provide at least three Business Days'
prior written notice (or telephonic notice confirmed in writing) to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Lenders), of any reduction of the Total
Term Loan Commitment pursuant to this section 4.3(e), specifying the date and
amount of the reduction.
(f) The Total General Revolving Commitment shall be permanently
reduced, without premium or penalty, at the time that any mandatory prepayment
of General Revolving Loans would be made pursuant to section 5.2(f) if General
Revolving Loans were then outstanding in the full amount of the Total General
Revolving Commitment, in an amount equal to the required prepayment of principal
of General Revolving Loans which would be required to be made in such
circumstance. Any such reduction shall apply to proportionately and permanently
reduce the General Revolving Commitment of each of the affected Lenders. The
Borrower will provide at least three Business Days' prior written notice (or
telephonic notice confirmed in writing) to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders), of any reduction of the Total General Revolving Commitment
pursuant to this section 4.3(f), specifying the date and amount of the
reduction.
SECTION 5. PAYMENTS.
5.1. VOLUNTARY PREPAYMENTS. The Borrower shall have the right to prepay
any of its Loans, in whole or in part, without premium or penalty, from time to
time, but only on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent at the
Notice Office written or telephonic notice (in the case of telephonic
notice, promptly confirmed in writing if so requested by the
Administrative Agent) of its intent to prepay the Term Loans or the
Revolving Loans, as the case may be, the amount of such prepayment and
(in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to
which made, which notice shall be received by the Administrative Agent
by
(x) 11:00 A.M. (local time at the Notice Office) three
Business Days prior to the date of such prepayment, in the
case of any prepayment of Eurodollar Loans, or
(y) 12:00 noon (local time at the Notice Office) on
the date of such prepayment, in the case of any prepayment of
Prime Rate Loans, and which notice shall promptly be
transmitted by the Administrative Agent to each of the
affected Lenders;
(ii) each partial prepayment by the Borrower of any Term Loan
Borrowing shall be in an aggregate principal amount of (A) at least
$500,000, or an integral multiple of $100,000 in excess thereof,
37
<PAGE>
in the case of Term Loans which are Prime Rate Loans, or (B) at least
$3,000,000, or an integral multiple of $1,000,000 in excess thereof, in
the case of Term Loans which are Eurodollar Loans;
(iii) each partial prepayment by the Borrower of any General
Revolving Borrowing shall be in an aggregate principal amount of (A) at
least $500,000, or an integral multiple of $100,000 in excess thereof,
in the case of General Revolving Loans which are Prime Rate Loans, or
(B) at least $3,000,000, or an integral multiple of $1,000,000 in
excess thereof, in the case of General Revolving Loans which are
Eurodollar Loans;
(iv) each partial prepayment by the Borrower of any Swing Line
Revolving Borrowing shall be in an aggregate principal amount of at
least $100,000, or an integral multiple of $50,000 in excess thereof;
(v) no prepayment by the Borrower of any Term Loans shall be
made, unless after giving effect thereto (A) the Unutilized Total
General Revolving Commitment is at least $5,000,000, and (B) the
Unutilized Total General Revolving Commitment exceeds the outstanding
Swing Line Revolving Loans, if any, by at least $5,000,000;
(vi) no partial prepayment of Eurodollar Loans of the Borrower
made pursuant to a Borrowing shall reduce the aggregate principal
amount of the Eurodollar Loans outstanding pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount applicable thereto;
(vii) each prepayment in respect of any Loans made pursuant to
a Borrowing shall be applied PRO RATA among such Loans; and
(viii) each prepayment of Eurodollar Loans pursuant to this
section 5.1 on any date other than the last day of the Interest Period
applicable thereto shall be accompanied by any amounts payable in
respect thereof under section 2.10.
5.2. MANDATORY PREPAYMENTS. The Loans shall be subject to
mandatory prepayment in accordance with the following provisions:
(a) IF OUTSTANDING REVOLVING LOANS AND LETTER OF CREDIT
OUTSTANDINGS EXCEED TOTAL GENERAL REVOLVING COMMITMENT. If on any date
(after giving effect to any other payments on such date) the sum of (i)
the aggregate outstanding principal amount of Revolving Loans PLUS (ii)
the aggregate amount of Letter of Credit Outstandings, exceeds the
Total General Revolving Commitment as then in effect, the Borrower
shall prepay on such date that principal amount of Swing Line Revolving
Loans and, after Swing Line Revolving Loans have been paid in full,
General Revolving Loans, and after General Revolving Loans have been
paid in full, Unpaid Drawings, in an aggregate amount at least equal to
such excess and conforming in the case of partial prepayments of
Revolving Loans to the requirements as to the amounts of prepayments of
Revolving Loans which are contained in section 5.1. If, after giving
effect to the prepayment of Revolving Loans and Unpaid Drawings, the
aggregate amount of Letter of Credit Outstandings exceeds the Total
General Revolving Commitment as then in effect, the Borrower shall pay
to the Administrative Agent an amount in cash and/or Cash Equivalents
equal to such excess and the Administrative Agent shall hold such
payment as security for the reimbursement obligations of the Borrower
hereunder in respect of Letters of Credit pursuant to a cash collateral
agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent and the Borrower (which shall
permit certain investments in Cash Equivalents satisfactory to the
Administrative Agent and the Borrower until the proceeds are applied to
the secured obligations).
(b) IF OUTSTANDING SWING LINE REVOLVING LOANS EXCEED THE
UNUTILIZED TOTAL GENERAL REVOLVING COMMITMENT. If on any date (after
giving effect to any other payments on such date) the aggregate
outstanding principal amount of Swing Line Revolving Loans exceeds the
Unutilized Total General Revolving Commitment as then in effect, the
Borrower shall prepay on such date Swing Line
38
<PAGE>
Revolving Loans in an aggregate principal amount, conforming to the
requirements of section 5.1 as to the amount of partial prepayments
provided for therein, at least equal to such excess.
(c) IF OUTSTANDING SWING LINE REVOLVING LOANS EXCEED THE TOTAL
SWING LINE REVOLVING COMMITMENT. If on any date (after giving effect to
any other payments on such date) the aggregate outstanding principal
amount of Swing Line Revolving Loans exceeds the Total Swing Line
Revolving Commitment as then in effect, the Borrower shall prepay on
such date Swing Line Revolving Loans in an aggregate principal amount,
conforming to the requirements of section 5.1 as to the amount of
partial prepayments provided for therein, at least equal to such
excess.
(d) IF OUTSTANDING TERM LOANS EXCEED THE TOTAL TERM LOAN
COMMITMENT. If on any date (after giving effect to any other payments
on such date) the aggregate outstanding principal amount of Term Loans
exceeds the Total Term Loan Commitment as then in effect, the Borrower
shall prepay Term Loans on such date in an aggregate principal amount,
conforming to the requirements of section 5.1 as to the amount of
partial prepayments provided for therein, at least equal to such
excess.
(e) CERTAIN PROCEEDS OF EQUITY SALES. Not later than the
Business Day following the date of the receipt by the Borrower and/or
any Subsidiary of the cash proceeds (net of underwriting discounts and
commissions, placement agent fees and other customary fees and costs
associated therewith) from any sale or issuance of equity securities by
the Borrower or any Subsidiary after the Closing Date (other than (i)
any inter-company sale to the Borrower or any Subsidiary and (ii) any
sale or issuance to management, employees (or key employees) or
directors pursuant to stock option or similar plans for the benefit of
management, employees (key employees) or directors generally), the
Borrower will prepay Term Loans in an aggregate amount, conforming to
the requirements as to the amounts of prepayments of Term Loans which
are contained in section 5.1, which is not less than (x) 100% of such
net proceeds, or (y) if less, an amount equal to the then aggregate
outstanding principal amount of the Term Loans, if any. If in
connection with any prepayment of Term Loans made pursuant to this
section 5.2(c), the Borrower desires that all or a portion of the
amount of the principal amount of such prepayment be available for
reborrowing as additional Term Loans, it shall so specify in a written
election delivered to the Administrative Agent at the time of such
prepayment.
(f) CERTAIN PROCEEDS OF ASSET SALES. If during any fiscal year
of the Borrower, the Borrower and its Subsidiaries have received
cumulative Cash Proceeds during such fiscal year from one or more Asset
Sales of at least $1,000,000, not later than the third Business Day
following the date of receipt of any Cash Proceeds in excess of such
amount, an amount, conforming to the requirements as to the amount of
partial prepayments contained in section 5.1, at least equal to 100% of
the Net Cash Proceeds then received in excess of such amount from any
Asset Sale, shall be applied as a mandatory prepayment of principal
which shall be allocated 40% to the outstanding Term Loans and 60% to
the outstanding General Revolving Loans, with any amount remaining
which cannot be so allocated because Term Loans or General Revolving
Loans are not outstanding in the amount which would be allocated
thereto being applied to the prepayment of (x) FIRST, the then
outstanding Term Loans and (y) SECOND, once no Term Loans remain
outstanding, the then outstanding General Revolving Loans; PROVIDED,
that (i) if no Default under section 10.1(a) or Event of Default shall
have occurred and be continuing, (ii) the Borrower and its Subsidiaries
have scheduled Consolidated Capital Expenditures during the following
six months, and (iii) the Borrower notifies the Administrative Agent of
the amount and nature thereof and of its intention to reinvest all or a
portion of such Net Cash Proceeds in such Consolidated Capital
Expenditures during such six month period, then no such prepayment
shall be required to the extent the Borrower so indicates that such
reinvestment will take place. If at the end of any such six month
period any portion of such Net Cash Proceeds has not been so
reinvested, the Borrower will immediately make a prepayment of the
outstanding Loans as provided above in an amount, conforming to the
requirements as to amount of prepayments contained in section 5.1, at
least equal to such remaining amount.
(g) CHANGE OF CONTROL. On the date of which a Change of
Control occurs, notwithstanding anything to the contrary contained in
this Agreement, no further Borrowings shall be made and the then
39
<PAGE>
outstanding principal amount of all Loans, if any, shall become due and
payable and shall be prepaid in full, and the Borrower shall
contemporaneously either (i) cause all outstanding Letters of Credit to
be surrendered for cancellation (any such Letters of Credit to be
replaced by letters of credit issued by other financial institutions),
or (ii) the Borrower shall pay to the Administrative Agent an amount in
cash and/or Cash Equivalents equal to 100% of the Letter of Credit
Outstandings and the Administrative Agent shall hold such payment as
security for the reimbursement obligations of the Borrower hereunder in
respect of Letters of Credit pursuant to a cash collateral agreement to
be entered into in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower (which shall permit certain
investments in Cash Equivalents satisfactory to the Administrative
Agent and the Borrower until the proceeds are applied to the secured
obligations).
(h) PARTICULAR LOANS TO BE PREPAID. With respect to each
repayment or prepayment of Loans required by this section 5.2, the
Borrower shall designate the Types of Loans which are to be prepaid and
the specific Borrowing(s) pursuant to which such repayment or
prepayment is to be made, PROVIDED that (i) the Borrower shall first so
designate all Loans that are Prime Rate Loans and Eurodollar Loans with
Interest Periods ending on the date of repayment or prepayment prior to
designating any other Eurodollar Loans for repayment or prepayment,
(ii) if the outstanding principal amount of Eurodollar Loans made
pursuant to a Borrowing is reduced below the applicable Minimum
Borrowing Amount as a result of any such repayment or prepayment, then
all the Loans outstanding pursuant to such Borrowing shall be converted
into Prime Rate Loans, and (iii) each repayment and prepayment of any
Loans made pursuant to a Borrowing shall be applied PRO RATA among such
Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Administrative Agent shall, subject to the
above, make such designation in its sole discretion with a view, but no
obligation, to minimize breakage costs owing under section 2.10. Any
repayment or prepayment of Eurodollar Loans pursuant to this section
5.2 shall in all events be accompanied by such compensation as is
required by section 2.10.
5.3. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its pro rata share) account of
the Lenders entitled thereto, not later than 11:00 A.M. (local time at the
Payment Office) on the date when due and shall be made in immediately available
funds and in lawful money of the United States of America at the Payment Office,
it being understood that written notice by the Borrower to the Administrative
Agent to make a payment from the funds in the Borrower's account at the Payment
Office shall constitute the making of such payment to the extent of such funds
held in such account. Any payments under this Agreement which are made later
than 11:00 A.M. (local time at the Payment Office) shall be deemed to have been
made on the next succeeding Business Day. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.
5.4. NET PAYMENTS. (a) All payments made by the Borrower hereunder,
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in section 5.4(c), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future United States withholding taxes. The
Borrower will furnish to the Administrative Agent within 45 days after the date
of any withholding or deduction on account of United States withholding taxes
certified copies of tax receipts, or other evidence satisfactory to the Lender,
evidencing such payment by the Borrower.
(b) Each Lender that is not a United States person (as such term is
defined in section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to provide to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the cases of a Lender that is an assignee or
transferee of an interest under this Agreement pursuant to section 12.4 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer and such Lender is in compliance with the provisions of
this section 5.4(b)), on the date of such assignment or transfer to such Lender,
(i) two accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001 (or successor forms) certifying to such Lender's entitlement
to a complete exemption from United States withholding tax with respect to
payments to be made under this Agreement, any Note or any other Credit Document,
or (ii) if the Lender is not a "bank" within the meaning of section 881(c)(3)(A)
of
40
<PAGE>
the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit H (any such certificate, a "SECTION 5.4(b)(ii) CERTIFICATE") and (y)
two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect to
payments of interest to be made under this Agreement, any Note or any other
Credit Document. In addition, each Lender agrees that from time to time after
the Effective Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect, it
will deliver to the Borrower and the Administrative Agent two new accurate
and complete original signed copies of Internal Revenue Service Form 4224 or
1001, or Form W-8 and a Section 5.4(b)(ii) Certificate, as the case may be,
and such other forms as may be required in order to confirm or establish the
entitlement of such Lender to a continued exemption from or reduction in
United States withholding tax with respect to payments under this Agreement,
any Note or any other Credit Document, or it shall immediately notify the
Borrower and the Administrative Agent of its inability to deliver any such
Form or Certificate, in which case such Lender shall not be required to
deliver any such Form or Certificate pursuant to this section 5.4(b).
(c) Notwithstanding anything to the contrary contained in section
5.4(a), the Borrower shall be entitled, to the extent it is required to do so
by law, to deduct or withhold income or other similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from interest, fees or other amounts payable hereunder for the
account of any Lender which is not a United States person (as such term is
defined in section 7701(a)(30) of the Code) for United States federal income
tax purposes and which has not provided to the Borrower such forms that
establish a complete exemption from such deduction or withholding (i) if such
Lender has not provided to the Borrower the Internal Revenue Service forms
required to be provided to the Borrower pursuant to section 5.4(b), or (ii)
in the case of a payment other than interest, to a Lender described in clause
(ii) of section 5.2(b) above, to the extent that such forms do not establish
a complete exemption from withholding of such taxes.
SECTION 6. CONDITIONS PRECEDENT.
6.1. CONDITIONS PRECEDENT AT CLOSING DATE. The obligation of the
Lenders to make Loans, and of any Letter of Credit Issuer to issue Letters of
Credit, is subject to the satisfaction of each of the following conditions on
the Closing Date:
(a) EFFECTIVENESS; NOTES. On or prior to the Closing Date,
(i) the Effective Date shall have occurred and (ii) there shall have
been delivered to the Administrative Agent for the account of each
Lender the appropriate Note or Notes executed by the Borrower, in
each case, in the amount, maturity and as otherwise provided herein.
(b) FEES, ETC. The Borrower shall have paid or caused to be
paid all fees required to be paid by it on or prior to such date
pursuant to section 4 hereof and all reasonable fees and expenses of
the Administrative Agent and of special counsel to the
Administrative Agent which are payable or reimbursable by the
Borrower in accordance with section 12.1 and have been invoiced on
or prior to such date in connection with the preparation, execution
and delivery of this Agreement and the other Credit Documents and
the consummation of the transactions contemplated hereby and thereby.
(c) OTHER CREDIT DOCUMENTS. The Credit Parties named
therein shall have duly executed and delivered and there shall be in
full force and effect, and original counterparts shall have been
delivered to the Administrative Agent, in sufficient quantities for
the Administrative Agent and the Lenders, of, (i) the Subsidiary
Guaranty (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "SUBSIDIARY
GUARANTY"), substantially in the form attached hereto as Exhibit C;
(ii) the Security Agreement (as modified, amended or supplemented
from time to time in accordance with the terms thereof and hereof,
the "SECURITY AGREEMENT"), substantially in the form attached hereto
as Exhibit D; (iii) the Pledge Agreement (as modified, amended or
supplemented from time to time in accordance with the terms thereof
and hereof, the "PLEDGE AGREEMENT"), substantially in the form
attached hereto as Exhibit
41
<PAGE>
E-1;.and (iv) the Mortgage providing for the pledge of a portion of
the outstanding shares of the Borrower's English Subsidiary,
substantially in the form attached hereto as Exhibit E-2.
(d) CORPORATE RESOLUTIONS AND APPROVALS. The Administrative
Agent shall have received, in sufficient quantity for the
Administrative Agent and the Lenders, certified copies of the
resolutions of the Board of Directors of the Borrower and each other
Credit Party, approving the Credit Documents to which the Borrower
or any such other Credit Party, as the case may be, is or may become
a party, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the
execution, delivery and performance by the Borrower or any such
other Credit Party of the Credit Documents to which it is or may
become a party.
(e) INCUMBENCY CERTIFICATES. The Administrative Agent shall
have received, in sufficient quantity for the Administrative Agent
and the Lenders, a certificate of the Secretary or an Assistant
Secretary of the Borrower and of each other Credit Party, certifying
the names and true signatures of the officers of the Borrower or
such other Credit Party, as the case may be, authorized to sign the
Credit Documents to which the Borrower or such other Credit Party is
a party and any other documents to which the Borrower or any such
other Credit Party is a party which may be executed and delivered in
connection herewith.
(f) OPINION OF COUNSEL. On the Closing Date, the Administrative
Agent shall have received an opinion, addressed to the
Administrative Agent and each of the Lenders and dated the Closing
Date, from Elias, Matz, Tiernan & Herrick LLP, special counsel to
the Borrower, substantially in the form of Exhibit F hereto and
covering such other matters incident to the transactions
contemplated hereby as the Administrative Agent may reasonably
request, such opinion to be in form and substance satisfactory to
the Administrative Agent.
(g) EXISTING CREDIT AGREEMENT. Contemporaneously with the
initial Borrowing hereunder, the Borrower shall have terminated the
commitments of the lenders under the existing financing arrangements
with NCB (or any of its Affiliates), shall have prepaid all
borrowings thereunder, shall have made effective provision
satisfactory to the Administrative Agent for the termination, or
assignment to the Collateral Agent, of the liens and security
thereunder, and if required in connection with such termination,
made effective provision for any letters of credit issued thereunder
to be supported or replaced by Letters of Credit issued hereunder.
(h) RECORDATION OF SECURITY DOCUMENTS, DELIVERY OF COLLATERAL,
TAXES, ETC. The Security Documents (or proper notices or financing
statements in respect thereof) shall have been duly recorded,
published and filed in such manner and in such places as is required
by law to establish, perfect, preserve and protect the rights and
security interests of the parties thereto and their respective
successors and assigns, all collateral items required to be
physically delivered to the Collateral Agent thereunder shall have
been so delivered, accompanied by any appropriate instruments of
transfer, and all taxes, fees and other charges then due and payable
in connection with the execution, delivery, recording, publishing
and filing of such instruments and the issue and delivery of the
Notes shall have been paid in full.
(i) EVIDENCE OF INSURANCE. The Collateral Agent shall have
received certificates of insurance and other evidence, satisfactory
to it, of compliance with the insurance requirements of this
Agreement and the Security Documents.
(j) SEARCH REPORTS. The Administrative Agent shall have
received completed requests for information on Form UCC-11, or
search reports from one or more commercial search firms acceptable
to the Administrative Agent, listing all of the effective financing
statements filed against any Credit Party which is a party to the
Security Agreement in any jurisdiction in which such Credit Party
maintains an office or in which any Collateral of such Credit Party
is located, together with copies of such financing statements.
42
<PAGE>
(k) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incidental to the transactions
contemplated hereby shall be satisfactory in substance and form to
the Administrative Agent and the Lenders and the Administrative
Agent and its special counsel and the Lenders shall have received
all such counterpart originals or certified or other copies of such
documents as the Administrative Agent or its special counsel or any
Lender may reasonably request.
6.2. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligations of
the Lenders to make each Loan and/or of a Letter of Credit Issuer to issue
each Letter of Credit is subject, at the time thereof, to the satisfaction of
the following conditions:
(a) NOTICE OF BORROWING, ETC. The Administrative Agent shall
have received a Notice of Borrowing meeting the requirements of
section 2.3 with respect to the incurrence of Loans or a Letter of
Credit Request meeting the requirement of section 3.2 with respect
to the issuance of a Letter of Credit.
(b) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
each Credit Event and also after giving effect thereto, (i) there
shall exist no Default or Event of Default and (ii) all
representations and warranties of the Credit Parties contained
herein or in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such
representations and warranties had been made on and as of the date
of such Credit Event, except to the extent that such representations
and warranties expressly relate to an earlier specified date, in
which case such representations and warranties shall have been true
and correct in all material respects as of the date when made.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to each of the Lenders that all
of the applicable conditions specified in section 6.1 and/or 6.2, as the case
may be, exist as of that time. All of the certificates, legal opinions and
other documents and papers referred to in this section 6, unless otherwise
specified, shall be delivered to the Administrative Agent for the account of
each of the Lenders and, except for the Notes, in sufficient counterparts for
each of the Lenders, and the Administrative Agent will promptly distribute to
the Lenders their respective Notes and the copies of such other certificates,
legal opinions and documents.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to
make the Loans, and/or to issue and/or to participate in the Letters of
Credit provided for herein, the Borrower makes the following representations
and warranties to, and agreements with, the Lenders, all of which shall
survive the execution and delivery of this Agreement and each Credit Event:
7.1. CORPORATE STATUS, ETC. Each of the Borrower and its
Subsidiaries (i) is a duly organized or formed and validly existing
corporation, partnership or limited liability company, as the case may be, in
good standing under the laws of the jurisdiction of its formation and has the
corporate, partnership or limited liability company power and authority, as
applicable, to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage, and (ii) has duly
qualified and is authorized to do business in all jurisdictions where it is
required to be so qualified except where the failure to be so qualified would
not have a Material Adverse Effect.
7.2. SUBSIDIARIES. Annex II hereto lists, as of the date
hereof, each Subsidiary of the Borrower (and the direct and indirect
ownership interest of the Borrower therein).
7.3. CORPORATE POWER AND AUTHORITY, ETC. Each Credit Party has the
corporate or other organizational power and authority to execute, deliver and
carry out the terms and provisions of the Credit Documents to which it is
party and has taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Credit Documents to
which it is party. Each Credit Party has duly executed and delivered each
Credit Document to which it is party and each Credit Document to which it is
party constitutes the legal, valid and binding agreement or obligation of
such Credit Party enforceable in accordance with its terms, except to the
extent
43
<PAGE>
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally
affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).
7.4. NO VIOLATION. Neither the execution, delivery and performance
by any Credit Party of the Credit Documents to which it is party nor
compliance with the terms and provisions thereof (i) will contravene any
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality applicable to such Credit
Party or its properties and assets, (ii) will conflict with or result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or
the obligation to create or impose) any Lien (other than the Liens created
pursuant to the Security Documents) upon any of the property or assets of
such Credit Party pursuant to the terms of any promissory note, bond,
debenture, indenture, mortgage, deed of trust, credit or loan agreement, or
any other material agreement or other instrument, to which such Credit Party
is a party or by which it or any of its property or assets are bound or to
which it may be subject, or (iii) will violate any provision of the
certificate or articles of incorporation, code of regulations or by-laws, or
other charter documents of such Credit Party.
7.5. GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with,
or exemption by, any foreign or domestic governmental or public body or
authority, or any subdivision thereof, is required to authorize or is
required as a condition to (i) the execution, delivery and performance by any
Credit Party of any Credit Document to which it is a party, or (ii) the
legality, validity, binding effect or enforceability of any Credit Document
to which any Credit Party is a party, except the filing and recording of
financing statements and other documents necessary in order to perfect the
Liens created by the Security Documents
7.6. LITIGATION. There are no actions, suits or proceedings pending
or, to, the knowledge of the Borrower, threatened with respect to the
Borrower or any of its Subsidiaries (i) that have, or could reasonably be
expected to have, a Material Adverse Effect, with the possible exception of
those matters identified in a letter from the Borrower to the Lenders
delivered prior to the Effective Date which makes reference to this section
7.6, or (ii) which question the validity or enforceability of any of the
Credit Documents, or of any action to be taken by any Credit Party pursuant
to any of the Credit Documents.
7.7. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The proceeds of (i)
any Term Loans shall be used solely to finance Permitted Acquisitions; and
(ii) all Revolving Loans shall be utilized to retire any Indebtedness which
is to be retired as of the Closing Date as provided in section 6.1, to
finance the Initial Acquisitions, and for general corporate purposes
(including working capital) not inconsistent with the requirements of this
Agreement.
(b) No part of the proceeds of any Credit Event will be used
directly or indirectly to purchase or carry Margin Stock, or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock, in
violation of the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock. At no time would more than 25% of the value of the assets of
the Borrower or of the Borrower and its consolidated Subsidiaries that are
subject to any "arrangement" (as such term is used in section 221.2(g) of
such Regulation U) hereunder be represented by Margin Stock.
7.8. FINANCIAL STATEMENTS, ETC. (a) The Borrower has furnished to
the Lenders and the Administrative Agent complete and correct copies of (i)
the audited consolidated balance sheets of the Borrower and its consolidated
subsidiaries as of December 31, 1996, and December 31, 1995, and the related
audited consolidated statements of income, shareholders' equity, and cash
flows for the fiscal years then ended, accompanied by the unqualified report
thereon of the Borrower's independent accountants, as contained in the Form
10-K Annual Report of the Borrower filed with the SEC; and (ii) the unaudited
condensed consolidated balance sheets of the Borrower and its consolidated
subsidiaries as of September 30, 1997, and the related unaudited condensed
consolidated statements of income and of cash flows of the Borrower and its
consolidated subsidiaries for the fiscal quarter then ended, as contained in
the Form 10-Q Quarterly Report of the Borrower filed with the SEC. All such
financial statements have been prepared in accordance with GAAP, consistently
applied (except as stated therein), and fairly present the financial position
44
<PAGE>
of the Borrower and its consolidated subsidiaries as of the respective dates
indicated and the consolidated results of their operations and cash flows for
the respective periods indicated, subject in the case of any such financial
statements which are unaudited, to normal audit adjustments, none of which
will involve a Material Adverse Effect.
(b) The Borrower has received consideration which is the reasonable
equivalent value of the obligations and liabilities that the Borrower has
incurred to the Administrative Agent and the Lenders. The Borrower now has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage and is now solvent and able
to pay its debts as they mature and the Borrower, as of the Closing Date,
owns property having a value, both at fair valuation and at present fair
salable value, greater than the amount required to pay the Borrower's debts;
and the Borrower is not entering into the Credit Documents with the intent to
hinder, delay or defraud its creditors. Without limitation of the foregoing,
on and as of the Closing Date, and after giving effect to all Indebtedness
incurred and to be incurred by the Borrower and its Subsidiaries in
connection herewith, (i) the sum of the assets, at a fair valuation, of the
Borrower will exceed its debts, (ii) the Borrower will not have incurred or
intended to, or believe that it will, incur debts beyond its ability to pay
such debts as such debts mature and (iii) the Borrower will have sufficient
capital with which to conduct its business. For purposes of this section
7.8(b), "DEBT" means any liability on a claim, and "CLAIM" means (x) right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (y) right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
(c) The Borrower has delivered or caused to be delivered to the
Lenders prior to the execution and delivery of this Agreement (i) a copy of
the Borrower's Report on Form 10-K as filed (without Exhibits) with the SEC
for its fiscal year ended December 31, 1996, which contains a general
description of the business and affairs of the Borrower and its Subsidiaries,
(ii) a confidential information brochure dated November 1997 prepared by the
Administrative Agent (with assistance from the Borrower) which contains
information with respect to the business, properties and operations of the
Borrower and its Subsidiaries and the initial Acquisitions (the "CONFIDENTIAL
INFORMATION MEMORANDUM"), and (iii) confidential financial projections
prepared by management of the Borrower for the Borrower and its Subsidiaries
and with respect to the Initial Acquisitions, which are included as Tab VI of
the Confidential Information Memorandum (the "FINANCIAL PROJECTIONS"). The
Financial Projections were prepared on behalf of the Borrower in good faith
after taking into account the existing and historical levels of business
activity of the Borrower and its Subsidiaries, historical financial
information with respect to the properties and business to be acquired
pursuant to the Initial Acquisitions, as supplied by the sellers, known
trends, including general economic trends, and other information, assumptions
and estimates considered by management of the Borrower and its Subsidiaries
to be pertinent thereto, taking into account the fact that such management is
not intimately familiar with the properties and business acquired pursuant to
the Initial Acquisitions and that management's knowledge is limited to the
information disclosed to them by the sellers. The Financial Projections were
considered by management of the Borrower, as of such date of preparation, to
be reasonable, based upon the assumptions presented therewith; PROVIDED, that
no representation or warranty is made as to impact of future general economic
conditions or as to whether the Borrower's projected consolidated results as
set forth in the Financial Projections will actually be achieved or realized.
No facts are known to the Borrower at the date hereof which, if reflected in
the Financial Projections, would result in a material adverse change in the
assets, liabilities, results of operations or cash flows reflected therein.
7.9. NO MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has
been no change in the condition, business or affairs of the Borrower and its
Subsidiaries taken as a whole, or their properties and assets considered as
an entirety, except for changes, none of which, individually or in the
aggregate, has had or could reasonably be expected to have, a Material
Adverse Effect.
7.10. TAX RETURNS AND PAYMENTS. Each of the Borrower and each of its
Subsidiaries has filed all federal income tax returns and all other material
tax returns, domestic and foreign, required to be filed by it and has paid
all material taxes and assessments payable by it which have become due, other
than those not yet delinquent and except for those contested in good faith.
The Borrower and each of its Subsidiaries has established on its books such
charges, accruals and reserves in respect of taxes, assessments, fees and
other governmental charges for all fiscal
45
<PAGE>
periods as are required by GAAP. The Borrower knows of no proposed assessment
for additional federal, foreign or state taxes for any period, or of any
basis therefor, which, individually or in the aggregate, taking into account
such charges, accruals and reserves in respect thereof as the Borrower and
its Subsidiaries have made, could reasonably be expected to have a Material
Adverse Effect.
7.11. TITLE TO PROPERTIES, ETC. The Borrower and each of its
Subsidiaries has good and marketable title, in the case of real property, and
good title (or valid leasehold interests, in the case of any leased
property), in the case of all other property, to all of its properties and
assets free and clear of Liens other than Liens permitted by section 9.3. The
interests of the Borrower and each of its Subsidiaries in the properties
reflected in the most recent balance sheet referred to in section 7.8, taken
as a whole, were sufficient, in the judgment of the Borrower, as of the date
of such balance sheet for purposes of the ownership and operation of the
businesses conducted by the Borrower and such Subsidiaries.
7.12. LAWFUL OPERATIONS, ETC. The Borrower and each of its
Subsidiaries (i) holds all necessary federal, state and local governmental
licenses, registrations, certifications, permits and authorizations necessary
to conduct its business, and (ii) is in compliance with all material
requirements imposed by law, regulation or rule, whether federal, state or
local, which are applicable to it, its operations, or its properties and
assets, including without limitation, applicable requirements of
Environmental Laws, except for any failure to obtain and maintain in effect,
or noncompliance, which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
7.13. ENVIRONMENTAL MATTERS. (a) The Borrower and each of its
Subsidiaries is, to the actual knowledge of the senior management officers of
the Borrower, in compliance with all Environmental Laws governing its
business except to the extent that any such failure to comply (together with
any resulting penalties, fines or forfeitures) would not reasonably be
expected to have a Material Adverse Effect. To the actual knowledge of the
senior management officers of the Borrower, all licenses, permits,
registrations or approvals required for the business of the Borrower and each
of its Subsidiaries, as conducted as of the Closing Date, under any
Environmental Law have been secured and the Borrower and each of its
Subsidiaries is in substantial compliance therewith, except for such
licenses, permits, registrations or approvals the failure to secure or to
comply therewith is not reasonably likely to have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has received written notice,
or otherwise knows, that it is in any respect in noncompliance with, breach
of or default under any applicable writ, order, judgment, injunction, or
decree to which the Borrower or such Subsidiary is a party or which would
affect the ability of the Borrower or such Subsidiary to operate any real
property and no event has occurred and is continuing which, with the passage
of time or the giving of notice or both, would constitute noncompliance,
breach of or default thereunder, except in each such case, such
noncompliance, breaches or defaults as would not reasonably be expected to,
in the aggregate, have a Material Adverse Effect. There are, as of the
Closing Date, no Environmental Claims pending or, to the actual knowledge of
the senior management officers of the Borrower, threatened wherein an
unfavorable decision, ruling or finding would reasonably be expected to have
a Material Adverse Effect. There are no facts, circumstances, conditions or
occurrences on any Real Property now or at any time owned, leased or operated
by the Borrower or any of its Subsidiaries or on any property adjacent to any
such Real Property, which are known by the Borrower or as to which the
Borrower or any such Subsidiary has received written notice, that (in the
judgment of the senior management officers of the Borrower) could reasonably
be expected (i) to form the basis of an Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Property of the Borrower or
any of its Subsidiaries, or (ii) to cause such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability of such
Real Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
(b) To the actual knowledge of the senior management officers of the
Borrower, Hazardous Materials have not at any time been (i) generated, used,
treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any such Real
Property, in each case where such occurrence or event is not in compliance
with Environmental Laws and is reasonably likely to have a Material Adverse
Effect.
46
<PAGE>
7.14. COMPLIANCE WITH ERISA. Compliance by the Borrower with the
provisions hereof and Credit Events contemplated hereby will not involve any
prohibited transaction within the meaning of ERISA or section 4975 of the
Code. The Borrower and each of its Subsidiaries, (i) has fulfilled all
obligations under minimum funding standards of ERISA and the Code with
respect to each Plan that is not a Multiemployer Plan or a Multiple Employer
Plan, (ii) has satisfied all respective contribution obligations in respect
of each Multiemployer Plan and each Multiple Employer Plan, (iii) is in
compliance in all material respects with all other applicable provisions of
ERISA and the Code with respect to each Plan, each Multiemployer Plan and
each Multiple Employer Plan, and (iv) has not incurred any liability under
the Title IV of ERISA to the PBGC with respect to any Plan, any Multiemployer
Plan, any Multiple Employer Plan, or any trust established thereunder. No
Plan or trust created thereunder has been terminated, and there have been no
Reportable Events, with respect to any Plan or trust created thereunder or
with respect to any Multiemployer Plan or Multiple Employer Plan, which
termination or Reportable Event will or could result in the termination of
such Plan, Multiemployer Plan or Multi Employer Plan and give rise to a
material liability of the Borrower or any ERISA Affiliate in respect thereof.
Neither the Borrower nor any ERISA Affiliate is at the date hereof, or has
been at any time within the two years preceding the date hereof, an employer
required to contribute to any Multiemployer Plan or Multi Employer Plan, or a
"contributing sponsor" (as such term is defined in section 4001 of ERISA) in
any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor
any ERISA Affiliate has any contingent liability with respect to any
post-retirement "welfare benefit plan" (as such term is defined in ERISA)
except as has been disclosed to the Lenders in writing.
7.15. INTELLECTUAL PROPERTY, ETC. The Borrower and each of its
Subsidiaries has obtained or has the right to use all material patents,
trademarks, servicemarks, trade names, copyrights, licenses and other rights
with respect to the foregoing necessary for the present and planned future
conduct of its business, without any known conflict with the rights of
others, EXCEPT for such patents, trademarks, servicemarks, trade names,
copyrights, licenses and rights, the loss of which, and such conflicts, which
in any such case individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
7.16. INVESTMENT COMPANY ACT, ETC. Neither the Borrower nor any of
its Subsidiaries is subject to regulation with respect to the creation or
incurrence of Indebtedness under the Investment Company Act of 1940, as
amended, the Interstate Commerce Act, as amended, the Federal Power Act, as
amended, the Public Utility Holding Company Act of 1935, as amended, or any
applicable state public utility law.
7.17. BURDENSOME CONTRACTS; LABOR RELATIONS. Neither the Borrower
nor any of its Subsidiaries (i) is subject to any burdensome contract,
agreement, corporate restriction, judgment, decree or order, (ii) is a party
to any labor dispute affecting any bargaining unit or other group of
employees generally, (iii) is subject to any material strike, slow down,
workout or other concerted interruptions of operations by employees of the
Borrower or any Subsidiary, whether or not relating to any labor contracts,
(iv) is subject to any significant pending or, to the knowledge of the
Borrower, threatened, unfair labor practice complaint, before the National
Labor Relations Board, and (v) is subject to any significant pending or, to
the knowledge of the Borrower, threatened, grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement, (vi) is subject to any significant pending or, to the knowledge of
the Borrower, threatened, significant strike, labor dispute, slowdown or
stoppage, or (vii) is, to the knowledge of the Borrower, involved or subject
to any union representation organizing or certification matter with respect
to the employees of the Borrower or any of its Subsidiaries, EXCEPT (with
respect to any matter specified in any of the above clauses), for such
matters as, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
7.18. EXISTING INDEBTEDNESS. Annex III sets forth a true and
complete list, as of the date or dates set forth therein, of all Indebtedness
of the Borrower and each of its Subsidiaries, on a consolidated basis, which
(i) has an outstanding principal amount of at least $250,000, or may be
incurred pursuant to existing commitments or lines of credit, or (ii) is
secured by any Lien on any property of the Borrower or any Subsidiary, and
which will be outstanding on the Closing Date after giving effect to the
initial Borrowing hereunder, other than the Indebtedness created under the
Credit Documents (all such Indebtedness, whether or not in a principal amount
meeting such threshold and required to be so listed on Annex III, herein the
"EXISTING INDEBTEDNESS"). The Borrower has provided to the Administrative
Agent prior to the date of execution hereof true and complete copies (or
summary descriptions)
47
<PAGE>
of all agreements and instruments governing the Indebtedness listed on Annex
III (the "EXISTING INDEBTEDNESS AGREEMENTS").
7.19. SECURITY INTERESTS. Once executed and delivered, and until
terminated in accordance with the terms thereof, each of the Security
Documents creates, as security for the obligations purported to be secured
thereby, a valid and enforceable perfected security interest in and Lien on
all of the Collateral subject thereto from time to time, in favor of the
Collateral Agent for the benefit of the Secured Creditors referred to in the
Security Documents, subject to no other Liens (except Permitted Liens). No
filings or recordings are required in order to perfect the security interests
created under any Security Document except for filings or recordings required
in connection with any such Security Document which shall have been made, or
for which satisfactory arrangements have been made, upon or prior to the
execution and delivery thereof. All recording, stamp, intangible or other
similar taxes required to be paid by any person under applicable legal
requirements or other laws applicable to the property encumbered by the
Security Documents in connection with the execution, delivery, recordation,
filing, registration, perfection or enforcement thereof have been paid.
7.20. TRUE AND COMPLETE DISCLOSURE. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to the Administrative Agent or
any Lender for purposes of or in connection with this Agreement or any
transaction contemplated herein, other than the Financial Projections (as to
which representations are made only as provided in section 7.8), is, and all
other such factual information (taken as a whole) hereafter furnished by or
on behalf of such person in writing to any Lender will be, true and accurate
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary
to make such information (taken as a whole) not misleading at such time in
light of the circumstances under which such information was provided, except
that any such future information consisting of financial projections prepared
by management of the Borrower is only represented herein as being based on
good faith estimates and assumptions believed by such persons to be
reasonable at the time made, it being recognized by the Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may
differ materially from the projected results. As of the Effective Date, there
is no fact known to the Borrower or any of its Subsidiaries which has, or
could reasonably be expected to have, a Material Adverse Effect which has not
theretofore been disclosed in writing to the Lenders.
SECTION 8. AFFIRMATIVE COVENANTS.
The Borrower hereby covenants and agrees that so long as this
Agreement is in effect and until such time as the Total Commitment has been
terminated, no Notes are outstanding and the Loans, together with interest,
Fees and all other Obligations hereunder, have been paid in full:
8.1. REPORTING REQUIREMENTS. The Borrower will furnish to each
Lender and the Administrative Agent:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event within 90 days after the close of each fiscal year of the
Borrower, the consolidated and consolidating balance sheets of the
Borrower and its consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated and consolidating
statements of income, of stockholder's equity and of cash flows for
such fiscal year, in each case setting forth comparative figures for
the preceding fiscal year, all in reasonable detail and accompanied
by the opinion with respect to such consolidated financial
statements of independent public accountants of recognized national
standing selected by the Borrower, which opinion shall be
unqualified and shall (i) state that such accountants audited such
consolidated financial statements in accordance with generally
accepted auditing standards, that such accountants believe that such
audit provides a reasonable basis for their opinion, and that in
their opinion such consolidated financial statements present fairly,
in all material respects, the consolidated financial position of the
Borrower and its consolidated subsidiaries as at the end of such
fiscal year and the consolidated results of their operations and
cash flows for such fiscal year in conformity with generally
accepted accounting principles, or (ii) contain such statements as
are customarily
48
<PAGE>
included in unqualified reports of independent accountants in
conformity with the recommendations and requirements of the American
Institute of Certified Public Accountants (or any successor
organization).
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in
any event within 45 days after the close of each of the first three
quarterly accounting periods in each fiscal year of the Borrower,
the unaudited condensed consolidated balance sheets of the Borrower
and its consolidated Subsidiaries as at the end of such quarterly
period and the related unaudited condensed consolidated statements
of income and of cash flows for such quarterly period, and setting
forth, in the case of such unaudited consolidated statements of
income and of cash flows, comparative figures for the related
periods in the prior fiscal year, and which consolidated financial
statements shall be certified on behalf of the Borrower by the Chief
Financial Officer or other Authorized Officer of the Borrower,
subject to changes resulting from normal year-end audit adjustments.
(c) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the
delivery of the financial statements provided for in sections 8.1(a)
and (b), a certificate on behalf of the Borrower of the Chief
Financial Officer or other Authorized Officer of the Borrower to the
effect that, to the best knowledge of the Borrower, no Default or
Event of Default exists or, if any Default or Event of Default does
exist, specifying the nature and extent thereof, which certificate
shall set forth the calculations required to establish compliance
with the provisions of sections 9.4(b), 9.5(r), 9.7. 9.8, 9.9, 9.10
and 9.11 of this Agreement and identify in reasonable detail any
financial adjustments included in such calculations to take into
account the acquisition or disposition of any business which is
required or permitted to be taken into account hereunder in
connection with such calculations.
(d) BUDGETS AND FORECASTS. Not later than 30 days prior to the
commencement of any fiscal year of the Borrower and its
Subsidiaries, a confidential consolidated budget in reasonable
detail for each of the four fiscal quarters of such fiscal year, and
(if and to the extent prepared by management of the Borrower) for
any subsequent fiscal years, as customarily prepared by management
for its internal use, setting forth, with appropriate discussion,
the forecasted balance sheet, income statement, operating cash flows
and capital expenditures of the Borrower and its Subsidiaries for
the period covered thereby, and the principal assumptions upon which
forecasts and budget are based.
(e) NOTICE OF DEFAULT, LITIGATION OR CERTAIN MATTERS INVOLVING
MAJOR CUSTOMERS OR SUPPLIERS. Promptly, and in any event within
three Business Days, in the case of clause (i) below, or five
Business Days, in the case of clause (ii) or (iii) below, after the
Borrower or any of its Material Subsidiaries obtains knowledge
thereof, notice of
(i) the occurrence of any event which constitutes
a Default or Event of Default, which notice shall specify
the nature thereof, the period of existence thereof and
what action the Borrower proposes to take with respect
thereto,
(ii) any litigation or governmental or regulatory
proceeding pending against the Borrower or any of its
Material Subsidiaries which is likely to have a Material
Adverse Effect or a material adverse effect on the ability
of the Borrower to perform its obligations hereunder or
under any other Credit Document, and
(iii) any significant adverse change (in the
Borrower's reasonable judgment) in the Borrower's or any
Subsidiary's relationship with, or any significant event or
circumstance which is in the Borrower's reasonable judgment
likely to adversely affect the Borrower's or any
Subsidiary's relationship with, (A) any customer (or
related group of customers) representing more than 10% of
the Borrower's consolidated revenues during its most recent
fiscal year, or (B) any supplier which is significant to
the Borrower and its Subsidiaries considered as an entirety.
(f) ERISA. Promptly, and in any event within 10 days after
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
knows of the occurrence of any of the following, the Borrower will
49
<PAGE>
deliver to each of the Lenders a certificate on behalf of the
Borrower of an Authorized Officer of the Borrower setting forth the
full details as to such occurrence and the action, if any, that the
Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to
be given to or filed with or by the Borrower, the Subsidiary, the
ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto:
(i) that a Reportable Event has occurred with
respect to any Plan;
(ii) the institution of any steps by the Borrower,
any ERISA Affiliate, the PBGC or any other person to
terminate any Plan;
(iii) the institution of any steps by the Borrower
or any ERISA Affiliate to withdraw from any Plan;
(iv) the institution of any steps by the Borrower
or any Subsidiary to withdraw from any Multiemployer Plan or
Multiple Employer Plan, if such withdrawal could result in
withdrawal liability (as described in Part 1 of Subtitle E of
Title IV of ERISA) in excess of $1,000,000;
(v) a non-exempt "prohibited transaction" within
the meaning of section 406 of ERISA in connection with any
Plan;
(vi) that a Plan has an Unfunded Current
Liability exceeding $1,000,000;
(vii) any material increase in the contingent
liability of the Borrower or any Subsidiary with respect to
any post-retirement welfare liability; or
(viii) the taking of any action by, or the
threatening of the taking of any action by, the Internal
Revenue Service, the Department of Labor or the PBGC with
respect to any of the foregoing.
(g) ENVIRONMENTAL MATTERS. Promptly upon, and in any event
within 10 Business Days after, an officer of the Borrower obtains
actual knowledge thereof, notice of any of the following
environmental matters which involves any reasonable likelihood (in
the Borrower's reasonable judgment) of resulting in a Material
Adverse Effect:
(i) any pending or threatened (in writing)
Environmental Claim against the Borrower or any of its
Subsidiaries or any Real Property owned or operated by the
Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising
from any Real Property owned or operated by the Borrower or
any of its Subsidiaries that results in material
noncompliance by the Borrower or any of its Subsidiaries
with any applicable Environmental Law;
(iii) any condition or occurrence on any Real
Property owned, leased or operated by the Borrower or any
of its Subsidiaries that could reasonably be expected to
cause such Real Property to be subject to any restrictions
on the ownership, occupancy, use or transferability by the
Borrower or any of its Subsidiaries of such Real Property
under any Environmental Law; and
(iv) the taking of any removal or remedial action
in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned, leased or
operated by the Borrower or any of its Subsidiaries as
required by any Environmental Law or any governmental or
other administrative agency.
50
<PAGE>
All such notices shall describe in reasonable detail the nature of the
Environmental Claim and the Borrower's or such Subsidiary's response
thereto.
(h) AUDITORS' INTERNAL CONTROL COMMENT LETTERS, ETC. Promptly
upon receipt thereof, a copy of each letter or memorandum commenting on
internal accounting controls and/or accounting or financial reporting
policies followed by the Borrower and/or any of its Subsidiaries, which
is submitted to the Borrower by its independent accountants in
connection with any annual or interim audit made by them of the books
of the Borrower or any of its Subsidiaries.
(i) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly upon
transmission thereof or other filing with the SEC, copies of all
registration statements (other than the exhibits thereto and any
registration statement on Form S-8 or its equivalent) and annual,
quarterly or current reports that the Borrower or any of its
Subsidiaries files with the SEC.
(j) OTHER INFORMATION. With reasonable promptness, such other
information or documents (financial or otherwise) relating to the
Borrower or any of its Subsidiaries as any Lender may reasonably
request from time to time.
8.2. BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will cause
each of its Subsidiaries to, (i) keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Borrower or such Subsidiaries, as the case may
be, in accordance with GAAP; and (ii) permit, upon at least five Business Days'
notice to the Chief Financial Officer or any other Authorized Officer of the
Borrower, officers and designated representatives of the Administrative Agent or
any of the Lenders to visit and inspect any of the properties or assets of the
Borrower and any of its Subsidiaries in whomsoever's possession (but only to the
extent the Borrower or such Subsidiary has the right to do so to the extent in
the possession of another person), to examine the books of account and other
records of the Borrower and any of its Subsidiaries, to make copies thereof and
take extracts therefrom, and to discuss the affairs, finances and accounts of
the Borrower and of any of its Subsidiaries with, and be advised as to the same
by, its and their officers and independent accountants and independent
actuaries, if any, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or any of the Lenders may request
without disrupting the continuation of the business operations of the Borrower
and its Subsidiaries.
8.3. INSURANCE. (a) The Borrower will, and will cause each of its
Subsidiaries to, (i) maintain insurance coverage by such insurers and in such
forms and amounts and against such risks as are generally consistent with the
insurance coverage maintained by the Borrower and its Subsidiaries at the date
hereof, and (ii) promptly upon any Lender's written request, furnish to such
Lender such information about such insurance as such Lender may from time to
time reasonably request, which information shall be prepared in form and detail
satisfactory to such Lender and certified by an Authorized Officer of the
Borrower.
(b) The Borrower will, and will cause each of its Subsidiaries which is
a Credit Party to, at all times keep their respective property which is subject
to the Lien of any Security Document insured in favor of the Collateral Agent
and any applicable Credit Party, and all policies or certificates (or certified
copies thereof) with respect to such insurance (and any other insurance
maintained by the Borrower or any such Subsidiary) (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee
(with respect to Collateral) or, to the extent permitted by applicable law, as
an additional insured), (ii) shall state that such insurance policies shall not
be canceled without 30 days' prior written notice thereof (or 10 days' prior
written notice in the case of cancellation for the non-payment of premiums) by
the respective insurer to the Collateral Agent, (iii) shall provide that the
respective insurers irrevocably waive any and all rights of subrogation with
respect to the Collateral Agent and the Lenders, and (iv) shall in the case of
any such certificates or endorsements in favor of the Collateral Agent, be
delivered to or deposited with the Collateral Agent. In no event shall the
Borrower be required to deposit the actual insurance policies with the
Collateral Agent. The Administrative Agent shall deliver copies of any
certificates of insurance to a Lender upon such Lender's request.
51
<PAGE>
(c) If the Borrower or any of its Subsidiaries shall fail to maintain
all insurance in accordance with this section 8.3, or if the Borrower or any of
its Subsidiaries shall fail to so endorse and deliver or deposit all
endorsements or certificates with respect thereto, the Administrative Agent
and/or the Collateral Agent shall have the right (but shall be under no
obligation), upon prior notice to the Borrower, to procure such insurance and
the Borrower agrees to reimburse the Administrative Agent or the Collateral
Agent, as the case may be, on demand, for all costs and expenses of procuring
such insurance.
8.4. PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries; PROVIDED that neither the Borrower nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP. Without limiting
the generality of the foregoing, the Borrower will, and will cause each of its
Subsidiaries to, pay in full all of its wage obligations to its employees in
accordance with the Fair Labor Standards Act (29 U.S.C. sections 206-207) and
any comparable provisions of applicable law.
8.5. CORPORATE FRANCHISES. The Borrower will do, and will cause each of
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its corporate or other organizational
existence, rights, authority and franchises, PROVIDED that nothing in this
section 8.5 shall be deemed to prohibit (i) any transaction permitted by section
9.2; (ii) the termination of existence of any Subsidiary if (A) the Borrower
determines that such termination is in its best interest and (B) such
termination is not adverse in any material respect to the Lenders; or (iii) the
loss of any rights, authorities or franchises if the loss thereof, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
8.6. GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used or
useful in its business in whomsoever's possession they may be, are kept in good
repair, working order and condition, normal wear and tear excepted, and that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements, thereto, to the extent and in the manner customary for
companies in similar businesses.
8.7. COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will cause
each of its Subsidiaries to, comply, in all material respects, with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, other than those (i)
being contested in good faith by appropriate proceedings, as to which adequate
reserves are established to the extent required under GAAP, and (ii) the
noncompliance with which would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse effect on the
ability of the Borrower to perform its obligations under any Credit Document.
8.8. COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limitation of
the covenants contained in section 8.7 hereof:
(a) The Borrower will, and will cause each of its Subsidiaries
to, (i) comply, in all material respects, with all Environmental Laws
applicable to the ownership, lease or use of all Real Property now or
hereafter owned, leased or operated by the Borrower or any of its
Subsidiaries, and promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, except for such
noncompliance as would not have, and which would not be reasonably
expected to have, a Material Adverse Effect or a material adverse
effect on the ability of the Borrower to perform its obligations under
any Credit Document; and (ii) keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such
Environmental Laws which are not permitted under section 9.3.
52
<PAGE>
(b) Without limitation of the foregoing, if the Borrower or
any of its Subsidiaries shall generate, use, treat, store, release or
dispose of, or permit the generation, use, treatment, storage, release
or disposal of, Hazardous Materials on any Real Property now or
hereafter owned, leased or operated by the Borrower or any of its
Subsidiaries, or transport or permit the transportation of Hazardous
Materials to or from any such Real Property, any such action shall be
effected only in the ordinary course of business and in any event in
compliance, in all material respects, with all Environmental Laws
applicable thereto, except for such noncompliance as would not have,
and which would not be reasonably expected to have, a Material Adverse
Effect or a material adverse effect on the ability of the Borrower to
perform its obligations under any Credit Document.
(c) If required to do so under any applicable order of any
governmental agency, the Borrower will undertake, and cause each of its
Subsidiaries to undertake, any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Borrower or any of
its Subsidiaries in accordance with, in all material respects, the
requirements of all applicable Environmental Laws and in accordance
with, in all material respects, such orders of all governmental
authorities, except (i) to the extent that the Borrower or such
Subsidiary is contesting such order in good faith and by appropriate
proceedings and for which adequate reserves have been established to
the extent required by GAAP, or (ii) for such noncompliance as would
not have, and which would not be reasonably expected to have, a
Material Adverse Effect or a material adverse effect on the ability of
the Borrower to perform its obligations under any Credit Document.
(d) At the written request of the Administrative Agent or the
Required Lenders, which request shall specify in reasonable detail the
basis therefor, at any time and from time to time after the Lenders
receive notice under section 8.1(g) for any Environmental Claim
involving potential expenditures by the Borrower or any of its
Subsidiaries in excess of $1,000,000 in the aggregate for any Real
Property, the Borrower will provide, at its sole cost and expense, an
environmental site assessment report concerning any such Real Property
now or hereafter owned, leased or operated by the Borrower or any of
its Subsidiaries, prepared by an environmental consulting firm
reasonably acceptable to the Administrative Agent, indicating the
presence or absence of Hazardous Materials and the potential cost of
any removal or a remedial action in connection with any Hazardous
Materials on such Real Property. If the Borrower fails to provide the
same within 90 days after such request was made, the Administrative
Agent may order the same, and the Borrower shall grant and hereby
grants, to the Administrative Agent and the Lenders and their agents,
access to such Real Property and specifically grants the Administrative
Agent and the Lenders an irrevocable non-exclusive license, subject to
the rights of tenants, to undertake such an assessment, all at the
Borrower's expense, but in a manner which shall not disrupt the
continuation of normal business activities of the Borrower and its
Subsidiaries.
8.9. FISCAL YEARS, FISCAL QUARTERS. The Borrower will, for consolidated
financial reporting purposes, continue to use December 31 as the end of its
fiscal year and March 31, June 30, September 30 and December 31 as the end of
its fiscal quarters. If the Borrower shall change any of its Subsidiaries'
fiscal years or fiscal quarters (other than the fiscal year or fiscal quarters
of a person which becomes a Subsidiary, made at the time such person becomes a
Subsidiary, to conform to the Borrower's fiscal year and fiscal quarters or to
conform to the fiscal year or fiscal quarters which the Borrower generally
utilizes for its Subsidiaries), the Borrower will promptly, and in any event
within 30 days following any such change, deliver a notice to the Administrative
Agent and the Lenders describing such change and any material accounting entries
made in connection therewith and stating whether such change will have any
impact upon any financial computations to be made hereunder, and if any such
impact is foreseen, describing in reasonable detail the nature and extent of
such impact. If the Required Lenders determine that any such change will have
any impact upon any financial computations to be made hereunder which is adverse
to the Lenders, the Borrower will, if so requested by the Administrative Agent,
enter into an amendment to this Agreement, in form and substance satisfactory to
the Administrative Agent and the Required Lenders, modifying any of the
financial covenants or related provisions hereof in such manner as the Required
Lenders determine is necessary to eliminate such adverse effect.
53
<PAGE>
8.10. CERTAIN SUBSIDIARIES TO JOIN IN SUBSIDIARY GUARANTY. (a)
In the event that at any time after the Closing Date
(x) the Borrower has any Subsidiary (other than a Foreign
Subsidiary as to which section 8.10(b) applies) which is not a party to
the Subsidiary Guaranty, or
(y) an Event of Default shall have occurred and be
continuing and the Borrower has any Subsidiary which is not a party to
the Subsidiary Guaranty,
the Borrower will notify the Administrative Agent in writing of such event,
identifying the Subsidiary in question and referring specifically to the rights
of the Administrative Agent and the Lenders under this section. The Borrower
will, within 30 days following written request therefor from the Administrative
Agent (who may give such request on its own initiative or upon request by the
Required Lenders), cause such Subsidiary to deliver to the Administrative Agent,
in sufficient quantities for the Lenders, (i) a joinder supplement, satisfactory
in form and substance to the Administrative Agent and the Required Lenders, duly
executed by such Subsidiary, pursuant to which such Subsidiary joins in the
Subsidiary Guaranty as a guarantor thereunder, and (ii) if such Subsidiary is a
corporation, resolutions of the Board of Directors of such Subsidiary, certified
by the Secretary or an Assistant Secretary of such Subsidiary as duly adopted
and in full force and effect, authorizing the execution and delivery of such
joinder supplement, or if such Subsidiary is not a corporation, such other
evidence of the authority of such Subsidiary to execute such joinder supplement
as the Administrative Agent may reasonably request.
(b) Notwithstanding the foregoing or the provisions of section 8.11
hereof, the Borrower shall not, unless an Event of Default shall have occurred
and be continuing, be required to cause a Foreign Subsidiary to join in the
Subsidiary Guaranty or to become a party to an Additional Security Document if
(i) to do so would subject the Borrower to liability for additional United
States income taxes by virtue of section 956 of the Code in an amount the
Borrower considers material, and (ii) the Borrower provides the Administrative
Agent with documentation, including computations prepared by the Borrower's
internal tax officer, its independent accountants or tax counsel, acceptable to
the Required Lenders, in support thereof.
8.11. ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) In the event
that at any time after the Closing Date
(x) the Borrower or any Subsidiary acquires, or a person which
has become a Subsidiary owns or holds, an ownership interest in any
Real Property, or any interest in any other property (tangible or
intangible), located in the United States, which is not at the time
included in the Collateral and is not subject to a Permitted Lien
securing Indebtedness, the Borrower will notify the Administrative
Agent in writing of such event, identifying the property in question
and referring specifically to the rights of the Administrative Agent
and the Lenders under this section,
(y) the Borrower or any Subsidiary at any time owns or holds
an ownership interest in any Real Property, or any interest in any
other property (tangible or intangible), located in the United States,
(1) which is not at the time included in the Collateral and is not
subject to a Permitted Lien securing Indebtedness, and (2) as to which
the Administrative Agent on its own initiative or upon instructions
from the Required Lenders has notified the Borrower that it requires
that the same be included in the Collateral, or
(z) an Event of Default shall have occurred and be continuing
and the Borrower or any Subsidiary at any time owns or holds an
interest in any Real Property or other property (tangible or
intangible), located within or outside of the United States, which is
not at the time included in the Collateral and is not subject to a
Permitted Lien securing Indebtedness,
the Borrower will, or will cause such Subsidiary to, within 20 days following
request by the Collateral Agent (who may make such request on its own initiative
or upon instructions from the Required Lenders), grant the Collateral Agent for
the benefit of the Secured Creditors (as defined in the Security Documents)
security interests and mortgages (each an "ADDITIONAL SECURITY DOCUMENT") in
such interests or properties of the Borrower or any Subsidiary, subject
54
<PAGE>
to obtaining any required consents from third parties (including third party
lessors and co-venturers) necessary to be obtained for the granting of a Lien on
the interests or assets involved (with the Borrower hereby agreeing to use its
reasonable best efforts to obtain such consents), and also subject to the
provisions of section 8.11(b). Each Additional Security Document (i) shall be
granted pursuant to documentation satisfactory in form and substance to the
Administrative Agent and the Collateral Agent, which documentation shall in the
case of Real Property or interests therein be accompanied by such Phase I
environmental assessments, surveys and surveyor's certifications, a mortgage
policy of title insurance, consents of landlords and other supporting
documentation requested by and satisfactory in form and substance to the
Administrative Agent and the Collateral Agent; and (ii) shall constitute a valid
and enforceable perfected Lien upon the interests or properties so included in
the Collateral, subject to no other Liens except those permitted by section 9.3
or otherwise agreed by the Administrative Agent at the time of perfection
thereof and (in the case of Real Property or interests therein) such other
encumbrances as may be set forth in the mortgage policy, if any, relating to
such Additional Security Document which shall be delivered to the Collateral
Agent together with such Additional Security Document and which shall be
satisfactory in form and substance to the Collateral Agent. The Borrower, at its
sole cost and expense, will cause each Additional Security Document or
instruments related thereto to be duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and protect
the Liens created thereby required to be granted pursuant to the Additional
Security Document, and will pay or cause to be paid in full all taxes, fees and
other charges payable in connection therewith.
(b) The Borrower will, and will cause each of its Subsidiaries to, at
the expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, and other
assurances or instruments and take such further steps relating to the Collateral
covered by any of the Security Documents as the Collateral Agent may reasonably
require. If at any time the Collateral Agent determines, based on applicable
law, that all applicable taxes (including, without limitation, mortgage
recording taxes or similar charges) were not paid in connection with the
recordation of any mortgage or deed of trust, the Borrower shall promptly pay
the same upon demand. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of local counsel, appraisals, title
insurance, surveys, environmental assessments, consents of landlords, lien
waivers from landlords or mortgagees and other related documents as may be
reasonably requested by the Administrative Agent or the Collateral Agent in
connection therewith, all of which documents shall be in form and substance
satisfactory to the Administrative Agent and the Collateral Agent, except that
no title insurance or surveys shall be required for any leasehold properties
(unless the lessee has a nominal or bargain purchase option).
(c) The Borrower will if requested by any Lender at any time, in order
to meet any legal requirement applicable to such Lender, provide to
Administrative Agent, the Collateral Agent and the Lenders, at the sole cost and
expense of the Borrower, appraisals and other supporting documentation relating
to any mortgage or deed of trust delivered as an Additional Security Document
hereunder, as specified by any Lender, meeting the appraisal and other
documentation requirements of the Real Estate Reform Amendments of the Financial
Institution Reform, Recovery and Enforcement Act of 1989, as amended, or any
other legal requirements applicable to any Lender, which in the case of any such
appraisal shall be prepared by one or more valuation firms of national standing,
acceptable to the Required Lenders, utilizing appraisal standards satisfying
such Amendments, Act or other legal requirements.
(d) The Borrower will provide the Administrative Agent with sufficient
copies of each Additional Security Document and any additional supporting
documents delivered in connection therewith for distribution of copies thereof
to the Lenders, and the Administrative Agent will promptly so distribute such
copies.
8.12. CASUALTY AND CONDEMNATION. (a) The Borrower will promptly (and in
any event within 10 days) furnish to the Administrative Agent and the Lenders
written notice of any casualty or other insured damage to any portion of any
material Collateral or the commencement of any action or other proceeding for
the taking of any material portion of or interest in any Collateral under power
of eminent domain or by condemnation or similar proceeding.
(b) If any event described in the preceding paragraph (a) results in
Net Proceeds (whether in the form of insurance proceeds, a condemnation award or
otherwise), the Collateral Agent is authorized to collect such Net
55
<PAGE>
Proceeds and, if received by any Credit Party, the Borrower will, or will cause
any applicable Credit Party, to pay over such Net Proceeds to the Collateral
Agent; PROVIDED that (i) if the aggregate Net Proceeds in respect of such event
(other than proceeds in respect of business interruption insurance) are less
than $500,000, such Net Proceeds shall be paid over to or retained by the
applicable Credit Party unless a Default has occurred and is continuing, and
(ii) all proceeds of business interruption insurance shall be paid over to or
retained by the applicable Credit Party unless a Default has occurred and is
continuing. All such Net Proceeds retained by or paid over to the Collateral
Agent shall be held by the Collateral Agent as part of the Collateral and
released from time to time to pay the costs of repairing, restoring or replacing
the affected property in accordance with the terms of the applicable Security
Document, subject to the terms of the applicable Security Document regarding
application of such Net Proceeds during a Default or Event of Default.
(c) If any Net Proceeds retained by or paid over to the Collateral
Agent as provided above continue to be held by the Collateral Agent on the date
that is 9 months after the occurrence of the event giving rise to such Net
Proceeds, then such Net Proceeds shall be applied to prepay Term Loans and
Revolving Loans in accordance with the provisions of this Agreement applicable
to the prepayment of Loans in connection with Asset Sales.
8.13. HEDGE AGREEMENTS, ETC. The Borrower will, and will cause each of
its Subsidiaries to, enter into Hedge Agreements (i) in order to provide
protection to the Borrower or any such Subsidiary from fluctuations and other
changes in interest rates and currency exchange rates, as and to the extent
considered reasonably necessary by the Borrower, but without exposing the
Borrower or its Subsidiaries to predominantly speculative risks unrelated to the
amount of assets, Indebtedness or other liabilities intended to be subject to
coverage on a notional basis under all such Hedge Agreements; and (ii) in the
case of any Hedge Agreement entered into after the Effective Date, only if the
proposed form thereof (including any proposed pricing or other material terms)
has been provided to the Administrative Agent contemporaneously with the entry
into such Hedge Agreement.
8.14. SENIOR DEBT. The Borrower will at all times ensure that (a) the
claims of the Lenders in respect of the Obligations of the Borrower will not be
subordinate to, and will in all respects at least rank PARI PASSU with, the
claims of every other senior secured or unsecured creditor of the Borrower, and
(b) any Indebtedness subordinated in any manner to the claims of any other
senior secured or unsecured creditor of the Borrower will be subordinated in
like manner to such claims of the Lenders.
SECTION 9. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that on the Effective Date and
thereafter for so long as this Agreement is in effect and until such time as the
Total Commitment has been terminated, no Notes remain outstanding and the Loans,
together with interest, Fees and all other Obligations incurred hereunder are
paid in full:
9.1. CHANGES IN BUSINESS. Neither the Borrower nor any of its
Subsidiaries will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Borrower and its Subsidiaries, would be substantially changed from the
general nature of the business engaged in by the Borrower and its Subsidiaries
on the date hereof.
9.2. CONSOLIDATION, MERGER, ACQUISITIONS, SALE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation
or sell or otherwise dispose of any of its property or assets (but excluding any
sale or disposition of obsolete or excess furniture, fixtures or equipment or
excess vacant land in the ordinary course of business), or purchase, lease or
otherwise acquire (in one transaction or a series of related transactions) all
or any part of the property or assets of any person (excluding any purchases,
leases or other acquisitions of property or assets in, and for use in, the
ordinary course of business) or agree to do any of the foregoing at any future
time, EXCEPT that the following shall be permitted:
56
<PAGE>
(a) INITIAL ACQUISITIONS: completion of any Initial
Acquisition in accordance with the Initial Acquisition Documents
related thereto within 60 days following the Closing Date, PROVIDED
that at the time of completion of any Initial Acquisition all of the
following conditions shall be satisfied:
(i) The Borrower shall have delivered to the
Administrative Agent, in sufficient quantities for the
Lenders, (x) all Initial Acquisition Documents related to such
Initial Acquisition, certified as true and correct by an
Authorized Officer, all of which Initial Acquisition Documents
shall be in the same form as they were in at the time they
were previously furnished to the Lenders not later than five
days prior to the Effective Date, or shall otherwise be
satisfactory to the Required Lenders; and (y) not later than
five days prior to the Effective Date, copies of all financial
statements and other material financial information furnished
to the Borrower pursuant to the provisions of such Initial
Acquisition Documents.
(ii) Each of the conditions precedent to the
obligations of the Borrower to consummate such Initial
Acquisition which is contained in any of the Initial
Acquisition Documents related to such Initial Acquisition
shall have been fulfilled (without any waiver thereto not
consented to by the Required Lenders) to the satisfaction of
the Required Lenders.
(iii) Without limiting the generality of the
foregoing, such Initial Acquisition shall have been
consummated in compliance with the terms of the Initial
Acquisition Documents related thereto and all applicable laws,
and all material governmental and third party approvals in
connection with such Initial Acquisition contemplated by the
Initial Acquisition Documents related thereto and otherwise
referred to herein or therein shall have been obtained and
remain in effect, and all applicable waiting periods shall
have expired without any action being taken by any competent
authority (including any court having jurisdiction) which
restrains or prevents such transactions or imposes, in the
judgment of the Required Lenders, materially adverse
conditions upon the consummation of such Initial Acquisition
or the continued operation of the Borrower's businesses or the
business to be acquired by the Borrower in such Initial
Acquisition.
(b) PERMITTED INVESTMENTS: the investments permitted pursuant
to section 9.5;
(c) CERTAIN INTERCOMPANY MERGERS, ETC.: if no Default or Event
of Default shall have occurred and be continuing or would result
therefrom, (i) the merger, consolidation or amalgamation of any
Wholly-Owned Subsidiary with or into the Borrower or another
Wholly-Owned Subsidiary, so long as in any merger, consolidation or
amalgamation involving the Borrower, the Borrower is the surviving or
continuing or resulting corporation, or the liquidation or dissolution
of any Subsidiary, or (ii) the transfer or other disposition of any
property by the Borrower to any Wholly-Owned Subsidiary or by any
Wholly- Owned Subsidiary to the Borrower or any other Wholly-Owned
Subsidiary of the Borrower;
(d) PERMITTED ACQUISITIONS: if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any Subsidiary may make Permitted Acquisitions, PROVIDED
that (i) at least five Business Days prior to the date of any such
Permitted Acquisition which involves consideration (including the
amount of any assumed Indebtedness and (without duplication) any
outstanding Indebtedness of any person which becomes a Subsidiary as a
result of such Permitted Acquisition) of $1,500,000 or more, the
Borrower shall have delivered to the Administrative Agent an officer's
certificate executed on behalf of the Borrower by an Authorized Officer
of the Borrower, which certificate shall (A) contain the date such
Permitted Acquisition is scheduled to be consummated, (B) contain the
estimated purchase price of such Permitted Acquisition, (C) contain a
description of the property and/or assets acquired in connection with
such Permitted Acquisition, (D) demonstrate that at the time of making
any such Permitted Acquisition the covenants contained in sections 9.7
through 9.13 shall be complied with on a PRO FORMA basis as if the
properties and/or assets so acquired had been owned by the Borrower,
and the Indebtedness assumed and/or incurred to acquire and/or finance
same has been outstanding, for the four fiscal quarter period ended
most recently prior to such acquisition for which financial information
is available and has been delivered to the Lenders (without giving
effect to any credit for unobtained or
57
<PAGE>
unrealized gains or any adjustments to overhead in connection with any
such Permitted Acquisition), and (E) if requested by the Administrative
Agent, attach thereto a true and correct copy of the then proposed
purchase agreement, merger agreement or similar agreement, partnership
agreement and/or other contract entered into in connection with such
Permitted Acquisition;
(e) PERMITTED DISPOSITIONS: if no Default or Event of Default
shall have occurred and be continuing or would result therefrom, the
Borrower or any of its Subsidiaries may (i) sell any property, land or
building (including any related receivables or other intangible assets)
to any person which is not a Subsidiary of the Borrower, or (ii) sell
the entire capital stock (or other equity interests) and Indebtedness
of any Subsidiary owned by the Borrower or any other Subsidiary to any
person which is not a Subsidiary of the Borrower, or (iii) permit any
Subsidiary to be merged or consolidated with a person which is not an
Affiliate of the Borrower, or (iv) consummate any other Asset Sale with
a person who is not a Subsidiary of the Borrower; PROVIDED that (A) the
consideration for such transaction represents fair value (as determined
by management of the Borrower), and at least 90% of such consideration
consists of cash, (B) in the case of any such transaction involving
consideration in excess of $1,500,000, at least five Business Days
prior to the date of completion of such transaction the Borrower shall
have delivered to the Administrative Agent an officer's certificate
executed on behalf of the Borrower by an Authorized Officer of the
Borrower, which certificate shall contain a description of the proposed
transaction, the date such transaction is scheduled to be consummated,
the estimated purchase price or other consideration for such
transaction, financial information pertaining to compliance with the
preceding clause (A), and which shall (if requested by the
Administrative Agent) include a certified copy of the draft or
definitive documentation pertaining thereto, and (C) contemporaneously
therewith, the Borrower prepays Loans as and to the extent contemplated
by section 5.2(d);
(f) CAPITAL EXPENDITURES: Consolidated Capital Expenditures
permitted by section 9.9; and
(g) LEASES: the Borrower or any of its Subsidiaries may enter
into leases of property or assets not constituting Permitted
Acquisitions in the ordinary course of business not otherwise in
violation of this Agreement.
To the extent the Required Lenders (or all of the Lenders as shall be required
by section 12.12) waive the provisions of this section 9.2 with respect to the
sale, transfer or other disposition of any Collateral, or any Collateral is
sold, transferred or disposed of as permitted by this section 9.2, (i) such
Collateral shall be sold, transferred or disposed of free and clear of the Liens
created by the respective Security Documents; (ii) if such Collateral includes
all of the capital stock of a Subsidiary which is a party to the Subsidiary
Guaranty or the Pledge Agreement, such capital stock shall be released from the
Pledge Agreement and such Subsidiary shall be released from the Subsidiary
Guaranty; and (iii) the Administrative Agent and the Collateral Agent shall be
authorized to take actions deemed appropriate by them in order to effectuate the
foregoing.
9.3. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of the Borrower or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with or without
recourse to the Borrower or any of its Subsidiaries, other than for purposes of
collection of delinquent accounts in the ordinary course of business) or assign
any right to receive income, or file or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute, EXCEPT that the foregoing restrictions shall not
apply to:
(a) the Standard Permitted Liens;
(b) Liens consisting of purchase money security interests
retained by Hewlett Packard (or other major manufacturers approved in
writing by the Administrative Agent, acting on instructions from the
Required Lenders) on computers and other items manufactured by it and
purchased by the Borrower and its Subsidiaries for resale in the
ordinary course of business, PROVIDED such purchase money security
58
<PAGE>
interests cover only the items so supplied (and the proceeds thereof),
secure only the purchase price thereof, and do not extend to other
property of the Borrower or any of its Subsidiaries; and
(c) Liens which
(i) are placed upon equipment or machinery used in
the ordinary course of business of the Borrower or any
Subsidiary at the time of (or within 180 days after) the
acquisition thereof by the Borrower or any such Subsidiary to
secure Indebtedness incurred to pay or finance all or a
portion of the purchase price thereof, PROVIDED that the Lien
encumbering the equipment or machinery so acquired does not
encumber any other asset of the Borrower or any such
Subsidiary; or
(ii) are existing on property or other assets at the
time acquired by the Borrower or any Subsidiary or on assets
of a person at the time such person first becomes a Subsidiary
of the Borrower; PROVIDED that (A) any such Liens were not
created at the time of or in contemplation of the acquisition
of such assets or person by the Borrower or any of its
Subsidiaries; (B) in the case of any such acquisition of a
person, any such Lien attaches only to the property and assets
of such person; and (C) in the case of any such acquisition of
property or assets by the Borrower or any Subsidiary, any such
Lien attaches only to the property and assets so acquired and
not to any other property or assets of the Borrower or any
Subsidiary;
PROVIDED that (1) the Indebtedness secured by any such Lien does not
exceed 100% of the fair market value of the property and assets to
which such Lien attaches, determined at the time of the acquisition of
such property or asset or the time at which such person becomes a
Subsidiary of the Borrower (except in the circumstances described in
clause (ii) above to the extent such Liens constituted customary
purchase money Liens at the time of incurrence and were entered into in
the ordinary course of business), and (2) the Indebtedness secured
thereby is permitted by section 9.4(b).
9.4. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness of the Borrower or any of its Subsidiaries, EXCEPT:
(a) Indebtedness incurred under this Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower or any Subsidiary (x) in
respect of Capital Leases and/or (y) subject to Liens permitted by
section 9.3(c); PROVIDED that (i) the aggregate Capitalized Lease
Obligations of the Borrower and its Subsidiaries, plus the aggregate
outstanding principal amount of Indebtedness subject to Liens permitted
under section 9.3(c), shall not exceed $3,000,000 in the aggregate at
any time outstanding, and (ii) at the time of any incurrence thereof
after the date hereof, and after giving effect thereto, no Event of
Default shall have occurred and be continuing or would result
therefrom;
(c) any guaranty by the Borrower of any Indebtedness
referred to in the preceding clause (b);
(d) Existing Indebtedness, to the extent not otherwise
permitted pursuant to the foregoing clauses; and any refinancing,
extension, renewal or refunding of any such Existing Indebtedness not
involving an increase in the principal amount thereof or a reduction of
more than 10% in the remaining weighted average life to maturity
thereof (computed in accordance with standard financial practice);
(e) Indebtedness of the Borrower or any Subsidiary under
Hedge Agreements;
(f) Indebtedness of the Borrower to any of its Subsidiaries,
and Indebtedness of any of the Borrower's Subsidiaries to the Borrower
or to another Subsidiary of the Borrower, in each case to the extent
permitted under section 9.5; and
(g) Guaranty Obligations permitted under section 9.5.
59
<PAGE>
9.5. ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS. The
Borrower will not, and will not permit any of its Subsidiaries to, (1) lend
money or credit or make advances to any person, (2) purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, or other investment in, any person, (3) create, acquire
or hold any Subsidiary, (4) be or become a party to any joint venture or
partnership, or (5) be or become obligated under any Guaranty Obligations (other
than those created in favor of the Lenders pursuant to the Credit Documents),
EXCEPT:
(a) the Borrower or any of its Subsidiaries may invest in
cash and Cash Equivalents;
(b) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal course
of business;
(c) the Borrower and its Subsidiaries may acquire and hold
receivables owing to them in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(d) investments acquired by the Borrower or any of its
Subsidiaries (i) in exchange for any other investment held by the
Borrower or any such Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other investment, or (ii) as a result of a foreclosure by the
Borrower or any of its Subsidiaries with respect to any secured
investment or other transfer of title with respect to any secured
investment in default;
(e) loans and advances to employees for business-related
travel expenses, moving expenses, costs of replacement homes, business
machines or supplies, automobiles and other similar expenses, in each
case incurred in the ordinary course of business, shall be permitted;
(f) investments in the capital of any Wholly-Owned Subsidiary
which is not a Foreign Subsidiary;
(g) to the extent not permitted by the foregoing clauses,
existing investments in any Subsidiaries (and any increases thereof
attributable to increases in retained earnings);
(h) to the extent not permitted by the foregoing clauses, the
existing loans, advances, investments and guarantees described on Annex
V hereto;
(i) any unsecured guaranty by the Borrower of any Indebtedness
of a Subsidiary permitted by section 9.4, and any guaranty by any
Subsidiary described in section 9.4;
(j) investments of the Borrower and its Subsidiaries in Hedge
Agreements;
(k) loans and advances by any Subsidiary of the Borrower to
the Borrower, PROVIDED that the Indebtedness represented thereby
constitutes Subordinated Indebtedness;
(l) loans and advances by the Borrower or by any Subsidiary of
the Borrower to, or other investments in, any Subsidiary of the
Borrower which is (i) a Subsidiary Guarantor, (ii) a Wholly-Owned
Subsidiary, and (iii) not a Foreign Subsidiary;
(m) loans and advances by any Subsidiary of the Borrower which
is not a Subsidiary Guarantor to, or other investments by any such
Subsidiary in, any other Subsidiary of the Borrower which is a Wholly-
Owned Subsidiary;
(n) Guaranty Obligations, not otherwise permitted by the
foregoing clauses, of (i) the Borrower or any Subsidiary in respect of
leases of the Borrower or any Subsidiary the entry into which is not
prohibited by this Agreement, (ii) the Borrower or any Subsidiary in
respect of any other person (other than in respect of (x) Indebtedness
for borrowed money or represented by bonds, notes, debentures or
60
<PAGE>
similar securities, or (y) Indebtedness constituting Capital Leases)
arising as a matter of applicable law because the Borrower or such
Subsidiary is or is deemed to be a general partner of such other
person, or (iii) the Borrower or any Subsidiary in respect of any other
person (other than in respect of (x) Indebtedness for borrowed money or
represented by bonds, notes, debentures or similar securities, or (y)
Indebtedness constituting Capital Leases) arising in the ordinary
course of business;
(o) the Acquisitions permitted by section 9.2;
(p) loans, advances and investments of any person which are
outstanding at the time such person becomes a Subsidiary of the
Borrower as a result of an Acquisition permitted by section 9.2, but
not any increase in the amount thereof;
(q) Subordinated Indebtedness of the Borrower representing the
deferred purchase price payable in connection with any Acquisition
permitted by section 9.2, PROVIDED that the maturity of any such
Subordinated Indebtedness is not greater than 13 months; and
(r) any other loans, advances, investments (whether in the
form of cash or contribution of property, and if in the form of a
contribution of property, such property shall be valued for purposes of
this clause (r) at the fair value thereof as reasonably determined by
the Borrower) and Guaranty Obligations, including, without limitation,
in or to or for the benefit of, Subsidiaries, joint ventures, or other
persons, not otherwise permitted by the foregoing clauses, made after
the end of the most recent fiscal quarter of the Borrower for which
financial statements were furnished to the Lenders prior to the
Effective Date (such loans, advances and investments, collectively,
"BASKET INVESTMENTS", and such Guaranty Obligations, collectively
"BASKET GUARANTEES") described below: (i) if no Event of Default shall
have occurred and be continuing, or would result therefrom, Basket
Investments of up to an aggregate of $1,000,000, taking into account
the repayment of any loans or advances comprising such Basket
Investments, shall be permitted to be made, and (ii) if no Event of
Default shall have occurred and be continuing, or would result
therefrom, Basket Guarantees covering up to $1,000,000 aggregate
principal amount of Indebtedness outstanding at any time, shall be
permitted to be incurred.
9.6. DIVIDENDS, ETC. The Borrower will not (a) directly or indirectly
declare, order, pay or make any dividend (other than dividends payable solely in
capital stock of the Borrower) or other distribution on or in respect of any
capital stock of any class of the Borrower, whether by reduction of capital or
otherwise, or (b) directly or indirectly make, or permit any of its Subsidiaries
to directly or indirectly make, any purchase, redemption, retirement or other
acquisition of any capital stock of any class of the Borrower (other than for a
consideration consisting solely of capital stock of the same class of the
Borrower) or of any warrants, rights or options to acquire or any securities
convertible into or exchangeable for any capital stock of the Borrower.
9.7. CONSOLIDATED TOTAL INDEBTEDNESS/CONSOLIDATED EBITDA RATIO. The
Borrower will not at any time permit the ratio of (i) the amount of Consolidated
Total Indebtedness at such time to (ii) Consolidated EBITDA for any Testing
Period, to exceed 3.75 to 1.00.
9.8. FIXED CHARGE COVERAGE RATIO. The Borrower will not permit its
Fixed Charge Coverage Ratio for any Testing Period to be less than 1.40 to 1.00.
9.9. CAPITAL EXPENDITURES. The Borrower will not, and will not permit
any of its Subsidiaries to, make or incur Consolidated Capital Expenditures
during any fiscal year in excess of $1,000,000. In the event actual Consolidated
Capital Expenditures for any fiscal year are less than such amount, the excess
amount may not be carried over to any subsequent period.
9.10. CERTAIN LEASES. The Borrower will not permit the aggregate
payments (excluding any property taxes, insurance or maintenance obligations
paid by the Borrower and its Subsidiaries as additional rent or lease payments)
by the Borrower and its Subsidiaries on a consolidated basis under agreements to
rent or lease any real or personal property for a period exceeding 12 months
(including any renewal or similar option periods), including
61
<PAGE>
any leases constituting Capital Leases, to exceed in any fiscal year of the
Borrower an amount equal to 2% of the consolidated revenues of the Borrower and
its Subsidiaries for the preceding fiscal year.
9.11. MINIMUM CONSOLIDATED NET WORTH. The Borrower will not permit its
Consolidated Net Worth at any time to be less than $17,694,057, EXCEPT that (i)
effective as of the end of the Borrower's fiscal quarter ended December 31,
1997, and as of the end of each fiscal quarter thereafter, the foregoing amount
(as it may from time to time be increased as herein provided), shall be
increased by 50% of the consolidated net income of the Borrower and its
Subsidiaries for the fiscal quarter ended on such date, if any, without
deduction for minority interests, as determined in conformity with GAAP (there
being no reduction in the case of any such consolidated net income which
reflects a deficit), (ii) the foregoing amount (as it may from time to time be
increased as herein provided), shall be increased by an amount equal to 50% of
the cash proceeds (net of underwriting discounts and commissions and other
customary fees and costs associated therewith) from any sale or issuance of
equity by the Borrower after the Closing Date (other than any sale or issuance
to management or employees pursuant to employee benefit plans of general
application), and (iii) the foregoing amount (as it may from time to time be
increased as herein provided), shall be increased by an amount equal to 90% of
the increase in Consolidated Net Worth attributable to the issuance of common
stock or other equity interests subsequent to September 30, 1997 as
consideration in the Initial Acquisitions and any Permitted Acquisitions.
9.12. PREPAYMENTS AND REFINANCINGS OF OTHER DEBT, ETC. The Borrower
will not, and will not permit any of its Subsidiaries to, make (or give any
notice in respect thereof) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) or exchange of, or refinance or refund, any
Indebtedness of the Borrower or its Subsidiaries (other than the Obligations,
intercompany loans and advances among the Borrower and its Subsidiaries, and
Indebtedness representing all or any portion of the consideration payable for
any Initial Acquisition or Permitted Acquisition); PROVIDED that the Borrower or
any Subsidiary may refinance or refund any such Indebtedness if the aggregate
principal amount thereof is not increased and the weighted average life to
maturity thereof (computed in accordance with standard financial practice) is
not reduced by more than 10%.
9.13. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate (other than, in the case of the Borrower, any Subsidiary, and
in the case of a Subsidiary, the Borrower or another Subsidiary) other than in
the ordinary course of business of and pursuant to the reasonable requirements
of the Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than would obtain in
a comparable arm's-length transaction with a person other than an Affiliate,
EXCEPT (i) loans, advances and investments permitted by section 9.5, (ii) sales
of goods to an Affiliate for use or distribution outside the United States which
in the good faith judgment of the Borrower complies with any applicable legal
requirements of the Code, or (iii) agreements and transactions (including
leases) with and payments to officers, directors and shareholders which are
either (A) entered into in the ordinary course of business and not prohibited by
any of the provisions of this Agreement, or (B) entered into outside the
ordinary course of business, approved by the directors or shareholders of the
Borrower, and not prohibited by any of the provisions of this Agreement.
9.14. LIMITATION ON CERTAIN RESTRICTIVE AGREEMENTS. The Borrower will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist or become effective, any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Subsidiary to create, incur or suffer to exist
any Lien upon any of its property or assets as security for Indebtedness, or (b)
the ability of any such Subsidiary to pay dividends or make any other
distributions on its capital stock or any other interest or participation in its
profits owned by the Borrower or any Subsidiary of the Borrower, or pay any
Indebtedness owed to the Borrower or a Subsidiary of the Borrower, or to make
loans or advances to the Borrower or any of the Borrower's other Subsidiaries,
or transfer any of its property or assets to the Borrower or any of the
Borrower's other Subsidiaries, EXCEPT for such restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest, (iv) customary provisions restricting
assignment of any licensing agreement entered into in the ordinary course of
business, (v) customary provisions restricting the transfer or further
62
<PAGE>
encumbering of assets subject to Liens permitted under section 9.3 (b) or (c),
(vi) restrictions contained in the Existing Indebtedness Agreements as in effect
on the Effective Date and customary restrictions affecting only a Subsidiary of
the Borrower under any agreement or instrument governing any of the Indebtedness
of a Subsidiary permitted pursuant to 9.4, (vii) any document relating to
Indebtedness secured by a Lien permitted by section 9.3, insofar as the
provisions thereof limit grants of junior liens on the assets securing such
Indebtedness, and (viii) any operating lease or Capital Lease, insofar as the
provisions thereof limit grants of a security interest in, or other assignments
of, the related leasehold interest to any other person.
9.15. LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. The Borrower will
not, nor will it permit any Subsidiary to, enter into any Sale and Lease-Back
Transaction involving any individual property (or related group of properties as
part of the same Sale and Lease-Back Transaction) having a Value over $100,000
unless either (a) the Borrower or such Subsidiary would be entitled to incur
Indebtedness secured by a Lien on such property pursuant to section 9.4(c), or
(b) the Borrower shall prepay General Revolving Loans, and to the extent General
Revolving Loans are not so prepaid, shall voluntarily permanently reduce the
Unutilized Total General Revolving Commitment, by an amount, conforming to the
requirements of section 4.2 as to the amount of any partial reduction of the
Unutilized Total General Revolving Commitment, and/or section 5.1, as to the
amount of any partial prepayment of the General Revolving Loans, at least equal
to the Value of such Sale and Lease-Back Transaction.
SECTION 10. EVENTS OF DEFAULT.
10.1. EVENTS OF DEFAULT. Upon the occurrence of any of the following
specified events (each an "EVENT OF DEFAULT"):
(a) PAYMENTS: the Borrower shall (i) default in the payment
when due of any principal of the Loans or any reimbursement obligation
in respect of any Unpaid Drawing; or (ii) default, and such default
shall continue for five or more days, in the payment when due of any
interest on the Loans or any Fees or any other amounts owing hereunder
or under any other Credit Document; or
(b) REPRESENTATIONS, ETC.: any representation, warranty or
statement made by the Borrower herein or in any other Credit Document
or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
(c) CERTAIN NEGATIVE COVENANTS: the Borrower shall default in
the due performance or observance by it of any term, covenant or
agreement contained in sections 9.2 through 9.12, inclusive, or section
9.15, of this Agreement; or
(d) OTHER COVENANTS: the Borrower shall default in the due
performance or observance by it of any term, covenant or agreement
contained in this Agreement or any other Credit Document, other than
those referred to in section 10.1(a) or (b) or (c) above, and such
default shall not be remedied within 30 days after the earlier of (i)
an officer of the Borrower obtaining actual knowledge of such default
or (ii) the Borrower receiving written notice of such default from the
Administrative Agent or the Required Lenders (any such notice to be
identified as a "notice of default " and to refer specifically to this
paragraph); or
(e) DEFAULT UNDER OTHER AGREEMENTS: the Borrower or any of its
Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) owed to any Lender, or having
an unpaid principal amount of $100,000 or greater, and such default
shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness, or (ii)
default in the observance or performance of any agreement or condition
relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto (and all grace
periods applicable to such observance, performance or condition shall
have expired), or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or
63
<PAGE>
holders) to cause any such Indebtedness to become due prior to its
stated maturity; or any such Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or shall be
required to be prepaid (other than by a regularly scheduled required
prepayment or redemption, prior to the stated maturity thereof); or
(f) OTHER CREDIT DOCUMENTS: the Subsidiary Guaranty or any
Security Document (once executed and delivered) shall cease for any
reason (other than termination in accordance with its terms) to be in
full force and effect; or any Credit Party shall default in any payment
obligation thereunder; or any Credit Party shall default in any
material respect in the due performance and observance of any other
obligation thereunder and such default shall continue unremedied for a
period of at least 30 days after notice by the Administrative Agent or
the Required Lenders; or any Credit Party shall (or seek to) disaffirm
or otherwise limit its obligations thereunder otherwise than in strict
compliance with the terms thereof; or
(g) JUDGMENTS: one or more judgments or decrees shall be
entered against the Borrower and/or any of its Subsidiaries involving a
liability (whether or not covered by insurance) of $250,000 or more in
the aggregate for all such judgments and decrees for the Borrower and
its Subsidiaries) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days
from the entry thereof; or
(h) BANKRUPTCY, ETC.: any of the following shall occur:
(i) the Borrower, any of its Material Subsidiaries
or any other Credit Party (the Borrower and each of such other
persons, each a "PRINCIPAL PARTY") shall commence a voluntary
case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "BANKRUPTCY CODE"); or
(ii) an involuntary case is commenced against any
Principal Party and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement
of the case; or
(iii) a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or
substantially all of the property of any Principal Party; or
(iv) any Principal Party commences (including by
way of applying for or consenting to the appointment of, or
the taking of possession by, a rehabilitator, receiver,
custodian, trustee, conservator or liquidator (collectively, a
"CONSERVATOR") of itself or all or any substantial portion of
its property) any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency, liquidation, rehabilitation,
conservatorship or similar law of any jurisdiction whether now
or hereafter in effect relating to such Principal Party; or
(v) any such proceeding is commenced against any
Principal Party to the extent such proceeding is consented by
such person or remains undismissed for a period of 60 days; or
(vi) any Principal Party is adjudicated insolvent
or bankrupt; or
(vii) any order of relief or other order approving
any such case or proceeding is entered; or
(viii) any Principal Party suffers any appointment of
any conservator or the like for it or any substantial part of
its property which continues undischarged or unstayed for a
period of 60 days; or
(ix) any Principal Party makes a general
assignment for the benefit of creditors; or
64
<PAGE>
(x) any corporate (or similar organizational)
action is taken by any Principal Party for the purpose of
effecting any of the foregoing; or
(i) ERISA: (i) any of the events described in clauses (i)
through (viii) of section 8.1(f) shall have occurred; or (ii) there
shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk
of incurring a liability; and (iii) any such event or events or any
such lien, security interest or liability, individually, and/or in the
aggregate, in the opinion of the Required Lenders, has had, or could
reasonably be expected to have, a Material Adverse Effect; or
(j) MATERIAL ADVERSE EFFECT: any event or circumstance shall
occur or exist which has a Material Adverse Effect upon the Borrower,
as compared to the business, operations, property, assets, liabilities
or condition (financial or otherwise) of the Borrower and its
Subsidiaries as reflected in the financial statements and the Financial
Projections referred to in section 7.8.
10.2. ACCELERATION, ETC. Upon the occurrence of any Event of Default,
and at any time thereafter, if any Event of Default shall then be continuing,
the Administrative Agent shall, upon the written request of the Required
Lenders, by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Administrative Agent or any
Lender to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (PROVIDED that, if an Event of
Default specified in section 10.1(h) shall occur with respect to the Borrower,
the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Lender shall forthwith
terminate immediately without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans, all Unpaid
Drawings and all obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; and (iv) direct the Borrower to pay (and the Borrower
hereby agrees that on receipt of such notice or upon the occurrence of an Event
of Default with respect to the Borrower under section 10.1(h), it will pay) to
the Administrative Agent an amount of cash equal to the aggregate Stated Amount
of all Letters of Credit then outstanding (such amount to be held as security
after the Borrower's reimbursement obligations in respect thereof).
10.3. APPLICATION OF LIQUIDATION PROCEEDS. All monies received by the
Administrative Agent or any Lender from the exercise of remedies hereunder or
under the other Credit Documents or under any other documents relating to this
Agreement shall, unless otherwise required by the terms of the other Credit
Documents or by applicable law, be applied as follows:
(i) FIRST, to the payment of all expenses (to the extent not
otherwise paid by the Borrower or any of the other Credit Parties)
incurred by the Administrative Agent and the Lenders in connection with
the exercise of such remedies, including, without limitation, all
reasonable costs and expenses of collection, reasonable documented
attorneys' fees, court costs and any foreclosure expenses;
(ii) SECOND, to the payment PRO RATA of interest then accrued
on the outstanding Loans;
(iii) THIRD, to the payment PRO RATA of any fees then accrued
and payable to the Administrative Agent, any Letter of Credit Issuer or
any Lender under this Agreement in respect of the Loans or the Letter
of Credit Outstandings;
(iv) FOURTH, to the payment PRO RATA of (A) the principal
balance then owing on the outstanding Loans, (B) the amounts then due
under Designated Hedge Agreements to creditors of the Borrower or any
Subsidiary, subject to confirmation by the Administrative Agent of any
calculations of termination or other payment amounts being made in
accordance with normal industry practice, and (C) the Stated Amount of
the Letter of Credit Outstandings (to be held and applied by the
Administrative Agent as security for the reimbursement obligations in
respect thereof);
65
<PAGE>
(v) FIFTH, to the payment to the Lenders of any amounts then
accrued and unpaid under sections 2.9, 2.10 and 3.5 hereof, and if such
proceeds are insufficient to pay such amounts in full, to the payment
of such amounts PRO RATA;
(vi) SIXTH, to the payment PRO RATA of all other amounts owed
by the Borrower to the Administrative Agent, to any Letter of Credit
Issuer or any Lender under this Agreement or any other Credit Document,
and to any counterparties under Designated Hedge Agreements of the
Borrower and its Subsidiaries, and if such proceeds are insufficient to
pay such amounts in full, to the payment of such amounts PRO RATA; and
(vii) FINALLY, any remaining surplus after all of the
Obligations have been paid in full, to the Borrower or to whomsoever
shall be lawfully entitled thereto.
SECTION 11. THE ADMINISTRATIVE AGENT.
11.1. APPOINTMENT. Each Lender hereby irrevocably designates and
appoints NCB as Administrative Agent (such term to include, for the purposes of
this section 11, NCB acting as Collateral Agent) to act as specified herein and
in the other Credit Documents, and each such Lender hereby irrevocably
authorizes NCB as the Administrative Agent for such Lender, to take such action
on its behalf under the provisions of this Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent agrees to act as such upon the
express conditions contained in this section 11. The Administrative Agent will
not give any written notice or other written communication to the Borrower which
purports to be on behalf of the Required Lenders or all Lenders unless the
Required Lenders or all Lenders, as applicable, have consented thereto or
otherwise instructed the Administrative Agent to do so. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set forth
herein or in the other Credit Documents, nor any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Administrative Agent. The provisions of this section 11 are solely
for the benefit of the Administrative Agent, and the Lenders, and the Borrower
and its Subsidiaries shall not have any rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this
Agreement, the Administrative Agent shall act solely as agent of the Lenders and
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for the Borrower or any of its
Subsidiaries.
11.2. DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by section 11.3.
11.3. EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such person under or in connection with this Agreement (except
for its or such person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or of its Subsidiaries or any
of their respective officers contained in this Agreement, any other Credit
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Credit Document or for any failure
of the Borrower or any Subsidiary of the Borrower or any of their respective
officers to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Borrower or any of its Subsidiaries. The Administrative Agent shall not be
responsible to any Lender for the
66
<PAGE>
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Credit Document or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Administrative Agent to the Lenders or by or on behalf
of the Borrower or any of its Subsidiaries to the Administrative Agent or any
Lender or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of Default.
11.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile transmission, telex or teletype message, statement, order or
other document or conversation believed by it, in good faith, to be genuine and
correct and to have been signed, sent or made by the proper person or persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrower or any of its Subsidiaries), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Credit Documents in accordance with a request of the Required Lenders (or
all of the Lenders, as to any matter which, pursuant to section 12.12, can only
be effectuated with the consent of all Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders.
11.5. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders, PROVIDED that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
11.6. NON-RELIANCE. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Borrower and its Subsidiaries.
The Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower or any of its Subsidiaries which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
67
<PAGE>
11.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such ratably according to their
respective Loans and Unutilized Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the
Administrative Agent in its capacity as such in any way relating to or arising
out of this Agreement or any other Credit Document, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Administrative Agent under or in
connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by the Borrower, PROVIDED that no Lender shall be liable
to the Administrative Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting solely from the Administrative
Agent's gross negligence or willful misconduct. If any indemnity furnished to
the Administrative Agent for any purpose shall, in the opinion of the
Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this section 11.7 shall survive the payment of all Obligations.
11.8. THE ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, its Subsidiaries
and their Affiliates as though not acting as Administrative Agent hereunder.
With respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
11.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as the Administrative Agent upon 20 days' notice to the Lenders and the
Borrower. The Required Lenders shall appoint from among the Lenders a successor
Administrative Agent for the Lenders subject to prior approval by the Borrower
(such approval not to be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall include such
successor agent effective upon its appointment, and the resigning Administrative
Agent's rights, powers and duties as the Administrative Agent shall be
terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After the retiring
Administrative Agent's resignation hereunder as the Administrative Agent, the
provisions of this section 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement.
11.10. OTHER AGENTS. Any Lender identified herein as a Co-Agent,
Syndication Agent, Documentation Agent, Managing Agent, Manager or any other
corresponding title, other than "Administrative Agent" or "Collateral Agent",
shall have no right, power, obligation, liability, responsibility or duty under
this Agreement or any other Credit Document except those applicable to all
Lenders as such. Each Lender acknowledges that it has not relied, and will not
rely, on any Lender so identified in deciding to enter into this Agreement or in
taking or not taking any action hereunder.
SECTION 12. MISCELLANEOUS.
12.1. PAYMENT OF EXPENSES ETC. The Borrower agrees to:
(a) whether or not the transactions herein contemplated are
consummated, pay (or reimburse the Administrative Agent and the Lenders
for) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Lenders in connection with the
negotiation, preparation, execution and delivery of the Credit
Documents and the documents and instruments referred to therein, and
the initial Borrowing hereunder, including, without limitation, (i) the
reasonable documented fees and disbursements of Jones, Day, Reavis &
Pogue, special counsel to the Administrative Agent, up to the amount
previously quoted by the Administrative Agent to the Borrower, and (ii)
the reasonable documented fees and disbursements of any individual
counsel to any Lender (including allocated costs of internal counsel);
68
<PAGE>
(b) pay (or reimburse the Administrative Agent and the Lenders
for) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Lenders in connection with any amendment,
waiver or consent relating to any of the Credit Documents which is
requested by any Credit Party, including, without limitation, (i) the
reasonable documented fees and disbursements of Jones, Day, Reavis &
Pogue, special counsel to the Administrative Agent, and (ii) the
reasonable documented fees and disbursements of any individual counsel
to any Lender (including allocated costs of internal counsel);
(c) pay (or reimburse the Administrative Agent and the Lenders
for) all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Lenders in connection with the enforcement
of any of the Credit Documents or the other documents and instruments
referred to therein, including, without limitation, (i) the reasonable
documented fees and disbursements of Jones, Day, Reavis & Pogue,
special counsel to the Administrative Agent, and (ii) the reasonable
documented fees and disbursements of any individual counsel to any
Lender (including allocated costs of internal counsel);
(d) without limitation of the preceding clause (c), in the
event of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of the Borrower or any of its Subsidiaries, pay
all costs of collection and defense, including reasonable documented
attorneys' fees in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, which
shall be due and payable together with all required service or use
taxes;
(e) pay and hold each of the Lenders harmless from and against
any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Lenders harmless
from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to
such Lender) to pay such taxes; and
(f) indemnify each Lender, its officers, directors, employees,
representatives and agents (collectively, the "INDEMNITEES") from and
hold each of them harmless against any and all losses, liabilities,
claims, damages or expenses reasonably incurred by any of them as a
result of, or arising out of, or in any way related to, or by reason of
(i) any investigation, litigation or other proceeding
(whether or not any Lender is a party thereto) related to the
entering into and/or performance of any Credit Document or the
use of the proceeds of any Loans hereunder or the consummation
of any transactions contemplated in any Credit Document, other
than any such investigation, litigation or proceeding arising
out of transactions solely between any of the Lenders or the
Administrative Agent, transactions solely involving the
assignment by a Lender of all or a portion of its Loans and
Commitments, or the granting of participations therein, as
provided in this Agreement, or arising solely out of any
examination of a Lender by any regulatory authority having
jurisdiction over it, or
(ii) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the
surface or subsurface of any Real Property owned, leased or at
any time operated by the Borrower or any of its Subsidiaries,
the release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or
not owned or operated by the Borrower or any of its
Subsidiaries, if the Borrower or any such Subsidiary could
have or is alleged to have any responsibility in respect
thereof, the non-compliance of any such Real Property with
foreign, federal, state and local laws, regulations and
ordinances (including applicable permits thereunder)
applicable thereto, or any Environmental Claim asserted
against the Borrower or any of its Subsidiaries, in respect of
any such Real Property,
including, in each case, without limitation, the reasonable documented
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred
by reason of the gross negligence or willful misconduct of the person
to be indemnified or of any other Indemnitee who is such person or an
Affiliate of such person).
69
<PAGE>
To the extent that the undertaking to indemnify, pay or hold harmless any person
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Borrower shall make the maximum contribution to
the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
12.2. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender (including, without limitation, by
branches and agencies of such Lender wherever located) to or for the credit or
the account of the Borrower against and on account of the Obligations and
liabilities of the Borrower to such Lender under this Agreement or under any of
the other Credit Documents, including, without limitation, all interests in
Obligations the Borrower purchased by such Lender pursuant to section 12.4(b),
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Credit Document, irrespective of whether or not
such Lender shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
12.3. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile transmission or cable communication)
and mailed, telegraphed, telexed, transmitted, cabled or delivered, if to the
Borrower, at 4750 Hempstead Station Drive, Dayton, Ohio 54529, attention: Chief
Financial Officer (facsimile: (937) 291-8250); if to any Lender at its address
specified for such Lender on Annex I hereto; if to the Administrative Agent, at
its Notice Office; or at such other address as shall be designated by any party
in a written notice to the other parties hereto. All such notices and
communications shall be mailed, telegraphed, telexed, telecopied, or cabled or
sent by overnight courier, and shall be effective when received.
12.4. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, PROVIDED that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of all the Lenders, and, PROVIDED, FURTHER, that any assignment by a
Lender of its rights and obligations hereunder shall be effected in accordance
with section 12.4(b). Notwithstanding the foregoing, each Lender may at any time
grant participations in any of its rights hereunder or under any of the Notes to
(x) another Lender that is not a Defaulting Lender or to an Affiliate of such
Lender which is a commercial bank, financial institution or other "accredited
investor" (as defined in SEC Regulation D), and (y) one or more Eligible
Transferees, PROVIDED that in the case of any such participation, (i) the
participant shall not have any rights under this Agreement or any of the other
Credit Documents, including rights of consent, approval or waiver (the
participant's rights against such Lender in respect of such participation to be
those set forth in the agreement executed by such Lender in favor of the
participant relating thereto), (ii) such Lender's obligations under this
Agreement (including, without limitation, its Commitment hereunder) shall remain
unchanged, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iv) such Lender shall
remain the holder of any Note for all purposes of this Agreement and (v) the
Borrower, the Administrative Agent, and the other Lenders shall continue to deal
solely and directly with the selling Lender in connection with such Lender's
rights and obligations under this Agreement, and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that the participant shall be entitled to the benefits of
sections 2.9 and 2.10 of this Agreement to the extent that such Lender would be
entitled to such benefits if the participation had not been entered into or
sold, and, PROVIDED FURTHER, that no Lender shall transfer, grant or sell any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (x) extend the final scheduled
maturity of the Loans in which such participant is participating (it being
understood that any waiver of the making of, or the application of , any
mandatory prepayment to such Loans shall not constitute an extension of the
final maturity date thereof), or reduce the rate or extend the time of payment
of interest or Fees thereon (except in connection with a waiver of the
applicability of any post- default increase in interest rates), or reduce the
principal amount thereof, or increase such participant's participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default
70
<PAGE>
or Event of Default or of any mandatory prepayment or a mandatory reduction in
such Commitment, or a mandatory prepayment, shall not constitute a change in the
terms of any such Commitment) or (y) release any Credit Party from its
obligations under the Subsidiary Guaranty, or release all or any substantially
all of the Collateral, in each case except strictly in accordance with the terms
of the Credit Documents, or (z) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement.
(b) Notwithstanding the foregoing, (x) any Lender may assign all or a
fixed portion of its Loans and/or Commitments, which assignment does not have to
be PRO RATA among the Facilities, and its rights and obligations hereunder, to
another Lender that is not a Defaulting Lender, or to an Affiliate of any Lender
(including itself) and which is not a Defaulting Lender and which is a
commercial bank, financial institution or other "accredited investor" (as
defined in SEC Regulation D), and (y) any Lender may assign all, or if less than
all, a fixed portion, equal to at least $5,000,000 in the aggregate for the
assigning Lender or assigning Lenders in the case of assignments of General
Revolving Loans and/or Term Loans and/or Commitments related thereto, of its
Loans and/or Commitments and its rights and obligations hereunder, which
assignment does not have to be PRO RATA among the Facilities, to one or more
Eligible Transferees, each of which assignees shall become a party to this
Agreement as a Lender by execution of an Assignment Agreement, PROVIDED that,
(i) in the case of any assignment of a portion of any General Revolving Loans
and /or Term Loans and/or related Commitments of a Lender, such Lender shall
retain a minimum fixed portion thereof equal to at least $5,000,000, (ii) at the
time of any such assignment Annex I shall be deemed modified to reflect the
Commitments of such new Lender and of the existing Lenders, (iii) upon surrender
of the old Notes, new Notes will be issued to such new Lender and to the
assigning Lender, such new Notes to be in conformity with the requirements of
section 2.5 (with appropriate modifications) to the extent needed to reflect the
revised Commitments, (iv) in the case of clause (y) only, the consent of the
Administrative Agent and each Letter of Credit Issuer shall be required in
connection with any such assignment (which consent shall not be unreasonably
withheld or delayed), and (v) the Administrative Agent shall receive at the time
of each such assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $3,000 and, PROVIDED FURTHER, that such
transfer or assignment will not be effective until recorded by the
Administrative Agent on the Lender Register maintained by it as provided herein.
To the extent of any assignment pursuant to this section 12.4(b) the assigning
Lender shall be relieved of its obligations hereunder with respect to its
assigned Commitments. At the time of each assignment pursuant to this section
12.4(b) to a person which is not already a Lender hereunder and which is not a
United States person (as such term is defined in section 7701(a)(30) of the
Code) for Federal income tax purposes, the respective assignee Lender shall
provide to the Borrower and the Administrative Agent the appropriate Internal
Revenue Service Forms (and, if applicable a Section 5.4(b)(ii) Certificate)
described in section 5.4(b). To the extent that an assignment of all or any
portion of a Lender's Commitment and related outstanding Obligations pursuant to
this section 12.4(b) would, at the time of such assignment, result in increased
costs under section 2.9 from those being charged by the respective assigning
Lender prior to such assignment, then the Borrower shall not be obligated to pay
such increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment). Nothing in this section 12.4(b) shall
prevent or prohibit any Lender from pledging its Notes or Loans to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank.
(c) Notwithstanding any other provisions of this section 12.4, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Lender initially party to this Agreement hereby represents,
and each person that becomes a Lender pursuant to an assignment permitted by
this section 12.4 will, upon its becoming party to this Agreement, represent
that it is a commercial lender, other financial institution or other
"accredited" investor (as defined in SEC Regulation D) which makes or acquires
loans in the ordinary course of its business and that it will make or acquire
Loans for its own account in the ordinary course of such business, PROVIDED that
subject to the preceding sections 12.4(a) and (b), the disposition of any
promissory notes or other evidences of or interests in Indebtedness held by such
Lender shall at all times be within its exclusive control.
71
<PAGE>
12.5. NO WAIVER: REMEDIES CUMULATIVE. No failure or delay on the part
of the Administrative Agent or any Lender in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Administrative Agent or any Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Lender would otherwise have. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand.
12.6. PAYMENTS PRO RATA. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of the Borrower in
respect of any Obligations, it shall distribute such payment to the Lenders
(other than any Lender that has expressly waived in writing its right to receive
its PRO RATA share thereof) PRO RATA based upon their respective shares, if any,
of the Obligations with respect to which such payment was received. As to any
such payment received by the Administrative Agent prior to 1:00 P.M. (local time
at the Payment Office) in funds which are immediately available on such day, the
Administrative Agent will use all reasonable efforts to distribute such payment
in immediately available funds on the same day to the Lenders as aforesaid.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount, PROVIDED that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding sections 12.6(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Lenders which are not Defaulting Lenders, as opposed to
Defaulting Lenders.
12.7. CALCULATIONS: COMPUTATIONS. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders); PROVIDED, that if at any time the computations
determining compliance with section 9 utilize accounting principles different
from those utilized in the financial statements furnished to the Lenders, such
computations shall set forth in reasonable detail a description of the
differences and the effect upon such computations.
(b) All computations of interest on Eurodollar Loans hereunder and all
computations of Commitment Fees, Letter of Credit Fees and other Fees hereunder
shall be made on the actual number of days elapsed over a year of 360 days, and
all computations of interest on Prime Rate Loans hereunder shall be made on the
actual number of days elapsed over a year of 364 or 365 days, as applicable.
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER
THAN THE STATE OF OHIO GOVERNS THIS AGREEMENT OR ANY OF THE OTHER CREDIT
DOCUMENTS.
72
<PAGE>
Any legal action or proceeding with respect to this Agreement or any other
Credit Document may be brought in the Court of Common Pleas of Cuyahoga County,
Ohio, or of the United States for the Northern District of Ohio, and, by
execution and delivery of this Agreement, the Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Borrower at its
address for notices pursuant to section 12.3, such service to become effective
30 days after such mailing or at such earlier time as may be provided under
applicable law. Nothing herein shall affect the right of the Administrative
Agent or any Lender to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in section 12.8(a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
12.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same agreement. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
12.10. EFFECTIVENESS. This Agreement shall become effective on the date
(the "EFFECTIVE DATE") on which the Borrower and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at the Notice Office of the
Administrative Agent or, in the case of the Lenders, shall have given to the
Administrative Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it.
12.11. HEADINGS DESCRIPTIVE. The headings of the several sections and
other portions of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
12.12. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof
or thereof may be changed, waived, discharged or terminated UNLESS such change,
waiver, discharge or termination is in writing signed by the Borrower and the
Required Lenders, PROVIDED that no such change, waiver, discharge or termination
shall, without the consent of each Lender (other than a Defaulting Lender)
affected thereby, (i) extend any maturity date provided for herein applicable to
a Loan or a Commitment (it being understood that any waiver of the making, or
application of, any mandatory prepayment of the Loans shall not constitute an
extension of the maturity date thereof), reduce the rate or extend the time of
payment of interest (other than as a result of waiving the applicability of any
post- default increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, or increase the Commitment of any Lender over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of any mandatory prepayment or a mandatory reduction in
any Commitment shall not constitute a change in the terms of any Commitment of
any Lender), (ii) release the Borrower from any obligations as a guarantor of
its Subsidiaries' obligations under any Credit Document, (iii) release any
Credit Party from the Subsidiary Guaranty, except in connection with a
transaction permitted by section 9.2(e), (iv) release all or any substantial
portion of the Collateral, except strictly in accordance with the provisions of
the Credit Documents, (v) change the definition of the term "Change of Control"
or any of the provisions of section 5.2(g) which are applicable upon a Change of
Control, (vi) change the definition of the term "Permitted Acquisition" or any
of the provisions of section 9.2(d) which are applicable to Permitted
Acquisitions which would have the effect of depriving such
73
<PAGE>
Lender of its rights as contemplated by such definition in the case of "hostile"
acquisitions, (vii) amend, modify or waive any provision of this section 12.12,
or section 11.7, 12.1, 12.4, 12.6 or 12.7(b), or any other provision of any of
the Credit Documents pursuant to which the consent or approval of all Lenders is
by the terms of such provision explicitly required, (viii) reduce the percentage
specified in, or otherwise modify, the definition of Required Lenders, or (ix)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement. No provision of section 3 or 11 may be amended
without the consent of (x) any Letter of Credit Issuer adversely affected
thereby or (y) the Administrative Agent, respectively.
12.13. SURVIVAL OF INDEMNITIES. All indemnities set forth herein
including, without limitation, in section 2.9, 2.10, 3.5, 11.7 or 12.1 shall
survive the execution and delivery of this Agreement and the making and
repayment or prepayment of Loans for the full period of any statute of
limitations applicable thereto.
12.14. DOMICILE OF LOANS. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or affiliate of such
Lender, PROVIDED that the Borrower shall not be responsible for costs arising
under section 2.9 resulting from any such transfer (other than a transfer
pursuant to section 2.11) to the extent not otherwise applicable to such Lender
prior to such transfer.
12.15. CONFIDENTIALITY. Each Lender shall hold all non-public
information obtained pursuant to the requirements of this Agreement which has
been identified as such by the Borrower in accordance with its customary
procedure for handling confidential information of this nature and in accordance
with safe and sound banking practices. Notwithstanding the foregoing, any Lender
may in any event may make disclosures of, and furnish copies of such information
(i) to another Lender; (ii) when reasonably required by any BONA FIDE transferee
or participant in connection with the contemplated transfer of any Loans or
Commitment or participation therein (PROVIDED that each such prospective
transferee and/or participant shall execute an agreement for the benefit of the
Borrower with such prospective transferor Lender and/or participant containing
provisions substantially identical to those contained in this section 12.15);
(iii) to its parent corporation or corporations, and to its and their auditors
and attorneys, who shall be apprised of and bound by the confidentiality
provisions contained herein; and (iv) as required or requested by any
governmental agency or representative thereof or pursuant to legal process,
PROVIDED that, unless specifically prohibited by applicable law or court order,
each Lender shall notify the Borrower of any request by any governmental agency
or representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information. In no event shall any Lender be obligated or required to
return any materials furnished by or on behalf of the Borrower or any of its
Subsidiaries. The Borrower hereby agrees that the failure of a Lender to comply
with the provisions of this section 12.15 shall not relieve the Borrower of any
of the obligations to such Lender under this Agreement and the other Credit
Documents.
12.16. LENDER REGISTER. The Borrower hereby designates the
Administrative Agent to serve as its agent, solely for purposes of this section
12.16, to maintain a register (the "LENDER REGISTER") on or in which it will
record the names and addresses of the Lenders, and the Commitments from time to
time of each of the Lenders, the Loans made to the Borrower by each of the
Lenders and each repayment and prepayment in respect of the principal amount of
such Loans of each such Lender. Failure to make any such recordation, or (absent
manifest error) any error in such recordation, shall not affect the Borrower's
obligations in respect of such Loans. With respect to any Lender, the transfer
of the Commitment of such Lender and the rights to the principal of, and
interest on, any Loan made pursuant to such Commitment shall not be effective
until such transfer is recorded on the Lender Register maintained by the
Administrative Agent with respect to ownership of such Commitment and Loans and
prior to such recordation all amounts owing to the transferor with respect to
such Commitment and Loans shall remain owing to the transferor. The registration
of assignment or transfer of all or part of any Commitments and Loans shall be
recorded by the Administrative Agent on the Lender Register only upon the
acceptance by the Administrative Agent of a properly executed and delivered
Assignment Agreement pursuant to section 12.4(b). The Borrower agrees to
indemnify the Administrative Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its duties under
this section 12.16. The Lender Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
74
<PAGE>
12.17. LIMITATIONS ON LIABILITY OF THE LETTER OF CREDIT ISSUERS. The
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letters of
Credit. Neither any Letter of Credit Issuer nor any of its officers or directors
shall be liable or responsible for: (a) the use which may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by a
Letter of Credit Issuer against presentation of documents that do not comply
with the terms of a Letter of Credit, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, EXCEPT that the Borrower (or a Subsidiary which is the account party
in respect of the Letter of Credit in question) shall have a claim against a
Letter of Credit Issuer, and a Letter of Credit Issuer shall be liable to the
Borrower (or such Subsidiary), to the extent of any direct, but not
consequential, damages suffered by the Borrower (or such Subsidiary) which the
Borrower (or such Subsidiary) proves were caused by (i) such Letter of Credit
Issuer's willful misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (ii) such Letter of Credit Issuer's willful failure to make lawful
payment under any Letter of Credit after the presentation to it of documentation
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, a Letter of Credit Issuer
may accept documents that appear on their face to be in order, without
responsibility for further investigation.
12.18. GENERAL LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any Lender, the Administrative Agent, any Letter of Credit Issuer or
any other person against the Administrative Agent, any Letter of Credit Issuer,
or any other Lender or the Affiliates, directors, officers, employees, attorneys
or agents of any of them for any damages other than actual compensatory damages
in respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
any of the other Credit Documents, or any act, omission or event occurring in
connection therewith; and each of the Borrower, each Lender, the Administrative
Agent and each Letter of Credit Issuer hereby, to the fullest extent permitted
under applicable law, waives, releases and agrees not to sue or counterclaim
upon any such claim for any special, consequential or punitive damages, whether
or not accrued and whether or not known or suspected to exist in its favor.
12.19. NO DUTY. All attorneys, accountants, appraisers, consultants and
other professional persons (including the firms or other entities on behalf of
which any such person may act) retained by the Administrative Agent or any
Lender with respect to the transactions contemplated by the Credit Documents
shall have the right to act exclusively in the interest of the Administrative
Agent or such Lender, as the case may be, and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to the Borrower, to any of its Subsidiaries, or to any other person,
with respect to any matters within the scope of such representation or related
to their activities in connection with such representation.
12.20. LENDERS AND AGENT NOT FIDUCIARY TO BORROWER, ETC. The
relationship among the Borrower and its Subsidiaries, on the one hand, and the
Administrative Agent, each Letter of Credit Issuer and the Lenders, on the other
hand, is solely that of debtor and creditor, and the Administrative Agent, each
Letter of Credit Issuer and the Lenders have no fiduciary or other special
relationship with the Borrower and its Subsidiaries, and no term or provision of
any Credit Document, no course of dealing, no written or oral communication, or
other action, shall be construed so as to deem such relationship to be other
than that of debtor and creditor.
12.21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties herein shall survive the making of Loans and the issuance of
Letters of Credit hereunder, the execution and delivery of this Agreement, the
Notes and the other documents the forms of which are attached as Exhibits
hereto, the issue and delivery of the Notes, any disposition thereof by any
holder thereof, and any investigation made by the Administrative Agent or any
Lender or any other holder of any of the Notes or on its behalf. All statements
contained in any certificate or other document delivered to the Administrative
Agent or any Lender or any holder of any Notes by or on behalf of the Borrower
or of its Subsidiaries pursuant hereto or otherwise specifically for use in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the
75
<PAGE>
Borrower hereunder, made as of the respective dates specified therein or, if no
date is specified, as of the respective dates furnished to the Administrative
Agent or any Lender.
[The balance of this page is intentionally blank;
the next page is an unnumbered signature page.]
76
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
MIAMI COMPUTER SUPPLY CORPORATION
BY:
-----------------------------------
TITLE:
NATIONAL CITY BANK,
INDIVIDUALLY AS A LETTER OF CREDIT
ISSUER AND AS ADMINISTRATIVE AGENT
BY:
-----------------------------------
VICE PRESIDENT
NATIONAL CITY BANK, DAYTON
BY:
-----------------------------------
VICE PRESIDENT
KEY CORPORATE CAPITAL INC.
BY:
-----------------------------------
VICE PRESIDENT
PNC BANK, N. A.
BY:
-----------------------------------
VICE PRESIDENT
[signature page]
77
<PAGE>
ANNEX I
INFORMATION AS TO LENDERS
<TABLE>
<CAPTION>
NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
<S> <C> <C> <C>
National City Bank, National City Bank, Dayton National City Bank, Dayton
Dayton GENERAL 6 North Main Street 6 North Main Street
REVOLVING Dayton, Ohio 45412 Dayton, Ohio 45412
COMMITMENT:
CONTACTS/ NOTIFICATION METHODS:
$12,000,000 National City Bank, Dayton
6 North Main Street
Dayton, Ohio 45412
SWING LINE Glen R. Horner
REVOLVING Vice President
COMMITMENT: Direct Dial: (937) 226-2498
Facsimile: (937) 226-2058
$3,000,000
AGENCY SERVICES (BILLING AND GENERAL
INQUIRIES AND TO RECEIVE COPIES OF FINANCIAL
TERM LOAN INFORMATION):
COMMITMENT: Kimberly M. Stevenson
Assistant Vice President
$8,000,000 National City Bank
Locator Code #2104
1900 East Ninth Street
Cleveland, Ohio 44114
Telephone: (216) 575-2398
Facsimile: (216) 575-9396
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Connie B. Djucik
Money Desk Manager
Telephone: (216) 575-2578
Facsimile: (216) 575-2481
CONTACT FOR LETTERS OF CREDIT:
Jamie M. Lanzalco
Letter of Credit Officer
Telephone: (216) 575-2916
Facsimile: (216) 575-9910
WIRING INFORMATION:
National City Bank
ABA # 041 000 124
Ref.: Miami Computer Supply Corporation
Attention: Commercial Loan Operations
National City Bank, Dayton
ABA # 042 200 279
Ref.: Miami Computer Supply Corporation
Attention: Commercial Loan Operations
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Key Corporate GENERAL Key Corporate Capital Inc. Key Corporate Capital Inc.
Capital Inc. REVOLVING 127 Public Square 127 Public Square
COMMITMENT: Cleveland, Ohio 44114 Cleveland, Ohio 44114
CONTACTS/NOTIFICATION METHODS:
$9,000,000 Michael F. McCullough
Vice President
KeyStructured Finance
TERM LOAN Telephone: (216) 689-3952
COMMITMENT: Facsimile: (216) 689-4077
$6,000,000 Lee Mosby
Senior Vice President
KeyStructured Finance
Telephone: (216) 689-4391
Facsimile: (216) 689-4077
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Elizabeth ("Betty" Zimmerman
Telephone: (216) 689-4402
Facsimile: (216) 689-3298
PAYMENT INSTRUCTIONS:
KeyBank
ABA # 041 000 1039
Attention: Commercial Loan Operations
Reference: Miami Computer Supply
Corporation (wire info for L/Cs: must direct
to International Operations--Attn.: Gerald
Zapfe; ref: Miami Computer Supply)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PNC Bank, N. A. GENERAL PNC Bank, N. A. PNC Bank, N. A.
REVOLVING 201 East 5th Street 201 East 5th Street
COMMITMENT: Cincinnati, Ohio 45201-1198 Cincinnati, Ohio 45201-1198
CONTACTS/NOTIFICATION METHODS:
$9,000,000 Timothy E. Reilly
Vice President
Corporate Banking
TERM LOAN Telephone: (513) 651-8786
COMMITMENT: Facsimile: (513) 651-8952
$6,000,000 William P. Seifrit
Relationship Associate
Telephone: (513) 651-8941
Facsimile: (513) 651-8952
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Susie Richardson
Admin. Coordinator
Telephone: (513) 651-8683
Facsimile: (513) 651-8952
LETTER OF CREDIT CONTACT:
Teresa Fern
Trade Services
Telephone: (513) 651-8566
Facsimile: (513) 651-7182
PAYMENT INSTRUCTIONS:
ABA # 042 000 398
ATTENTION: Commercial Loan Operations
REFERENCE: Miami Computer Supply
Corporation
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ANNEX II
INFORMATION AS TO SUBSIDIARIES
(as of January 8, 1998)
- ---------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF
OUTSTANDING STOCK
NAME OF TYPE OF JURISDICTION OR OTHER EQUITY
SUBSIDIARY ORGANIZATION WHERE INTERESTS OWNED
ORGANIZED (INDICATING WHETHER
OWNED BY THE
BORROWER OR A
SPECIFIED SUBSIDIARY)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Diversified Data Products, Inc. ("DDP") corporation Michigan 100%, by the
Borrower
- ---------------------------------------------------------------------------------------------------------------------
Force 4 D. P. Supplies, Inc. corporation Oregon 100%, by the
Borrower
- ---------------------------------------------------------------------------------------------------------------------
NTI Data Products, Inc. corporation New 100%, by the
Hampshire Borrower
- ---------------------------------------------------------------------------------------------------------------------
BRITCO, Inc. corporation Texas 100%, by the
Borrower
- ---------------------------------------------------------------------------------------------------------------------
Diversified Data Products (UK) Limited company U. K. 99%, by DDP
- ---------------------------------------------------------------------------------------------------------------------
CEM (Overseas) Limited company British Virgin 100%, by DDP
Islands
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
ANNEX III
DESCRIPTION OF EXISTING INDEBTEDNESS
1. Loans outstanding under credit facilities with National City Bank,
Dayton, to be refinanced hereunder (outstanding balance at 10:00 a.m.
on January 8, 1998 was $11,740,133.09).
2. Capitalized Lease Obligations as reflected in most recent balance sheet.
3. Outstanding Letter of Credit (see Annex VI).
1
<PAGE>
ANNEX IV
DESCRIPTION OF EXISTING LIENS
1. See Annex A to the Security Agreement.
2. Liens in favor of National City Bank, Dayton, in connection with the
credit facility referenced in Annex III, to be discharged at the
Closing Date.
1
<PAGE>
ANNEX V
DESCRIPTION OF EXISTING ADVANCES, LOANS, INVESTMENTS AND GUARANTEES
1. Loans of $292,000 and $146,000, due December 31, 1998, made to Lothar
Rowe and John McCoubrie, secured by shares of the Borrower's stock.
2. Contingent additional contingent consideration payable in connection
with the acquisition of TBS in the maximum aggregate amount of
$2,200,000, payable 55% in stock and the balance in cash.
1
<PAGE>
<TABLE>
<CAPTION>
ANNEX VI
DESCRIPTION OF LETTERS OF CREDIT DEEMED ISSUED UNDER
THE CREDIT AGREEMENT
======================= ========================= ========================== ================ =======================
LETTER OF ORIGINAL DATE AND NO./ EXPIRATION
CREDIT ISSUER APPLICANT BENEFICIARY AMOUNT DATE
- ----------------------- ------------------------- -------------------------- ---------------- -----------------------
<S> <C> <C> <C> <C>
National City Bank, Miami Computer Supply, May 10, 1993, as amended Reduced to May 2, 1998
Dayton Inc. through April 25, 1997, $156,000 on
for the benefit of Jerome April 25, 1997
Dienstag, former owner of
Datron Computer Products,
Inc.
SB93038
- ----------------------- ------------------------- -------------------------- ---------------- -----------------------
- ----------------------- ------------------------- -------------------------- ---------------- -----------------------
- ----------------------- ------------------------- -------------------------- ---------------- -----------------------
======================= ========================= ========================== ================ =======================
</TABLE>
1
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MIAMI COMPUTER SUPPLY CORPORATION
AS THE BORROWER
AND
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS LENDERS
AND
NATIONAL CITY BANK
AND ADMINISTRATIVE AGENT
-------------------
AMENDMENT NO. 1
DATED AS OF
FEBRUARY 13, 1998
TO
CREDIT AGREEMENT
DATED AS OF
JANUARY 8, 1998
-------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of February 13,
1998 ("THIS AMENDMENT"), among:
(i) MIAMI COMPUTER SUPPLY CORPORATION, an Ohio corporation
(herein, together with its successors and assigns, the "BORROWER");
(ii) the financial institutions listed on the signature pages
hereof (the "LENDERS"); and
(iii) NATIONAL CITY BANK, a national banking association, as
Administrative Agent (the "ADMINISTRATIVE AGENT") for the Lenders under
the Credit Agreement:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders named therein, and the Administrative
Agent entered into the Credit Agreement, dated as of January 8, 1998 (herein
referred to as the "CREDIT AGREEMENT"; with the terms defined therein, or the
definitions of which are incorporated therein, being used herein as so
defined).
(2) The parties hereto desire to increase the Total General Revolving
Commitment from $30,000,000 to $35,000,000 and to reduce the Total Term Loan
Commitment from $20,000,000 to $15,000,000, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENT.
Effective on the Effective Date (as hereinafter defined), the Total
General Revolving Commitment is increased from $30,000,000 to $35,000,000 and
the Total Term Loan Commitment is reduced from $20,000,000 to $15,000,000,
and Annex I to the Credit Agreement is amended to read in its entirety as set
forth on Annex I hereto.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
2.1. AUTHORIZATION, VALIDITY AND BINDING EFFECT. This Amendment has been
duly authorized by all necessary corporate action on the part of the
Borrower, has been duly executed and delivered by a duly authorized officer
or officers of the Borrower, and constitutes the valid and binding agreement
of the Borrower, enforceable against the Borrower in accordance with its
terms.
2.2. REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The
representations and warranties of the Borrower contained in the Credit
Agreement, as amended hereby, are true and correct on and as of the date
hereof as though made on and as of the date hereof, except to the extent that
such representations
<PAGE>
and warranties expressly relate to a specified date, in which case such
representations and warranties are hereby reaffirmed as true and correct when
made.
2.3. NO EVENT OF DEFAULT, ETC. No condition or event has occurred or
exists which constitutes or which, after notice or lapse of time or both, would
constitute an Event of Default.
2.4. COMPLIANCE. The Borrower is in full compliance with all
covenants and agreements contained in the Credit Agreement, as amended hereby.
SECTION 3. EFFECTIVENESS.
This Amendment shall become effective on and as of the date (the
"EFFECTIVE DATE"), on or before February 27, 1998 if the following conditions
are satisfied:
(a) this Amendment shall have been executed by the Borrower
and the Administrative Agent, and counterparts hereof as so executed
shall have been delivered to the Administrative Agent;
(b) the Acknowledgment and Consent appended hereto shall have
been executed by the Credit Parties named therein, and counterparts
hereof as so executed shall have been delivered to the Administrative
Agent;
(c) the Administrative Agent shall have been notified by all
of the Lenders that such Lenders have executed this Amendment (which
notification may be by facsimile or other written confirmation of such
execution); and
(d) the Borrower shall have duly executed and delivered to the
Administrative Agent for the Lenders new Notes reflecting the revised
Commitments provided for in this Amendment.
The Administrative Agent shall notify the Borrower and each Lender in writing
of the effectiveness hereof.
SECTION 4. RATIFICATIONS.
The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Credit
Agreement, and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect.
SECTION 5. MISCELLANEOUS.
5.1. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon
and inure to the benefit of the Borrower, each Lender and the Administrative
Agent and their respective permitted successors and assigns.
5.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by
2
<PAGE>
the Administrative Agent or any Lender or any subsequent Loan or issuance of
a Letter of Credit shall affect the representations and warranties or the
right of the Administrative Agent or any Lender to rely upon them.
5.3. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed
and delivered pursuant to the terms of the Credit Agreement as amended
hereby, are hereby amended so that any reference therein to the Credit
Agreement shall mean a reference to the Credit Agreement as amended hereby.
5.4. EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Borrower agrees to pay on
demand all costs and expenses incurred by the Administrative Agent in
connection with the preparation, negotiation, and execution of this
Amendment, including without limitation the costs and fees of the
Administrative Agent's special legal counsel, regardless of whether this
Amendment becomes effective in accordance with the terms hereof, and all
costs and expenses incurred by the Administrative Agent or any Lender in
connection with the enforcement or preservation of any rights under the
Credit Agreement, as amended hereby.
5.5. SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the term or provision so held to be invalid or
unenforceable.
5.6. APPLICABLE LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Ohio.
5.7. HEADINGS. The headings, captions and arrangements used in
this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
5.8. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written
or oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent
oral agreements or discussions of the parties hereto. There are no oral
agreements among the parties hereto relating to the subject matter hereof or
any other subject matter relating to the Credit Agreement.
5.9. COUNTERPARTS. This Amendment may be executed by the parties
hereto separately in one or more counterparts, each of which when so executed
shall be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.
[The balance of this page is intentionally blank.]
3
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.
MIAMI COMPUTER SUPPLY KEY CORPORATE CAPITAL INC.
CORPORATION
By:
-----------------------------
By: Title:
----------------------------
President &
Chief Executive Officer
NATIONAL CITY BANK, PNC BANK, NATIONAL ASSOCIATION
individually and as (successor to PNC Bank, Ohio, N.A.)
Administrative Agent (as
successor to National City
Bank, Dayton) By:
-----------------------------
Title:
By:
----------------------------
Vice President
4
<PAGE>
ACKNOWLEDGMENT AND CONSENT
For the avoidance of doubt, and without limitation of the intent and
effect of sections 6 and 10 of the Subsidiary Guaranty (as such term is
defined in the Credit Agreement referred to in the Amendment No. 1 to Credit
Agreement (the "AMENDMENT"), to which this Acknowledgment and Consent is
appended), each of the undersigned hereby unconditionally and irrevocably (i)
acknowledges receipt of a copy of the Credit Agreement and the Amendment, and
(ii) consents to all of the terms and provisions of the Credit Agreement as
amended by the Amendment.
Capitalized terms which are used herein without definition shall
have the respective meanings ascribed thereto in the Credit Agreement
referred to herein. This Acknowledgment and Consent is for the benefit of the
Lenders and the Administrative Agent, any other person who is a third party
beneficiary of the Subsidiary Guaranty, and their respective successors and
assigns. No term or provision of this Acknowledgment and Consent may be
modified or otherwise changed without the prior written consent of the
Administrative Agent, given as provided in the Credit Agreement. This
Acknowledgment and Consent shall be binding upon the successors and assigns
of each of the undersigned. This Acknowledgment and Consent may be executed
by any of the undersigned in separate counterparts, each of which shall be an
original and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Acknowledgment and Consent as of the date of the Amendment
referred to herein.
DIVERSIFIED DATA PRODUCTS, INC.
By:
----------------------------------
Title:
FORCE 4 D. P. SUPPLIES, INC.
By:
----------------------------------
Title:
NTI DATA PRODUCTS, INC.
By:
----------------------------------
Title:
BRITCO, INC.
By:
----------------------------------
Title:
<PAGE>
ANNEX I
INFORMATION AS TO LENDERS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
National City Bank National City Bank National City Bank
GENERAL 6 North Main Street 6 North Main Street
REVOLVING Dayton, Ohio 45412 Dayton, Ohio 45412
COMMITMENT:
CONTACTS/ NOTIFICATION METHODS:
$14,000,000 National City Bank
6 North Main Street
Dayton, Ohio 45412
SWING LINE Glen R. Horner
REVOLVING Vice President
COMMITMENT: Direct Dial: (937) 226-2498
Facsimile: (937) 226-2058
$3,000,000
AGENCY SERVICES (BILLING AND GENERAL
INQUIRIES AND TO RECEIVE COPIES OF
TERM LOAN FINANCIAL INFORMATION):
COMMITMENT: Kimberly M. Stevenson
Assistant Vice President
$6,000,000 National City Bank
Locator Code #2104
1900 East Ninth Street
Cleveland, Ohio 44114
Telephone: (216) 575-2398
Facsimile: (216) 575-9396
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Connie B. Djucik
Money Desk Manager
Telephone: (216) 575-2578
Facsimile: (216) 575-2481
CONTACT FOR LETTERS OF CREDIT:
Jamie M. Lanzalco
Letter of Credit Officer
Telephone: (216) 575-2916
Facsimile: (216) 575-9910
WIRING INFORMATION:
National City Bank
ABA # 041 000 124
Ref.: Miami Computer Supply Corporation
Attention: Commercial Loan Operations
National City Bank, Dayton
ABA # 042 200 279
Ref.: Miami Computer Supply Corporation
Attention: Commercial Loan Operations
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Key Corporate Key Corporate Capital Inc. Key Corporate Capital Inc.
Capital Inc. GENERAL 127 Public Square 127 Public Square
REVOLVING Cleveland, Ohio 44114 Cleveland, Ohio 44114
COMMITMENT:
CONTACTS/NOTIFICATION METHODS:
$10,500,000 Michael F. McCullough
Vice President
KeyStructured Finance
TERM LOAN Telephone: (216) 689-3952
COMMITMENT: Facsimile: (216) 689-4077
$4,500,000 Lee Mosby
Senior Vice President
KeyStructured Finance
Telephone: (216) 689-4391
Facsimile: (216) 689-4077
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Elizabeth ("Betty") Zimmerman
Telephone: (216) 689-4402
Facsimile: (216) 689-3298
PAYMENT INSTRUCTIONS:
KeyBank
ABA # 041 000 1039
Attention: Commercial Loan Operations
Reference: Miami Computer Supply
Corporation (wire info for L/Cs: must
direct to International Operations--
Attn.: Gerald Zapfe; ref: Miami
Computer Supply)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
NAME OF LENDER COMMITMENT DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PNC Bank, National PNC Bank, National Association PNC Bank, National Association
Association GENERAL 201 East 5th Street 201 East 5th Street
REVOLVING Cincinnati, Ohio 45201-1198 Cincinnati, Ohio 45201-1198
COMMITMENT:
CONTACTS/NOTIFICATION METHODS:
$10,500,000 Timothy E. Reilly
Vice President
Corporate Banking
TERM LOAN Telephone: (513) 651-8786
COMMITMENT: Facsimile: (513) 651-8952
$4,500,000 William P. Seifrit
Relationship Associate
Telephone: (513) 651-8941
Facsimile: (513) 651-8952
CONTACT FOR BORROWINGS, PAYMENTS, ETC.:
Susie Richardson
Admin. Coordinator
Telephone: (513) 651-8683
Facsimile: (513) 651-8952
LETTER OF CREDIT CONTACT:
Teresa Fern
Trade Services
Telephone: (513) 651-8566
Facsimile: (513) 651-7182
PAYMENT INSTRUCTIONS:
ABA # 042 000 398
Attention: Commercial Loan Operations
Reference: Miami Computer Supply
Corporation
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
EXHIBIT 23.1
CONSENT
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Registration Statement and the Prospectus included therein. In
giving the foregoing consent, we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations promulgated thereunder.
/s/ ELIAS, MATZ, TIERNAN & HERRICK LLP
Washington, D.C.
March 5, 1998
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 19, 1997 appearing on page 19 of Miami Computer Supply Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996.
Additionally, we hereby consent to the incorporation by reference in the
aforementioned Prospectus and Registration Statement of our reports dated
October 22, 1997, November 4, 1997 and November 14, 1997 relating to the audited
financial statements of Britco, Inc., TBS Printware Corporation and Minnesota
Western/Creative Office Products, Inc., which appear in the Current Reports on
Form 8-K of Miami Computer Supply Corporation dated December 15, 1997, January
15, 1998 and January 30, 1998.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
March 5, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 166,971
<SECURITIES> 0
<RECEIVABLES> 14,726,951
<ALLOWANCES> 46,511
<INVENTORY> 8,210,256
<CURRENT-ASSETS> 23,238,704
<PP&E> 3,538,283
<DEPRECIATION> 2,043,187
<TOTAL-ASSETS> 31,232,866
<CURRENT-LIABILITIES> 13,367,644
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 31,232,866
<SALES> 71,351,489
<TOTAL-REVENUES> 71,351,489
<CGS> 58,616,014
<TOTAL-COSTS> 68,737,744
<OTHER-EXPENSES> 47,048
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,959
<INCOME-PRETAX> 2,566,897
<INCOME-TAX> 1,049,315
<INCOME-CONTINUING> 1,517,382
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,517,382
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
