SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report December 2, 1997
(Date of earliest event reported) (November 17, 1997)
OMNIQUIP INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21461 43-1721419
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
222 East Main Street 53074
Port Washington, Wisconsin (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (414) 268-8965
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On November 17, 1997, SKL Lift, Inc. ("SKL"), a wholly-owned subsidiary of
OmniQuip International, Inc. (the "Company"), acquired the business and
substantially all of the assets of the Snorkel Division ("Snorkel") of Figgie
International Inc. ("Figgie") pursuant to a definitive agreement entered into on
July 19, 1997 and amended on November 9, 1997. The Company has guaranteed the
obligations of SKL under the purchase agreement. Snorkel is a leading
manufacturer and marketer of aerial work platforms and aerial fire apparatus
with facilities located in Kansas, Missouri, Australia and New Zealand. The
assets acquired by SKL by virtue of the acquisition, include, among other
things, certain real property, machinery and equipment, accounts receivable,
inventory and certain intangibles. The Company intends to continue operating
Snorkel in the markets it now serves and, accordingly, intends to continue to
use its assets in substantially the same manner they were used prior to the
acquisition.
The purchase price paid by the Company for Snorkel was $100 million in cash
at closing plus the assumption of certain liabilities. The funds were obtained
by the Company pursuant to a secured credit facility with Morgan Stanley Senior
Funding Inc., as Syndication Agent and Arranger, and First Union National Bank,
as Administrative Agent and Co-Arranger. The Company is also required to pay an
additional purchase price amount of up to $50 million, which will be equal to
the amount of the net sales of Snorkel for the twelve-month period commencing on
April 1, 1998 and ending on March 31, 1999 (the "Earn-Out Period") in excess of
$140 million, such additional amount not to exceed $20 million, plus 70% of the
amount of net sales of Snorkel during the Earn-Out Period in excess of $160
million, such additional amount not to exceed $30 million. The purchase price
was determined by negotiation between the parties. The acquisition will be
accounted for under the purchase method of accounting with the excess purchase
price over the estimated fair value of net assets acquired recorded as goodwill.
Item 5. Other Events.
On December 1, 1997, the Company filed a Certificate of Correction of
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware, which changed the spelling of the Company's name from "Omniquip
International, Inc." to "OmniQuip International, Inc." The correction is
effective as of September 30, 1996, the date of filing of the Company's Restated
Certificate of Incorporation.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements
<PAGE>
Financial Statements of Snorkel for the nine months ended September 30,
1997 and September 30, 1996 (unaudited) and the fiscal years ended December 31,
1996, December 31, 1995 and December 31, 1994.*
(b) Pro Forma Financial Information
Pro Forma Financial Information of the Company for the fiscal year ended
September 30, 1997.*
(c) Exhibits
(i) Asset Purchase Agreement, dated as of July 19, 1997, by and among
Figgie International Inc., Figgie International Real Estate Inc., Figgie
Properties Inc., Figgie Licensing Corporation, Figgie Risk Management Co. and
SKL Lift, Inc.
(ii) Amendment, dated as of November 9, 1997, by and between Figgie
International Inc. and SKL Lift, Inc.
(iii) Credit Agreement, dated November 17, 1997, by and among Omniquip
International, Inc., the certain lending institutions party thereto from time to
time, Morgan Stanley Senior Funding, Inc., as Syndication Agent and Arranger,
and First Union National Bank, as Administrative Agent and Co-Arranger.
- -----------------
*It is impractical for the Company, at the time of this filing, to
provide financial statements and pro forma financial information. Pursuant to
the instructions for Item 7 of Form 8-K, the Company will furnish such financial
statements and pro forma financial information as soon as practicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
OMNIQUIP INTERNATIONAL, INC.
Date: December 2, 1997 By:__________________________
Philip G. Franklin
Vice President - Finance, Chief
Financial Officer, Treasurer and
Secretary
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
2.1 Asset Purchase Agreement, dated as of July 19, 1997, by and
among Figgie International Inc., Figgie International Real
Estate Inc., Figgie Properties Inc., Figgie Licensing
Corporation, Figgie Risk Management Co. and SKL Lift, Inc.
2.2 Amendment, dated as of November 9, 1997, by and between Figgie
International Inc. and SKL Lift, Inc.
10 Credit Agreement, dated November 17, 1997, by and among
Omniquip International, Inc., the certain lending institutions
party thereto from time to time, Morgan Stanley Senior Funding,
Inc., as Syndication Agent and Arranger, and First Union
National Bank, as Administrative Agent and Co-Arranger.
[Execution Copy]
---------------------------------------------------------------
ASSET PURCHASE AGREEMENT
by and among
FIGGIE INTERNATIONAL INC.,
FIGGIE INTERNATIONAL REAL ESTATE INC.,
FIGGIE PROPERTIES INC.,
FIGGIE LICENSING CORPORATION,
FIGGIE RISK MANAGEMENT CO.
and
SKL LIFT, INC.
Dated as of July 19, 1997
---------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE I
PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.................. 2
SECTION 1.1 Purchase and Sale...................................... 2
SECTION 1.2 Assumed Liabilities.................................... 7
SECTION 1.3 Retained Liabilities................................... 10
SECTION 1.4 Consideration.......................................... 12
SECTION 1.5 Undertaking............................................ 12
SECTION 1.6 Closing................................................ 12
SECTION 1.7 Deliveries by Seller................................... 13
SECTION 1.8 Deliveries by Buyer.................................... 14
ARTICLE II
RELATED MATTERS ...................................................... 15
SECTION 2.1 Excluded Intellectual Property; Use of Trade-
marks and Logos....................................... 15
SECTION 2.2 Books and Records of the Business..................... 16
SECTION 2.3 Ongoing or Transition Services........................ 19
SECTION 2.4 Intercompany Accounts................................. 19
SECTION 2.5 Exclusive Remedy...................................... 19
SECTION 2.6 Post-Closing Adjustment............................... 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER, FIGGIE REAL ESTATE,
FIGGIE PROPERTIES AND FIGGIE LICENSING................................... 23
SECTION 3.1 Organization and Authority of Seller................. 23
SECTION 3.2 Conveyed Subsidiaries................................ 24
SECTION 3.3 Consents and Approvals: No Violations................ 27
SECTION 3.4 Division and Subsidiary Financial Statements......... 29
SECTION 3.5 Absence of Undisclosed Liabilities................... 29
SECTION 3.6 Absence of Material Adverse Changes, etc............. 30
SECTION 3.7 Title; Properties and Assets Necessary for
Conduct of Business.................................. 31
SECTION 3.8 Real Property........................................ 34
SECTION 3.9 Real Property Leases................................. 35
SECTION 3.10 Material Contracts................................... 36
-i-
<PAGE>
Page
SECTION 3.11 Intellectual Property................................ 37
SECTION 3.12 Litigation........................................... 38
SECTION 3.13 Compliance with Applicable Law....................... 39
SECTION 3.14 Insurance............................................ 39
SECTION 3.15 Employee Benefit Plans: ERISA....................... 40
SECTION 3.16 Taxes................................................ 44
SECTION 3.17 Environmental Matters................................ 47
SECTION 3.18 Certain Fees......................................... 48
SECTION 3.19 Employees............................................ 48
SECTION 3.20 Powers of Attorney................................... 49
SECTION 3.21 Accounts Receivable and Accounts Payable............. 49
SECTION 3.22 Inventory............................................ 49
SECTION 3.23 Employee Relations; Labor Disagreements.............. 50
SECTION 3.24 Related Party Transactions........................... 51
SECTION 3.25 Absence of Questionable Payments..................... 51
SECTION 3.26 Customers and Vendors................................ 52
SECTION 3.27 Distributors and Representatives..................... 52
SECTION 3.28 Defects in Products or Designs; Product Safety....... 53
SECTION 3.29 Product Warranties................................... 53
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER.................................. 53
SECTION 4.1 Corporate Organization and Authority................. 54
SECTION 4.2 Consents and Approvals: No Violations............... 54
SECTION 4.3 Litigation........................................... 55
SECTION 4.4 Investigation by Buyer............................... 56
SECTION 4.5 Solvency; Financing.................................. 56
SECTION 4.6 Certain Fees......................................... 57
ARTICLE V
COVENANTS ..................................................... 57
SECTION 5.1 Conduct of the Business.............................. 57
SECTION 5.2 Access to Information................................ 61
SECTION 5.3 Regulatory Compliance................................ 62
SECTION 5.4 Consents; Assignments................................ 63
SECTION 5.5 Reasonable Best Efforts, etc......................... 64
SECTION 5.6 Public Announcements................................. 64
SECTION 5.7 Employees; Employee Benefits......................... 65
-ii-
<PAGE>
Page
SECTION 5.8 Allocation of Purchase Price......................... 68
SECTION 5.9 Proration of Certain Taxes........................... 68
SECTION 5.10 Warranty Claims...................................... 69
SECTION 5.11 Delivery of Reports, Defaults, etc. Pending
Closing.............................................. 69
SECTION 5.12 Real Property Title Review........................... 70
SECTION 5.13 Preliminary Environmental Assessment Reports......... 71
SECTION 5.14 Agreement Not to Compete or Solicit.................. 72
SECTION 5.15 Tax Returns.......................................... 73
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES................................. 73
SECTION 6.1 Conditions to Each Party's Obligations............... 73
SECTION 6.2 Conditions to the Obligations of Buyer............... 74
SECTION 6.3 Conditions to the Obligations of Seller.............. 76
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER; SURVIVAL................................. 77
SECTION 7.1 Termination.......................................... 77
SECTION 7.2 Procedure and Effect of Termination.................. 78
SECTION 7.3 Amendment, Modification and Waiver................... 78
SECTION 7.4 Survival of Representations and Warranties........... 79
SECTION 7.5 Post-Closing Liability; Indemnification.............. 80
SECTION 7.6 New Zealand Property................................. 89
ARTICLE VIII
DEFINITIONS.............................................................. 93
ARTICLE IX
MISCELLANEOUS............................................................ 105
SECTION 9.1 Further Assurances................................... 105
SECTION 9.2 Notices.............................................. 105
SECTION 9.3 Severability......................................... 106
SECTION 9.4 Assignment; Binding Effect........................... 107
-iii-
<PAGE>
Page
SECTION 9.5 No Third Party Beneficiaries........................ 107
SECTION 9.6 Interpretation...................................... 107
SECTION 9.7 Entire Agreement.................................... 108
SECTION 9.8 Governing Law....................................... 108
SECTION 9.9 Specific Performance................................ 108
SECTION 9.10 Counterparts........................................ 108
EXHIBIT A - Form of Undertaking
EXHIBIT B - Form of Bill of Sale
EXHIBIT C - Form of Deed
EXHIBIT D - Form of St. Joseph Lease
EXHIBIT E - Form of Closing Balance Sheet Report and Principles
EXHIBIT F - Form of Skadden, Arps, Slate, Meagher & Flom LLP Opinion
EXHIBIT G - Form of Deacons Graham & James Opinion
EXHIBIT H - Form of Chapman Tripp Sheffield Young Opinion
EXHIBIT I - Form of Dickstein Shapiro Morin & Oshinsky LLP Opinion
EXHIBIT J - Form of Seller's Release
EXHIBIT K - Form of Designee's Release
EXHIBIT L - Form of Conveyed Subsidiary's Release
EXHIBIT M - Form of New Zealand Lease
-iv-
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of July 19,
1997, by and among Figgie International Inc., a Delaware corporation ("Seller"),
Figgie International Real Estate Inc., a Delaware corporation ("Figgie Real
Estate"), Figgie Properties Inc., a Delaware corporation ("Figgie Properties"),
Figgie Licensing Corporation, a Delaware corporation ("Figgie Licensing" and,
together with Figgie Real Estate and Figgie Properties, the "Asset Affiliates"),
Figgie Risk Management Co., a Florida corporation, and SKL Lift, Inc. a Delaware
corporation ("Buyer").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Seller owns and operates the Business (as hereafter defined);
WHEREAS, except as set forth in Section 3.2(c) of the Seller Disclosure
Schedule (as hereafter defined), Seller is the record and beneficial owner of
all of the issued and outstanding shares of common stock of the Conveyed
Subsidiaries (as hereafter defined); and
WHEREAS, pursuant to the terms and conditions set forth in this Agreement,
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Business as a going concern, including (i) all of the assets, properties and
rights, the use of which is primarily in the Business (other than those
specifically excluded as described in this Agreement) and (ii) all of the issued
and outstanding common stock of the Conveyed Subsidiaries owned by Seller (the
"Shares") and the Designee Shares (as hereafter defined), and to assume certain
liabilities relating thereto;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereafter set
forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
-1-
<PAGE>
ARTICLE I
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF LIABILITIES
SECTION 1.1 Purchase and Sale.
(a) Assets. In reliance on the representations, warranties, covenants
and agreements set forth in this Agreement and subject to paragraphs (c) and (d)
of this Section 1.1 and to the other terms and conditions of this Agreement, at
the Closing (as hereafter defined), Seller shall sell, convey, assign, transfer
and deliver to Buyer, or shall cause to be sold, conveyed, assigned, transferred
and delivered to Buyer, and Buyer shall purchase, acquire and accept from Seller
and Seller's Designee (as hereafter defined), in each case free and clear of all
liens, charges and encumbrances (except for Permitted Liens (as hereafter
defined) and as otherwise expressly permitted by Sections 3.7 and 5.12 hereof),
the Business as a going concern together with all of Seller's (or, in the case
of certain real property, of Figgie Properties' or Figgie Real Estate's and, in
the case of certain Intellectual Property (as hereafter defined), of Figgie
Licensing's) rights, title and interests in and to all of the properties,
contracts, rights and other assets (of every kind, nature, character and
description, whether real, personal or mixed, whether tangible or intangible,
whether accrued, contingent or otherwise and wherever situated), the use of
which is primarily in the Business (the "Assets"), including, without
limitation, the following:
(i) All of the real property owned as of the Closing Date (as
hereafter defined) by Seller, Figgie Properties or Figgie Real Estate, the use
of which is primarily in the Business (other than the Retained Property (as
hereafter defined)) (the "Property") and any rights of Seller, Figgie Properties
or Figgie Real Estate in all facilities, easements, rights of way, licenses,
permits and other appurtenances thereunto belonging (in each case, to the extent
transferable) and all buildings, facilities, structures, fixtures, leasehold and
other improvements located thereon, which Property is listed in Section
1.1(a)(i) of the Seller Disclosure Schedule;
-2-
<PAGE>
(ii) All of the rights and incidents of ownership as of the
Closing Date of Seller, or Figgie Properties, in leases or subleases of real
property, the use of which is primarily in the Business (the "Real Property
Leases") and any rights of Seller or Figgie Properties in all easements, rights
of way, licenses, permits and other appurtenances thereunto belonging (in each
case, to the extent transferable) and all buildings, facilities, structures,
fixtures, leasehold and other improvements located thereon, which Real Property
Leases are listed in Section 1.1(a)(ii) of the Seller Disclosure Schedule;
(iii) All of the rights and incidents of ownership as of the
Closing Date of Seller in and to all the leases of personal property, the use of
which is primarily in the Business, to the extent transferable, including all
assets listed in Section 1.1(a)(iii) of the Seller Disclosure Schedule;
(iv) All machinery, equipment, tools, business machines,
vehicles, office furniture and fixtures, office equipment, computer data
processing equipment, office materials, supplies, raw materials, work-in-process
and inventory owned as of the Closing Date by Seller, the use of which is
primarily in the Business, including all assets listed in Section 3.7(a)(i) of
the Seller Disclosure Schedule;
(v) All rights and incidents of ownership of Seller as of the
Closing Date in, to and under all contracts, licenses, leases (other than leases
for real property), commitments, purchase orders, Employment Agreements (as
hereafter defined) and other agreements (in each case, to the extent
transferable), the use of which is primarily in the Business (the "Contracts"),
including the Material Contracts (as hereafter defined) listed in Section
1.1(a)(v) of the Seller Disclosure Schedule;
(vi) All customer and supplier lists of the Business;
-3-
<PAGE>
(vii) All accounts receivable and prepaid expenses of the
Business, other than prepaid insurance, as of the Closing Date;
(viii) Subject to Sections 1.1(c)(v) and 2.1 hereof, all domestic
and foreign trademarks, service marks, certification marks, collective marks,
collective membership marks, copyrights, registrations and applications for
registration for any of the foregoing, patents and applications therefor, trade
secrets, tradenames, service names, logos, assumed names, all rights of
enforcement for past infringement thereof, royalty rights, and licenses thereof
and thereto (excluding the Excluded Intellectual Property (as hereafter
defined)), owned by Seller or Figgie Licensing as of the Closing Date, that are
used primarily in the Business, (collectively, the "Intellectual Property"),
including that Intellectual Property listed in Section 1.1(a)(viii) of the
Seller Disclosure Schedule;
(ix) All of Seller's permits, licenses, approvals, consents and
authorizations by any Governmental Entity (as hereafter defined) (collectively,
"Permits"), to the extent transferable, that are exclusively used or held for
use in the Business as of the Closing Date;
(x) All of the Division's (as hereafter defined) books and
records relating solely to the Division and/or the Business;
(xi) All of the Division's other files, indices, market research
studies, surveys, reports, analyses and similar information relating to the
Business;
(xii) All of the Shares and the share of common stock of each of
the Conveyed Subsidiaries owned by Seller's Designee (collectively, the
"Designee Shares");
(xiii) The goodwill of the Business in or arising from the Assets
and the business represented thereby;
-4-
<PAGE>
(xiv) All other assets listed in Section 1.1(a)(xiv) of the
Seller Disclosure Schedule;
(xv) All telephone, telex, e-mail, Internet, post office box and
other numbers and addresses primarily related to the Business, to the extent
transferable;
(xvi) All sales data, brochures, catalogs, literature, forms,
mailing lists, art work, photographs and advertising material, in whatever form
or media, that relate primarily to the Business; and
(xvii) Except as provided in Section 1.1(c)(iv) hereof and except
as arising from or relating to the Retained Liabilities (as hereafter defined),
all claims, causes of action, choses in action, rights of recovery and rights of
set-off of any kind in favor of Seller and pertaining to, or arising out of, the
Assets or offsetting any Assumed Liabilities (as hereafter defined), to the
extent transferable.
(b) Instruments of Transfer. The sale, assignment, transfer and
delivery of the Assets, including the Shares, shall be effected by delivery by
Seller to Buyer of (i) the Bill of Sale (as hereafter defined), (ii) the Deeds
(as hereafter defined), (iii) the certificates representing the Shares duly
endorsed and in form for transfer to Buyer and (iv) the Other Instruments (as
hereafter defined). Seller shall cause the Designee Shares to be sold, assigned,
transferred and delivered to Buyer or, at Buyer's request, Buyer's designee and
to deliver to Buyer or, at Buyer's request, Buyer's designee the certificate
representing such shares duly endorsed and in form for transfer to Buyer or, at
Buyer's request, Buyer's designee.
(c) Excluded Assets. Notwithstanding anything contained in paragraph
(a) of this Section 1.1 to the contrary, the Assets shall not include any of the
following properties, contracts, rights and other assets (the "Excluded
Assets"):
(i) All rights that accrue or will accrue to Seller under this
Agreement;
-5-
<PAGE>
(ii) All cash and cash equivalents, including certificates of
deposit, short-term deposits, time investments and similar items and all
securities (other than petty cash balances at the various locations of the
Business, the Shares and the Designee Shares);
(iii) All tax refunds (including any interest thereon) and all
tax credits and deductions attributable to the Business prior to and including
the Closing Date;
(iv) All insurance policies of Seller and all refunds, rights and
claims thereunder;
(v) Except as specifically provided in Section 2.1(b) hereof, the
Figgie Trademarks and Logos (as hereafter defined) and all intellectual property
that is set forth in Section 1.1(c)(v) of the Seller Disclosure Schedule (such
scheduled intellectual property, together with the Figgie Trademarks and Logos
and the intellectual property that is not used primarily in the Business, the
"Excluded Intellectual Property"); and
(vi) That certain real property listed in Section 1.1(c)(vi) of
the Seller Disclosure Schedule (the "Retained Property").
(d) Nonassignability. Anything contained in this Agreement or any
Related Agreement (as hereafter defined) to the contrary notwithstanding,
neither this Agreement nor any Related Agreement shall constitute an assignment,
transfer, sublicense or sublease of, or an agreement to assign, transfer,
sublicense or sublease any right, title or interest in, to or under any,
contract, license, lease, commitment, sales order, purchase order or other
agreement, or any claim or right to any benefit arising thereunder or resulting
therefrom, if an attempted assignment, transfer, sublicense or sublease thereof,
without the consent or waiver of a third party thereto (including a Governmental
Entity) would constitute a breach thereof or a violation of any Legal
Requirement (as hereafter defined), or in any way adversely affect the rights of
Buyer or Seller thereunder, unless and until such consent or waiver has been
duly obtained or such assignment, transfer, sublicense or sublease has
-6-
<PAGE>
otherwise become lawful. In the event and to the extent that Seller is unable,
with the assistance and cooperation of Buyer, to obtain any such required
consent or waiver, Seller shall, as provided in and subject to Section 5.4
hereof, use its reasonable efforts to provide Buyer the benefits of any such
contract, license, lease, commitment, sales order, purchase order or other
agreement (including contracts, licenses, leases, commitments, sales orders,
purchase orders or other agreements pertaining to the use of (x) all software
used primarily in the Business (collectively the "Software Contracts") and (y)
all equipment that is material to the manufacturing operations of the Business
(collectively, the "Manufacturing Equipment Contracts").
SECTION 1.2 Assumed Liabilities. In reliance on the representations,
warranties, covenants and agreements set forth in this Agreement and subject to
the terms and conditions of this Agreement, at the Closing, and concurrently
with the purchase described in Section 1.1 hereof, Buyer shall assume and be
responsible for all of the following obligations and liabilities (collectively,
the "Assumed Liabilities"):
(a) Those Current Liabilities (as such accounting term is generally
used) of Seller to the extent and only to the extent reflected as a liability or
reserve (other than those liabilities or reserves set forth in Section 1.2(a) of
the Seller Disclosure Schedule, which Buyer shall fully assume) on the Final
Closing Balance Sheet (as hereafter defined), as of the close of business on the
Closing Date, remaining unpaid or unperformed as of the Closing Date;
(b) Except as otherwise provided in Section 1.2(e) hereof in respect
of clause 4 of the Hogan Service Agreement (as hereafter defined), all
liabilities, obligations and costs of Seller arising after the Closing Date
under any Contract assigned to Buyer pursuant to Section 1.1(a)(v) hereof or as
to which arrangements have been made pursuant to Section 5.4 hereof which is set
forth in the Seller Disclosure Schedule (or which is not required to be set
forth thereon), or which was entered into after the date hereof and prior to the
Closing Date in accordance with the provisions of this Agreement;
-7-
<PAGE>
(c) All liabilities, obligations and costs of Seller arising under
express, written or implied warranties in respect to products sold or
manufactured or services performed by Seller and distributed in the ordinary
course of the Business;
(d) Except as provided in Section 5.9 hereof, all liabilities and
obligations for Taxes (as hereafter defined) of Seller or the Conveyed
Subsidiaries that are attributable to or incurred in connection with the
Business after the Closing Date;
(e) Except as provided in Section 1.3(g) hereof, liabilities and
obligations attributable to or incurred in connection with the Business prior
to, on or after the Closing Date with respect to Affected Employees (as
hereafter defined) arising from, or relating to, any incentive, deferred
compensation, insurance, employment, performance, vacation, retiree benefit
plan, program, agreement or arrangement for the benefit of any current or former
employee of the Division, including obligations under clause 4 of the Hogan
Service Agreement; provided that in the case of any liability of a type required
by GAAP (as hereafter defined) to be reflected on the Final Closing Balance
Sheet then such liability only to the extent so reflected;
(f) All liabilities, obligations and costs arising under or in
relation to any product liability suit, action, claim or proceeding (whether for
personal injuries or property damages and whether or not related to the
Hunterlift or Economy Engineering product lines) with respect to products sold
or manufactured or services performed by the Division prior to, on or after the
Closing Date if, but only if, such liabilities, obligations or costs arise out
of events (which term for this purpose shall not be deemed to include either the
sale or manufacture of products or the performance of services prior to the
Closing Date) or accidents occurring after the Closing Date;
(g) All liabilities, obligations and costs of Seller from or relating
to any claim for workers' compensation or automobile and similar liabilities for
personal injuries arising in connection with the Business or in
-8-
<PAGE>
respect of persons employed in the Business prior to, on or after the Closing
Date if, but only if, such liabilities, obligations or costs arise out of events
or accidents occurring after the Closing Date;
(h) All liabilities, obligations and costs from or relating to any
claim, demand, action, lawsuit or proceeding, which relates to the Business,
Division or Assets by any third party, including any Governmental Entity
(collectively, the "General Litigation Claims"), if, but only if, such General
Litigation Claims (i) are listed in Section 1.2(h) of the Seller Disclosure
Schedule or (ii) arise out of events or accidents occurring after the Closing
Date;
(i) All liabilities, obligations and costs of Seller from or relating
to (i) any Environmental Claim, Release or presence of any Hazardous Materials,
or violation of any Environmental Law (each as hereafter defined) which arises
from or relates to the Business and which arose or occurred prior to the Closing
Date if such Environmental Claim, Release, presence or violation, or a risk
thereof or particular facts related thereto, was disclosed in, or reasonably
ascertainable from a review of the Phase I Environmental Report described in
Section 5.13 hereof (the "Known Pre-Closing Environmental Liabilities"), (ii)
any Release or event that causes the presence of any Hazardous Materials, or
violation of any Environmental Law, which arises from or relates to the Business
and which occurs on or after the Closing (except for a period of ninety days
following the Closing with respect to any violation prior to the Closing and
continuing after the Closing, provided that Buyer shall have made reasonable
efforts to correct such violation), or (iii) any Environmental Claim which
arises from or relates to the Business and which arises from conditions or
events that occur on or after the Closing (except for Environmental Claims
relating to alleged violations of Environmental Law for a period of ninety days
following the Closing with respect to any violation prior to the Closing and
continuing after the Closing, provided that Buyer shall have made reasonable
efforts to correct such violation).
-9-
<PAGE>
(j) All liabilities, obligations and costs of Seller, or any of its
Affiliates (as hereafter defined), from or relating to (x) that Amended and
Restated Management Agreement dated as of June 9, 1997 between Seller and
Richard A. Solon (other than Section 4.1 thereof) and (y) the letter agreements,
as amended, initially entered into during the period commencing on March 14,
1996 and ending on May 22, 1997, between Seller and the persons set forth in
Section 1.2(j) of the Seller Disclosure Schedule;
(k) All liabilities, obligations and costs set forth in Section 5.7
hereof;
(l) All liabilities, obligations and costs from or relating to the
Hunterlift recall program except those with respect to the Fagan Litigation (as
hereafter defined);
(m) All liabilities based, in whole or in part, upon the failure to
comply with laws applicable to bulk sale transfers in respect of any liability
that is otherwise an Assumed Liability; and
(n) All liabilities, obligations and costs incurred after the Closing
Date from or relating to the Fagan Equipment, et al. v. Figgie International
Inc. (Superior Court of California, County of Alameda, Southern Division, No.
H-193146 8) potential class action in California (the "Fagan Litigation"), if
but only if the class of plaintiffs is not ultimately certified.
SECTION 1.3 Retained Liabilities. Notwithstanding anything in this
Agreement to the contrary, other than Section 2.6(c) hereof, Buyer shall not
assume and shall be deemed not to have assumed and be responsible for, and
Seller shall be solely and exclusively liable and responsible for all debts,
obligations, contracts or liabilities, whether known or unknown, contingent or
otherwise, which arise out of the conduct of the Business prior to the Closing
which are not Assumed Liabilities (the "Retained Liabilities"), including
without limitation the following:
-10-
<PAGE>
(a) All liabilities and obligations incurred in connection with the
Excluded Assets;
(b) Except as provided in Section 2.6(c) hereof, all liabilities and
obligations for Taxes of Seller or the Conveyed Subsidiaries that are
attributable to or incurred in connection with the Business prior to or on the
Closing Date;
(c) All liabilities and obligations owed to any current or former
employee of the Division that arises prior to, on or after the Closing Date
under any stock option, stock appreciation, stock purchase, phantom stock or
other equity-based plan of Seller;
(d) All attorneys', accountants', brokers' or finder's fees or other
costs or expenses of Seller incurred in connection with this Agreement or the
transactions contemplated hereby, unless otherwise provided herein;
(e) All liabilities or obligations of any nature whatsoever arising
out of any misrepresentation or breach of any warranty of Seller contained in
this Agreement, or out of the failure of Seller to perform any of the covenants
or agreements contained herein;
(f) All liabilities, obligations and costs relating to the Centaur
insurance dispute;
(g) All liabilities, obligations and costs arising out of Section 4.1
of the Amended and Restated Management Agreement dated June 9, 1997 between
Seller and Richard A. Solon;
(h) All liabilities, obligations and costs of Seller from or relating
to any claim for workers' compensation or automobile and similar liabilities for
personal injuries arising in connection with the Business or in respect of
persons employed in the Business prior to or on the Closing Date;
(i) All liabilities, obligations and costs arising under or in
relation to any product liability suit, action, claim or proceeding (whether for
personal
-11-
<PAGE>
injuries or property damages and whether or not related to the Hunterlift or
Economy Engineering product lines) with respect to products sold or manufactured
or services performed by the Division prior to, on or after the Closing Date,
if, but only if, such liabilities, obligations or costs arise out of events or
accidents occurring prior to or on the Closing Date;
(j) All liabilities, obligations and costs of Seller from or relating
to any Environmental Claim, Release or presence of any Hazardous Materials, or
violation of any Environmental Law arising prior to the Closing Date other than
the Known Pre-Closing Environmental Liabilities;
(k) All liabilities, obligations and costs relating to the Fagan
Litigation in the event that the conditions required in order for such
litigation to become an Assumed Liability are not satisfied; and
(l) All liabilities based, in whole or in part, upon the failure to
comply with laws applicable to bulk sale transfers in respect of any liability
that is otherwise a Retained Liability.
SECTION 1.4 Consideration. The purchase price for the Assets shall be
$150,000,000 in cash, as the same may be adjusted pursuant to Section 2.6 hereof
(the "Purchase Price"). The amount payable at Closing shall be $150,000,000 in
cash, as the same may be adjusted pursuant to Section 2.6(a) hereof (as so
adjusted, the "Closing Cash Payment"), payable in immediately available funds.
SECTION 1.5 Undertaking. At the Closing, and as additional
consideration for the purchase of the Assets, Buyer shall execute and deliver to
Seller an undertaking substantially in the form attached hereto as Exhibit A
(the "Undertaking") pursuant to which Buyer shall agree to pay, perform and
discharge when due, to the extent the same are unpaid, unperformed or
undischarged on the Closing Date, the Assumed Liabilities.
SECTION 1.6 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall take
-12-
<PAGE>
place on the later of (i) the date that is forty-five (45) days after the date
of this Agreement and (ii) upon the satisfaction or waiver of the conditions set
forth in Article VI hereof at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York, or at such other time and place
as the parties may agree.
SECTION 1.7 Deliveries by Seller. At the Closing, Seller shall deliver
or cause to be delivered to Buyer (unless delivered previously) the following:
(a) the Deeds, provided that as to the Deeds and other conveyancing
documents requiring recordation, delivery to Buyer shall consist of physical
delivery in escrow to Chicago Title Insurance Company, or such other title
insurance company as shall be mutually acceptable to the parties hereto, not
less than 2 business days prior to the Closing, together with Seller's authority
at the Closing to file such documents for recordation;
(b) the Bill of Sale;
(c) the certificates representing the Shares and the Designee Shares
duly endorsed and in form for transfer to Buyer or, in the case of the Designee
Shares, Buyer's designee;
(d) the Other Instruments, if any;
(e) general assignments of registered and applied for Intellectual
Property, including patents (excluding Excluded Intellectual Property)
sufficient to transfer title to Buyer in such Intellectual Property under the
laws of the United States, New Zealand and Australia (the "General
Assignments");
(f) the Seller's Closing Certificate (as hereafter defined);
(g) the Seller's Release (as hereafter defined);
(h) the Designee's Release (as hereafter defined);
-13-
<PAGE>
(i) resignations of each of the following directors and officers of
the Conveyed Subsidiaries: William M. Goellner, William J. Sickman and Robert D.
Vilsack;
(j) the St. Joseph Lease (as hereafter defined);
(k) the New Zealand Lease (as hereafter defined); and
(l) all other documents, instruments and writings necessary to
consummate the transactions contemplated hereby or expressly required to be
delivered by Seller at or prior to the Closing pursuant to this Agreement.
SECTION 1.8 Deliveries by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to Seller (unless previously delivered) the following:
(a) the Closing Cash Payment, by wire transfer in immediately
available funds to such bank account or accounts as shall be designated by
Seller prior to the Closing;
(b) a duly executed Undertaking;
(c) the Conveyed Subsidiaries' Release (as hereafter defined);
(d) the St. Joseph Lease;
(e) the New Zealand Lease; and
(f) all other documents, instruments and writings (including, if
necessary, the Other Instruments) necessary to consummate the transactions
contemplated hereby or expressly required to be delivered by Buyer at or prior
to the Closing pursuant to this Agreement.
-14-
<PAGE>
ARTICLE II
RELATED MATTERS
SECTION 2.1 Excluded Intellectual Property; Use of Trademarks and
Logos.
(a) Buyer hereby expressly agrees and acknowledges that, subject to
paragraph (b) of this Section 2.1, Seller is not transferring or selling to
Buyer, and Buyer is not purchasing or acquiring from Seller, any right, title or
interest in the Excluded Intellectual Property (including the Figgie Trademarks
and Logos), it being understood that Seller shall retain all right to the
Excluded Intellectual Property and the goodwill represented thereby and
pertaining thereto.
(b) Buyer agrees that each of it and its Affiliates shall cease to
make any use of the Figgie Trademarks and Logos as soon as practicable after the
Closing Date and in any event within nine months thereafter, and from and after
the Closing Date (or, in the case of the matters referred to in the following
sentence, the respective nine-month anniversary or eighteen-month anniversary
thereof) shall not hold itself out as having any continuing affiliation with
Seller or its Affiliates. In addition, as promptly as practicable but in no
event later than nine months following the Closing Date, Buyer shall, and shall
cause its Affiliates to, remove, strike over or otherwise obliterate all of the
Figgie Trademarks and Logos from all materials constituting Assets, including,
without limitation, any vehicles, business cards, schedules, stationery,
displays, signs, promotional materials, manuals, forms, computer software and
other materials and Buyer shall cause all vehicles and, to the extent
practicable, other Assets to be de-marked prior to their disposition to any
third party; provided that until such stock is exhausted (but, in no event later
than eighteen months following the Closing Date), Buyer may continue to use and
dispose of raw materials, work in process and finished goods inventory on which
such name is stamped or imprinted. If the laws of any country require that
Buyer's right, as permitted herein, to use any inventory on which a Figgie
Trademark or Logo is marked be registered in order to fully protect Seller,
-15-
<PAGE>
Buyer and Seller shall use reasonable efforts to constitute Buyer as a
registered user (or its equivalent) in each of the countries in which such
registration is necessary. If required by the laws of any country Seller shall,
or if after the eighteen-month anniversary of the Closing Date Buyer desires to
continue to use or dispose of finished goods inventory marked with a Figgie
Trademark and Logo, Seller may, in its sole discretion, enter into such
licensing agreement or agreements consistent with this Section 2.1(b) as Buyer
shall reasonably request or as may be required by law with respect to the uses
thereon of a Figgie Trademark or Logo. Any expenses for constituting Buyer as a
registered user in any country shall be shared equally by Buyer and Seller. Any
registration of Buyer as a permitted user of any marks hereunder shall be
expunged on termination of the period of permitted use under this Agreement and
Seller shall be entitled to, and Buyer shall cooperate with Seller to, take all
necessary steps to that end.
(c) Seller agrees that each of Seller and its Affiliates that are
controlled by Seller shall cease to make any use of the Intellectual Property as
soon as practicable after the Closing Date and in any event within nine months
following the Closing Date and, from and after the Closing Date (or, in the case
of the matters referred to in the following sentence, the nine-month anniversary
thereof), shall not hold itself out as having any affiliation with the Division
or Buyer or its Affiliates. In addition, as promptly as practicable but in no
event later than nine months following the Closing Date, Seller shall, and shall
cause its Affiliates that are controlled by Seller to, remove, strike over or
otherwise obliterate all trademarks and logos included in the Intellectual
Property from all materials not constituting Assets, including, without
limitation, any vehicles, business cards, schedules, stationery, displays,
signs, promotional materials, manuals, forms, computer software and other
materials.
SECTION 2.2 Books and Records of the Business.
(a) Seller agrees to deliver to Buyer or make available to Buyer at
the places of business of the
-16-
<PAGE>
Business, at or as soon as practicable after the Closing, as requested by Buyer,
(i) all books and records of Seller to the extent such books and records relate
exclusively to the Division and/or the Business and (ii) a copy of that portion
of all other books and records that relate to the Division and/or the Business
(in the case of each of (i) and (ii) above, including, but not limited to,
correspondence, memoranda, personnel and payroll records and the like).
Notwithstanding the foregoing and except as otherwise provided in Section 2.2(b)
hereof, Seller shall not be obligated to provide (i) any books and records that
relate solely to, or (ii) any distinct portion of any books and records that
relate solely to, Seller as a whole or any divisions or Subsidiaries of Seller
other than the Division and/or the Business.
(b) For a period of five years following the Closing, or for such
longer periods as may be required to satisfy applicable laws, regulations or
agreements, or record retention requirements for Government Contracts (as
hereafter defined), (i) Seller shall retain all books and records relating to
the Division and/or the Business that are integrated or non-separable from the
books and records related to any divisions or Subsidiaries of Seller other than
the Division and/or the Business and (ii) Buyer shall retain all other books and
records of the Division and/or the Business, including, without limitation, all
other such books and records of the Division and/or the Business (A) relating to
Taxes, including, without limitation, accounting and tax records and information
pertaining to events occurring prior to the Closing Date and (B) required to be
retained pursuant to obligations imposed by any Government Contract, statute,
rule or regulation (such books and records of the Division and/or the Business
collectively, the "Records").
(c) For a period of five years following the Closing, or for such
longer periods as may be required to satisfy applicable laws, regulations or
agreements, or record retention requirements for Government Contracts, (i) each
party hereto shall provide to duly authorized representatives of the other party
who wish to review any Records for bona fide business reasons reasonable access,
during regular business hours, to (A) employees of such
-17-
<PAGE>
party, if any, who are familiar with such Records and who can assist such
representatives of such other party, at such other party's own expense, in
locating, explaining or otherwise reviewing such Records and (B) use of such
party's copying facilities, clerical services and telephone in a reasonable
manner at such other party's own expense and (ii) neither Seller nor Buyer shall
dispose of or destroy any Records within such period without written permission
of the other.
(d) If original documents are required to respond to legal process in
connection with the conduct by any party of any litigation, arbitration, audit,
settlement proceedings or negotiations with third parties with respect to its
conduct of the Business ("Legal Proceedings"), such party, subject to applicable
laws, regulations or agreements, shall be permitted to remove the Records
temporarily from the other party's premises, provided that such party shall
return such original documents to such other party as promptly as practicable
after such time when such original documents are no longer required in
connection with such Legal Proceedings.
(e) If, in connection with Legal Proceedings, Buyer shall require the
assistance of Seller's employees, Seller shall provide such employees to Buyer
as are reasonably required by Buyer. Buyer shall pay Seller's out-of-pocket
costs incurred in connection with such use of Seller's employees and shall
reimburse Seller for the number of whole business days spent by each such
employee in providing such services at the rate equal to the average daily gross
pay (excluding the value of employee benefits) of such employee during each
calendar month in which such services are performed.
(f) If, in connection with Legal Proceedings, Seller shall require the
assistance of Buyer's employees, Buyer shall provide such employees to Seller as
are reasonably required by Seller. Seller shall pay Buyer's out-of-pocket costs
incurred in connection with such use of Buyer's employees and shall reimburse
Buyer for the number of whole business days spent by each such employee in
providing such services at the rate equal to the average daily gross pay
(excluding the value of employee
-18-
<PAGE>
benefits) of such employee during each calendar month in which such services are
performed.
SECTION 2.3 Ongoing or Transition Services. Except (a) as identified
in Section 2.3 of the Seller Disclosure Schedule, (b) for services mutually
agreed upon to be provided by Seller to Buyer upon such terms as they may
mutually agree, and (c) as otherwise agreed to by Seller and Buyer, all data
processing services, real estate and construction services activities, cash
management and property and casualty insurance activities, purchasing and
logistics services, corporate-wide productivity improvement programs regarding
benefits administration and certain financial matters and other products or
services provided (i) to the Division by Seller or any Affiliate of Seller
(other than the Division) or (ii) to Seller or any Affiliate of Seller (other
than the Division) by the Division, including any agreements or understandings
(written or oral) with respect thereto, shall terminate.
SECTION 2.4 Intercompany Accounts. On the Closing Date, all
intercompany account balances then outstanding between the Division, on the one
hand, and Seller and its Affiliates (other than the Division), on the other
hand, shall be cancelled without any payment being made with respect thereto. No
adjustment shall be made to the Purchase Price as a result of any such
cancellation. No intercompany accounts shall be reflected in the Preliminary
Closing Balance Sheet (as hereafter defined) or the Final Closing Balance Sheet.
SECTION 2.5 Exclusive Remedy. Except as otherwise provided in Sections
5.14 and 9.9 hereof, the parties hereto agree that, in the absence of fraud,
their exclusive remedy against each other for claims made in connection with
this Agreement or the Related Agreements shall be those remedies available
pursuant to the indemnification and reimbursement provisions set forth in
Article VII hereof.
-19-
<PAGE>
SECTION 2.6 Post-Closing Adjustment.
(a) Seller, at its expense, shall prepare, in accordance with the
accounting principles and procedures set forth in Exhibit E hereto (the "Closing
Balance Sheet Principles"), an estimated balance sheet of the Business as of the
close of business on the Closing Date (the "Preliminary Closing Balance Sheet").
In addition, Seller shall prepare a report as of the Closing Date (the
"Preliminary Closing Report") setting forth its estimate of the net assets of
the Business as of the Closing Date (the "Preliminary Net Assets") as calculated
in accordance with the Closing Balance Sheet Principles. Not later than two (2)
business days prior to the Closing Date, Seller shall deliver to Buyer (i) the
Preliminary Closing Balance Sheet and the Preliminary Closing Report and (ii)
its estimate of the amount of the Closing Cash Payment. The Closing Cash Payment
shall be equal to $150,000,000 (i) plus the amount, if any, by which the
Preliminary Net Assets exceeds $58,000,000 or (ii) minus the amount, if any, by
which $58,000,000 exceeds the Preliminary Net Assets.
(b) As promptly as practicable following the Closing Date, Seller, at
its expense, shall cause to be prepared in accordance with the Closing Balance
Sheet Principles, a balance sheet of the Business as of the close of business on
the Closing Date. This balance sheet (the "Final Closing Balance Sheet") shall
be prepared by Seller and examined in accordance with the Closing Balance Sheet
Principles and U.S. generally accepted auditing standards by Arthur Andersen
LLP, independent auditors for Seller ("Arthur Andersen"), and delivered to
Buyer, as soon after the Closing Date as possible, but in no event later than
sixty (60) days after the Closing Date, and shall be accompanied by a report
prepared by Arthur Andersen (the "Final Closing Report") setting forth the net
assets of the Business as of the Closing Date (the "Final Net Assets"). At
Buyer's expense, Buyer and Price Waterhouse LLP, independent auditors for Buyer
("Price Waterhouse") shall have the opportunity to participate in the physical
inventory taken in connection with the preparation and examination of the Final
Closing Balance Sheet, and to review such of the worksheets and other documents
created or utilized by
-20-
<PAGE>
Seller and the related work papers of Arthur Andersen in connection with the
preparation and examination of the Final Closing Balance Sheet as Buyer shall
from time to time reasonably request.
(c) Recording fees, transfer taxes, and escrow fees incurred in
connection with the conveyance of the Shares, Property, Real Property Leases,
Subsidiary Real Property Leases (as hereafter defined) or personal property,
including such taxes as are imposed by the Australian and New Zealand taxing
authorities, shall be borne equally by Buyer and Seller and shall not be
reflected as an asset or a liability on the Final Closing Balance Sheet. Costs
associated with obtaining title insurance of the Property shall be the
responsibility of Buyer. Sales and use taxes and all other similar taxes (other
than income and franchise taxes) and all interest and penalties thereon incurred
in connection with conveyance of the Property, Real Property Leases, Subsidiary
Real Property Leases or personal property shall be borne equally by Buyer and
Seller and shall not be reflected as an asset or a liability on the Final
Closing Balance Sheet. Seller shall provide copies of the current or most recent
property tax bills for the Property and, if available, for any leased
properties, to Buyer prior to the Closing Date. After the Closing Date, any
bills or requests for payment received by either Seller or Buyer in connection
with the Business attributable to Taxes which have not been accrued on the Final
Closing Balance Sheet and reflect in whole or part liabilities retained or
assumed, respectively, by Seller on the one hand, or Buyer on the other, shall
be allocated between Buyer and Seller in the manner described in Section 5.9
hereof, or as otherwise appropriate under the terms of this Agreement; provided,
however, that neither party shall pay such bill without the prior written
consent of the other party, which consent shall not be unreasonably withheld.
(d) Buyer shall have 30 days following delivery to Buyer of the Final
Closing Balance Sheet during which to notify Seller of any dispute of any item
contained in the Final Closing Balance Sheet, which notice shall set forth in
reasonable detail the basis for such dispute and shall be accompanied by a
certificate of Price Waterhouse that they concur with each of the posi-
-21-
<PAGE>
tions taken by Buyer in the notice that the Final Closing Balance Sheet was not
prepared in accordance with the Closing Balance Sheet Principles. If Buyer fails
to notify Seller of any such dispute within such 30-day period, the Final
Closing Balance Sheet shall be deemed to be the agreed upon Final Closing
Balance Sheet. In the event that Buyer shall so notify Seller of any dispute,
Buyer and Seller shall cooperate in good faith to resolve such dispute as
promptly as possible, and upon such resolution, the Final Closing Balance Sheet
shall be prepared in accordance with the agreement of Buyer and Seller.
(e) If Buyer and Seller are unable to resolve any such dispute within
15 days (or such longer period as Buyer and Seller shall mutually agree in
writing) of Buyer's delivery of such notice, such dispute shall be resolved by
the Independent Accounting Firm (as hereafter defined), and such determination
shall be final and binding on the parties. Seller and Buyer shall mutually
select the Independent Accounting Firm, but if Seller and Buyer cannot mutually
agree on the identity of the Independent Accounting Firm, then Seller and Buyer
shall each submit to the other party's independent auditor the name of a
national accounting firm other than the firm whose report accompanied the Final
Closing Balance Sheet or Buyer's objections thereto and other than any firm that
has in the prior two years provided services to Seller, Buyer or any of their
respective Affiliates, and the Independent Accounting Firm shall be selected by
lot from these two firms by the independent auditors of the two parties. (If no
national accounting firm shall be willing to serve as the Independent Accounting
Firm, then an arbitrator shall be selected to serve as such, such selection to
be according to the above procedures.) Any expenses relating to the engagement
of the Independent Accounting Firm shall be shared equally by Buyer and Seller.
The Independent Accounting Firm shall be instructed to use every reasonable
effort to perform its services within 15 days of submission of the Final Closing
Balance Sheet to it and, in any case, as promptly as practicable after such
submission. The Final Closing Balance Sheet shall then be prepared by the Buyer
and Seller based on the determination of the Independent Accounting Firm.
-22-
<PAGE>
(f) The Purchase Price shall be equal to the Closing Cash Payment (i)
plus the amount, if any, by which the Final Net Assets exceed the Preliminary
Net Assets or (ii) minus the amount, if any, by which the Preliminary Net Assets
exceed the Final Net Assets. Buyer or Seller, as the case may be, shall, within
10 business days after the final determination of the Final Closing Balance
Sheet pursuant to Sections 2.6(c) and 2.6(d) hereof, make payment by wire
transfer in immediately available funds of the amount of such difference as
determined pursuant to the preceding sentence, together with interest thereon at
a rate equal to the prime rate per annum on the date immediately preceding the
date on which payment is to be made, as quoted by NationsBank, N.A., from the
Closing Date to the date of payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER, FIGGIE REAL
ESTATE, FIGGIE PROPERTIES AND FIGGIE LICENSING
Seller, Figgie Real Estate, Figgie Properties and Figgie Licensing,
jointly and severally, represent and warrant to Buyer as follows and Buyer, in
agreeing to consummate the transactions contemplated by this Agreement, has
relied upon such representations and warranties:
SECTION 3.1 Organization and Authority of Seller.
(a) Except as set forth in Section 3.1(a) of the Seller Disclosure
Schedule, Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate the Business properties owned,
leased and operated by it and to carry on the operations of the Business as now
being conducted by it. Seller and each of the Asset Affiliates are duly
qualified or licensed to do business and are in good standing in each
jurisdiction in which the property owned, leased or operated by it with respect
to the Business or the nature of the business conducted by the Division makes
such licensing or quali-
-23-
<PAGE>
fication necessary, except in any jurisdictions where the failure to be so duly
qualified or licensed or in good standing would not in the aggregate have a
material adverse effect on the assets, liabilities, business, results of
operations or financial condition of the Business, including the Conveyed
Subsidiaries, taken as a whole (a "Material Adverse Effect"). Seller has
heretofore made available to Buyer a complete and correct copy of each of its
Restated Certificate of Incorporation and Bylaws, as currently in effect.
(b) Seller has all requisite corporate power and authority to execute
and deliver this Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder and each Asset Affiliate of Seller has all
requisite power and authority to convey to Buyer title subject to Permitted
Liens and consents of third parties that might be required. The execution and
delivery of this Agreement and the Related Agreements by Seller and the
performance of its obligations hereunder and thereunder have been duly and
validly authorized by the Board of Directors of Seller (the "Board") and no
other corporate or stockholder action on the part of Seller or any of its Asset
Affiliates is necessary to authorize the execution, delivery and performance of
this Agreement and the Related Agreements. This Agreement has been duly executed
and delivered by Seller and constitutes, assuming due authorization, execution
and delivery of this Agreement by Buyer, and each of the Related Agreements to
be executed and delivered by Seller pursuant hereto, when fully executed and
delivered, shall constitute, a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
SECTION 3.2 Conveyed Subsidiaries.
(a) Section 3.2(a) of the Seller Disclosure Schedule sets forth the
name and jurisdiction of organization or incorporation of each Conveyed
Subsidiary. To the extent that such concepts are recognized by its jurisdiction
of organization or incorporation, each Conveyed Subsidiary (i) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization or incorporation, (ii) has all requisite corporate
power and authority to own, lease or
-24-
<PAGE>
operate the properties and assets owned, leased and operated by such Conveyed
Subsidiary and to carry on its business as currently conducted and (iii) is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
in any jurisdictions where the failure to be so qualified or in good standing
would not in the aggregate have a material adverse effect on the assets,
liabilities, business, results of operations or financial condition of the
Conveyed Subsidiaries taken as a whole (a "Subsidiary Material Adverse Effect").
Seller has heretofore made available to Buyer a complete and correct copy of
each of the certificate of incorporation and bylaws (or other organizational
documents of like import), as currently in effect, of each of the Conveyed
Subsidiaries. The copy of the certificate of incorporation and bylaws (or other
organizational documents of like import) of the Conveyed Subsidiaries heretofore
made available to Buyer will be true, complete and correct as of the Closing
Date and will have annexed thereto a copy of every resolution required to be
annexed by the legislation applicable to such Conveyed Subsidiaries.
(b) The minute books and records of each of the Conveyed Subsidiaries,
copies of which have been made available to Buyer prior to the date hereof, (i)
are the original minute books and records of the Conveyed Subsidiaries, (ii) to
the knowledge of Seller, contain all proceedings of the stockholders, the Board
of Directors and any committees thereof with respect to the Conveyed
Subsidiaries, and (iii) to the knowledge of Seller, are true and correct in all
material respects. With respect to each Conveyed Subsidiary, all Tax returns
required to be made and annual financial statements required to be filed with
any federal Australian or New Zealand Governmental Entity have been duly and
correctly made or filed.
(c) Except as set forth in Section 3.2(c) of the Seller Disclosure
Schedule and to the extent that such concepts are recognized by the jurisdiction
of organization or incorporation of each Conveyed Subsidiary, the Shares and the
Designee Shares are validly issued, fully paid and nonassessable, and Seller
owns the
-25-
<PAGE>
Shares, and Seller's Designee owns the Designee Shares, free and clear of all
liens, security interests or other encumbrances whatsoever and free and clear of
preemptive rights. Except for this Agreement, there are no outstanding calls,
options, warrants, rights, proxies, participation rights, subscriptions or
commitments relating to the Shares or to any other shares of the capital stock
of the Conveyed Subsidiaries. The Shares shown in Section 3.2(c) of the Seller
Disclosure Schedule as issued and outstanding and the Designee Shares are the
only shares of capital stock of each of the Conveyed Subsidiaries which are
issued or outstanding. Except for this Agreement, there are (i) no
understandings, arrangements, restrictions, commitments or agreements, of any
kind, to which Seller, Seller's Designee or any of Seller's Affiliates is a
party relating to the Shares or the Designee Shares or to any other shares of
the capital stock of the Conveyed Subsidiaries and (ii) no securities
outstanding directly or indirectly convertible into or exchangeable for the
Shares or the Designee Shares. Upon consummation of the transactions at the
Closing, the stock certificates, endorsements and other documents delivered to
Buyer at the Closing will (subject to payment of any stamp duty or similar
charge of the relevant jurisdiction) transfer to and vest in Buyer good, valid
and indefeasible title to the Shares and the Designee Shares, free and clear of
all liens, security interests and other encumbrances whatsoever.
(d) The authorized share capital of Snorkel Elevating Work Platforms
Limited, a company incorporated under the laws of New Zealand ("Snorkel-New
Zealand"), consists solely of 100 issued and fully paid shares of NZ$1.00 par
each, of which 100 shares are issued and outstanding. All of the issued and
outstanding shares of common stock of Snorkel-New Zealand (other than the
Designee Share, which is owned by the Designee) are owned by Seller and are duly
authorized, validly issued, fully paid and nonassessable, and none of such
issued and outstanding shares of common stock were issued in violation of the
preemptive rights of any present or former stockholder of Snorkel-New Zealand.
The authorized capital stock of Snorkel Elevating Work Platforms Pty Limited, a
corporation organized under the laws of New South Wales, Australia
("Snorkel-Australia"), consists of
-26-
<PAGE>
100,000 ordinary shares, par value A$1.00 per share, of which 100 shares are
issued and outstanding. All of such ordinary shares are owned by Seller (other
than the Designee Share, which is owned by the Designee) and are duly
authorized, validly issued and fully paid, and none of the issued and
outstanding shares of Snorkel-Australia were issued in violation of the
preemptive rights of any present or former stockholder thereof.
(e) Neither of the Conveyed Subsidiaries owns any capital stock or
other equity securities of any other corporation and has no other type of
interest (whether ownership or other) in any other corporation, partnership,
joint venture or other business organization or entity. Neither of the Conveyed
Subsidiaries is subject to any obligation or requirement to provide funds for,
or to make any investment (in the form of a loan, capital contribution or
otherwise) to or in, any Person (as hereafter defined). Neither Seller nor
either of the Conveyed Subsidiaries has any direct or indirect interest in any
Person that competes with, conducts any business similar to, has any agreement
or arrangement with or is involved in any way with, the Business.
SECTION 3.3 Consents and Approvals: No Violations.
(a) Except as set forth in Section 3.3 of the Seller Disclosure
Schedule, neither the execution by Seller and delivery of this Agreement or the
Related Agreements nor the performance by Seller or any Asset Affiliate of
Seller of its obligations hereunder and thereunder will (i) conflict with or
result in any breach of any provision of the Restated Certificate of
Incorporation or Bylaws of Seller, of the certificate of incorporation or bylaws
of any Asset Affiliate of Seller, or of the organizational or constitutional
documents of either Conveyed Subsidiary; (ii) result in (with or without the
giving of notice or lapse of time or both) a violation or breach of, or
constitute a default or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any note,
mortgage, letter of credit, other evidence of indebtedness, guarantee, license,
lease or agreement or similar instrument or obligation to which Seller, any
-27-
<PAGE>
Asset Affiliate or a Conveyed Subsidiary is a party or by which any of the
Assets may be bound (provided that Seller makes no representation as to any
contract with any federal, state or local government or agency or authority
thereof) or (iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b) below have
been obtained or made, as the case may be, violate any order, injunction,
decree, statute, rule or regulation of any Governmental Entity to which Seller,
an Asset Affiliate, a Conveyed Subsidiary or the Business is subject, excluding
from the foregoing clauses (ii) and (iii) such requirements, defaults, breaches,
rights or violations that either (A) would not have a material adverse effect on
the ability of Seller to perform its obligations under this Agreement or the
Related Agreements, or (B) become applicable (and would not otherwise be
applicable except) as a result of (1) the business or activities in which Buyer
or any of its Affiliates is or proposes to be engaged or (2) any acts or
omissions by, or facts pertaining to, Buyer or any of its Affiliates.
(b) Except as set forth in Section 3.3 of the Seller Disclosure
Schedule, no filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement or the Related Agreements by Seller
or the performance by Seller of its obligations hereunder or thereunder, except
(i) compliance with any applicable requirements of the HSR Act (as hereafter
defined) and the Australian and New Zealand equivalents thereof, if any, (ii)
compliance with any applicable requirements of the Foreign Acquisitions and
Takeovers Act of the Commonwealth of Australia (the "Australian Foreign Change
of Control Law"), (iii) compliance with any applicable requirements of the
Overseas Investment Regulations 1995 of New Zealand (the "New Zealand Foreign
Change of Control Law") and (iv) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings that
either (A) may be required to novate, assign or transfer any contract or
agreement with any Governmental Entity, (B) the failure of which to be obtained
or made would not have a material adverse effect on the ability of Seller to
perform its obliga-
-28-
<PAGE>
tions under this Agreement or the Related Agreements or (C) become applicable
(and would not otherwise be applicable except) as a result of (1) the business
or activities in which Buyer or any of its Affiliates is or proposes to be
engaged or (2) any acts or omissions by, or facts pertaining to, Buyer or any of
its Affiliates.
SECTION 3.4 Division and Subsidiary Financial Statements. Section 3.4
of the Seller Disclosure Schedule contains true and accurate copies of the
Business's financial statements as of and for the years ended December 31, 1995
and December 31 1996, and as of and for the quarters ended June 30, 1996 and
June 30, 1997 (collectively, the "Division Financial Statements") and the
financial statements of each of the Conveyed Subsidiaries as of and for the
years ended December 31, 1995 and December 31, 1996 (the "Subsidiary Financial
Statements" and, together with the Division Financial Statements, the "Financial
Statements"). Except as set forth in Section 3.4 of the Seller Disclosure
Schedule, the Division Financial Statements (a) have been fairly and accurately
derived from the books and records of the Division and (b) fairly present in
accordance with GAAP consistently applied during and among the periods indicated
the financial position of the Business as of the dates thereof and the results
of operations and cash flows of the Business for the periods then ended. The
Subsidiary Financial Statements comply as to form with applicable accounting
requirements, have been prepared in accordance with generally accepted
accounting principles in effect in New Zealand and Australia, respectively,
consistently applied during and among the periods involved (except as may be
indicated in the notes thereto) and fairly present the financial position of
each of the Conveyed Subsidiaries at the dates thereof and the results of
operations and cash flows for the periods then ended.
SECTION 3.5 Absence of Undisclosed Liabilities. Except (a) for
liabilities and obligations incurred since June 30, 1997 in the ordinary course
of business and consistent with past practice and (b) as otherwise disclosed in
this Agreement or in the Seller Disclosure Schedule, the Division has no
liabilities or obligations (whether direct, indirect, accrued, contin-
-29-
<PAGE>
gent, absolute or otherwise) of such nature as would be required to be accrued
on a balance sheet or disclosed in the footnotes of a balance sheet prepared in
accordance with GAAP or, in the case of the Conveyed Subsidiaries, a balance
sheet or disclosed in the footnotes of a balance sheet prepared in accordance
with generally accepted accounting principles as in effect in Australia and New
Zealand, respectively, except for those liabilities and obligations that are, in
the aggregate, immaterial.
SECTION 3.6 Absence of Material Adverse Changes, etc. Except as set
forth in Section 3.6(a) of the Seller Disclosure Schedule, since June 30, 1997,
(a) there has not been any material adverse change in the Assets, liabilities,
business, operations or condition (financial or otherwise) of the Division
(other than changes resulting from changes in general economic or financial
conditions or changes affecting generally the industry in which the Business
operates); (b) Seller and the Conveyed Subsidiaries have conducted the Business
only in the ordinary course and consistent with past practice; (c) none of
Seller or the Conveyed Subsidiaries has increased the compensation of any of the
officers or employees of the Business, except such increases as are granted in
the ordinary course of business in accordance with its customary practices
(which shall include normal periodic performance reviews and related
compensation and benefit increases); (d) none of Seller or the Conveyed
Subsidiaries has sold or disposed of material properties or assets of the
Business, except in the ordinary course of business; (e) Seller and the Conveyed
Subsidiaries have not suffered any loss or damage (whether or not covered by
insurance) to the properties or assets of the Business in excess of $250,000;
(f) none of Seller or the Conveyed Subsidiaries has changed its methods of
accounting or its accounting principles or practices or revalued any of its
assets or determined as collectible any notes or accounts receivable arising out
of the Business that were previously determined to be uncollectible (including,
without limitation, any write-downs of inventory or write-offs of accounts
receivable other than in the ordinary course of business and consistent with
past practice) insofar as they relate to the Business; (g) there has not been
mortgaged, pledged, or subjected to any lien, lease or security interest or
other charge
-30-
<PAGE>
or encumbrance any of the Assets other than in the ordinary course of business
and other than Permitted Liens; (h) there has not been any waiver or compromise
by Seller relating to the Assets of a valuable right or of a material debt owed
to it other than in the ordinary course of business; (i) none of Seller or the
Conveyed Subsidiaries has entered into any agreement or made any commitment to
take any of the preceding actions described in this Section 3.6; (j) none of
Seller or the Conveyed Subsidiaries in connection with the Business has, prior
to the date of this Agreement, (i) incurred any indebtedness or other
liabilities (whether absolute, accrued, contingent or otherwise) or guaranteed
any such indebtedness, except in the ordinary course of business, consistent
with past practice; (ii) paid, discharged or satisfied any claims, liabilities
or obligations (absolute, accrued, contingent or otherwise) except in each case
in the ordinary course of business; (iii) permitted any material insurance
policy to be canceled or terminated; (iv) factored or discounted accounts
receivable and other amounts due or sold any inventory at less than fair market
value or made any bulk sale of such inventory except in the ordinary course of
business; (v) sold, assigned, encumbered, licensed, pledged, abandoned or
otherwise transferred any Intellectual Property, Subsidiary Intellectual
Property (as hereafter defined) or other intangible assets; (vi) made any loans
which in the aggregate exceed $5,000 to any employee or made any loans to any
stockholder, officer, director or Affiliate; (vii) made capital expenditures or
commitments in excess of $750,000 in the aggregate; (viii) to the knowledge of
Seller, lost or learned of the prospective loss of any customer, vendor,
representative or agent listed in Section 3.26(a) or 3.27(a) of the Seller
Disclosure Schedule; (ix) made or guaranteed any loans to any customer, vendor
or distributor; or (x) reduced liabilities or reserves in the aggregate in
amounts in excess of $500,000, except by reason of related cash payments.
SECTION 3.7 Title; Properties and Assets Necessary for Conduct of
Business.
(a) Section 3.7(a)(i) of the Seller Disclosure Schedule contains a
complete and accurate list of all fixed assets and each item of tangible
personal property
-31-
<PAGE>
(other than inventory and supplies of Seller) used in connection with the
operation of the Business in the United States as of December 31, 1996, other
than the Excluded Assets. Subject to Section 1.1(d) hereof, and except as set
forth in Section 1.1(a) of the Seller Disclosure Schedule, Seller, Figgie
Properties, Figgie Real Estate, Figgie Licensing, or a Conveyed Subsidiary, owns
the Assets and as applicable, has, or will as of the Closing have (and, in the
case of the Assets, Seller shall deliver or cause to be delivered to Buyer)
good, valid and marketable title (subject to Permitted Liens) to, or rights by
license, lease or other agreement to use, all of the Assets and all of the
assets and properties owned by a Conveyed Subsidiary (the "Subsidiary Assets")
(except for, in each case, those disposed of prior to the Closing Date not in
violation of this Agreement), in each case, free and clear of all mortgages,
pledges, security interests, liens, charges, options, easements, rights-of-way
or other encumbrances of any nature whatsoever (collectively, "Liens"), except
for (i) those Liens set forth in Section 3.7(a)(ii) of the Seller Disclosure
Schedule, (ii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Liens arising or incurred in the ordinary
course of business if the obligations secured by such Liens (x) are not
delinquent on either the date of this Agreement or the Closing Date or (y) are
being contested in good faith by appropriate proceedings and for which
appropriate and adequate reserves are established on the Final Closing Balance
Sheet, (iii) Liens exclusively resulting from any action taken by Buyer which is
separate and apart from any action taken, or omitted to be taken, by Seller,
(iv) all matters disclosed in the title commitments delivered by Seller to Buyer
prior to the execution of this Agreement, with respect to the Property (except
to the extent that such matters, in connection with the surveys to be delivered
pursuant to Section 5.12 hereof, reveal material defects that materially
restrict or could materially restrict the continuance after Closing of the
operations of the Business as operated on a recent historical basis), (v) all
matters disclosed in the title commitments, if any, delivered by Seller to Buyer
following the date of this Agreement and within the period specified in Section
5.12 hereof, with respect to the Property, to the extent such matters will not
materi-
-32-
<PAGE>
ally restrict the operation of the Business as operated on a recent, historical
basis, (vi) Liens for current Taxes not yet due or that are being contested in
good faith by appropriate proceedings and for which appropriate and adequate
reserves are established on the Final Closing Balance Sheet (collectively,
"Permitted Liens") and except that Seller makes no representation that the
General Assignments or any other documents to be delivered by Seller under
Section 1.7(e) hereof are in form sufficient for recordation in any patent or
trademark office in any jurisdiction outside of the United States; provided that
the representation of Seller in this Section 3.7(a) does not, and shall not be
deemed to, relate or pertain to any asset if the failure of Seller, an Asset
Affiliate or a Conveyed Subsidiary, as applicable, to own such asset would not
render untrue Seller's representation in Section 3.7(b) hereof.
(b) Except as set forth in Section 3.7(b) of the Seller Disclosure
Schedule, and subject to receiving any necessary consents to the transfer or
assignment thereof to Buyer, the Assets and the Subsidiary Assets include all
properties and assets primarily used by Seller in connection with its conduct of
the Business and are and will be sufficient to conduct the Business as of the
date of this Agreement and as of the Closing Date on each of the date of this
Agreement and the Closing Date except, in the case of the foregoing
representation with respect to the date of this Agreement, any Assets disposed
of not in violation of Section 5.1(b)(i) of this Agreement between the date
hereof and the Closing Date.
(c) Section 3.7(c) of the Seller Disclosure Schedule contains a
complete and accurate list of all leases of tangible personal property
(excluding standard office equipment and automobile leases other than any master
automobile lease) leased in connection with the operation of the Business.
(d) All of the fixed assets and other personal property listed (or
required to be listed) in Section 3.7(a)(i) of the Seller Disclosure Schedule
and the assets leased pursuant to the leases listed (or required to be listed)
in Section 3.7(c) of the Seller Disclosure
-33-
<PAGE>
Schedule are, taken as a whole, in good operating condition and repair, subject
to ordinary wear and tear.
SECTION 3.8 Real Property. (a) Section 1.1(a)(i) of the Seller
Disclosure Schedule contains a complete and correct list of all Property and all
real property owned by a Conveyed Subsidiary (the "Subsidiary Property") other
than the Retained Property. Seller has supplied to Buyer copies of all surveys
conducted on behalf of and all title insurance policies issued in favor of
Seller or any of its Asset Affiliates which Seller currently has in its
possession with respect to said property.
(b) There are no adverse or other parties in possession of the
Property, the Subsidiary Property, the improvements thereon or any portion or
portions thereof, and on the Closing Date, the Property, the Subsidiary Property
and the improvements thereon will be free and clear of any and all leases,
licensees, occupants or tenants except for Permitted Liens and as set forth in
Section 3.8(a) of the Seller Disclosure Schedule. To the knowledge of Seller,
there are no pending or threatened condemnation, eminent domain or similar
proceedings, or litigation or other proceedings affecting the Property, the
Subsidiary Property, the improvements thereon or any portion or portions
thereof. Except as set forth in Section 3.8(b) of the Seller Disclosure
Schedule, to the knowledge of Seller, there are no pending requests,
applications or proceedings to alter or restrict any zoning or other use
restrictions applicable to the Property, the Subsidiary Property or the
improvements thereon that would interfere with the conduct of the Business or
the use of the Assets consistent with past practice. All necessary easements
exist and are in full force and effect. The Property and the Subsidiary Property
have access, in accordance with past practice, to and from a public right of way
or road and no notice has been received by Seller relating to the termination or
impairment of such access (including applicable parking requirements). Except as
set forth in Section 3.8(b) of the Seller Disclosure Schedule, to the knowledge
of Seller, there is no Maori land claim with respect to the Subsidiary Property.
-34-
<PAGE>
(c) Notwithstanding anything herein to the contrary, Seller makes no
representation with respect to the Retained Property.
SECTION 3.9 Real Property Leases. (a) Section 1.1(a)(ii) of the Seller
Disclosure Schedule contains a complete and correct list, of all Real Property
Leases and all leases for real property to which a Conveyed Subsidiary is a
party (the "Subsidiary Real Property Leases"). True and complete copies of the
Real Property Leases and the Subsidiary Real Property Leases, and all written
amendments and agreements relating thereto, have been supplied to Buyer. Each
Real Property Lease and Subsidiary Real Property Lease is valid (except as set
forth in Section 3.9 of the Seller Disclosure Schedule) and neither Seller nor
any Conveyed Subsidiary or, to the knowledge of Seller, any other party thereto
is in default of any material provision thereunder, nor is there any event which
with notice or lapse of time, or both, would constitute a default thereunder and
neither Seller nor any Conveyed Subsidiary has received notice that any party
thereto intends to cancel or terminate same. None of the rights of the tenant
under any such leasehold or other interest in real property will be impaired by
the consummation of the transactions contemplated by this Agreement, except as
specifically listed in Section 3.9 of the Seller Disclosure Schedule.
(b) There are no adverse or other parties in possession of the real
property (including the improvements thereon) subject to the Real Property
Leases or Subsidiary Real Property Leases or any portion or portions thereof,
and on the Closing Date the leasehold interest in the real property (including
the improvements thereon) subject to the Real Property Leases and Subsidiary
Real Property Leases will be free and clear of any and all leases, licensees,
occupants or tenants except for Permitted Liens and as set forth in Section
3.9(a) of the Seller Disclosure Schedule. To the knowledge of Seller, there are
no pending or threatened condemnation, eminent domain or similar proceedings, or
litigation or other proceedings affecting the real property (including the
improvements thereon) subject to the Real Property Leases or Subsidiary Real
Property Leases or any portion or portions thereof. Except as set forth in
Section
-35-
<PAGE>
3.9(b) of the Seller Disclosure Schedule, to the knowledge of Seller, there are
no pending requests, applications or proceedings to alter or restrict any zoning
or other use restrictions applicable to the real property subject to the Real
Property Leases or Subsidiary Real Property Leases or any portion or portions
thereof. To the knowledge of Seller, all necessary easements exist and are in
full force and effect. To the knowledge of Seller, all such leased real property
has access, in accordance with past practice, to and from a public right of way
or road and no notice has been received by Seller relating to the termination or
impairment of such access (including applicable parking requirements).
SECTION 3.10 Material Contracts. Section 1.1(a)(v) of the Seller
Disclosure Schedule contains a complete and correct list of all of the following
Contracts (excluding contracts, agreements and commitments otherwise required to
be set forth on the Seller Disclosure Schedule pursuant to this Article III):
(a) employment agreements between Seller or a Conveyed Subsidiary and
an employee of the Business in effect on the date of this Agreement;
(b) Government Contracts;
(c) contracts, agreements and commitments (other than purchase orders
in the ordinary course of business) of Seller or a Conveyed Subsidiary relating
to the Business that involve commitments in excess of $100,000 or have a term of
six (6) months or more;
(d) sales representative agreements to which Seller or a Conveyed
Subsidiary is a party in effect on the date of this Agreement involving the sale
of greater than $2,500,000 of product of the Business annually, except those
agreements that may be cancelled by Seller or such Conveyed Subsidiary without
material penalty upon not more than 180 days' notice;
(e) agreements to which Seller or a Conveyed Subsidiary is a party in
effect on the date of this
-36-
<PAGE>
Agreement that limit the ability of the Division to conduct its business in any
geographic market; and
(f) with respect to Snorkel-New Zealand, any agreement, arrangement or
understanding requiring authorization under Part II of the New Zealand Commerce
Act 1986 for its legality or validity
(together with the contracts, agreements and commitments otherwise required to
be set forth on the Seller Disclosure Schedule pursuant to this Article III, the
"Material Contracts").
True and complete copies of the Material Contracts and all written
amendments thereto have been made available to Buyer. Except as set forth in
Section 3.10 of the Seller Disclosure Schedule, none of the Material Contracts
has been assigned by Seller or a Conveyed Subsidiary or, to the knowledge of
Seller, is the subject of any security agreement. Except as set forth in Section
3.10 of the Seller Disclosure Schedule, (i) each of the Material Contracts is a
valid and binding obligation of Seller or a Conveyed Subsidiary and, to the
knowledge of Seller, of the other party or parties thereto, enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws or equitable principles relating to
creditors' rights generally; (ii) neither Seller, any Conveyed Subsidiary nor
any other party thereto has terminated, canceled, modified or waived any
material term or condition of any Material Contract; and (iii) neither Seller,
any Conveyed Subsidiary nor, to the knowledge of Seller, any other party to any
Material Contract is in material default under any Material Contract and there
exists no event, condition or occurrence that, after notice or lapse of time, or
both, would constitute such a default either by Seller, any Conveyed Subsidiary
or, to the knowledge of Seller, by any other party to any such Material
Contract.
SECTION 3.11 Intellectual Property. Section 1.1(a)(viii) of the Seller
Disclosure Schedule contains a complete and correct list of the following items
contained within the Intellectual Property and the Subsidiary Intellectual
Property excluding the Excluded Intel-
-37-
<PAGE>
lectual Property: all registrations and applications to register domestic and
foreign trademarks, service marks, certification marks, collective marks,
collective membership marks and copyrights; all patents and applications
therefor; all tradenames, service names, and assumed names; and all other
material trademarks and copyrights. Except as set forth in Section 3.11 of the
Seller Disclosure Schedule, all registrations or applications included in the
Intellectual Property and the Subsidiary Intellectual Property are in the name
of Seller, Figgie Licensing or a Conveyed Subsidiary and each such entity has
the right to use its Intellectual Property and Subsidiary Intellectual Property,
as the case may be, with respect to the products and services for which, and in
the geographic areas where, the Intellectual Property and the Subsidiary
Intellectual Property, as the case may be, is currently being used. Except as
set forth in Section 3.12 of the Seller Disclosure Schedule, there are no
pending or, to the knowledge of Seller, threatened claims by any Person (as
hereafter defined) challenging the validity of, or Seller's or a Conveyed
Subsidiary's ownership and use in the Business of, such Intellectual Property or
Subsidiary Intellectual Property, as the case may be.
SECTION 3.12 Litigation. Except as set forth in Section 3.12 of the
Seller Disclosure Schedule, as of the date of this Agreement, there is no claim,
action or proceeding pending or, to the knowledge of Seller, threatened against
Seller or a Conveyed Subsidiary by or before any Governmental Entity with
respect to the Business or its operations in which the relief sought exceeds
$50,000 or the primary relief sought is injunctive or equitable in nature (it
being understood that Section 3.12 of the Seller Disclosure Schedule may include
claims, actions or proceedings, in which the relief sought is less than $50,000
or the primary relief sought is not injunctive or equitable in nature) or that
challenges the validity of this Agreement or the Related Agreements or the
ability of Seller to perform its obligations hereunder or thereunder or any
Asset Affiliate to convey to Buyer good, valid and marketable title subject to
Permitted Liens.
-38-
<PAGE>
SECTION 3.13 Compliance with Applicable Law. Except as set forth in
Section 3.13 of the Seller Disclosure Schedule, each of Seller and the Conveyed
Subsidiaries is in compliance in all material respects with all applicable laws,
ordinances, rules and regulations of any federal, state, local or foreign
governmental authority applicable to the Business and its operations (other than
Environmental Laws (as hereafter defined) with respect to which reference is
made to Section 3.17 hereof). All Permits required to conduct the Business have
been obtained, are in full force and effect and are being complied with, except
for immaterial violations and immaterial failures to have the Permits in full
force and effect, if any.
SECTION 3.14 Insurance.
(a) Section 3.14(a) of the Seller Disclosure Schedule contains a
complete and correct list of all material policies (including their respective
expiration dates) of fire, liability, product liability, workers' compensation,
title and other forms of insurance presently in effect with respect to the
current operation of the Business. All such insurance coverage will cease as to
the Business upon the Closing.
(b) Seller has heretofore delivered to Buyer true and complete copies
of certificates evidencing all such policies and inspection reports, if any,
received since January 1, 1993 from insurance underwriters as to the conditions
of the properties and assets owned, leased, occupied or operated by Seller, any
Asset Affiliate or any Conveyed Subsidiary with respect to the Business. None of
Seller, any Asset Affiliate or any Conveyed Subsidiary is in default with
respect to any of the material provisions of such insurance policy, all premiums
due thereon have been paid, and none of Seller, any Asset Affiliate or any
Conveyed Subsidiary has failed to give any notice of or present any claim under
any insurance policy in due and timely fashion. Except as set forth in Section
3.14(b) of the Seller Disclosure Schedule, none of Seller, any Asset Affiliate
or any Conveyed Subsidiary has been refused the issuance of any insurance policy
with respect to the Business, nor has coverage been limited by any insurance
carrier to which it has
-39-
<PAGE>
applied for payment under the terms of an insurance policy or with which it has
carried insurance, during the last two years.
SECTION 3.15 Employee Benefit Plans: ERISA.
(a) Section 3.15 of the Seller Disclosure Schedule contains a true and
complete list of all written and oral, formal and, to the knowledge of Seller,
informal annuity, bonus, cafeteria, stock option, stock purchase, profit
sharing, savings, pension, or retirement plans (including all frozen plans and
all terminated plans that have not completed final distribution of its assets),
incentive, group insurance, disability, employee welfare, prepaid legal,
non-qualified deferred compensation including, without limitation, excess
benefit plans, top-hat plans, deferred bonuses, rabbi trusts, secular trusts,
non-qualified annuity contracts, insurance arrangements, non-qualified stock
options, phantom stock plans, or golden parachute payments, or other similar
fringe benefit plans, and all other employee benefit funds or programs (within
the meaning of Section 3(3) of ERISA (as hereafter defined)), covering employees
engaged or formally engaged in the operation of the Business (the "Plans").
Except as set forth in Section 3.15 of the Seller Disclosure Schedule, none of
Seller, any Asset Affiliate or either Conveyed Subsidiary is a party to any
employee agreement, understanding, plan, policy, procedure or arrangement,
whether written or oral, which provides compensation or fringe benefits to its
employees engaged or formerly engaged in the operation of the Business or which
applies to former employees of Seller, any Asset Affiliate or either Conveyed
Subsidiary who were engaged in the Business, and Seller, each Asset Affiliate
and each Conveyed Subsidiary are in compliance with their respective obligations
under all such Plans. Except for changes required by applicable law, there are
no negotiations, demands, commitments or proposals that are pending or that have
been made that concern matters now covered, or that would be covered by the type
of agreements described in Section 3.15 of the Seller Disclosure Schedule or
this Section 3.15(a). None of Seller, any Asset Affiliate or either Conveyed
Subsidiary has any direct or indirect, actual or contingent liability for any
Plan which may become a liability of Buyer, other
-40-
<PAGE>
than to make payments for contributions, premiums or benefits when due, all of
which payments have been timely made. None of the Purchased Assets are subject
to any lien or security interest under Section 302(f), 306(a), 307(a) or 4068 of
ERISA or Section 401(a)(29), 412(n) or 6321 of the Code (as hereafter defined).
(b) No "employee pension benefit plan" (as defined in section 3(2) of
ERISA) that Seller or any Asset Affiliate maintains (sometimes referred to
herein as "Pension Plan"), or to which Seller or any Asset Affiliate is
obligated to contribute, has an "accumulated funding deficiency" (as such term
is defined in section 302 of ERISA or section 412 of the Code), whether or not
waived. No Pension Plan to which Seller or any Asset Affiliate is obligated to
contribute with respect to any current or former employee of the Business is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA) or
a "multiple employer plan" (as described in section 413(c) of the Code).
(c) Each "employee welfare benefit plan" (as defined in section 3(1)
of ERISA) that Seller, any Asset Affiliate or either Conveyed Subsidiary
maintains (sometimes referred to herein as "Welfare Plan") and that is a "group
health plan" (as such term is defined in section 5000(b)(1) of the Code),
complies in all material respects with the applicable requirements of section
4990B(f) of the Code. Any plan, program or arrangement that Seller, any of the
Asset Affiliates or either Conveyed Subsidiary maintains and that provides for
the continuation of health care or life insurance benefits following termination
of employment or the occurrence of a disability provides that it may be amended
or terminated at any time.
(d) Other than claims for benefits arising in the ordinary course of
the administration and operation of the Pension Plans and Welfare Plans, no
claims, investigations or arbitrations are pending by or with respect to any
current or former employee of the Business against any Pension Plan or Welfare
Plan or against Seller, any Asset Affiliate or either Conveyed Subsidiary, any
trust or arrangement created under or as part of any Pension Plan or Welfare
Plan, or any trustee, fiduciary, custodi-
-41-
<PAGE>
an, administrator or other person or entity holding or controlling assets of any
Pension Plan or Welfare Plan.
(e) With respect to the Plans listed in Section 3.15 of the Seller
Disclosure Schedule which are subject to ERISA and except as set forth in
Section 3.15 of the Seller Disclosure Schedule:
(i) The Plans are in material compliance with the applicable
provisions of ERISA and each of the Pension Plans, which are intended to be
qualified under Section 401(a) of the Code have been determined by the Internal
Revenue Service (the "IRS") to be so qualified or a request for such
determination has been timely filed with the IRS (and to the knowledge of the
Seller or any Asset Affiliate, nothing has occurred to cause the IRS to revoke
such determination and the IRS has not indicated any disapproval of any request
for such a determination);
(ii) Each Plan has been operated in accordance with its terms and all
required filings that are due prior to the date hereof, including without
limitation, the Forms 5500, for all Plans have been made;
(iii) No prohibited transactions, as defined by Section 406 of ERISA
or Section 4975 of the Code, have occurred with respect to any of the Plans;
(iv) None of Seller, any Asset Affiliate or either Conveyed Subsidiary
has engaged in any transaction with respect to the Plans in connection with
which Seller, any Asset Affiliate or either Conveyed Subsidiary could be
subjected to a criminal or civil penalty under ERISA;
(v) To the knowledge of Seller, none of the Plans, nor any trust which
serves as a funding medium for any of such Plans, nor any issue relating thereto
is currently under examination by or pending before the IRS, the Department of
Labor, the Pension Benefit Guaranty Corporation or any court, other than
applications for determinations pending before the IRS;
(vi) None of the Plans is a "multiemployer plan" as that term is
defined in Section
-42-
<PAGE>
3(37) of ERISA and Section 411(f) of the Code, nor a plan maintained by more
than one employer (hereinafter referred to as a "multiple employer plan"), nor a
single employer plan under a multiple controlled group within the meaning of
Section 4063 of ERISA, and none of Seller, any Asset Affiliate or either
Conveyed Subsidiary nor any entity required to be aggregated with Seller, any
Asset Affiliate or either Conveyed Subsidiary under Section 414(b), (c), (m) or
(o) of the Code has incurred any withdrawal liability with respect to any single
plan, multiemployer or multiple employer plan, which liability could constitute
a liability of Buyer;
(vii) No material benefit claims (except those submitted in the
ordinary course of administration of such Plan) are currently pending against
any Plan;
(viii) No Plan provides for retiree medical or retiree life insurance
benefits for former employees of Seller, any Asset Affiliate or either Conveyed
Subsidiary and there is no liability for Taxes with respect to disqualified
benefits under Section 4976 of the Code with respect to any Plan;
(ix) No Pension Plan has been terminated by Seller, any Asset
Affiliate or either Conveyed Subsidiary and there is no liability for Taxes with
respect to a reversion of qualified plan assets under Section 4980 of the Code;
and
(x) Each Pension Plan that has been terminated has completed final
distribution of its assets in accordance with both the terms of the Pension Plan
and such termination.
(f) All Plans that are subject to the laws of Australia and New
Zealand are in material compliance with such applicable laws, including relevant
Tax laws, and the requirements of any trust deed under which they are
established. All contributions payable to such Plans have been made, and all
such Plans are in material compliance with any applicable funding requirements
under the laws of Australia and New Zealand. Each such Plan is funded to an
extent which is sufficient to meet the bene-
-43-
<PAGE>
fits prospectively payable and contingently payable to the members of such
Plans.
SECTION 3.16 Taxes.
(a) Except as set forth in Section 3.16(a) of the Seller Disclosure
Schedule, there have been timely filed (taking into account all lawful
extensions of due dates) with the appropriate Taxing Authority (as hereafter
defined) all Tax Returns (as hereafter defined) of Seller relating to the
Business and all Tax Returns of the Conveyed Subsidiaries required to be filed
on or before the Closing Date, and all such Tax Returns were correct and
complete in all material respects.
(b) Seller and the Conveyed Subsidiaries have paid in full all Taxes
if any, shown to be due on such Tax Returns, or otherwise have reserved for or
paid all other Taxes due for all periods up to and including the date hereof,
and at the Closing Date shall have paid or reserved for all Taxes allocable to
periods or portions thereof ending on or before the Closing Date. All Taxes for
the periods covered by the Tax Returns filed or to be filed by Seller and the
Conveyed Subsidiaries, or if not covered by a Tax Return but required to be
paid, have been or will be paid when due whether to a Taxing Authority or to
other Persons (as, for example, under tax allocation agreements).
(c) Except for representations relating to the Conveyed Subsidiaries,
the representations and warranties set forth in subsections (a) and (b) of this
Section 3.16 are not applicable to the extent the Business cannot be made
subject to Liens for Taxes and Buyer and the Conveyed Subsidiaries cannot be
made liable for Taxes relating to the matters constituting breaches of such
representations and warranties.
(d) There are no Liens for Taxes upon the Business or any of the
Assets except Liens for current Taxes not yet due or that are being contested in
good faith by appropriate proceedings and for which appropriate and adequate
reserves are established on the Final Closing Balance Sheet.
-44-
<PAGE>
(e) None of the Assets is property which is required to be treated as
being owned by any other Person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(f) None of the Assets is currently financed directly or indirectly by
any tax exempt bonds.
(g) None of the Assets is "tax-exempt use property" within the meaning
of Section 168(h) of the Code.
(h) Except as set forth in Section 3.16(h) of the Seller Disclosure
Schedule, no claim has ever been made by any Taxing Authority in a jurisdiction
where Seller and the Conveyed Subsidiaries do not file Tax Returns that they are
or may be subject to taxation by that jurisdiction with respect to the Assets or
the Business.
(i) Except as set forth in Section 3.16(i) of the Seller Disclosure
Schedule, none of the Conveyed Subsidiaries is a party to any tax allocation or
sharing agreement.
(j) Neither of the Conveyed Subsidiaries has any liability for the
Taxes of any Person (other than the Conveyed Subsidiaries) under Treas. Reg.
Section 1.1502-6 (or any similar provision of the laws of Australia or New
Zealand) as a transferee or successor, by contract, or otherwise.
(k) Neither of the Conveyed Subsidiaries is engaged in a trade or
business in the United States within the meaning of Section 864 of the Code.
(l) Neither of the Conveyed Subsidiaries is a Passive Foreign
Investment Company within the meaning of Section 1296 of the Code.
(m) None of Seller or the Conveyed Subsidiaries has participated in or
cooperated with an international boycott or received a request to participate in
or cooperate with an international boycott within the meaning of Section 999 of
the Code.
-45-
<PAGE>
(n) The imputation credit account and dividend withholding payment
account which Snorkel-New Zealand is required to maintain (i) did not on
December 31, 1996, (ii) does not on the date of this Agreement and (iii) will
not on the Closing Date have a debit balance.
(o) Except as set forth in Section 3.16(o) of the Seller Disclosure
Schedule and as otherwise disclosed by Seller to Buyer, no state of facts exist
to the knowledge of Seller that would constitute grounds for the assessment of
any additional Taxes by any Taxing Authority against the Conveyed Subsidiaries
other than sales, use, transfer, recording or similar fees and Taxes that may
arise from the transactions contemplated by this Agreement. No state of facts
exist to the knowledge of Seller that would constitute grounds for the
assessment of any liability for Taxes with respect to the Conveyed Subsidiaries
for the periods that have not been audited by the Internal Revenue Service or
any other Taxing Authority.
(p) Neither of the Conveyed Subsidiaries has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Taxes that relate to the Business.
(q) Except as set forth in Section 3.16(q) of the Seller Disclosure
Schedule, there is no material action, suit, proceeding, investigation, audit or
claim now pending against Seller with respect to the Business or any of the
Assets or the Conveyed Subsidiaries in respect of any Tax, and no matter under
discussion with any Taxing Authority relating to any material Tax or assessment
or any claim for additional Tax, asserted by and such Taxing Authority against
Seller or the Conveyed Subsidiaries with respect to the Business or any of the
Assets.
(r) All Taxes with respect to the Assets and the Business that are
required to be withheld or collected have been duly withheld and collected and,
to the extent required have been paid to the proper Taxing Authority, person, or
entity to have been properly deposited as required by applicable law.
-46-
<PAGE>
(s) The imputation credit account and dividend withholding payment
account (or similar account) which Snorkel-Australia is required to maintain did
not on December 31, 1996 and does not on the date of this Agreement have a debit
balance.
SECTION 3.17 Environmental Matters.
(a) Except as set forth in Section 3.17(a) of the Seller Disclosure
Schedule, to the knowledge of Seller and its Asset Affiliates, each of Seller
and the Conveyed Subsidiaries is in material compliance with all applicable
Environmental Laws (which material compliance includes, but is not limited to,
the possession by Seller or the appropriate Conveyed Subsidiary, and the timely
making of the application for or for the renewal of, of all permits and other
governmental authorizations required under applicable Environmental Laws and
material compliance with the terms and conditions thereof) with respect to the
Property, the Subsidiary Property and the real property which is the subject of
the Property Leases or the Subsidiary Property Leases. Except as set forth in
Section 3.17(a) of the Seller Disclosure Schedule, since January 1, 1994, none
of Seller and the Conveyed Subsidiaries has received any communication (written
or oral), whether from a Governmental Entity, citizens' group, employee or
otherwise, alleging that Seller or a Conveyed Subsidiary is not in such material
compliance, and there are no past or present actions, activities, circumstances,
conditions, events or incidents that may prevent or interfere with such material
compliance in the future.
(b) Except as set forth in Section 3.17(b) of the Seller Disclosure
Schedule, there is no material Environmental Claim pending or, to the knowledge
of Seller and its Asset Affiliates, threatened with respect to the Property, the
Subsidiary Property or the real property which is the subject of the Property
Leases or the Subsidiary Property Leases against Seller or a Conveyed
Subsidiary, or against any Person whose liability for any material Environmental
Claim Seller or a Conveyed Subsidiary has or may have retained or assumed either
contractually or by operation of law.
-47-
<PAGE>
(c) Except as set forth in Section 3.17(c) of the Seller Disclosure
Schedule, to the knowledge of Seller and its Asset Affiliates, there are no past
or present actions, activities, circumstances, conditions, events or incidents
with respect to the Property, the Subsidiary Property, or the real property
which is the subject of the Property Leases or the Real Property Leases,
including, without limitation, the Release, presence, transportation, disposal
or arrangement for disposal of any Hazardous Material that could form the basis
of any material Environmental Claim against Seller or a Conveyed Subsidiary, or
against any Person whose liability for any material Environmental Claim Seller
or a Conveyed Subsidiary has or may have retained or assumed either
contractually or by operation of law.
(d) Seller agrees to cooperate, and to cause the Conveyed Subsidiaries
to cooperate, with Buyer to effect the transfers of any permits or other
governmental authorizations under Environmental Laws that will be required to
permit Buyer to conduct the Business as conducted by Seller and the Conveyed
Subsidiaries immediately prior to the Closing Date.
SECTION 3.18 Certain Fees. Except in connection with the retention of
Morgan Stanley & Co. Incorporated (whose fees shall be the sole responsibility
of Seller), (i) neither Seller nor any of its Asset Affiliates has employed any
financial advisor or finder and (ii) neither Seller nor the Division has
incurred any liability for any financial advisory or finders' fees, in each case
in connection with this Agreement or the Related Agreements or the transactions
contemplated hereby or thereby.
SECTION 3.19 Employees. Except as set forth in Section 3.19 of the
Seller Disclosure Schedule, since January 1, 1996, no principal executive or key
employee of the Business has left the employ of Seller or any Conveyed
Subsidiary. Except as set forth in Section 3.19 of the Seller Disclosure
Schedule, since January 1, 1996, no salaried employee of the Business who has
been compensated at an annual rate in excess of $75,000 has terminated his or
her employment or had such employment terminated for any reason or for no
reason; no such employee
-48-
<PAGE>
has given notice of his or her intent to terminate such employment; and no
notice of termination has been given to any such employee by Seller or any
Conveyed Subsidiary.
SECTION 3.20 Powers of Attorney. There are no outstanding powers of
attorney granted by or binding Seller with respect to the Business or the
Assets, except for revocable powers of attorney routinely granted in the
ordinary course of business that relate to representation before governmental
agencies or were given in connection with the qualification to conduct business
in other jurisdictions.
SECTION 3.21 Accounts Receivable and Accounts Payable. All accounts
receivable of Seller and the Conveyed Subsidiaries related to the Business,
whether reflected on the Financial Statements, or to be reflected on the Final
Closing Balance Sheet, represent sales actually made in the ordinary course of
business or valid claims as to which full performance has been rendered, and the
reserves against the accounts receivable for returns and bad debts are
commercially reasonable and have been calculated in a manner consistent with
past practice. Except to the extent reserved against the accounts receivable in
the appropriate Financial Statement, no counterclaims or offsetting claims with
respect to the accounts receivable have been formally asserted. The accounts
payable of Seller and the Conveyed Subsidiaries reflected on the Financial
Statements and to be reflected on the Final Closing Balance Sheet arose, or will
arise, from bona fide transactions in the ordinary course of business, and all
such accounts payable have been paid or are in the process of being paid, are
not yet due and payable under Seller's or the Conveyed Subsidiaries' payment
policies and procedures, or are being contested by Seller or a Conveyed
Subsidiary in good faith.
SECTION 3.22 Inventory. The inventories of Seller and the Conveyed
Subsidiaries related to the Business consist of raw materials, goods in process
and finished goods salable or usable in the normal course of the Business, and
such inventories are at levels consistent with past practices of the Business.
All such inventories are carried on the books of Seller or the
-49-
<PAGE>
Conveyed Subsidiaries pursuant to the normal inventory valuation policies of
Seller or the Conveyed Subsidiaries, as reflected in the Financial Statements.
Either reserves for slow-moving, excess and obsolete inventories have been
established or such inventories have been reduced to their net realizable value
in the Financial Statements in a manner consistent with past practice. Section
3.22(a) of the Seller Disclosure Schedule sets forth the locations of all
inventories of the Division. Except as set forth in Section 3.22(b) of the
Seller Disclosure Schedule, no items included in inventories of Seller or a
Conveyed Subsidiary are or will be pledged as collateral or held by Seller or
the Conveyed Subsidiaries on consignment from others. Neither Seller nor any
Conveyed Subsidiary has outstanding any commitments to purchase inventories in
amounts greater than are reasonably expected to be usable in the ordinary course
of business as presently conducted. All of the foregoing statements are made
only as of the date of the most recent financial statements available and as of
the Closing Balance Sheet subject to the Closing Balance Sheet Principles. With
respect to inventories in the hands of suppliers for which Seller and the
Conveyed Subsidiaries will be committed on the Closing Date, such inventories on
the Closing Date will be reasonably expected to be usable in the ordinary course
of business as presently being conducted.
SECTION 3.23 Employee Relations; Labor Disagreements. Except as set
forth in Section 3.23 of the Seller Disclosure Schedule, no union organizing
efforts have been conducted within the past five (5) years or are now being
conducted in respect of the Business. Except as set forth in Section 3.23 of the
Seller Disclosure Schedule, within the last five (5) years, neither Seller nor
the Conveyed Subsidiaries has had, nor is there now threatened, a strike,
picket, work stoppage, work slowdown, or other labor trouble relating to the
Business or employees engaged therein. Neither Seller nor the Conveyed
Subsidiaries has been a party within the last three (3) years to any collective
bargaining or similar labor agreement relating to the Business or employees
engaged therein. Except as set forth in Section 3.23 of the Seller Disclosure
Schedule, within the last three (3) years, neither Seller nor the Conveyed
Subsidiaries has
-50-
<PAGE>
experienced any labor disputes or any work stoppage or slowdowns due to labor
disagreements. Except as set forth in Section 3.23 of the Seller Disclosure
Schedule, (a) no question concerning representation has been raised or, to the
knowledge of Seller, is threatened with respect to the employees of Seller or
the Conveyed Subsidiaries; (b) no grievance that is reasonably likely to have a
Material Adverse Effect, nor any arbitration proceeding arising out of or under
any collective bargaining agreement, is pending and no claims therefor exist;
(c) no collective bargaining agreement that is binding on Seller or any Conveyed
Subsidiary restricts each from relocating, closing or subcontracting any of its
respective operations; and (d) there is no unfair labor practice, charge or
complaint against Seller or any Conveyed Subsidiary with respect to the
Business, or (to the knowledge of Seller) threatened before the National Labor
Relations Board or any foreign authority.
SECTION 3.24 Related Party Transactions. Except as set forth in
Section 3.24 of the Seller Disclosure Schedule, neither Seller, any Conveyed
Subsidiary nor any director or officer of Seller or any Conveyed Subsidiary is
currently a party to any transaction with Seller or any Conveyed Subsidiary
(other than for services as employees, officers and directors), including
without limitation any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from, Seller or any
Conveyed Subsidiary in connection with the operation of the Business, any
employee, officer or director of Seller or any Conveyed Subsidiary, or to or
from any corporation, partnership, trust or other entity in which any such
person, or group of such persons, owns in excess of 5% of the outstanding equity
interest. All transactions described in Section 3.24 of the Seller Disclosure
Schedule, or required to be described therein, were entered into at arms-length
upon terms no less favorable to Seller or any Conveyed Subsidiary than those
generally available from unrelated third parties.
SECTION 3.25 Absence of Questionable Payments. To the knowledge of
Seller, neither Seller nor any Conveyed Subsidiary nor any of their respective
-51-
<PAGE>
directors, officers, agents, employees or any other persons acting on their
behalf has, in connection with the operation of the Business, (i) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or established or maintained any unlawful or unrecorded
funds in violation of Section 104 of the Foreign Corrupt Practices Act of 1977,
as amended, or any other applicable foreign, federal or state law; or (ii)
accepted or received any unlawful contributions, payments, expenditures or
gifts.
SECTION 3.26 Customers and Vendors. Section 3.26(a) of the Seller
Disclosure Schedule sets forth correct and complete lists of the twenty (20)
largest (by dollar volume) customers and vendors of the Division during the most
recently completed fiscal year. Except as set forth in Section 3.26(b) of the
Seller Disclosure Schedule, to the knowledge of Seller, there are no outstanding
material disputes with any customer or vendor listed in Section 3.26(a) of the
Seller Disclosure Schedule and no customer or vendor listed thereon has refused
to continue to do business with the Division or has (x) stated its intention not
to continue to do business with the Division or (y) stated its intention to
order at least 10% less of product (measured in revenue dollars) in fiscal 1997
than it ordered in fiscal 1996 or (z) requested a change in its term of payment
to a term of more than 40 days. Except as set forth in Section 3.26(c) of the
Seller Disclosure Schedule, since December 31, 1996, there has not been any
material shortage or unavailability of the raw materials necessary to
manufacture the products sold by the Division, and, to the knowledge of Seller,
there is no current material shortage or unavailability which leads it to
believe that any such shortages will occur.
SECTION 3.27 Distributors and Representatives. Section 3.27(a) of the
Seller Disclosure Schedule sets forth a correct and complete list of the
distributors, representatives and agents for the sale of the products of the
Division during the most recently completed fiscal year. Except as set forth in
Section 3.27(b) of the Seller Disclosure Schedule, since December
-52-
<PAGE>
31, 1996, there has been no termination of any independent distributor,
wholesaler, sales representative or agent relationship.
SECTION 3.28 Defects in Products or Designs; Product Safety.
(a) Except as set forth in Section 3.28(a) of the Seller Disclosure
Schedule, the Division has not received actual notice of any alleged
noncompliance with any regulatory, engineering, industrial or other codes
applicable to the design, construction, manufacturing or installation of any
material product made, manufactured, constructed, distributed, sold, leased or
installed by the Division or its employees or agents.
(b) Except as set forth in Section 3.28(b) of the Seller Disclosure
Schedule, Seller has not within the preceding three years filed a notification
or report with the United States Consumer Product Safety Commission concerning
actual or potential hazards with respect to any product manufactured or sold by
the Division.
SECTION 3.29 Product Warranties. True and correct copies of all
express written product warranties and express written product guaranties
applicable to Seller and the Conveyed Subsidiaries and their products and
services in connection with the Business, which were made by Seller or the
Conveyed Subsidiaries after December 31, 1996, have been provided to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, Figgie Real Estate, Figgie
Properties and Figgie Licensing as follows:
-53-
<PAGE>
SECTION 4.1 Corporate Organization and Authority.
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Buyer has
heretofore delivered to Seller complete and correct copies of its certificate of
incorporation and bylaws (or other organizational documents of like import), as
currently in effect.
(b) Buyer has all requisite corporate power and authority to execute
and deliver this Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Related Agreements by Buyer and the performance by Buyer of
its obligations hereunder and thereunder have been duly and validly authorized
by the Board of Directors of Buyer and no other corporate or stockholder on the
part of Buyer are necessary to authorize the execution, delivery and performance
of this Agreement and the Related Agreements. This Agreement has been duly
executed and delivered by Buyer and constitutes, and when executed and delivered
each of the Related Agreements to be executed and delivered by Buyer will
constitute, assuming due authorization, execution and delivery of this Agreement
and the Related Agreements by Seller, Figgie Real Estate, Figgie Properties and
Figgie Licensing, a valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
SECTION 4.2 Consents and Approvals: No Violations.
(a) Neither the execution and delivery of this Agreement or the
Related Agreements by Buyer nor the performance by Buyer of its obligations
hereunder or thereunder will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws (or other organizational
documents of like import) of Buyer; (ii) result in (with or without the giving
of notice or lapse of time or both) a violation or breach of, or constitute a
default or give rise to any right of termination, cancellation or acceleration
under any of the terms, conditions or provisions of any note, mort-
-54-
<PAGE>
gage, letter of credit, other evidence of indebtedness, guarantee, license,
lease or agreement or similar instrument or obligation relating to the business
of Buyer or to which Buyer is a party or by which Buyer or any of the assets
exclusively used or held for use by Buyer may be bound or (iii) assuming that
the filings, registrations, notifications, authorizations, consents and
approvals referred to subsection (b) below have been obtained or made, as the
case may be, violate any order, injunction, decree, statute, rule or regulation
of any Governmental Entity to which Buyer is subject, excluding from the
foregoing clauses (ii) and (iii) such requirements, defaults, breaches, rights
or violations (A) that would not in the aggregate have a material adverse effect
on the ability of Buyer to perform its obligations under this Agreement or the
Related Agreements or (B) that become applicable as a result of any acts or
omissions by Seller.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement or the Related Agreements by Buyer
or the performance by Buyer of its obligations hereunder and thereunder, except
(i) compliance with any applicable requirements of the HSR Act and the
Australian and New Zealand equivalents thereof, if any, (ii) compliance with the
Australia Foreign Change of Control Law and the New Zealand Foreign Change of
Control Law and (iii) such other consents, approvals, orders, authorizations,
notifications, registrations, declarations and filings that either (A) may be
required to novate, assign or transfer any contract or agreement with any
Governmental Entity, (B) the failure of which to be obtained or made would not
have a material adverse effect on the ability of Buyer to perform its
obligations under this Agreement or the Related Agreements or (C) become
applicable as a result of any acts or omissions by Seller.
SECTION 4.3 Litigation. As of the date hereof, there is no claim,
action or proceeding pending or, to the knowledge of Buyer, threatened against
Buyer that challenges the validity of this Agreement or the Related Agreements,
or the ability of Buyer to perform
-55-
<PAGE>
its obligations hereunder or thereunder, by or before any Governmental Entity.
SECTION 4.4 Investigation by Buyer. Buyer has conducted its own
independent review and analysis of the business, operations, technology, assets,
liabilities, results of operations, financial condition and prospects of the
Business and acknowledges that Seller has provided Buyer with access to the
personnel, properties, premises and records of the Business for this purpose. In
entering into this Agreement, Buyer has relied solely upon its own investigation
and analysis and the representations and warranties, information, statements and
covenants contained in this Agreement (including, without limitation, the Seller
Disclosure Schedule) and the Related Agreements, and acknowledges that neither
Seller nor any of its Affiliates, nor any of their respective directors,
officers, employees, controlling persons, agents, representatives or any other
Person makes or has made, other than as specifically made in this Agreement or
any Related Agreement, any representation or warranty, either express or
implied, as to the accuracy or completeness of any of the information provided
or made available to Buyer or its Affiliates, or their respective directors,
officers, employees, controlling persons, agents, representatives or any other
Person. Notwithstanding anything herein to the contrary, the foregoing shall not
be construed to diminish or otherwise adversely affect the rights of Buyer
hereunder, including, without limitation, the rights of Buyer under Section 7.5
hereof.
SECTION 4.5 Solvency; Financing. a) At and immediately after the
Closing, and after giving effect to the transactions contemplated by this
Agreement and the Related Agreements and the financing of such transactions,
Buyer will not (i) be insolvent (either because its financial condition is such
that the sum of its debts is greater than the fair value of its assets or
because the present fair saleable value of its assets will be less than the
amount required to pay its liabilities on its debts and liabilities as they
mature), (ii) have unreasonably small capital with which to engage in its
business or (iii) have incurred or plan to incur debts beyond its ability to pay
as they mature.
-56-
<PAGE>
(b) Buyer has, as of the date of this Agreement, delivered to Seller a
complete and correct copy of a commitment letter relating to certain financing
with respect to the purchase of the Division.
SECTION 4.6 Certain Fees. Except in connection with the retention of
Harbour Group Industries, Inc. (whose fees shall be the sole responsibility of
Buyer), none of Buyer or its respective Affiliates has employed any financial
advisor or finder or incurred any liability for any financial advisory or
finders' fees in connection with this Agreement or the Related Agreements or the
transactions contemplated hereby or thereby.
ARTICLE V
COVENANTS
SECTION 5.1 Conduct of the Business. Seller agrees that, during the
period from the date of this Agreement to the Closing, except (i) for transfers
of Excluded Assets from the Division to Seller, (ii) as set forth in Section 5.1
of the Seller Disclosure Schedule or (iii) as consented to by Buyer in writing:
(a) Seller shall (i) cause the business operations of the Division to
be conducted in the ordinary course consistent with past practice, (ii) preserve
intact the Division's organization and use its reasonable best efforts to
preserve relationships with suppliers, customers and others having business
dealings with the Division in order that its goodwill and ongoing business shall
not be impaired in any material respect on the Closing Date, (iii) maintain its
books, accounts and records relating to the Business in the ordinary manner, on
a basis consistent with past practice, (iv) comply in all material respects with
all contractual obligations applicable to the Division or the conduct of the
Business and perform all of its material obligations relating to the Business,
(v) maintain in the ordinary course all of the material licenses and permits
listed on the Seller Disclosure Schedule in full force and effect, (vi) maintain
in the ordinary course all real property, buildings,
-57-
<PAGE>
offices, shops and other structures and material properties included in the
Assets in good operating condition and repair, except for ordinary wear and
tear; and (vii) pay its accounts payable relating to the Business in the
ordinary course on a basis consistent with past practice;
(b) Seller shall not (i) sell or dispose of any of the properties or
assets of the Division in excess of $100,000, in the aggregate, except in the
ordinary course of business; (ii) except as may be required by existing
contracts and except for intercompany loans and advances, make any loans,
advances (other than advances in the ordinary course of business and consistent
with past practice of the Business) or capital contributions to, or investments
in, any other Person on behalf of the Business; (iii) increase in any manner the
compensation of any of the officers or other employees of the Business, except
such increases as are granted in the ordinary course of business in accordance
with its practices of the last two years (which shall include normal periodic
performance reviews and related compensation and benefit increases); (iv) adopt,
grant, extend or increase the rate or terms of any bonus, insurance, pension or
other employee benefit plan, payment or arrangement made to, for or with any
such officers or employees of the Business, except for increases occurring in
the ordinary course of business in accordance with its practices of the last two
years or increases required by any applicable law, rule or regulation; (v) make
any change in any of the present accounting methods and practices of the
Business, except as required by changes in GAAP; (vi) mortgage, pledge or
subject to Lien or other encumbrances any of the Assets or the Shares (other
than Permitted Liens and other than pursuant to the Credit Agreement, dated as
of December 19, 1995, as amended between Seller, the lenders party thereto and
General Electric Capital Corporation); (vii) cancel any debt or material claim
in its favor or waive any right of material significance relating to the
Business or the Assets; (viii) with respect to the Division, settle or
compromise any material claims or litigation or, except in the ordinary course
of business, modify, amend or terminate any material contracts; (ix) with
respect to the Division, permit any material insurance policy to be canceled
-58-
<PAGE>
or terminated without notice to Buyer; (x) with respect to the Division, fail to
confer on a regular and frequent basis with one or more representatives of Buyer
to report material operational matters and the general status of ongoing
operations; (xi) with respect to the Division, commit a breach of, or default
under, any material contract, agreement, license or instrument to which they are
a party or to which any of their assets may be subject; (xii) with respect to
the Division, (A) factor or discount its accounts receivable or other amounts
due, (B) delay payment on, or otherwise alter the payment terms of, accounts
payable or pay the amounts due thereunder later than the stated date for payment
thereof in accordance with past practice or (C) sell any inventory at less than
fair market value or make any bulk sale of such inventory except in the ordinary
course; (xiii) with respect to the Division, (A) make or authorize capital
expenditures in excess of $500,000; (B) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof; (C) assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans or advances to any Person; (D) enter into any material contract
or agreement other than in the ordinary course of business; or (E) amend or
terminate in any respect any material contract, agreement, commitment or
arrangement other than in the ordinary course of business; (xiv) with respect to
the Conveyed Subsidiaries, (A) make any new or change any current Tax election
or (B) settle or compromise any material federal, state, local or foreign income
Tax liability; (xv) with respect to the Division, incur or assume any
indebtedness or guarantee any indebtedness or commitments for the same; (xvi)
with respect to the Division, loan or advance any amount to, or sell, transfer
or lease any property or asset to, or enter into any agreement with, any of
their respective stockholders, officers, employees or directors; (xvii) with
respect to the Division, enter into any employment agreement, sales agency
agreement or other contract for the performance of personal services which is
not terminable without liability upon no more than thirty (30) days' notice (or
such greater notice period prescribed by law) or grant any increase in the rate
of compensation or in the benefits payable or to become payable to any agent or
consultant
-59-
<PAGE>
over the levels in effect on the date hereof; (xviii) with respect to the
Division, terminate, modify or enter into any leases, governmental licenses or
permits affecting real and/or personal properties, or other authorizations or
agreements affecting real properties or the operation thereof other than as
contemplated by Sections 1.1(d) and 5.4 hereof; (xix) make or guarantee any
loans to any customer, vendor or distributor of the Division or its products;
(xx) with respect to the Division, reduce any liabilities or reserves in the
aggregate in amounts in excess of $500,000, except by reason of related cash
payments; (xxi) amend or propose to amend the articles of association or by-laws
of the Conveyed Subsidiaries; or (xxii) (A) declare or pay any dividends on or
make other distributions in respect of any of the capital stock of the Conveyed
Subsidiaries, (B) split, combine or reclassify any of such capital stock, or
issue or authorize or propose the issuance of any other securities or interests
in respect of, in lieu of or in substitution for shares of such capital stock or
(C) repurchase or otherwise acquire any shares of such capital stock.
(c) Seller shall not take any action regarding the Conveyed
Subsidiaries that would adversely affect Buyer as owner of the Shares after
Closing or adversely affect Seller's ability to transfer the Shares to Buyer.
(d) Seller shall promptly comply, and shall cause the Asset Affiliates
and the Conveyed Subsidiaries to comply, in all material respects with all laws
and regulations (including, without limitation, those relating to the protection
of the environment and employee benefits) applicable to the Division and the
Assets and all laws and regulations with which compliance is required for the
valid consummation of the transactions contemplated hereby and shall promptly
notify Buyer of any legal, administrative or other proceedings, investigations,
inquiries, complaints, notices of violation or other asserted claims, judgments,
injunctions or restrictions, pending, outstanding or, to the knowledge of
Seller, threatened or contemplated, which could affect the Division, the
Business or any of the Assets.
-60-
<PAGE>
SECTION 5.2 Access to Information.
(a) Upon reasonable advance notice, between the date hereof and the
Closing, Seller shall (i) give Buyer and its authorized representatives
reasonable access during normal business hours to the offices, facilities,
properties, books and records of the Business; (ii) cause the management of the
Division to furnish Buyer with such financial and operating data and other
information with respect to the business and properties of the Business as Buyer
may from time to time reasonably request, and (iii) instruct the management of
the Division to cooperate with Buyer in its investigation of the Business,
provided, that all requests for information, to visit plants or facilities or to
interview Seller's or the Conveyed Subsidiaries' employees or agents must be
requested of, and coordinated with, an executive officer of Seller or such
person or persons as he shall designate; provided further that any such
investigation shall be conducted under the supervision of Seller's or a Conveyed
Subsidiary's personnel and in such a manner as not to interfere with the
business operations of the Business; provided further that no officer, employee,
or representative of Seller, including those of the Division, shall be required
(x) to participate in road shows or (y) to be otherwise involved in any
financing; provided still further that, subject to clause (x) of the preceding
proviso, officers of Seller, including those of the Division, shall meet, at
reasonable times, with Buyer's financing sources, provided that it shall be made
clear to such financing sources that none of Seller or any such persons shall
have any responsibility or liability with respect to such financing.
Notwithstanding anything to the contrary in this Agreement, none of Seller and
the Conveyed Subsidiaries shall be required to disclose any information to Buyer
or their authorized representatives if doing so would violate any agreement,
law, rule or regulation to which Seller or a Conveyed Subsidiary is a party or
to which Seller or a Conveyed Subsidiary is subject. Notwithstanding anything to
the contrary contained in this Agreement, neither Seller nor any of its
Affiliates shall have any obligation to make available or provide to Buyer or
their authorized representatives a copy of any consolidated, combined or unitary
Tax Return filed by Seller or any of its Affiliates
-61-
<PAGE>
or any related materials, except to the extent such Tax Return relates to the
Division.
(b) All information concerning Seller or the Business furnished or
provided by Seller to Buyer or their authorized representatives (whether
furnished before or after the date of this Agreement) shall be held subject to
the Confidentiality Agreement (as hereafter defined). The Confidentiality
Agreement shall remain in full force and effect pursuant to the terms thereof,
notwithstanding the execution and delivery of the Agreement or the termination
hereof.
SECTION 5.3 Regulatory Compliance.
(a) The parties hereto shall make or cause to be made all necessary
filings, as promptly as practicable, including, without limitation, those
required under the HSR Act, the Australian Foreign Change of Control Law, the
New Zealand Foreign Change of Control Law, applicable U.S. or foreign antitrust
laws and applicable state laws, in order to facilitate prompt consummation of
the transactions contemplated hereby and by the Related Agreements. In addition,
Buyer and Seller shall each use their respective reasonable efforts, and shall
cooperate fully with each other to (i) comply as promptly as practicable with
all governmental requirements applicable to the transactions contemplated hereby
and by the Related Agreements and (ii) obtain promptly all approvals, permits,
orders, qualifications or other consents of any applicable Governmental Entities
necessary for the consummation of the transactions contemplated by this
Agreement and the Related Agreements. Each of the parties hereto shall furnish
to the other party such necessary information and reasonable assistance as such
other party may reasonably request in connection with the foregoing.
(b) Subject to the Confidentiality Agreement and applicable law, Buyer
and Seller shall coordinate and cooperate with each other in providing such
assistance as the other may reasonably request in connection with the foregoing
and in seeking early termination of any applicable waiting periods under the HSR
Act, the Australian Foreign Change of Control Law, the New Zealand Foreign
Change of Control Law, or in connection with other regu-
-62-
<PAGE>
latory approvals and consents. Each of Buyer and Seller agrees to respond
promptly to and to comply fully with any request for additional information or
documents under the HSR Act, the Australian Foreign Change of Control Law, the
New Zealand Foreign Change of Control Law, and any similar applicable foreign
laws.
SECTION 5.4 Consents; Assignments. Seller shall use its best efforts
to take or cause to be taken all action and to do or cause to be done, and Buyer
shall assist and cooperate with Seller in doing, all things necessary, proper or
advisable under applicable laws and regulations and under applicable contractual
provisions to obtain any consent, approval or amendment required to novate
and/or assign all agreements, leases and licenses relating to the Assets
(including the Software Contracts and Manufacturing Equipment Contracts);
provided that the costs, fees and expenses relating to the assignment of the
agreements, leases and licenses relating to the Assets (including the Software
Contracts and Manufacturing Equipment Contracts) shall be borne by Seller
subject to such costs, fees and expenses not being patently commercially
unreasonable; provided further that Seller shall not request that Buyer make any
payments with respect to such assignments. In the event and to the extent that
Seller is unable to obtain any such required consent, approval or amendment, (i)
Seller shall use its reasonable efforts to (x) provide or cause to be provided
to Buyer the benefits of any permit or approval and of any agreement, lease or
license (including the Software Contracts and Manufacturing Equipment
Contracts), (y) cooperate in any arrangement, reasonable and lawful as to Seller
and Buyer, designed to provide such benefits to Buyer and (z) enforce for the
account of Buyer any rights of Seller arising from such agreements, leases and
licenses, including the right to elect to terminate in accordance with the terms
thereof on the advice of Buyer, (ii) Buyer shall use its reasonable efforts to
perform the obligations of Seller arising under such agreements, leases and
licenses, to the extent that, by reason of the transactions consummated pursuant
to this Agreement, Buyer has control over the resources necessary to perform
such obligations and (iii) Buyer shall indemnify and hold harmless Seller and
its Representatives (as hereafter defined) from and against any Damages (as
hereafter de-
-63-
<PAGE>
fined) arising out of or resulting from Buyer's performance or failure to
perform under such agreements, leases and licenses. Seller shall, without
further consideration therefor, pay and remit to Buyer promptly all monies,
rights and other considerations received in respect of such performance. If and
when any such consent shall be obtained or such agreement, lease or license
shall otherwise become assignable or able to be novated, Seller shall promptly
assign and novate all its rights and obligations thereunder to Buyer without the
payment of further consideration and Buyer shall, without the payment of any
further consideration therefor, assume such rights and obligations and Seller
shall be relieved of any and all liability hereunder.
SECTION 5.5 Reasonable Best Efforts, etc. Upon the terms and subject
to the conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take or cause to be taken all action, to do or cause
to be done, and to assist and cooperate with the other party hereto in doing,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement and the Related Agreements,
including, but not limited to, (i) the satisfaction of the conditions precedent
to the obligations of any of the parties hereto, (ii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the Related Agreements or the performance of the
obligations hereunder or thereunder, (iii) the execution and delivery of such
instruments, and the taking of such other actions as the other party hereto may
reasonably require in order to carry out the intent of this Agreement and the
Related Agreements and (iv) in the case of Buyer, the obtaining of the funds to
pay the Purchase Price and any fees, expenses and other amounts payable pursuant
to this Agreement and the Related Agreements.
SECTION 5.6 Public Announcements. Neither Seller, Buyer nor any of
their respective Affiliates shall issue or cause the publication of any press
release or other public announcement with respect to this Agreement, the Related
Agreements or the other transactions
-64-
<PAGE>
contemplated hereby and thereby without the prior consultation and consent of
the other party, except as may be required by law or by any listing agreement
with a national securities exchange.
SECTION 5.7 Employees; Employee Benefits.
(a) Buyer shall offer to continue the employment, after the Closing
Date, of each person who is an active employee of the Business on the Closing
Date (collectively, the "Affected Employees") in a position that is comparable
to that held with the Business as of the Closing Date, at a base salary
comparable to that provided as of such date. No employee of the Business who is
on a leave of absence or who is absent from work on account of a disability on
the Closing Date (the "Absent Employees") shall become an employee of Buyer as
of the Closing Date. Section 5.7 of the Seller Disclosure Schedule sets forth
the name of each Absent Employee, the commencement date of his or her absence
and the reason for such absence. If the terms of the Absent Employee's leave of
absence or disability absence provides for continued employment with the
Business, Buyer shall offer employment to each such Absent Employee listed in
Section 5.7 of the Seller Disclosure Schedule in accordance with such employee's
reemployment terms as of the date after the Closing Date that the employee
returns to work. An Absent Employee shall become an Affected Employee on the
date such employee returns to work having accepted employment with the Buyer
(the "Reemployment Date"). Prior to the Reemployment Date, the Absent Employee
shall continue to be an employee of Seller and shall not be an employee of
Buyer.
(b) As of the Closing Date, Affected Employees shall cease to
participate in the employee welfare benefit plans (as such term in defined in
ERISA) maintained or sponsored by Seller or its Affiliates (the "Prior Welfare
Plans") and shall commence to participate in welfare benefit plans of Buyer or
its Affiliates (the "Replacement Welfare Plans"). Buyer shall use its reasonable
efforts to (i) waive all limitations as to pre-existing condition exclusions and
waiting periods with respect to participation and coverage requirements
applicable to Affected Employees under the Replacement Welfare Plans,
-65-
<PAGE>
other than limitations or waiting periods that were in effect with respect to
such employees under the Prior Welfare Plans and that have not been satisfied as
of the Closing Date, and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Closing Date in satisfying any
deductible or out-of-pocket requirements under the Replacement Welfare Plans.
(c) For a period of one year immediately following the Closing Date,
the coverage and benefits provided to Affected Employees pursuant to employee
benefit plans or arrangements maintained by Buyer or its Affiliates shall be, in
the aggregate, not less favorable than those generally provided to the employees
of Buyer or Omniquip International, Inc. and its subsidiaries immediately prior
to the Closing Date. Buyer shall use its reasonable efforts to cause any
Affected Employee who accepts employment with Buyer to be given credit for all
service with the Business and Seller under all employee benefit plans, programs
and policies, and fringe benefits of Buyer in which they become participants for
purposes of eligibility, vesting and benefit accrual. Buyer shall be responsible
and assume all liability for all salary and, except in the case of a pension
plan as defined in ERISA, benefit continuation and/or severance payments
relating to any Affected Employee that may be payable as a result of any
termination by Buyer of the employment of any such Affected Employee within five
years after the Closing Date, and for all notices, payments, fines or
assessments due to any government authority pursuant to any applicable foreign,
federal, state or local law, common law, statute, rule or regulation with
respect to the employment, discharge or layoff of employees by Buyer within five
years after the Closing Date, including, but not limited to, such liability as
arises under the Worker Adjustment and Retraining Notification Act and any rules
or regulations as have been issued in connection with any of the foregoing. The
parties hereto acknowledge that nothing herein is intended to imply that Seller
shall have liability after five years with respect to any of the matters set
forth in preceding sentence.
(d) As of the Closing Date, Buyer shall assume the employment
agreements listed in Section 5.7(d)(i) of
-66-
<PAGE>
the Seller Disclosure Schedule (the "Employment Agreements"), which Employment
Agreements shall thereafter be binding obligations of Buyer. As of the Closing
Date, Buyer shall assume the letter agreements, as amended, initially entered
into during the period commencing on March 14, 1996 and ending on May 22, 1997,
between Seller and the persons listed in Section 1.2(k) of the Seller Disclosure
Schedule.
(e) The benefits of the Affected Employees in any of Seller's or its
Asset Affiliates' tax qualified retirement plans shall not be transferred to tax
qualified plans and trusts maintained or to be established by Buyer. Seller and
its Asset Affiliates shall retain all (and Buyer does not assume any) liability
with respect to benefits payable to any Affected Employees from such plans. The
benefits of the Affected Employees in Seller's or its Asset Affiliates' plans
shall be paid to the Affected Employees according to the terms of such plans.
(f) Except as otherwise provided in Section 5.7(d) hereof, Buyer shall
not assume any employee benefit plan entered into or established by Seller or
any Asset Affiliate with or for the benefit of any employee of the Seller or any
Asset Affiliate. Any assets or trust fund established or maintained by Seller or
any Asset Affiliate with respect to any such employee benefit plan shall be
retained by and remain the responsibility of Seller, the applicable Asset
Affiliate or the applicable trustee. The trust fund contemplated by clause 4 of
the Hogan Services Agreement and all assets therein shall be retained by and be
the responsibility of Snorkel-Australia.
(g) Seller shall be liable for and be responsible for the
administration of all claims, losses, damages and expenses (including, without
limitation, reasonable attorneys' fees) and other liabilities and obligations
relating to or arising out of all workers' compensation claims of Affected
Employees pending as of the Closing Date, or made after the Closing Date but
relating to events occurring prior to the Closing Date. Buyer shall have
responsibility for and shall indemnify and hold harmless Seller from and against
any and all
-67-
<PAGE>
claims, losses, damages and expenses (including, without limitation, reasonable
attorneys' fees) and other liabilities and obligations relating to or arising
out of all workers' compensation claims of Affected Employees made after the
Closing Date and relating to events occurring after the Closing Date.
SECTION 5.8 Allocation of Purchase Price. Section 5.8 of the Seller
Disclosure Schedule sets forth the allocation of the Purchase Price and the
Assumed Liabilities (other than contingent liabilities) among the Assets and the
Shares and the Designee Shares to be purchased hereunder (the "Allocation"),
which Allocation shall be updated as of the Closing Date as soon as practicable
after the final determination of the Final Closing Balance Sheet. The Allocation
shall be made in accordance with section 1060 of the Code and applicable
Treasury Regulations. Each of Seller and Buyer shall (i) be bound by the
Allocation for purposes of determining any Taxes, (ii) prepare and file, and
cause its Affiliates to prepare and file, its Tax Returns on a basis consistent
with the Allocation and (iii) take no position, and cause its Affiliates to take
no position, inconsistent with the Allocation on any applicable Tax Return, in
any proceeding before any Taxing Authority or otherwise. In the event that the
Allocation is disputed by any Taxing Authority, the party receiving notice of
the dispute shall promptly notify the other party hereto concerning resolution
of the dispute; provided, however, that if, in any audit of any Tax Return of
Seller or Buyer by a Taxing Authority, the allocations are finally determined to
be different from the Allocation, Buyer and Seller may (but shall not be
obligated to) take any position or action consistent with the allocations as
finally determined in such audit.
SECTION 5.9 Proration of Certain Taxes. Whenever necessary to
determine the liability for Taxes for a portion of a taxable year or period that
begins before and ends after the Closing Date, the determination of such Taxes
for the portion of the year or period ending on, and the portion of the year or
period beginning after, the Closing Date shall be determined by assuming that
the taxable year ends on the Closing Date, except that exemptions, allowances or
deductions that are
-68-
<PAGE>
calculated on an annual basis and annual real and personal property taxes shall
be prorated on the basis of the number of days in the annual period elapsed
through the Closing Date as compared to the number of days in the annual period
elapsing after the Closing Date.
SECTION 5.10 Warranty Claims. Seller and Buyer agree that after the
Closing, all express, implied or oral warranty claims made in connection with
events occurring prior to the Closing Date and in respect of products sold or
services performed by the Division prior to the Closing Date shall be referred
to and processed by Buyer. All such warranty claims shall continue to be Assumed
Liabilities or Retained Liabilities, as the case may be, as provided in Sections
1.2 and 1.3 hereof.
SECTION 5.11 Delivery of Reports, Defaults, etc. Pending Closing.
(a) Seller shall deliver to Buyer reasonably promptly each inspection
report, questionnaire, inquiry, demand or request for information that primarily
or secondarily relates to the Division received from the date of this Agreement
through the Closing Date by Seller, any Asset Affiliate or the Conveyed
Subsidiaries from (and each response thereto), and each statement, report or
other document filed from the date of this Agreement through the Closing Date by
Seller with respect to the Division or any Conveyed Subsidiary with, any
federal, state or local governmental body or administrative agency (including,
but not limited to, the Securities and Exchange Commission, or any stock
exchange, other than any request for information received from the Internal
Revenue Service in connection with its audit of federal income tax returns that
does not relate primarily to the Business).
(b) Seller shall, after becoming aware thereof, promptly notify Buyer
of any event or condition that might cause any Material Adverse Effect or any
Subsidiary Material Adverse Effect or any event or condition that might
reasonably be expected to cause any of its representations, warranties or
covenants set forth herein not to be true and correct as of the Closing Date.
Seller shall also promptly notify Buyer of any development
-69-
<PAGE>
involving any matter disclosed on the Seller Disclosure Schedule which shall
occur after the date hereof. The covenants set forth in this Section 5.11 shall
in no event serve as the basis for indemnification under Article VII hereof.
(c) Seller shall comply with all reasonable requests by Buyer to
obtain a good standing certificate with respect to Seller as of the Closing
Date; provided that the failure to obtain such good standing certificate shall
not be deemed a failure of any condition set forth in Article VI hereof.
(d) Seller shall have the right to update the following Sections of
the Seller Disclosure Schedule (solely with respect to actions or occurrences
after the date of this Agreement): 3.6 (only as to clauses (e), (f) and
(j)(viii) of Section 3.6 hereof), 3.7(a)(i) (only with respect to the first
sentence of Section 3.7(a) hereof), 3.8(b) (only with respect to the third and
sixth sentences of Section 3.8(b) hereof), 3.9(b) (only with respect to the
third sentence of Section 3.9(b) hereof), 3.10 (only as to the entering into of
Contracts after the date of this Agreement), 3.12, 3.14(b) (only with respect to
the last sentence of Section 3.14(b) hereof), 3.15 (only with respect to clauses
(e)(v) and (e)(vii) of Section 3.15 hereof), 3.16(h), 3.16(q), 3.17(a) (only
with respect to communications referenced in the last sentence of Section
3.17(a) hereof), 3.17(b), 3.19, 3.23, 3.26(b), 3.26(c), 3.27(b), 3.28(a) and
3.28(b). Such supplements to the Seller Disclosure Schedule shall be taken into
effect only for purposes of Sections 6.2(a) and 7.5 hereof (insofar as the
preceding representations are concerned) but not for any other purpose,
including, without limitation, Section 3.6 hereof, Section 6.2(a) hereof as
applied thereto, and Section 6.2(c) hereof.
SECTION 5.12 Real Property Title Review. To the extent not obtained
prior to the execution of this Agreement, Seller shall request that Chicago
Title Insurance Company or another title company mutually acceptable to Buyer
and Seller furnish commitments, at Buyer's expense, to issue ALTA owner's
policies of title insurance providing that upon due recordation or filing of an
appropriate deed or other instrument of conveyance, such
-70-
<PAGE>
title company shall insure that title to the real property to be transferred by
Seller or Figgie Properties or Figgie Real Estate to Buyer pursuant to Section
1.1 hereof, shall be vested in Buyer free and clear of all defects, liens and
encumbrances, other than Permitted Liens. Such commitments described in Section
3.7 hereof shall be delivered not later than ten days prior to the Closing Date.
Seller shall deliver to Buyer a current ALTA "as built" survey (which shows,
among other items, the location of all easements of record set forth in such
title commitments), at Buyer's expense, of each parcel of real property located
in the United States and described in Section 1.1(a)(i) of the Seller Disclosure
Schedule at least ten days prior to the Closing Date. Seller shall deliver to
Buyer a current survey, at Buyer's expense, of each parcel of real property not
located in the United States and described in Section 1.1(a)(i) of the Seller
Disclosure Schedule at least ten days prior to the Closing Date. Buyer shall
review the commitments and surveys prior to Closing. If there exists any
material defect, lien or encumbrance disclosed on said commitments or surveys
that was not disclosed on the title commitments and surveys furnished to Buyer
prior to the date of the execution of this Agreement which materially restricts
or could materially restrict the continuance after Closing of the operations of
the Business as operated on a recent, historical basis, Buyer shall advise
Seller reasonably promptly in writing and Seller shall have the opportunity
before Closing to cure, or make arrangements satisfactory to Buyer to cure, any
such defect, lien or encumbrance, it being agreed that any failure by Seller to
so cure shall constitute a failure to satisfy the conditions to Buyer's
obligation to close set forth in Section 6.2(b) hereof; provided that such
failure shall not otherwise be deemed a breach of any covenant, obligation or
condition herein, including for purposes of Section 7.2 and 7.5 hereof.
SECTION 5.13 Preliminary Environmental Assessment Reports. Buyer may
not prior to Closing conduct a Phase II Environmental Assessment Report for any
parcel of Property. Seller has heretofore delivered to Buyer that Phase I
Environmental Assessment Report of Snorkel-Economy, Elwood, Kansas and St.
Joseph, Missouri, dated August 12, 1996.
-71-
<PAGE>
SECTION 5.14 Agreement Not to Compete or Solicit. In order to assure
Buyer the complete benefit of the ownership of the Assets and the Business,
Seller covenants that, for a period of five years after the Closing Date,
neither Seller nor any Affiliate of Seller shall (i) engage in a business
similar to that of the Business and the Division as of the date of this
Agreement (a "Competing Business"), anywhere in the world whether such
engagement shall be as owner, partner, agent, consultant or shareholder (except
as the holder of not more than two percent (2%) of the outstanding shares of a
corporation whose stock is listed on any national or regional securities
exchange or reported by the National Association of Securities Dealers Automated
Quotation System or any successor thereto) or assist any other Person to be so
engaged; (ii) solicit the employment of or hire any person while such person is
in the employ of Buyer or its Affiliates; (iii) solicit any Person who is a
customer of the Division at the Closing Date for purposes of selling to such
customer any product that competes with any product made by the Division as of
the Closing Date; or (iv) induce or attempt to induce any individual, business,
corporation, firm, partnership or other business entity that is a customer or
supplier to Buyer or any distributor or seller of products of Buyer, or that is
otherwise a contracting party with Buyer, to terminate or otherwise adversely
change or cancel any written or oral agreement with Buyer. This Section shall
survive the expiration or termination of this Agreement. Seller acknowledges
that the periods of restriction, the geographical areas of restriction and the
restraints imposed by the provisions of this Section 5.14 are fair and
reasonably required for the protection of Buyer. In the event that any of the
provisions of this Section 5.14 relating to the geographic areas of restriction
or the periods of restriction shall be deemed to exceed the maximum area or
period of time which a court of competent jurisdiction would deem enforceable,
the geographic areas and times shall, for the purposes of this Agreement, be
deemed to be the maximum areas or time periods which a court of competent
jurisdiction would deem valid and enforceable in any state in which such court
of competent jurisdiction shall be convened. Seller acknowledges that any breach
of its obligations under this Section 5.14 may result in irreparable injury to
Buyer, for which Buyer
-72-
<PAGE>
may not have an adequate remedy at law. In the event of any such breach, Buyer
may, in its sole discretion and in addition to any other remedies available to
it, bring an action or actions against Seller for injunctive relief, specific
performance or both, and have entered a temporary restraining order, preliminary
or permanent injunction, or order compelling specific performance, and if
successful, obtain reimbursement of its actual costs and attorneys' fees for
bringing such action or actions. In the event of a breach by Seller or any of
its Affiliates of any covenant set forth in this Section 5.14, the term of such
covenant will be extended by the period of the duration of such breach.
Notwithstanding anything herein to the contrary, this Section 5.14 shall not be
deemed violated if Seller makes an acquisition of an interest in any entity that
is engaged in a Competing Business so long as (i) the operations engaged in by
such Competing Business are directly or indirectly disposed of or discontinued
(or Seller disposes of or reduces to below 2% its interest) within twelve months
of Seller having acquired such interest and (ii) neither the sales nor net
income of such acquired Competing Business exceeds 50% of the total sales or
operating income of such entity.
SECTION 5.15 Tax Returns. Buyer shall cause the Conveyed Subsidiaries
to include the results of their respective operations in any separate foreign
income Tax Return required to be filed by the Conveyed Subsidiaries for any
taxable year beginning before and ending after the Closing Date. Buyer shall
pay, or cause to be paid, all Taxes shown as due on any such Tax Return with
respect to the Conveyed Subsidiaries.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
SECTION 6.1 Conditions to Each Party's Obligations. The respective
obligation of each party to consummate the transactions contemplated hereby is
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver at or prior to the Closing of each of the following conditions:
-73-
<PAGE>
(a) Any waiting period applicable to the transactions contemplated by
this Agreement under the HSR Act, the Australian Foreign Change of Control Law
or the New Zealand Foreign Change of Control Law shall have expired or been
terminated and all material governmental authorizations or approvals required in
connection with the transactions contemplated by this Agreement shall have been
obtained or given and shall remain in full force and effect;
(b) No statute, rule or regulation shall have been enacted, entered,
promulgated or enforced by any United States, New Zealand or Australia court or
governmental authority that prohibits the consummation of the transactions
contemplated hereby; and
(c) There shall not be in effect any judgment, order, injunction or
decree of any United States, New Zealand or Australia court of competent
jurisdiction, or any action or proceeding, pending or threatened, by a
Governmental Entity, enjoining the consummation of the transactions contemplated
hereby.
SECTION 6.2 Conditions to the Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated hereby is subject to the
satisfaction or waiver at or prior to the Closing, of each of the following
conditions:
(a) On the Closing Date, the representations and warranties of Seller
set forth in Article III of this Agreement shall be true and correct in all
material respects as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date (except in the case of
any representation and warranty that speaks as of any other date, in such case,
such representation and warranty shall be true and correct in all material
respects as of such date); provided, that the foregoing condition shall be
deemed satisfied with respect to any representation and warranty that is untrue
at any time if the failure of such representation and warranty to be true would
not have a Material Adverse Effect. Buyer shall have received at the Closing a
certificate (the "Seller's Closing Certificate"), dated the Closing Date, signed
by the President
-74-
<PAGE>
or a Vice President of Seller to the foregoing effect and to the effect set
forth in subsection (b) below; provided that the qualification with respect to
Material Adverse Effect set forth in the proviso to the preceding sentence shall
be of no force and effect for purposes of the indemnification rights of Buyer
pursuant to Section 7.5 hereof insofar as the Seller's Closing Certificate is
concerned.
(b) Seller shall have performed and complied in all material respects
with all covenants and agreements contained in this Agreement required to be
performed by it on or prior to the Closing Date, and Buyer shall have received
the Seller's Closing Certificate to such effect.
(c) During the period from the date hereof to the Closing Date, there
shall not have occurred a Material Adverse Effect.
(d) All corporate proceedings to be taken by Seller, the Asset
Affiliates and the Conveyed Subsidiaries in connection with the transactions
contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Buyer.
(e) Seller shall have delivered to Buyer the items referred to in
Section 1.7 hereof.
(f) Seller shall have delivered to Buyer releases of (i) Liens
pursuant to the Credit Agreement, dated as of December 19, 1995, as amended
between Seller, the lenders party thereto and General Electric Capital
Corporation and (ii) Liens of First National Bank of Boston.
(g) (i) (A) There shall have been received all necessary consents from
third parties to the assignment of the contracts, licenses, leases and other
agreements set forth in Section 6.2(g)(i) of the Seller Disclosure Schedule or
(B) Seller shall have provided to Buyer substantially equivalent arrangements
with respect to the contracts, licenses, leases and other agreements set forth
in Section 6.2(g)(i) of the Seller Disclosure
-75-
<PAGE>
Schedule; provided that the replacement of any contract, license, lease or other
agreement with such arrangements shall not, in the aggregate, have a material
adverse impact on the operation of the Business and (ii) Seller shall have
obtained either the assignment described in clause (i) of Section 6.2(g)(ii) of
the Seller Disclosure Schedule or the license described in clause (ii) of
Section 6.2(g)(ii) of the Seller Disclosure Schedule.
(h) The condition set forth in the first sentence of clause (A)(xiv)
contained on page 9 of the commitment letter, dated July 18, 1997 (a copy of
which has been previously delivered to Seller), shall have been satisfied or
waived.
(i) Buyer shall have received a written opinion dated as of the
Closing Date from Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Seller,
in substantially the form attached hereto as Exhibit F.
(j) Buyer shall have received a written opinion dated as of the
Closing Date from Deacons Graham & James, Australian counsel to Seller, in
substantially the form attached hereto as Exhibit G.
(k) Buyer shall have received a written opinion dated as of the
Closing Date from Chapman Tripp Sheffield Young, New Zealand counsel to Seller,
in substantially the form attached hereto as Exhibit H.
SECTION 6.3 Conditions to the Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated hereby is subject to the
satisfaction or waiver at or prior to the Closing, of each of the following
conditions:
(a) On the Closing Date, the representations and warranties of Buyer
set forth in Article IV of this Agreement shall be true and correct in all
material respects as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date. Seller shall have
received at the Closing a certificate (the "Buyer's Closing Certificate"), dated
the Closing Date, signed by the President or a Vice
-76-
<PAGE>
President of Buyer to the foregoing effect and to the effect set forth in
subsection (b) below.
(b) Buyer shall have performed and complied in all material respects
with all covenants and agreements contained in this Agreement required to be
performed by it on or prior to the Closing Date, and Seller shall have received
the Buyer's Closing Certificate to such effect.
(c) All corporate proceedings to be taken by Buyer in connection with
the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Seller.
(d) Buyer shall have delivered to Seller the items referred to in
Section 1.8 hereof.
(e) Seller shall have received a written opinion dated as of the
Closing Date from Dickstein Shapiro Morin & Oshinsky LLP, counsel to Buyer, in
substantially the form attached hereto as Exhibit I.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER; SURVIVAL
SECTION 7.1 Termination. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of the Board of Directors of Seller
and the Board of Directors of Buyer;
(b) by either Buyer or Seller, if any United States, New Zealand or
Australian Governmental Entity shall have issued a statute, order, decree or
regulation or taken any other action (which statute, order, decree, regulation
or other action the parties hereto shall use their reasonable best efforts to
lift or render inapplicable to the transactions contemplated hereby), in each
case permanently restraining, enjoining or other other-
-77-
<PAGE>
wise prohibiting this Agreement or the Related Agreements or the consummation of
the transactions contemplated hereby or thereby or making this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby illegal and such statute, order, decree, regulation or other action
shall have become final and nonappealable;
(c) by either Seller or Buyer if the Closing shall not have occurred
by October 31, 1997; or
(d) by Seller in the event that the Board determines in the exercise
of its fiduciary duties that such termination is in the best interests of Seller
and its stockholders; provided that Seller agrees that immediately following
such termination it shall pay Buyer a fee of $3 million.
SECTION 7.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 7.1 hereof, written notice thereof shall
forthwith be given by the party so terminating to the other party specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall become void and of no effect with no liability on the part of any party
hereto and the transactions contemplated hereby shall be abandoned, without
further action; provided that the agreements contained in Sections 3.18, 4.6,
5.2(b), 7.2, 7.4 and 9.5 hereof shall survive the termination hereof; and
provided further that the Confidentiality Agreement shall remain in full force
and effect and that the termination of this Agreement shall not relieve any
party for liability for any willful and knowing breach of this Agreement.
SECTION 7.3 Amendment, Modification and Waiver.
(a) This Agreement may be amended, modified or supplemented only by a
signed written agreement of Seller and Buyer. Any failure of Seller or Buyer to
comply with any term or provision of this Agreement may be waived, with respect
to Buyer, by Seller and, with respect to Seller, by Buyer, by an instrument in
writing signed by
-78-
<PAGE>
or on behalf of the appropriate party or parties, but such waiver or failure to
insist upon strict compliance with such term or provision shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure to
comply.
(b) At any time prior to the Closing, a party may (i) extend the time
for the performance of any of the obligations or other acts of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance with any of the agreements
or conditions of the other party hereto contained herein. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
SECTION 7.4 Survival of Representations and Warranties. The
representations and warranties contained in Sections 3.1, 3.15, 3.17, and 4.1
hereof shall survive the Closing and remain in full force and effect until the
third anniversary of the Closing Date, at which time they shall terminate. The
representations and warranties contained in Sections 3.18, 4.5 and 4.6 hereof
shall survive the Closing and remain in full force and effect until the sixth
anniversary of the Closing Date, at which time they shall terminate. The
representations and warranties contained in Sections 3.7 (as to the fact of
ownership (but not as to the presence of Liens or otherwise as to the quality of
ownership) of the Assets) and 3.16 hereof shall survive the Closing and remain
in full force and effect until the expiration of the applicable statutes of
limitations, at which time they shall terminate. All other representations and
warranties contained in this Agreement shall survive the Closing and remain in
full force and effect until the date eighteen months from the Closing Date, at
which time they shall terminate. All covenants and agreements contained herein
shall survive the Closing for the same period of time as to which Seller is
obligated to indemnify Buyer (or, in the case of covenants and agreements of
Buyer, for the same period of time as to which Buyer is obligated to indemnify
Seller) pursuant to Section 7.5 hereof. The state-
-79-
<PAGE>
ments set forth in the Closing Certificates with respect to the representations
and warranties and covenants and agreements contained in this Agreement shall
survive for the same length of time as the corresponding representation and
warranty or covenant and agreement, as the case may be. The sole remedy for any
breach of any representation, warranty, covenant or agreement shall be pursuant
to Section 7.5 hereof, except in the case of fraud or as otherwise provided in
Sections 5.14 and 9.9 hereof.
SECTION 7.5 Post-Closing Liability; Indemnification.
(a) Indemnification. From and after the Closing, but subject to the
provisions of subsections (b) and (c) of this Section 7.5:
(i) Seller shall indemnify and hold harmless Buyer and its
Affiliates, each of Buyer's and its respective Affiliates' directors, officers,
employees, representatives and agents, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the
"Representatives") from and against any liabilities, costs and expenses
(including, without limitation, interest, penalties, reasonable attorneys' fees,
disbursements and expenses, reasonable consultants' fees, disbursements and
expenses, and other costs and expenses incident to proceedings or investigations
or the defense of any claim), judgments, fines, losses, demands, claims, actions
or causes of action, assessments, damages and amounts paid in settlement
(collectively, "Damages") arising out of, resulting from or related to, and to
pay Buyer, its Affiliates and their respective Representatives the full amount
of any sum which Buyer or any of its Affiliates or their respective
Representatives pays on account of (A) any inaccuracy in any representation and
warranty of Seller in this Agreement or in the Seller's Closing Certificate
(without giving effect to the proviso to the first sentence of Section 6.2(a)
hereof to the extent contained therein) or any instrument of transfer or
assumption related hereto, (B) any failure of Seller duly to perform or observe
any covenant or agreement to be performed or observed by Seller pursuant to this
Agreement or the Seller's Closing Certificate or any instrument of transfer or
assumption related hereto
-80-
<PAGE>
(other than those set forth in Sections 5.11 and 5.12 hereof), (C) except as
otherwise set forth in Section 2.6(c) hereof, liabilities for Taxes attributable
to the Business for the periods or portions thereof ending on or prior to the
Closing Date, (D) any liabilities related to failures to comply with laws
applicable to bulk sale transfers in respect of Retained Liabilities and (E) the
Retained Liabilities.
(ii) Buyer shall indemnify and hold harmless Seller, its
Affiliates and their respective Representatives from and against any Damages
arising out of, resulting from or related to, and to pay Seller, its Affiliates
and their respective Representatives the full amount of any sum which Seller or
any of its Affiliates or their respective Representatives pays on account of
(A) any inaccuracy in any representation and warranty of Buyer in this Agreement
or in the Buyer's Closing Certificate or any instrument of transfer or
assumption related hereto, (B) any failure of Buyer duly to perform or observe
any covenant or agreement to be performed or observed by Buyer pursuant to this
Agreement or any instrument of transfer or assumption related hereto, (C) the
imposition upon Seller, or assessment against Seller of any debt, liability or
obligation other than the Retained Liabilities arising after the Closing Date of
Buyer or any of its Affiliates relating to any of the Assets or the conduct of
the Business after the Closing Date, (D) liabilities for Taxes attributable to
the Business for the periods or portions thereof ending after the Closing Date
(except to the extent that such period began before the Closing Date, in which
case Buyer's indemnity shall cover only that portion of any such Tax Liability
that is attributable to the portion of the period beginning after the Closing
Date), (E) any liabilities related to failures to comply with laws applicable to
bulk sale transfers in respect of Assumed Liabilities, and (F) the Assumed
Liabilities.
(b) Limitations on Indemnification. i) No action, claim or setoff
for Damages subject to indemnification under this Section 7.5 shall be available
(x) with respect to any claim for Damages resulting from a breach of any
representation or warranty contained in this Agreement, unless such claim is
brought prior to the
-81-
<PAGE>
expiration of the survival period of such representation or warranty, (y) with
respect to any claim for Damages resulting from a breach of any covenant the
performance of which is to be made after the Closing Date, unless such claim is
brought within six months of the expiration date for the performance of such
covenant or (z) with respect to any claim for damages resulting from a breach of
any covenant the performance of which is to be made on or prior to the Closing
Date, unless such claim is brought on or before the date eighteen months from
the Closing Date; provided, however, that any claim made by the party seeking
indemnification (the "Indemnified Party") to the party from which
indemnification is sought (the "Indemnifying Party") within the time periods set
forth above shall survive (and be subject to indemnification) until it is
finally and fully resolved. The indemnification obligations of the respective
parties set forth in Sections 7.5(a)(i)(C), (D), and (E) and 7.5(a)(ii)(C), (D),
(E) and (F) hereof shall survive indefinitely.
(ii) Notwithstanding anything herein to the contrary, no
indemnification shall be available under Section 7.5(a)(i)(A) or Section
7.5(a)(ii)(A) hereof (excluding any Damages arising from any breach of the
representations and warranties set forth in Sections 3.1, 3.2(c), 3.18, 4.1, 4.5
and 4.6 hereof and as to the actual ownership of the Property (other than the
Retained Property) (but not the quality of such ownership or the existence of
Liens with respect thereto)) unless and until the aggregate amount of Damages
that would otherwise be subject to indemnification pursuant to Section
7.5(a)(i)(A) or 7.5(a)(ii)(A) hereof ("Basket Losses") exceeds $2 million (the
"Basket Amount"); provided, however, that in the event the Basket Losses exceed
the Basket Amount the Indemnifying Party shall indemnify the Indemnified Party
only for those Damages in excess of $1 million; provided further that any
Damages arising from any breach of the representations and warranties of Seller
in this Agreement or in the Seller's Closing Certificate that are qualified by
references to "Subsidiary Material Adverse Effect" or to "materiality" (but not
to "Material Adverse Effect" or "material adverse effect") and in respect of
which the condition set forth in Section 6.2(a) hereof would not have been
satisfied
-82-
<PAGE>
but for the proviso to the first sentence of Section 6.2(a) hereof shall be
excluded from the definition of Basket Losses.
(iii) Notwithstanding anything herein to the contrary, the
maximum aggregate liability of Seller under Section 7.5(a)(i)(A) or of Buyer
under Section 7.5(a)(ii)(A) (excluding any Damages arising from any breach of
the representations and warranties set forth in the first sentence of Section
3.1(a), 3.1(b), clauses (i) and (ii) of the second sentence of 3.2(a), 3.2(c),
3.18, 4.1, 4.5 and 4.6 and as to the actual ownership of the Property (other
than the Retained Property) (but not the quality of such ownership or the
existence of Liens with respect thereto) shall not exceed $20 million.
(iv) Notwithstanding anything herein to the contrary but except
as otherwise provided in Section 7.5(d)(i) hereof, neither Buyer, its
Affiliates, nor their respective Representatives shall be entitled to
indemnification by Seller for any Damages arising from either (A) any matter of
which any of the persons listed in Section 7.5(b)(iv) of the Seller Disclosure
Schedule had actual and specific knowledge prior to the execution of this
Agreement or (B) any breach of any representation and warranty of which Buyer
had actual and specific knowledge prior to the Closing if Buyer was not
required, pursuant to Article VI hereof, to close but nevertheless closed.
(v) Any calculation of Damages for purposes of indemnification
pursuant to this Section 7.5 shall be net of (a) any actual Tax Benefit (as
hereafter defined) to the Indemnified Party arising from such Damages and (b)
any insurance reimbursement in respect of Damages actually received by the
Indemnified Party (except to the extent any such proceeds must be repaid by the
Indemnified Party through adjustments to past, present or future insurance
premiums, which adjustments are directly caused by the payment of such insurance
reimbursement in respect of Damages).
(vi) Notwithstanding anything herein to the contrary, neither
Buyer, its Affiliates, nor their respective representatives shall be entitled to
indemni-
-83-
<PAGE>
fication for any matter if and to the extent reflected or included in a reserve
or as a liability on the Final Closing Balance Sheet (other than those matters
reflected or included in the liabilities or reserves set forth in Section 1.2(a)
of the Seller Disclosure Schedule, with respect to which Buyer shall not be
entitled to indemnification).
(c) Indemnification Procedures. All claims for indemnification under
this Agreement shall be asserted and resolved as follows:
(i) An Indemnified Party shall promptly (i) notify in writing the
Indemnifying Party of any third-party claim or claims ("Third Party Claim")
asserted against the Indemnified Party which could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying Party
a written notice ("Claim Notice") describing in reasonable detail the nature of
the Third Party Claim, a copy of all papers served with respect to such claim
(if any), an estimate of the amount of damages attributable to the Third Party
Claim, if reasonably possible, and the basis of the Indemnified Party's request
for indemnification under this Agreement.
(ii) Within forty-five days (45) days after receipt of any Claim
Notice (the "Election Period"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Section 7.5 with respect to such
Third Party Claim and (ii) whether the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified Party
against such Third Party Claim.
(iii) If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with
-84-
<PAGE>
this Section 7.5(c). The Indemnifying Party shall have full control of such
defense and proceedings including any compromise or settlement thereof; provided
that any non-monetary aspect of any settlement shall require the consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
The Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if such filing is reasonably necessary to protect
its interests and either the Indemnified Party is actually entitled to
indemnification hereunder or the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party shall deem
necessary or appropriate to protect its interests; provided, that there is not a
reasonable risk that such filings shall materially and adversely affect the
Indemnifying Party's defense; provided further that prior to making any such
filings, the Indemnified Party shall consult with the Indemnifying Party and
shall permit the Indemnifying Party to review such filings. If requested by the
Indemnifying Party, the Indemnified Party shall, at the sole cost and expense of
the Indemnifying Party, cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim which the Indemnifying Party elects to contest.
The Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section 7.5(c) and, except as permitted above, shall bear its
own costs and expenses with respect to such participation.
(iv) If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to this Section 7.5(c), or if the Indemnifying
Party elects to defend the Indemnified Party pursuant to this Section 7.5(c) but
fails to prosecute and handle the Third Party Claim with reasonable diligence
and promptness, then the Indemnified Party shall have the right to defend, at
the sole cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings. The Indemnified Party shall have full control of
such defense and proceedings; provided, however, that the Indemnified Party may
not enter
-85-
<PAGE>
into, without the Indemnifying Party's consent, which shall not be unreasonably
withheld or delayed, any compromise or settlement of such Third Party Claim. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 7.5(c),
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
(v) In the event an Indemnified Party should have a claim against
an Indemnifying Party hereunder which does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim and the basis of
the Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party does not notify the Indemnified Party within sixty (60) days
from its receipt of the Indemnity Notice that the Indemnifying Party disputes
such claim or the calculation of Damages associated therewith, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed a
liability of the Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction.
(vi) Payments of all amounts owing by the Indemnifying Party
pursuant to Sections 7.5(c)(iii) and 7.5(c)(iv) hereof shall be made within
thirty (30) days after the latest of (i) the settlement of the Third Party
Claim, (ii) the expiration of the period for appeal of a final adjudication of
such Third Party Claim or (iii) the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement. Payments of all amounts owing by the Indemnifying
Party pursuant to Section 7.5(c)(v) hereof shall be made within thirty (30) days
after the later of (i) the expiration of the sixty-day Indemnity Notice period
or (ii) the expiration of the period for appeal of a final adjudication of the
Indemnifying Party's liability to the Indemnified Party under this Agreement.
-86-
<PAGE>
(vii) The failure to provide notice as provided in this Section
7.5(c) shall not excuse any party from its continuing obligations hereunder;
however, any claim shall be reduced by the damages resulting from such party's
delay or failure to provide notice as provided in this Section 7.5(c).
(viii) The indemnification obligations set forth in this Section
7.5 are made notwithstanding any investigation made by or on behalf of any of
the parties hereto or the results of any such investigation and notwithstanding
the participation of any party in the Closing.
(d) Environmental Matters. (i) Notwithstanding anything to the
contrary in Sections 7.5(b)(ii), (iii), (iv) and (vi) hereof, Seller shall
indemnify and hold harmless Buyer, its Affiliates and their respective
Representatives from and against any Damages arising out of, resulting from or
related to, and shall pay Buyer, its Affiliates and their respective
Representatives the full amount of any sum which Buyer or any of its Affiliates
or their Representatives pays (including, without limitation, for any fines,
penalties, settlements and any curative action relating to such violation) on
account of (A) any violation of Environmental Laws (including, without
limitation, with respect to required notifications and filings under the federal
Emergency Planning and Community Right-to-Know Act) occurring prior to the
Closing or occurring prior to the Closing and continuing after the Closing
(provided, however, that Buyer shall have made reasonable efforts to correct the
violation, and provided further that Seller shall have no obligation hereunder
for any portion of a violation that continues more than ninety (90) days after
the Closing) and (B) any Cleanup (as hereafter defined) required under any
Environmental Law of Hazardous Materials which were Released (or, in the case of
asbestos-containing material, were the cause of a Release) prior to the Closing
(x) on any Property or (y) at any location to the extent the Business is
required to incur Damages with respect to the Cleanup of such Release; provided,
however, that Seller shall have no indemnification or other obligation pursuant
to this Section 7.5(d)(i) with respect to any Known Pre-Closing Environmental
-87-
<PAGE>
Liabilities. Seller shall be solely responsible for supervising and performing
any Cleanup relating to Hazardous Materials on any Property to the extent such
Cleanup is subject to the indemnification provisions of this Section 7.5(d)(i);
provided that (x) such Cleanup shall be consistent with the provisions of
Section 7.6(c) hereof as applied to the Property in question and shall not
include any use or deed restrictions on such Property and (y) Seller shall
ensure that all materials relating to the Cleanup that are disposed off-site of
the Property are properly disposed of under the name, and as the property of,
Seller. Except as specifically set forth above, the indemnification obligations
set forth in this Section 7.5(d) shall not include any portion of Damages
attributable to the exacerbation due to any actions of Buyer, its Affiliates or
Representatives of any condition existing as of the Closing involving any
violation of Environmental Laws or any Cleanup of Hazardous Materials.
(ii) Notwithstanding anything to the contrary in Sections
7.5(b)(ii) and (iii) hereof, Buyer shall indemnify and hold harmless Seller, its
Affiliates and their respective Representatives from and against any Damages
arising out of, resulting from or related to, and shall pay Seller, its
Affiliates and their respective Representatives the full amount of any sum which
Seller or any of its Affiliates or their Representatives pays (including,
without limitation, for any fines, penalties, settlements and any curative
action relating to such violation) on account of (A) any violation of
Environmental Laws (including, without limitation, with respect to required
notifications and filings under the federal Emergency Planning and Community
Right-to-Know Act) occurring on or after the Closing other than as specifically
set forth in Section 7.5(d)(i) hereof, (B) any Cleanup of Hazardous Materials
which were Released (or, in the case of asbestos-containing material, were for
the first time the cause of a Release) on or after the Closing (x) on any
Property or (y) at any location to the extent the Business is required to incur
Damages with respect to the Cleanup of such Release and (C) the Known
Pre-Closing Environmental Liabilities. Buyer shall be solely responsible for
supervising and performing any Cleanup relating to Hazardous Materials on any
Property
-88-
<PAGE>
to the extent such Cleanup is subject to the indemnification provisions of this
Section 7.5(d)(ii).
(e) All indemnification payments under this Section 7.5 shall be
treated as adjustments to the Purchase Price for income tax purposes.
(f) In the event that the Fagan Litigation does not become an
Assumed Liability, following certification of the class of plaintiffs in the
Fagan Litigation, Buyer shall pay Seller $500 in cash with respect to each unit
that is covered by the class action such payment to be made in respect of each
unit promptly following the later of (x) certification of the class of
plaintiffs and (y) such unit being covered by either (i) a settlement of the
class action which has been approved by the court and (ii) a final judgment in
the class action which is not the subject of appeal. In the event and to the
extent that it is ultimately determined as described in clauses (i) and (ii) of
the preceding sentence that the members of such class are entitled to receive
product, Buyer shall provide such product at no cost to Seller in lieu of and in
complete substitution for the $500 described in the preceding sentence.
SECTION 7.6 New Zealand Property. (a) In addition to, and not in
limitation of any other provision of this Agreement, and notwithstanding
anything to the contrary in Sections 7.5(b) (ii), (iii), (iv) and (vi) hereof,
from and after the Closing Date Seller shall be responsible for any Cleanup of
Hazardous Materials which were Released prior to the Closing Date on, at, or
under the Levin, New Zealand property (the "Levin Property") or Released or
disposed of in connection with the Business on any property contiguous to the
Levin Property prior to the Closing Date and for which Cleanup is required under
any Environmental Law as interpreted by the independent local council that has
jurisdiction over the Levin Property. Cleanup shall be in accordance with and to
the levels required under any Environmental Laws so interpreted. The parties
agree that they will jointly consult the independent local council in the event
they disagree as to applicable Cleanup requirements or standards; provided,
however, that the parties agree that any Cleanup ordered by a court with
jurisdiction shall be
-89-
<PAGE>
deemed to be required by Environmental Law under this Section except to the
extent the independent local council requires an additional or more extensive
Cleanup.
(b) With respect to any discrete part of a Cleanup that is
commenced during the term of the New Zealand Lease and regardless of
whether such discrete part is completed during the term of the Lease,
the Cleanup Costs (as hereafter defined) of such discrete part shall
be divided between Seller and Buyer and paid for as follows: (i)
Seller shall pay 75% of the total Cleanup Costs, and Buyer shall pay
25% of the total Cleanup Costs. "Cleanup Costs" means the costs
payable to an independent contractor for the performance of all or
part of the actions associated with the discrete part of the Cleanup.
Seller shall be responsible for obtaining the services of any
independent contractor necessary for the performance of all or part of
the actions associated with the discrete part of the Cleanup, and
Buyer shall reimburse Seller for 25% of its documented costs paid to
such contractor for any work covered by this Section 7.6. (ii) For
purposes of this Section 7.6, all discrete parts of a Cleanup
contained in a Buyer-approved work plan shall be deemed to have
commenced during the term of the Lease if a contract for performance
of any one discrete part of a Cleanup contained in such work plan is
executed during the term of the Lease, regardless of whether any work
relating to any discrete part of a Cleanup under such work plan has
occurred during the term of the Lease. (iii) Seller shall be 100%
responsible for all Cleanup Costs and other Damages attributable to
(x) the exacerbation due to any actions after the Closing of Seller,
its Affiliates or Representatives (excluding an independent contractor
performing the work) of any condition existing as of the Closing Date
involving the Cleanup of Hazardous Materials and (y) unsuccessfully
contesting the requirement of a Cleanup in negotiations with a
Governmental Entity with jurisdiction over the Levin Property. (iv)
Buyer shall be 100% responsible for all Cleanup Costs and other
Damages attributable to the exacerbation due to any actions of Buyer,
its Affiliates or Representatives (excluding an independent contractor
performing the work) of any condition existing as of the Closing Date
involving the Cleanup of Hazardous Materials.
-90-
<PAGE>
(c) (i) Seller shall perform any Cleanup in a manner that, to the
extent reasonably practicable, minimizes any disruption of or
interference with the operations of Buyer.
(ii) Seller shall provide to Buyer promptly upon receipt thereof
copies of all material investigations, plans, proposals and drafts
thereof relating to any proposed Cleanup or discrete part thereof
which Seller is or may be required to perform hereunder, and shall
provide Buyer with an opportunity to comment on such documents. Seller
shall provide Buyer with full and timely access to any independent
contractor retained by Seller, with respect to any Cleanup for which
Buyer is or may be obligated to reimburse Seller under Section 7.6(b)
hereof. Seller shall provide Buyer with timely notice of and an
opportunity to attend (at Buyer's sole expense) any meeting between
Seller and Governmental Entities or other Persons relating to the
Cleanup.
(iii) Any Cleanup performed by Seller hereunder shall be
performed in a workmanlike manner, using appropriate technology, in
accordance with all applicable Environmental Laws and occupational
safety and health requirements. Seller shall require all its
employees, agents, contractors, subcontractors, representatives and
invitees entering upon any of operations of Buyer to be bound by
Buyer's reasonable terms and conditions for such Persons entering such
property. Buyer shall have the right, with the full cooperation of
Seller, upon reasonable advance notice, to inspect and test (at
Buyer's sole expense), all equipment, monitoring devices, samples,
transportation vehicles and facilities taken, used or to be used by
Seller on the Levin Property or any property contiguous thereto.
Seller shall pay, when due, all invoices, bills and claims for labor
or materials furnished for any Cleanup performed by Seller pursuant
hereto, which claims are or may be secured by any mechanic's or
materialman's lien against the Levin Property or any interest therein;
provided, however, that notwithstanding the foregoing, Seller shall
have the right to contest any request for payment and withhold any
payment with the consent of Buyer, which consent shall not be
unreasonably withheld. During any work that Seller performs
(including, without
-91-
<PAGE>
limitation, any operation, closure or post-closure monitoring and
care) on the Levin Property or a property contiguous thereto, Seller
shall be solely responsible for compliance with all laws, regulations,
rules and professional standards applicable to its work. Seller shall
use reasonable efforts to require any contractor who performs Cleanup
hereunder to obtain automobile and comprehensive general liability
insurance in amounts customary for work of the nature and scope of the
Cleanup, and shall use reasonable efforts to require Buyer and Seller
be named as a co-insureds of any such insurance.
(d) Seller shall not commence any Cleanup without obtaining
Buyer's approval as follows: (i) Prior to commencing any discrete part
of a Cleanup, Seller shall provide Buyer with a detailed work plan for
such discrete part, including itemized cost estimates. For purposes of
this Section 7.6, a "discrete part of a Cleanup" means all required
remedial actions for specific environmental media (e.g., soil, ground
water), as well as specific stages of a Cleanup (e.g., establishment
of Cleanup requirements, negotiations with Governmental Entities,
preliminary investigation, more detailed investigation). (ii) No later
than 30 days after receiving such detailed work plan, Buyer shall
notify Seller either that it approves the work plan, in which case
Seller may proceed with the discrete part of the Cleanup, or that it
disapproves such work plan. If Buyer disapproves such work plan, Buyer
shall have 30 days to notify Seller that it is terminating the New
Zealand Lease. If Buyer fails to so notify Seller, Buyer shall be
deemed to have approved the work plan, in which case Seller may
proceed with the discrete part of the Cleanup. Notwithstanding Section
7.6(b)(ii) hereof, if Buyer notifies Seller that it is terminating the
New Zealand Lease, any Cleanup that Seller performs under a work plan
that Buyer has not approved shall be deemed to have commenced after
the termination of the Lease. In addition to the foregoing, Seller
may, prior to receiving the approval of Buyer, enter into a contract
with an independent consultant to (w) perform pre-remedial studies,
investigations and governmental negotiations as a basis for developing
a detailed work plan for a discrete part of a Cleanup, (x) develop a
detailed work
-92-
<PAGE>
plan for a discrete part of a Cleanup, (y) take emergency Cleanup
action or (z) respond to any government requests for information or
documents in any way relating to cleanup, removal, abatement,
containment, treatment or remediation or potential cleanup, removal,
abatement, containment, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment, but such a contract
shall not be deemed to commence a discrete part of a Cleanup under
Section 7.6(b) hereof unless Buyer ratifies the performance of such
work, which ratification shall not be unreasonably withheld, in which
case the work shall be deemed to be a discrete part of a Cleanup
covered by a Buyer-approved work plan under Section 7.6(b) hereof.
(e) In the event Buyer receives any demand, order or request
relating to a Cleanup covered by this Section 7.6 from a Governmental
Entity or third party, or otherwise becomes aware that a Cleanup
covered by this Section 7.6 may be required, Buyer shall promptly
notify Seller of such facts. Seller hereby consents to, and agrees not
to contest, the personal jurisdiction of the courts of New Zealand
over Seller for purposes of ensuring the parties' compliance with
their covenants, and adjudicating any claims between the parties,
under this Section 7.6, and Seller further agrees that venue proper
for any claims relating to environmental conditions at the Levin
Property is proper for claims relating to this Section 7.6.
ARTICLE VIII
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Absent Employees" has the meaning set forth in Section 5.7(a) hereof.
"Affected Employees" has the meaning set forth in Section 5.7(a)
hereof.
-93-
<PAGE>
"Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations promulgated under the Securities Exchange Act of 1934, as
amended.
"Agreement" has the meaning set forth in the preamble hereto.
"Allocation" has the meaning set forth in Section 5.8 hereof.
"Arthur Andersen" has the meaning set forth in Section 2.6(b) hereof.
"Asset Affiliate" has the meaning set forth in the preamble hereto.
"Assets" has the meaning set forth in Section l.l(a) hereof.
"Assumed Liabilities" has the meaning set forth in Section 1.2 hereof.
"Australian Foreign Change of Control Law" has the meaning set forth
in Section 3.3(b) hereof.
"Basket Amount" has the meaning set forth in Section 7.5(b)(ii)
hereof.
"Basket Losses" has the meaning set forth in Section 7.5(b)(ii)
hereof.
"Bill of Sale" means the duly executed bill of sale, substantially in
the form attached hereto as Exhibit B, that Seller shall deliver to Buyer
effecting the sale, assignment, transfer and delivery of the Assets.
"Board" has the meaning set forth in Section 3.1(b) hereof.
"Business" means the business conducted by the Division.
"Buyer" has the meaning set forth in the preamble hereto.
-94-
<PAGE>
"Buyer Disclosure Schedule" means the disclosure schedule delivered by
Buyer to Seller substantially concurrently with the execution and delivery by
Seller of this Agreement.
"Buyer's Closing Certificate" has the meaning set forth in Section
6.3(a) hereof.
"Claim Notice" has the meaning set forth in Section 7.5(c)(i) hereof.
"Cleanup" means all actions required to: (1) cleanup, remove, abate,
contain, treat, remediate or prevent exposure to Hazardous Materials in the
indoor or outdoor environment; (2) prevent the Release of Hazardous Materials so
that they do not migrate, endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; (3) perform pre-remedial studies
and investigations and post-remedial monitoring and care; or (4) respond to any
government requests for information or documents in any way relating to cleanup,
removal, abatement, containment, treatment or remediation or potential cleanup,
removal, abatement, containment, treatment or remediation of Hazardous Materials
in the indoor or outdoor environment.
"Cleanup Costs" has the meaning set forth in Section 7.6(b) hereof.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Balance Sheet Principles" has the meaning set forth in
Section 2.6(a) hereof.
"Closing Cash Payment" has the meaning set forth in Section 1.4
hereof.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competing Business" has the meaning set forth in Section 5.14 hereof.
-95-
<PAGE>
"Confidentiality Agreement" means the confidentiality agreement
entered into between Harbour Group Industries, Inc. and Seller, dated as of
March 11, 1996, as amended.
"Contracts" has the meaning set forth in Section l.l(a)(v) hereof.
"Conveyed Subsidiaries" means Snorkel Elevating Work Platforms
Limited, a company incorporated under the laws of New Zealand and subsidiary of
Seller, and Snorkel Elevating Work Platforms Pty Limited, a corporation
organized under the laws of New South Wales, Australia and subsidiary of Seller.
"Conveyed Subsidiaries' Release" means the release substantially in
the form attached hereto as Exhibit L.
"Damages" has the meaning set forth in Section 7.5(a)(i) hereof.
"Deeds" means quitclaim deeds in recordable form with respect to the
Property substantially in the form set forth in Exhibit C.
"Designee's Release" means the release substantially in the form
attached hereto as Exhibit K.
"Designee Shares" has the meaning set forth in Section 1.1(a)(xii)
hereof.
"Division" means the Snorkel division of Seller, including the
Conveyed Subsidiaries.
"Division Financial Statements" has the meaning set forth in Section
3.4 hereof.
"Election Period" has the meaning set forth in Section 7.5(c)(ii)
hereof.
"Employee" means any Affected Employee, as described in Section 5.7
hereof, or any former employee of the Business.
-96-
<PAGE>
"Employment Agreements" has the meaning set forth in Section 5.7(d)
hereof.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging potential
liability (including, without limitation, potential liability for investigatory
costs, Cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence or Release of any Hazardous Materials at any
location, whether or not owned or operated by Seller or either of the Conveyed
Subsidiaries, or (b) circumstances forming the basis of any violation of any
Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws
and regulations relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, transport or
handling of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" has the meaning set forth in Section l.l(c) hereof.
"Excluded Intellectual Property" has the meaning set forth in Section
l.l(c)(v) hereof.
"Fagan Litigation" has the meaning set forth in Section 1.2(n) hereof.
"Figgie Licensing" has the meaning set forth in the preamble hereto.
"Figgie Properties" has the meaning set forth in the preamble hereto.
"Figgie Real Estate" has the meaning set forth in the preamble hereto.
-97-
<PAGE>
"Figgie Trademarks and Logos" means the name of Seller and any service
marks, trademarks, trade names, identifying symbols, logos, emblems, signs or
insignia related thereto or containing or comprising the name "Figgie",
including any name or mark confusingly similar thereto, and the goodwill
relating thereto.
"Final Closing Balance Sheet" has the meaning set forth in Section
2.6(b) hereof.
"Final Closing Report" has the meaning set forth in Section 2.6(b)
hereof.
"Final Net Assets" has the meaning set forth in Section 2.6(b) hereof.
"Financial Statements" has the meaning set forth in Section 3.4
hereof.
"GAAP" means U.S. generally accepted accounting principles.
"General Assignments" has the meaning set forth in Section 1.7(e)
hereof.
"General Litigation Claims" has the meaning set forth in Section
1.2(i) hereof.
"Government Contract" means a mutually binding legal relationship
obligating Seller or a Conveyed Subsidiary to furnish supplies or services and a
government or government agency to pay for them, including all types of
commitments that obligate the government of the United States, New Zealand or
Australia to an expenditure of appropriated funds and that, except as otherwise
authorized, are in writing. In addition to bilateral instruments, "Government
Contract" includes (but is not limited to) awards and notices of awards; job
orders or task letters issued under basic ordering agreements; letter contracts;
orders, such as purchase orders, under which the contract becomes effective by
written acceptance or performance; and bilateral contract modifications.
"Governmental Entity" means any foreign, United States, state or local
governmental entity or municipali-
-98-
<PAGE>
ty or subdivision thereof or court, tribunal, commission, board, bureau, agency
or legislative, executive, governmental or regulatory authority or agency.
"Hazardous Materials" means all substances defined as Hazardous
Substances, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or defined as
such by, or regulated as such under, any Environmental Law including, without
limitation, petroleum products.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Hogan Services Agreement" means that certain services agreement,
dated September 28, 1990, between Seller and Ross Hogan.
"Independent Accounting Firm" means the national accounting firm
retained to resolve any disputes between Buyer and Seller over any item
contained in the Final Closing Balance Sheet.
"Indemnified Party" has the meaning set forth in Section 7.5(b)(i)
hereof.
"Indemnifying Party" has the meaning set forth in Section 7.5(b)(i)
hereof.
"Indemnity Notice" has the meaning set forth in Section 7.5(c)(v)
hereof.
"Intellectual Property" has the meaning set forth in Section
l.l(a)(viii) hereof.
"IRS" has the meaning set forth in Section 3.15(e)(i) hereof.
"Known Pre-Closing Environmental Liabilities" has the meaning set
forth in Section 1.2(j) hereof.
"Legal Proceedings" has the meaning set forth in Section 2.2(d)
hereof.
-99-
<PAGE>
"Legal Requirement" means all applicable laws, statutes, ordinances,
orders, rules, regulation or requirements.
"Levin Property" has the meaning set forth in Section 7.6(a) hereof.
"Liens" has the meaning set forth in Section 3.7(a) hereof.
"Manufacturing Equipment Contracts" has the meaning set forth in
Section 1.1(d) hereof.
"Material Adverse Effect" has the meaning set forth in Section 3.1(a)
hereof.
"Material Contracts" has the meaning set forth in Section 3.10 hereof.
"New Zealand Foreign Change of Control Law" has the meaning set forth
in Section 3.3(b) hereof.
"New Zealand Lease" means the lease substantially in the form attached
hereto as Exhibit M.
"Other Instruments" means such duly executed, good and sufficient
instruments of conveyance, transfer and assignment, other than the Bill of Sale,
the Deeds and the General Assignments, as shall be reasonably required by Buyer
and its counsel and as shall be necessary to convey to Buyer all of Seller's
rights, title and interests in and to the Assets.
"Pension Plan" has the meaning set forth in Section 3.15(b) hereof.
"Permits" has the meaning set forth in Section l.l(a)(ix) hereof.
"Permitted Liens" has the meaning set forth in Section 3.7(a) hereof.
"Person" means and includes any natural person, firm, individual,
partnership, joint venture, company,
-100-
<PAGE>
corporation, business trust, trust, association, unincorporated organization or
a Governmental Entity.
"Plans" has the meaning set forth in Section 3.15(a) hereof.
"Preliminary Closing Balance Sheet" has the meaning set forth in
Section 2.6(a) hereof.
"Preliminary Closing Report" has the meaning set forth in Section
2.6(a) hereof.
"Preliminary Net Assets" has the meaning set forth in Section 2.6(a)
hereof.
"Price Waterhouse" has the meaning set forth in Section 2.6(b) hereof.
"Prior Welfare Plans" has the meaning set forth in Section 5.7(b)
hereof.
"Property" has the meaning set forth in Section l.l(a)(i) hereof.
"Purchase Price" has the meaning set forth in Section 1.4 hereof.
"Real Property Leases" has the meaning set forth in Section l.l(a)(ii)
hereof.
"Records" has the meaning set forth in Section 2.2(b) hereof.
"Reemployment Date" has the meaning set forth in Section 5.7(a)
hereof.
"Related Agreements" means those other agreements and instruments
required to be executed pursuant to this Agreement.
"Release" means any release, spill, emission, escape, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the workplace or the environment (including, without limitation, ambient
air, surface water, groundwater and surface
-101-
<PAGE>
or subsurface strata) or into or out of any property, including the movement of
Hazardous Materials through or in the air, soil, surface water, groundwater or
property.
"Replacement Welfare Plans" has the meaning set forth in Section
5.7(b) hereof.
"Representatives" has the meaning set forth in Section 7.5(a)(i)
hereof.
"Retained Liabilities" has the meaning set forth in Section 1.3
hereof.
"Retained Property" has the meaning set forth in Section 1.1(c)(vi)
hereof.
"Seller" has the meaning set forth in the preamble hereto.
"Seller Disclosure Schedule" means the disclosure schedule delivered
by Seller to Buyer substantially concurrently with the execution and delivery by
Seller of this Agreement.
"Seller's Closing Certificate" has the meaning set forth in Section
6.2(a) hereof.
"Seller's Designee" means Ross Hogan.
"Seller's Release" means the release substantially in the form
attached hereto as Exhibit J.
"Shares" has the meaning set forth in the recitals hereto.
"Snorkel-Australia" has the meaning set forth in Section 3.2(d)
hereof.
"Snorkel-New Zealand" has the meaning set forth in Section 3.2(d)
hereof.
"Software Contracts" has the meaning set forth in Section 1.1(d)
hereof.
-102-
<PAGE>
"St. Joseph Lease" means the lease substantially in the form attached
hereto as Exhibit D.
"Subsidiary" means with respect to any Person, any corporation or
other legal entity of which such Person owns, directly or indirectly, more than
50% of the outstanding stock or other equity interests, the holders of which are
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"Subsidiary Assets" has the meaning set forth in Section 3.7(a)
hereof.
"Subsidiary Financial Statements" has the meaning set forth in Section
3.4 hereof.
"Subsidiary Intellectual Property" means (i) all domestic and foreign
registered trademarks, registered copyrights and patents, and applications for
any of the foregoing (excluding the Excluded Intellectual Property) that are
owned as of the Closing Date by the Conveyed Subsidiaries and (ii) all other
material trade names, service marks, logos and assumed names (excluding the
Excluded Intellectual Property) that are owned as of the Closing Date by the
Conveyed Subsidiaries, which Subsidiary Intellectual Property is listed in
Section l.l(a)(viii) of the Seller Disclosure Schedule.
"Subsidiary Material Adverse Effect" has the meaning set forth in
Section 3.2(a) hereof.
"Subsidiary Real Property Leases" has the meaning set forth in Section
3.9(a) hereof.
"Subsidiary Property" has the meaning set forth in Section 3.8(a)
hereof.
"Tax Benefit" shall mean the present value of any net reduction or
increase in Taxes attributable to any loss, deduction (including any positive or
negative changes in any depreciation or amortization deductions arising from any
adjustments to the basis of assets, including any adjustment to purchase price
arising from indemnification payments), credit or similar item for any
-103-
<PAGE>
Tax purpose. The amount of any Tax Benefit shall be calculated (i) using the
Indemnified Party's actual effective tax rate for federal, state and local Tax
purposes at the time the indemnification payment is made; (ii) with the
assumption that all Tax Benefits will be utilized by the Indemnified Party at
the first time that such Tax Benefits are allowable under the applicable Tax law
in existence at the time the indemnification payment is made; and (iii) using
the mid-term applicable federal rate (for annual payments) for present value
calculations. Any net negative Tax Benefits shall be treated as additional
Damages subject to indemnification under Section 7.5 hereof.
"Tax Return" means any report, return, statement or other written
information required to be supplied to a taxing authority in connection with
Taxes.
"Taxes" means (i) all income taxes (including any tax on or based upon
net income, or gross income, or income as specially defined, or earnings, or
profits, or selected items of income, earnings or profits) and all gross
receipts, estimated, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, stamp duty,
occupation, premium, property or windfall profits taxes, environment,
alternative or add-on minimum taxes, custom duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any Taxing
Authority and (ii) any liability for the payment of any amount of the Tax
described in the immediately preceding clause (i) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other
applicable law) of another person or successor, by contract, or otherwise, or a
member of an affiliated, consolidated, or combined group.
"Taxing Authority" means any federal, state, local or foreign
governmental entity or other authority (individually or collectively) that is
involved in any way with the determination, assessment or collection of any Tax.
-104-
<PAGE>
"Third Party Claim" has the meaning set forth in Section 7.5(c)(i)
hereof.
"Undertaking" has the meaning set forth in Section l.5 hereof.
"Welfare Plan" has the meaning set forth in Section 3.15(c) hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Further Assurances. From time to time after the Closing
Date, at the request of any party hereto and at the expense of such party, the
parties hereto shall execute and deliver to such requesting party such documents
and take such other action as such requesting party may reasonably request in
order to consummate more effectively the transactions contemplated hereby and by
the Related Agreements.
SECTION 9.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and may be given by any of the following methods: (a) personal
delivery, (b) facsimile transmission, (c) when mailed in the United States by
registered or certified mail, postage prepaid, return receipt requested or
(d) overnight delivery service. Notices shall be sent to the appropriate party
at its address or facsimile number given below (or at such other address or
facsimile number for such party as shall be specified by notice given
hereunder):
If to Buyer, to:
SKL Lift, Inc.
c/o Omniquip International, Inc.
369 West Western Avenue
Port Washington, Wisconsin 53074
Fax: (414) 284-4955
Attention: P. Enoch Stiff
-105-
<PAGE>
President and Chief Executive
Officer
with a copy to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
Fax: (202) 887-0689
Attention: Ira H. Polon, Esq.
If to Seller, to:
Figgie International Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
Fax: (216) 953-2859
Attention: Robert D. Vilsack, Esq.
General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-9931
Fax: (212) 735-2000
Attention: Lou R. Kling, Esq.
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
thereof to the appropriate address or (iii) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
SECTION 9.3 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public
-106-
<PAGE>
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated herein is affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner.
SECTION 9.4 Assignment; Binding Effect. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned, directly or
indirectly, including, without limitation, by operation of law, by any party
hereto without the prior written consent of the other parties hereto. Subject to
the preceding sentence, this Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Notwithstanding anything herein to
the contrary, Seller and Buyer may each assign any and all of its rights under
Article VII hereof to any of its lenders.
SECTION 9.5 No Third Party Beneficiaries. This Agreement is solely for
the benefit of Seller and its successors and permitted assigns, with respect to
the obligations of Buyer under this Agreement, and for the benefit of Buyer, and
its successors and permitted assigns, with respect to the obligations of Seller,
under this Agreement, and this Agreement shall not be deemed to confer upon or
give to any other third party any remedy, claim, liability, reimbursement, cause
of action or other right.
SECTION 9.6 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation." The phrase "made available" when used in this Agreement shall mean
that the information referred
-107-
<PAGE>
to has been made available if requested by the party to whom such information is
to be made available. Matters referred to in this Agreement as "to the knowledge
of Seller" and "to Seller's knowledge" shall mean the actual knowledge of Steven
L. Siemborski, Robert D. Vilsack, Richard A. Solon, Roy Brittingham, Stewart
Thompson and Ross A. Hogan.
The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
SECTION 9.7 Entire Agreement. This Agreement, together with the
Confidentiality Agreement, the Seller Disclosure Schedule, the Buyer Disclosure
Schedule and the exhibits and other documents referred to herein or delivered
pursuant hereto that form a part hereof, constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, between the
parties or either of them with respect to the subject matter hereof.
SECTION 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
SECTION 9.9 Specific Performance. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
SECTION 9.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of
-108-
<PAGE>
which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto.
-109-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
FIGGIE INTERNATIONAL INC.
By: /s/ Steven L. Siemborski
-------------------------------
Name: Steven L. Siemborski
Title: Senior Vice President and
Chief Financial Officer
FIGGIE INTERNATIONAL REAL ESTATE INC.
By: /s/ Robert D. Vilsack
--------------------------------
Name: Robert D. Vilsack
Title: Secretary
FIGGIE PROPERTIES INC.
By: /s/ Robert D. Vilsack
--------------------------------
Name: Robert D. Vilsack
Title: Secretary
FIGGIE LICENSING CORPORATION
By: /s/ Robert D. Vilsack
--------------------------------
Name: Robert D. Vilsack
Title: Secretary
FIGGIE RISK MANAGEMENT CO.
By: /s/ Robert D. Vilsack
--------------------------------
Name: Robert D. Vilsack
Title: Secretary
SKL LIFT, INC.
By: /s/ P. Enoch Stiff
--------------------------------
Name: P. Enoch Stiff
Title: President
<PAGE>
GUARANTY
The undersigned ("Guarantor") hereby agrees to guaranty the
obligations of SKL Lift, Inc., a Delaware corporation (the "Buyer"), under the
Asset Purchase Agreement, dated as of July 19, 1997, by and among Figgie
International Inc., a Delaware corporation, Figgie International Real Estate
Inc., a Delaware corporation, Figgie Properties Inc., a Delaware corporation,
Figgie Licensing Corporation, a Delaware corporation, Figgie Risk Management
Corporation, a Florida corporation, and Buyer.
The obligations of Guarantor under this guaranty are absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released, waived, suspended, discharged, terminated or otherwise
affected by, any circumstance or occurrence whatsoever, including, without
limitation, (i) any bankruptcy, insolvency, reorganization, dissolution,
liquidation or the like of Guarantor, (ii) any merger or consolidation of
Guarantor into or with any other entity or (iii) any sale of all or
substantially all of the assets of Guarantor.
This guaranty shall be governed by and construed in all respects under
the laws of the State of New York.
OMNIQUIP INTERNATIONAL, INC.
By: /s/ P. Enoch Stiff
--------------------------------
Name: P. Enoch Stiff
Title: President and Chief Executive Officer
AMENDMENT
---------
The undersigned hereby amend the Asset Purchase Agreement, dated as of July
19, 1997 (the "Agreement"), by and among Figgie International Inc. ("Seller"),
SKL Lift, Inc. ("Buyer") and the other parties named therein, pursuant to and in
accordance with Section 7.3 thereof. All capitalized terms not defined herein
are used as defined in the Agreement.
FIRST, Section 1.2(a) of the Agreement is hereby amended to read as
follows:
(a) Those current liabilities of Seller relating to the Business set
forth on Exhibit A hereto;
SECOND, Section 1.2(b) of the Agreement is hereby amended to read as
follows:
(b) All liabilities, obligations and costs of Seller arising after the
Closing Date under any Contract assigned to Buyer pursuant to Section
1.1(a)(v) hereof or as to which arrangements have been made pursuant to
Section 5.4 hereof which is set forth in the Seller Disclosure Schedule (or
which is not required to be set forth thereon), or which was entered into
after the date hereof and prior to the Closing Date in accordance with the
provisions of this Agreement;
THIRD, Section 1.2(e) of the Agreement is hereby amended to read as
follows:
(e) Except as provided in Section 1.3(g) hereof, liabilities and
obligations attributable to or incurred in connection with the Business
prior to, on or after the Closing Date with respect to Affected Employees
(as hereafter defined) arising from, or relating to, any incentive (other
than bonuses referred to in Section 1.3(m) hereof), de-
<PAGE>
ferred compensation, insurance, employment, performance, vacation, retiree
benefit plan, program, agreement or arrangement for the benefit of any
Affected Employee, including obligations under clause 4 of the Hogan
Service Agreement;
FOURTH, Section 1.3 of the Agreement is hereby amended to add the following
new subsections:
(m) All bonuses to employees of the Business for periods of service
ending on or prior to the Closing Date; and
(n) All liabilities, obligations and costs from or relating to the
matters described in the first sentence of Section 5.7(h).
FIFTH, Section 1.4 of the Agreement is hereby amended to read as follows:
SECTION 1.4. Consideration.
-------------
(a) The amount payable at Closing shall be $100,000,000 in cash (the
"Closing Cash Payment"), payable in immediately available funds. The
purchase price for the Assets (the "Purchase Price") shall be the Closing
Cash Payment plus an additional amount, if any, (the "Earn-Out Amount") to
be calculated as provided in subsection (b) of this Section 1.4.
(b) The Earn-Out Amount will be determined as follows:
(i) The Earn-Out Amount will be equal to the sum of (A) the
amount of Net Sales (as hereafter defined) of Snorkel Products (as
hereafter defined) during the twelve-month period commencing on April
1, 1998 and ending on March 31, 1999 (the "Earn-Out Period") in excess
of the First Threshold Amount (as hereafter defined), such amount not
to exceed $20,000,000, plus (B) 70% of the amount of
2
<PAGE>
Net Sales of Snorkel Products during the Earn-Out Period in excess of
the Second Threshold Amount (as hereafter defined), such amount not to
exceed $30,000,000. "Net Sales" means the gross sales of Snorkel
Products less rebates, discounts, invoice corrections, commissions,
freight-out, returns and allowances completed in the ordinary course
of business. "Snorkel Products" means products manufactured and sold
by the Division on the Closing Date and any successors to, or
replacements of, such products manufactured and sold by Buyer after
the Closing Date. The "First Threshold Amount" shall be equal to
$140,000,000, less the Firefighting Adjustment (as hereafter defined),
if any, and the "Second Threshold Amount" shall be equal to
$160,000,000, less the Firefighting Adjustment, if any. The
"Firefighting Adjustment" shall be equal to the aggregate Net Sales of
Snorkel Products used for firefighting in the period commencing on
November 1, 1996 and ending on October 31, 1997 times the quotient of
the number of days, if any, during the Earn-Out Period that the
Division no longer owns its firefighting business, over 365.
(ii) In the event that (i) Omniquip Products (as hereinafter
defined) and Snorkel Products are sold together during the Earn-Out
Period to National Account Customers (as hereafter defined) pursuant
to the same purchase order or sale agreement (each, a "Bundled Sale"),
(ii) the weighted-average discount, including rebate, from list prices
in effect on February 1, 1998 provided to National Account Customers
for Omniquip Products included in the Bundled Sale is less than the
weighted-average of the discount rates for such Omniquip Products set
forth in the Omniquip National Account Discount Schedule (as hereafter
defined) and (iii) the weighted-average discount, including rebates,
from list prices in effect on February 1, 1998 on Snorkel Products
sold in Bundled Sales during the Earn-Out Period are greater than the
weighted-average discount, including rebates, set forth in the Snorkel
National Account Discount Schedule (as hereafter defined) then the
discount, including rebates, from
3
<PAGE>
list prices in effect on February 1, 1998 used for the purpose of
calculating Net Sales of Snorkel Products included in such Bundled
Sale shall be equal to (x) the discount, including rebates, set forth
in the Snorkel National Account Discount Schedule increased by (y) the
percentage increase in the weighted-average discount, including
rebates, from list prices in effect on February 1, 1998 on such
Bundled Sale for Omniquip Products over the weighted-average discount,
including rebates, set forth in the Omniquip National Account Discount
Schedule. An example of the application of the provisions of the
preceding sentence to a hypothetical Bundled Sale is attached as
Exhibit B hereto. For purposes of this Agreement: the term "National
Account Customers" shall mean any national account of Omniquip
Products and Snorkel Products, during the Earn-Out Period, which are
sold as a Bundled Sale; the term "Snorkel National Account Discount
Schedule" shall mean the discounts, including rebates, for each of the
Snorkel Products offered to National Account Customers for calendar
year 1998 set forth on a schedule to be delivered by Seller to Buyer
on or prior to the date hereof; the term "Omniquip National Account
Discount Schedule" shall mean the discounts, including rebates, for
each of the Omniquip Products offered to National Account Customers
for calendar year 1998 set forth in a schedule to be delivered by
Buyer to Seller on or prior to the date hereof; and the term "Omniquip
Products" shall mean products manufactured and sold by Omniquip
International, Inc. and its Subsidiaries on the Closing Date and any
successors to, or replacements of, such products manufactured and sold
by Omniquip International, Inc. and its subsidiaries (other than
Buyer) after the Closing Date.
(iii) For purposes of determining the amount of Net Sales of
Snorkel Products during the month of April 1998, the actual Net Sales
of Snorkel Products during the months of March and April 1998 shall be
added and such sum shall be divided by two, with the resulting number
being deemed the amount of Net Sales of Snorkel Products
4
<PAGE>
during the month of April 1998. For purposes of determining the amount
of Net Sales of Snorkel Products during the month of March 1999, the
actual Net Sales of Snorkel Products during the months of March and
April 1999 shall be added and such sum shall be divided by two, with
the resulting number being deemed the amount of Net Sales of Snorkel
Products during the month of March 1999.
(iv) As promptly as practicable after the Earn-Out Period, Buyer
shall prepare, and Price Waterhouse LLP, independent auditors for
Buyer ("Price Waterhouse") shall examine a Statement of Net Sales of
Snorkel Products for the Earn-Out Period and shall calculate the
Earn-Out Amount in accordance with the Earn-Out Principles and
Procedures attached as Exhibit C. Price Waterhouse shall deliver a
report setting forth the Earn-Out Amount (the "Earn-Out Report") to
Seller as soon as possible after the end of the Earn-Out Period, but
in no event later than thirty (30) days after the end of the Earn-Out
Period. Seller and its independent auditors ("Seller's Auditors")
shall have the opportunity to (a) review records of the Division,
including sales journals, sales registers, invoices, credit invoices,
shipping records, backlog reports and customer purchase orders, (b)
review such of the worksheets and other documents created or utilized
by Price Waterhouse in connection with the preparation of the Earn-Out
Report as Seller shall reasonably request and (c) be present at,
observe and make inquiry as to the production, fulfillment and
shipping activities of the Division during the periods of March 15,
1998 through April 15, 1998 and March 15, 1999 through April 15, 1999.
Seller shall have 30 days following delivery to Seller of the Earn-Out
Report during which to notify Buyer of any dispute of the Earn-Out
Amount, which notice shall set forth in reasonable detail the basis
for such dispute. If Seller fails to notify Buyer of any such dispute
within such 30-day period, Price Waterhouse's calculation of the
Earn-Out Amount shall be deemed to be the agreed upon Earn-Out Amount
and such amount shall be paid to Seller not later than five (5) days
5
<PAGE>
following the end of such 30-day period. In the event that Seller
shall so notify Buyer of any dispute, Seller and Buyer shall cooperate
in good faith to resolve such dispute as promptly as possible.
(v) If Seller and Buyer are unable to resolve any such dispute
within 15 days (or such longer period as Seller and Buyer shall
mutually agree in writing) of Seller's delivery of such notice, such
dispute shall be resolved by the Independent Accounting Firm (as
hereafter defined), and such determination shall be final and binding
on the parties. Seller and Buyer shall mutually select the Independent
Accounting Firm, but if Seller and Buyer cannot mutually agree on the
identity of the Independent Accounting Firm, then Seller and Buyer
shall each submit to the other party's independent auditor the name of
a national accounting firm other than any firm that has in the prior
two years provided services to Seller, Buyer or any of their
respective Affiliates, and the Independent Accounting Firm shall be
selected by lot from these two firms by the independent auditors of
the two parties. (If no national accounting firm shall be willing to
serve as the Independent Accounting Firm, then an arbitrator shall be
selected to serve as such, such selection to be according to the above
procedures.) Any expenses relating to the engagement of the
Independent Accounting Firm shall be shared equally by Buyer and
Seller. The Earn-Out Amount shall then be determined by the
Independent Accounting Firm, which shall be instructed to use every
reasonable effort to perform its services within 15 days of submission
of the dispute to it and, in any case, as promptly as practicable
after such submission. Not later than five (5) days following such
determination by the Independent Accounting Firm, the Earn-Out Amount
shall be paid to Seller in cash.
(c) Any payments to Seller of the Earn-Out Amount shall be by wire
transfer in immediately available funds together with interest thereon at a
rate equal to the prime rate per annum on a date immediately preceding the
date on which payment is
6
<PAGE>
to be made, as quoted by First Union Bank, N.A., from the date which is 30
days after the end of the Earn-Out Period to the date of payment.
SIXTH, Section 1.6 of the Agreement is hereby amended to read as follows:
SECTION 1.6 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall occur not later than November 19, 1997
(provided that Buyer shall use its best efforts to close not later than
noon on November 17, 1997), at the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, 919 Third Avenue, New York, New York 10022, (or at such other
place as the parties may mutually agree). If the Closing has not occurred
by November 19, 1997, it shall, subject to the conditions hereof, occur as
soon as practicable thereafter. If the Closing has not theretofore
occurred, it shall occur on December 1, 1997, subject to the conditions
hereof.
SEVENTH, Section 2.4 of the Agreement is hereby amended to read as follows:
SECTION 2.4. Intercompany Accounts. On the Closing Date, all
intercompany account balances including all accrued general liability
insurance, accrued worker's compensation insurance and accrued benefit plan
items then outstanding between the Division, on the one hand, and Seller
and its Affiliates (other than the Division), on the other hand, shall be
cancelled without any payment being made with respect thereto. No
adjustment shall be made to the Purchase Price as a result of any such
cancellation.
7
<PAGE>
EIGHTH, Section 2.6 of the Agreement is hereby amended to read as follows:
SECTION 2.6. Miscellaneous Purchase Price Matters.
(a) (i) Seller agrees that the Accounts Payable, as defined in
item A of Exhibit A, of the Division shall not exceed $10,000,000 at
Closing. In the event that Accounts Payable as of the Closing Date
exceed $10,000,000, the Purchase Price shall be reduced on a
dollar-for-dollar basis by the amount of such excess.
(ii) As promptly as practicable after the Closing Date, Buyer
will prepare a list of Accounts Payable as of the Closing Date,
supporting documentation and a statement of the corresponding
reduction of the Purchase Price, if any, and furnish such materials to
Seller. Seller shall have the opportunity to review records and
details supporting the list of Accounts Payable. Seller shall have 30
days following delivery of the list of Accounts Payable and statement
of corresponding reduction of the Purchase Price, if any, during which
to notify Buyer of any dispute in the reduction of the Purchase Price,
which notice shall set forth in reasonable detail the basis for such
dispute. If Seller fails to notify Buyer of any such dispute within
such 30-day period, Buyer's calculation of the reduction of the
Purchase Price shall be deemed to be agreed upon and such amount shall
be paid to Buyer not later than five (5) days following the end of
such 30-day period. In the event that Seller shall so notify Buyer of
any dispute, Seller and Buyer shall cooperate in good faith to resolve
such dispute as promptly as possible.
(iii) If Seller and Buyer are unable to resolve any such dispute
within 15 days (or such longer period as Seller and Buyer shall
mutually agree in writing) of Seller's delivery of such notice, such
dispute shall be resolved by the Independent Accounting Firm (as
hereafter defined), and
8
<PAGE>
such determination shall be final and binding on the parties. Seller
and Buyer shall mutually select the Independent Accounting Firm, but
if Seller and Buyer cannot mutually agree on the identity of the
Independent Accounting Firm, then Seller and Buyer shall each submit
to the other party's independent auditor the name of a national
accounting firm other than any firm that has in the prior two years
provided services to Seller, Buyer or any of their respective
Affiliates, and the Independent Accounting Firm shall be selected by
lot from these two firms by the independent auditors of the two
parties. (If no national accounting firm shall be willing to serve as
the Independent Accounting Firm, then an arbitrator shall be selected
to serve as such, such selection to be according to the above
procedures.) Any expenses relating to the engagement of the
Independent Accounting Firm shall be shared equally by Buyer and
Seller. The amount of Accounts Payable shall then be determined by the
Independent Accounting Firm, which shall be instructed to use every
reasonable effort to perform its services within 15 days of submission
of the dispute to it and, in any case, as promptly as practicable
after such submission. Not later than five (5) days following such
determination by the Independent Accounting Firm, any amount required
to be paid under subsection (a)(i) of this Section 2.6 shall be paid
to Seller in cash.
(iv) Any payments to Buyer of any amount required to be paid
under subsection (a)(i) of this Section 2.6 shall be by wire transfer
in immediately available funds together with interest thereon at a
rate equal to the prime rate per annum on a date immediately preceding
the date on which payment is to be made, as quoted by First Union
Bank, N.A., from the Closing Date.
(b) Recording fees, transfer taxes, and escrow fees incurred in
connection with the conveyance of the Shares, Property, Real Property
Leases, Subsidiary Real Property Leases (as hereafter defined) or personal
property, including such taxes as
9
<PAGE>
are imposed by the Australian and New Zealand taxing authorities, shall be
borne equally by Buyer and Seller. Costs associated with obtaining title
insurance of the Property shall be the responsibility of Buyer. Sales and
use taxes and all other similar taxes (other than income and franchise
taxes) and all interest and penalties thereon incurred in connection with
conveyance of the Property, Real Property Leases, Subsidiary Real Property
Leases or personal property shall be borne equally by Buyer and Seller.
Seller shall provide copies of the current or most recent property tax
bills for the Property and, if available, for any leased properties, to
Buyer prior to the Closing Date. After the Closing Date, any bills or
requests for payment received by either Seller or Buyer in connection with
the Business attributable to Taxes which reflect in whole or part
liabilities retained or assumed, respectively, by Seller on the one hand,
or Buyer on the other, shall be allocated between Buyer and Seller in the
manner described in Sections 1.2(a) and 5.9 hereof, or as otherwise
appropriate under the terms of this Agreement; provided, however, that
neither party shall pay such bill without the prior written consent of the
other party, which consent shall not be unreasonably withheld.
NINTH, Clause (a) of Section 3.6 of the Agreement is hereby amended to read
as follows:
(a) there has not been any material adverse change in the Assets,
liabilities, business, operations or condition (financial or otherwise) of
the Division (other than (i) changes resulting from changes in general
economic or financial conditions, (ii) changes affecting generally the
industry in which the Business operates and (iii) changes in the financial
and operating condition of the Business between June 30, 1997 and October
30, 1997);
10
<PAGE>
TENTH, Section 5.7 of the Agreement is hereby amended to add the following
subsection (h):
(h) Seller shall be liable for all severance payments due under plans,
policies, agreements or laws in effect on the Closing Date with respect to
employees of the Division laid off prior to the Closing Date by Seller,
other than any such employees who are recalled from layoff by the Division
after the Closing Date. Seller has delivered to Buyer a list of all
employees of the Business who have been laid off since June 30, 1997.
ELEVENTH, Article V of the Agreement is hereby amended to add the following
Section 5.16:
SECTION 5.16. Dismissal of Action. Seller will dismiss (without
prejudice, with each party to bear its own fees and expenses) the complaint
filed in that certain action in the Chancery Court of the State of Delaware
in and for New Castle County entitled Figgie International Inc. v. Omniquip
International Inc. and SKL Lift, Inc. (Civil Action No. 16006) (the
"Action") no later than November 12, 1997. Seller agrees that such
dismissal shall be conclusively deemed for all purposes to be "with
prejudice", subject to, and effective upon the occurrence of, the Closing.
At Closing, Seller will deliver to Buyer a release, irrevocably releasing
Buyer from the claims set forth in the Action.
TWELFTH, Section 6.2(c) of the Agreement is hereby amended to read as
follows:
(c) During the period from July 19, 1997 to the Closing Date, there
shall not have occurred a Material Adverse Effect (other than the change in
the financial and operating condition of the Business between July 19, 1997
and October 30, 1997).
11
<PAGE>
THIRTEENTH, Section 7.1(c) of the Agreement is hereby amended so that the
reference to "October 31, 1997" is changed to "the close of business on December
1, 1997".
FOURTEENTH, the following clause (C) is hereby added to the end of Section
7.5(b)(iv):
or (C) any matter relating to the operations or financial condition of
the business as of October 30, 1997 of which any of the persons listed
in Section 7.5(b)(iv) of the Seller Disclosure Schedule had actual and
specific knowledge.
FIFTEENTH, a substantially final update of the Seller Disclosure Schedule
proposed to be delivered at the Closing shall be delivered two calendar days
prior to Closing.
This Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Amendment shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other party hereto.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
November 9, 1997.
FIGGIE INTERNATIONAL INC.
By: /s/ Steven L. Siemborski
--------------------------------
Name: Steven L. Siemborski
Title: Senior Vice President and
Chief Financial Officer
SKL LIFT, INC.
By: /s/ P. Enoch Stiff
---------------------------------
Name: P. Enoch Stiff
Title: President and Chief
Executive Officer
_______________________________________________________________________________
_______________________________________________________________________________
CREDIT AGREEMENT
among
OMNIQUIP INTERNATIONAL, INC.,
VARIOUS LENDING INSTITUTIONS,
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent and Arranger,
and
FIRST UNION NATIONAL BANK,
as Administrative Agent and Co-Arranger
__________________________________
Dated as of November 17, 1997
__________________________________
$165,000,000
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit................................. 1
1.01 The Commitments............................................ 1
1.02 Minimum Amount of Each Borrowing........................... 4
1.03 Notice of Borrowing........................................ 4
1.04 Disbursement of Funds...................................... 5
1.05 Notes...................................................... 6
1.06 Conversions................................................ 7
1.07 Pro Rata Borrowings........................................ 8
1.08 Interest................................................... 8
1.09 Interest Periods........................................... 9
1.10 Increased Costs, Illegality, etc........................... 10
1.11 Breakage................................................... 13
1.12 Change of Lending Office................................... 13
1.13 Replacement of Banks....................................... 13
SECTION 2. Letters of Credit.......................................... 15
2.01 Letters of Credit.......................................... 15
2.02 Maximum Letter of Credit Outstandings; Final Maturities.... 16
2.03 Letter of Credit Requests.................................. 17
2.04 Letter of Credit Participations............................ 17
2.05 Agreement to Repay Letter of Credit Drawings............... 19
2.06 Increased Costs............................................ 20
SECTION 3. Commitment Commission; Fees; Reductions of Commitment...... 21
3.01 Fees....................................................... 21
3.02 Voluntary Termination of Unutilized Commitments............ 22
3.03 Mandatory Reduction of Commitments......................... 23
SECTION 4. Prepayments; Payments; Taxes............................... 24
4.01 Voluntary Prepayments...................................... 24
4.02 Mandatory Repayments and Commitment Reductions............. 25
4.03 Method and Place of Payment................................ 30
(i)
<PAGE>
4.04 Net Payments............................................... 30
SECTION 5. Conditions Precedent to Initial Credit Events.............. 32
5.01 Execution of Agreement; Notes.............................. 32
5.02 Officer's Certificate...................................... 32
5.03 Opinions of Counsel........................................ 32
5.04 Corporate Documents; Proceedings; etc...................... 32
5.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Collective Bargaining
Agreements; Existing Indebtedness Agreements........... 33
5.06 Consummation of Acquisition................................ 34
5.07 Refinancing................................................ 34
5.08 Adverse Change, etc........................................ 34
5.09 Litigation................................................. 35
5.10 Pledge Agreement........................................... 35
5.11 Security Agreement......................................... 35
5.12 Subsidiaries Guaranty...................................... 36
5.13 Mortgages; Title Insurance; Survey; etc.................... 36
5.14 Projections; Pro Forma Balance Sheet....................... 37
5.15 Solvency Certificate; Insurance Certificates............... 37
5.16 Fees, etc.................................................. 37
SECTION 6. Conditions Precedent to All Credit Events.................. 37
6.01 No Default; Representations and Warranties................. 37
6.02 Notice of Borrowing; Letter of Credit Request.............. 38
SECTION 7. Representations, Warranties and Agreements................. 38
7.01 Corporate and Other Status................................. 38
7.02 Corporate and Other Power and Authority.................... 39
7.03 No Violation............................................... 39
7.04 Approvals.................................................. 39
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc............... 40
7.06 Litigation................................................. 41
7.07 True and Complete Disclosure............................... 41
7.08 Use of Proceeds; Margin Regulations........................ 42
7.09 Tax Returns and Payments................................... 42
7.10 Compliance with ERISA...................................... 42
7.11 The Security Documents..................................... 44
7.12 Representations and Warranties in Acquisition Documents.... 45
(ii)
<PAGE>
7.13 Properties................................................. 45
7.14 Capitalization............................................. 45
7.15 Subsidiaries............................................... 45
7.16 Compliance with Statutes, etc.............................. 45
7.17 Investment Company Act..................................... 46
7.18 Public Utility Holding Company Act......................... 46
7.19 Environmental Matters...................................... 46
7.20 Labor Relations............................................ 47
7.21 Patents, Licenses, Franchises and Formulas................. 47
7.22 Indebtedness............................................... 47
7.23 Transaction................................................ 48
SECTION 8. Affirmative Covenants...................................... 48
8.01 Information Covenants...................................... 48
8.02 Books, Records and Inspections............................. 51
8.03 Maintenance of Property; Insurance......................... 51
8.04 Corporate Franchises....................................... 52
8.05 Compliance with Statutes, etc.............................. 52
8.06 Compliance with Environmental Laws......................... 52
8.07 ERISA...................................................... 53
8.08 End of Fiscal Years; Fiscal Quarters....................... 54
8.09 Performance of Obligations................................. 54
8.10 Payment of Taxes........................................... 54
8.11 Interest Rate Protection................................... 55
8.12 Additional Security; Further Assurances.................... 55
8.13 Foreign Subsidiaries Security.............................. 55
8.14 Change of Name............................................. 56
SECTION 9. Negative Covenants......................................... 57
9.01 Liens...................................................... 57
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc..... 59
9.03 Dividends.................................................. 61
9.04 Indebtedness............................................... 62
9.05 Advances, Investments and Loans............................ 63
9.06 Transactions with Affiliates............................... 64
9.07 Capital Expenditures....................................... 65
9.08 Consolidated Fixed Charge Coverage Ratio................... 65
9.09 Consolidated Interest Coverage Ratio....................... 65
9.10 Maximum Leverage Ratio..................................... 66
(iii)
<PAGE>
9.11 Limitation on Voluntary Payments and Modifications
of Subordinated Indebtedness; Modifications of
Certificate of Incorporation and Certain
Other Agreements; etc.................................. 66
9.12 Limitation on Certain Restrictions on Subsidiaries......... 67
9.13 Limitation on Issuance of Capital Stock.................... 67
9.14 Business................................................... 67
9.15 Limitation on Creation of Subsidiaries..................... 68
SECTION 10. Events of Default.......................................... 68
10.01 Payments................................................... 68
10.02 Representations, etc....................................... 68
10.03 Covenants.................................................. 68
10.04 Default Under Other Agreements............................. 69
10.05 Bankruptcy, etc............................................ 69
10.06 ERISA...................................................... 69
10.07 Security Documents......................................... 70
10.08 Subsidiaries Guaranty...................................... 70
10.09 Judgments.................................................. 70
10.10 Change of Control.......................................... 71
SECTION 11. Definitions and Accounting Terms........................... 71
11.01 Defined Terms.............................................. 71
SECTION 12. The Administrative Agent and the Syndication Agent........ 98
12.01 Appointment............................................... 98
12.02 Nature of Duties.......................................... 99
12.03 Lack of Reliance on the Administrative Agent
and the Syndication Agent............................... 99
12.04 Certain Rights of the Agents............................... 100
12.05 Reliance................................................... 100
12.06 Indemnification............................................ 100
12.07 The Administrative Agent and the Syndication
Agent in Their Individual Capacity...................... 101
12.08 Holders.................................................... 101
12.09 Resignation by the Administrative Agent and the
Syndication Agent....................................... 101
SECTION 13. Miscellaneous............................................. 102
13.01 Payment of Expenses, etc.................................. 102
13.02 Right of Setoff........................................... 103
13.03 Notices................................................... 104
(iv)
<PAGE>
13.04 Benefit of Agreement; Assignments; Participations......... 104
13.05 No Waiver; Remedies Cumulative............................ 106
13.06 Payments Pro Rata......................................... 106
13.07 Calculations; Computations; Accounting Terms.............. 107
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL.................................... 107
13.09 Counterparts.............................................. 108
13.10 Effectiveness............................................. 109
13.11 Headings Descriptive...................................... 109
13.12 Amendment or Waiver; etc.................................. 109
13.13 Survival.................................................. 111
13.14 Domicile of Loans......................................... 111
13.15 Register.................................................. 111
13.16 Confidentiality........................................... 112
13.17 Limitation on Increased Costs............................. 112
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property
SCHEDULE IV Indebtedness to be Refinanced
SCHEDULE V Subsidiaries
SCHEDULE VI Existing Indebtedness
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
SCHEDULE IX Existing Investments
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 A Term Note
EXHIBIT B-2 B Term Note
EXHIBIT B-3 Revolving Note
EXHIBIT B-4 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E Opinion of Dickstein, Shapiro, Morin & Oshinsky LLP,
counsel to the Credit Parties
EXHIBIT F Officers' Certificate
EXHIBIT G Pledge Agreement
EXHIBIT H Security Agreement
EXHIBIT I Subsidiaries Guaranty
EXHIBIT J Solvency Certificate
(v)
<PAGE>
EXHIBIT K Assignment and Assumption Agreement
EXHIBIT L Intercompany Note
EXHIBIT M Notice of Account Designation
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of November 17, 1997, among OMNIQUIP
INTERNATIONAL, INC., a Delaware corporation (the "Borrower"), the Banks party
hereto from time to time, MORGAN STANLEY SENIOR FUNDING, INC., as Syndication
Agent and Arranger, and FIRST UNION NATIONAL BANK, as Administrative Agent and
Co-Arranger (all capitalized terms used herein and defined in Section 11 are
used herein as therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. (a) Subject to and upon the terms and conditions
set forth herein, each Bank with a Term Loan Commitment severally agrees to
make, on the Initial Borrowing Date, a term loan or term loans (each a "Term
Loan" and, collectively, the "Term Loans") to the Borrower, which Term Loans (i)
shall, at the option of the Borrower, be incurred and maintained as, and/or
converted into, Base Rate Loans or Eurodollar Loans, provided that (A) except as
otherwise specifically provided in Section 1.10(b), all Term Loans comprising
the same Borrowing shall at all times be of the same Type and (B) no Term Loans
maintained as Eurodollar Loans may be incurred prior to the earlier of (1) the
30th day after the Initial Borrowing Date and (2) that date (the "Syndication
Date") upon which the Agents shall have determined in their sole discretion (and
shall have notified the Borrower) that the primary syndication (and resultant
addition of institutions as Banks pursuant to Section 13.04(b)) has been
completed and (ii) shall not exceed for any Bank that amount which equals the
Term Loan Commitment of such Bank on the Initial Borrowing Date (before giving
effect to any reduction thereto on such date pursuant to Section 3.03(b)(i) but
after giving effect to any reductions thereto on or prior to such date pursuant
to Section 3.03(b)(ii)). Once repaid, Term Loans incurred hereunder may not be
reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment severally agrees, at any time and
from time to time on and after the Initial Borrowing Date and prior to the
Revolving Loan Maturity Date, to make
<PAGE>
a revolving loan or revolving loans (each a "Revolving Loan" and, collectively,
the "Revolving Loans") to the Borrower, which Revolving Loans (i) shall, at the
option of the Borrower, be incurred and maintained as, and/or converted into,
Base Rate Loans or Eurodollar Loans, provided that (A) except as otherwise
specifically provided in Section 1.10(b), all Revolving Loans comprising the
same Borrowing shall at all times be of the same Type and (B) no Borrowings of
Revolving Loans maintained as Eurodollar Loans may be incurred prior to the
earlier of (1) the 30th day after the Initial Borrowing Date and (2) the
Syndication Date, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed for any such Bank at any time
outstanding that aggregate principal amount which, when added to the product of
(x) such Bank's Adjusted RL Percentage and (y) the sum of (I) the aggregate
amount of all Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) at such time and (II) the aggregate
principal amount of all Swingline Loans (exclusive of Swingline Loans which are
repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) then outstanding, equals the Revolving
Loan Commitment of such Bank at such time and (iv) shall not exceed for all
Banks at any time outstanding that aggregate principal amount which, when added
to (I) the amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time and
(II) the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Total Revolving Loan Commitment at such time.
(c) Subject to and upon the terms and conditions set forth herein, the
Swingline Bank agrees to make, at any time and from time to time on and after
the Initial Borrowing Date and prior to the Swingline Expiry Date, a revolving
loan or revolving loans (each a "Swingline Loan" and, collectively, the
"Swingline Loans") to the Borrower, which Swingline Loans (i) shall be made and
maintained as Base Rate Loans, (ii) may be repaid and reborrowed in accordance
with the provisions hereof, (iii) shall not exceed in aggregate principal amount
at any time outstanding, when combined with the aggregate principal amount of
all Revolving Loans made by Non-Defaulting Banks then outstanding and the Letter
of Credit Outstandings at such time, an amount equal to the Adjusted Total
Revolving Loan Commitment at such time (after giving effect to any reductions to
the Adjusted Total Revolving Loan Commitment on such date), and (iv) shall not
exceed in aggregate principal amount at any time outstanding the Maximum
Swingline Amount. Notwithstanding anything to the contrary contained in this
Section 1.01(c), the Swingline Bank shall not make any Swingline Loan after it
has received written notice from the Borrower or the Required Banks stating that
a Default or an Event of Default exists and is continuing until such time as the
Swingline Bank shall have received written notice (i) of rescission of all such
notices from the party or parties originally delivering such notice, (ii) of the
waiver of such Default or Event of Default by the Required Banks or
-2-
<PAGE>
(iii) that the Agents in good faith believe that such Default or Event of
Default no longer exists.
(d) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks that its outstanding Swingline Loans shall
be funded with one or more Borrowings of Revolving Loans (provided that such
notice shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 10.05 or upon the exercise of any
of the remedies provided in the last paragraph of Section 10), in which case one
or more Borrowings of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately succeeding
Business Day by all Banks with a Revolving Loan Commitment (without giving
effect to any reductions thereto pursuant to the last paragraph of Section 10)
pro rata based on each such Bank's Adjusted RL Percentage (determined before
giving effect to any termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 10) and the proceeds thereof shall be applied
directly by the Swingline Bank to repay the Swingline Bank for such outstanding
Swingline Loans. Each such Bank hereby irrevocably agrees to make Revolving
Loans upon one Business Day's notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the date
specified in writing by the Swingline Bank notwithstanding (i) that the amount
of the Mandatory Borrowing may not comply with the Minimum Borrowing Amount
otherwise required hereunder, (ii) any failure to satisfy any conditions
specified in Section 6, (iii) any Default or Event of Default existing on such
date, (iv) the date of such Mandatory Borrowing and (v) the amount of the Total
Revolving Loan Commitment or the Adjusted Total Revolving Loan Commitment at
such time. In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower), then each such Bank hereby agrees that it shall
forthwith purchase (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received by the Swingline Bank from the
Borrower on or after such date and prior to such purchase) from the Swingline
Bank such participations in the outstanding Swingline Loans as shall be
necessary to cause such Banks to share in such Swingline Loans ratably based
upon their respective Adjusted RL Percentages (determined before giving effect
to any termination of the Revolving Loan Commitments pursuant to the last
paragraph of Section 10), provided that (x) all interest payable on the
Swingline Loans shall be for the account of the Swingline Bank until the date as
of which the respective participation is required to be purchased and, to the
extent attributable to the purchased participation, shall be payable to the
participant from and after such date and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing Bank
shall be required to pay the Swingline Bank interest on the principal amount of
the participation purchased for each day from and including the day upon which
the Mandatory Borrowing would otherwise have occurred to but excluding the date
of payment for such participation, at the overnight Federal Funds Rate for the
first three days and at the rate otherwise
-3-
<PAGE>
applicable to Revolving Loans maintained as Base Rate Loans hereunder for each
day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate principal amount
of each Borrowing of Loans under a respective Tranche shall not be less than the
Minimum Borrowing Amount for such Tranche and, if greater, shall be in integral
multiples of $100,000. More than one Borrowing may occur on the same date, but
at no time shall there be outstanding more than eight Borrowings of Eurodollar
Loans.
1.03 Notice of Borrowing . (a) Whenever the Borrower desires to incur
Loans hereunder (excluding Swingline Loans and Revolving Loans incurred pursuant
to a Mandatory Borrowing), the Borrower shall give the Administrative Agent at
its Notice Office at least one Business Day's prior notice of each Base Rate
Loan and at least three Business Days' prior notice of each Eurodollar Loan to
be incurred hereunder, provided that any such notice shall be deemed to have
been given on a certain day only if given before 12:00 Noon (Eastern time) on
such day. Each such notice (each a "Notice of Borrowing"), except as otherwise
expressly provided in Section 1.10, shall be irrevocable and shall be given by
the Borrower in writing, or by telephone promptly confirmed in writing, in the
form of Exhibit A, appropriately completed to specify the aggregate principal
amount of the Loans to be incurred pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day), whether the Loans being incurred
pursuant to such Borrowing shall constitute Term Loans, or Revolving Loans and
whether the Loans being incurred pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the
initial Interest Period to be applicable thereto. The Administrative Agent shall
promptly give each Bank which is required to make Loans of the Tranche specified
in the respective Notice of Borrowing, notice of such proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, the Borrower shall give the Swingline Bank no later than 1:00 P.M.
(Eastern time) on the date that a Swingline Loan is to be incurred, written
notice or telephonic notice promptly confirmed in writing of each Swingline Loan
to be incurred hereunder. Each such notice shall be irrevocable and specify in
each case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(d), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(d).
-4-
<PAGE>
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing or prepayment of
Loans, the Administrative Agent or the Swingline Bank, as the case may be, may
act without liability upon the basis of telephonic notice of such Borrowing or
prepayment, believed by the Administrative Agent or the Swingline Bank, as the
case may be, in good faith to be from the Chief Executive Officer, the
President, the Vice President-Finance, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer or the Controller of the Borrower, or from
any other authorized person of the Borrower designated in writing by the
Borrower to the Administrative Agent as being authorized to give such notices,
prior to receipt of written confirmation. In each such case, the Borrower hereby
waives the right, absent manifest error, to dispute the Administrative Agent's
or the Swingline Bank's record of the terms of such telephonic notice of such
Borrowing or prepayment of Loans.
1.04 Disbursement of Funds. No later than 12:00 Noon (Eastern time)
on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, no later than 3:00 P.M. (Eastern time) on the date specified
pursuant to Section 1.03(b)(i), or (y) in the case of Mandatory Borrowings, no
later than 12:00 Noon (Eastern time) on the date specified in Section 1.01(d)),
each Bank with a Commitment of the respective Tranche will make available its
pro rata portion (determined in accordance with Section 1.07) of each such
Borrowing requested to be made on such date (or, in the case of Swingline Loans,
the Swingline Bank will make available the full amount thereof). All such
amounts will be made available in Dollars and in immediately available funds at
the Payment Office of the Administrative Agent, and the Administrative Agent
will make available to the Borrower at the Payment Office the aggregate of the
amounts so made available by the Banks (other than in respect of Mandatory
Borrowings) by delivery of such amounts to the Borrower's Account. Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Administrative
Agent such Bank's portion of any Borrowing to be made on such date, the
Administrative Agent may assume that such Bank has made such amount available to
the Administrative Agent on such date of Borrowing and the Administrative Agent
may (but shall not be obligated to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Administrative Agent by such Bank, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Bank. If such Bank 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 on demand from such Bank 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 until the date such corresponding amount is recovered by
the Administrative Agent, at a rate per annum equal to (i) if recovered from
such Bank, the Federal Funds Rate for each day during the period consisting of
the first three Business Days
-5-
<PAGE>
following such date of availability and thereafter at the Base Rate as in effect
from time to time and (ii) if recovered from the Borrower, the rate of interest
applicable to the respective Borrowing, as determined pursuant to Section 1.08.
Nothing in this Section 1.04 shall be deemed to relieve any Bank from its
obligation to make Loans hereunder or to prejudice any rights which the Borrower
may have against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Bank shall be evidenced (i) if Term
Loans, by promissory notes duly executed and delivered by the Borrower
substantially in the form of Exhibits B-1 (each an "A Term Note" and,
collectively, the "A Term Notes") and B-2 (each a "B Term Note" and,
collectively, the "B Term Notes" and, together with the A Term Notes, each a
"Term Note" and, collectively, the "Term Notes"), in each case with blanks
appropriately completed in conformity herewith, (ii) if Revolving Loans, by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B-3, with blanks appropriately completed in conformity herewith
(each a "Revolving Note" and, collectively, the "Revolving Notes") and (iii) if
Swingline Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-4, with blanks appropriately
completed in conformity herewith (the "Swingline Note").
(b) The Term Notes issued to each Bank that has a Term Loan
Commitment or outstanding Term Loans shall (i) be executed by the Borrower, (ii)
be payable to such Bank or its registered assigns and be dated the Initial
Borrowing Date (or, if issued after the Initial Borrowing Date, be dated the
date of the issuance thereof), (iii) be in a combined stated principal amount
equal to the Term Loan Commitment of such Bank on the Initial Borrowing Date
(before giving effect to the making of any Term Loans on such date by such Bank)
(or, if issued after the Initial Borrowing Date, be in a stated principal amount
equal to the outstanding principal amount of any Term Loans of such Bank at such
time) and be payable in the outstanding principal amount of Term Loans evidenced
thereby, provided that the combined stated principal amount of the B Term Notes
shall be $3,000,000 at all times during which the Term Loan Commitments exist or
Term Loans in excess of $3,000,000 remain outstanding, with such B Term Notes to
be issued to each Bank with a Term Loan Commitment or outstanding Term Loans in
amounts equal to such Bank's pro rata portion of the Term Loan obligations
represented by such B Term Notes, (iv) mature on the Term Loan Maturity Date,
(v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01, and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents,
provided that the A Term Notes shall not be entitled to the benefits of the
Minnesota Mortgage.
-6-
<PAGE>
(c) The Revolving Note issued to each Bank that has a Revolving Loan
Commitment or outstanding Revolving Loans shall (i) be executed by the Borrower,
(ii) be payable to such Bank or its registered assigns and be dated the Initial
Borrowing Date (or, if issued after the Initial Borrowing Date, be dated the
date of the issuance thereof), (iii) be in a stated principal amount equal to
the Revolving Loan Commitment of such Bank (or, if issued after the termination
thereof, be in a stated principal amount equal to the outstanding Revolving
Loans of such Bank at such time) and be payable in the outstanding principal
amount of the Revolving Loans evidenced thereby, (iv) mature on the Revolving
Loan Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 4.01, and mandatory repayment as provided in Section 4.02 and (vii)
be entitled to the benefits of this Agreement and the other Credit Documents.
(d) The Swingline Note issued to the Swingline Bank shall (i) be
executed by the Borrower, (ii) be payable to the Swingline Bank or its
registered assigns and be dated the Initial Borrowing Date, (iii) be in a stated
principal amount equal to the Maximum Swingline Amount and be payable in the
outstanding principal amount of the Swingline Loans evidenced thereby from time
to time, (iv) mature on the Swingline Expiry Date, (v) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01, and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(e) Each Bank 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 any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in such notation shall not affect the Borrower's obligations in
respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert, on
any Business Day occurring after the Initial Borrowing Date, all or a portion
equal to at least the Minimum Borrowing Amount of the outstanding principal
amount of Loans (other than Swingline Loans, which may not be converted pursuant
to this Section 1.06) made pursuant to one or more Borrowings (so long as of the
same Tranche) of one or more Types of Loans into a Borrowing (of the same
Tranche) of another Type of Loan, provided that, (i) except as otherwise
provided in Section 1.10(b), Eurodollar Loans may be converted into Base Rate
Loans only on the last day of an Interest Period applicable to the Loans being
converted and no such partial conversion of Eurodollar Loans shall reduce the
outstanding principal amount of such Eurodollar Loans made pursuant to a single
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
Base Rate Loans may only be converted into Eurodollar Loans if no Default or
Event of Default is in existence on the date of the conver-
-7-
<PAGE>
sion, and (iii) no conversions of Base Rate Loans into Eurodollar Loans shall be
permitted prior to the earlier of (x) the 30th day after the Initial Borrowing
Date and (y) the Syndication Date. Each such conversion shall be effected by the
Borrower by giving the Administrative Agent at its Notice Office prior to 12:00
Noon (Eastern time) at least three Business Days' prior notice (each a "Notice
of Conversion") specifying the Loans to be so converted, the Borrowing or
Borrowings pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans. Upon any such conversion the proceeds
thereof will be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans and Revolving
Loans under this Agreement shall be incurred from the Banks pro rata on the
basis of their Term Loan Commitments or Revolving Loan Commitments, as the case
may be, provided, that all Borrowings of Revolving Loans made pursuant to a
Mandatory Borrowing shall be incurred from the Banks with Revolving Loan
Commitments pro rata on the basis of their Adjusted RL Percentages. No Bank
shall be responsible for any default by any other Bank of its obligation to make
Loans hereunder and each Bank shall be obligated to make the Loans provided to
be made by it hereunder, regardless of the failure of any other Bank to make its
Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
thereof (whether by acceleration or otherwise) and (ii) the conversion of such
Base Rate Loan into a Eurodollar Loan pursuant to Section 1.06, at a rate per
annum which shall be equal to the sum of the Applicable Base Rate Margin plus
the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower until the earlier of (i) the maturity thereof
(whether by acceleration or otherwise) and (ii) the conversion of such
Eurodollar Loan into a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10, as
applicable, at a rate per annum which shall, during each Interest Period
applicable thereto, be equal to the sum of the Applicable Eurodollar Margin plus
the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to 2% per annum in
excess of the rate otherwise applicable to Base Rate Loans of the respective
Tranche of Loans from time to time, provided that at no time shall any Loan bear
interest after maturity at a rate per annum which is less than 2% in
-8-
<PAGE>
excess of the rate applicable thereto at maturity without the application of the
preceding provisions of this Section 1.08(c), with such interest to be payable
on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Loan, on any repayment
or prepayment (on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of Borrowing or
Notice of Conversion in respect of the making of, or conversion into, any
Eurodollar Loan (in the case of the initial Interest Period applicable thereto)
or on the third Business Day prior to the expiration of an Interest Period
applicable to such Eurodollar Loan (in the case of any subsequent Interest
Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each an "Interest
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower (but subject to the limitation set forth in clause (B) of
the proviso in each of Sections 1.01(a)(i), and 1.01(b)(i), be a one, two, three
or six-month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the immediately preceding Interest
Period applicable thereto expires;
(iii) if any Interest Period for a Eurodollar Loan 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;
(iv) if any Interest Period for a Eurodollar Loan would otherwise
expire on a day which is not a Business Day, such Interest Period shall
expire on the next
-9-
<PAGE>
succeeding Business Day; provided, however, that if any Interest Period for
a Eurodollar Loan 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;
(v) no Interest Period may be selected at any time when a Default or
an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any Tranche of
Loans shall be selected which extends beyond the respective Maturity Date
for such Tranche of Loans; and
(vii) no Interest Period in respect of any Borrowing of Term Loans
shall be selected which extends beyond any date upon which a mandatory
repayment of such Term Loans will be required to be made under Section
4.02(b), if the aggregate principal amount of Term Loans which have
Interest Periods which will expire after such date will be in excess of the
aggregate principal amount of Term Loans then outstanding less the
aggregate amount of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any Bank
shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any changes
arising after the date of this Agreement 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 Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, order,
guideline 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, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation
-10-
<PAGE>
of payment to any Bank of the principal of or interest on the Notes or any
other amounts payable hereunder (except for changes in the rate of tax on,
or determined by reference to, the net income or profits of such Bank or
any change in a tax imposed solely on deposits or net assets of a Bank, in
each case pursuant to the laws of the jurisdiction in which it is organized
or in which its principal office or applicable lending office is located or
any subdivision thereof or therein) or (B) a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the Eurodollar
Rate and/or (y) other circumstances since the date of this Agreement
affecting the New York interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone promptly confirmed
in writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). 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 Banks 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
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall, subject to the provisions
of this Section 1.10(a) and Section 13.17 (to the extent applicable), pay to
such Bank, within ten Business Days after such Bank's written request therefor
and the delivery to the Borrower of the written notice described below in this
clause (y), such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its sole
discretion shall determine (but without duplication of any amounts that may be
payable to such Bank under Section 1.10(c) or 2.06) as shall be required to
compensate such Bank for such increased costs or reductions in amounts received
or receivable hereunder reasonably determined by such Bank in good faith (a
written notice as to the additional amounts owed to such Bank, showing in
reasonable detail the basis for the calculation thereof, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding on all the parties hereto) and (z) in the case of clause (iii) above,
the Borrower shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.
-11-
<PAGE>
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, by giving the Administrative
Agent telephonic notice (confirmed in writing) as promptly as practicable and in
any event within one Business Day after the date that the Borrower was notified
by the affected Bank or the Administrative Agent pursuant to Section 1.10(a)(ii)
or (iii) or (y) if the affected Eurodollar Loan is then outstanding, upon at
least three Business Days' written notice to the Administrative Agent, require
the affected Bank to convert such Eurodollar Loan into a Base Rate Loan,
provided that, if more than one Bank is affected at any time, then all affected
Banks must be treated the same pursuant to this Section 1.10(b).
(c) If at any time after the date of this Agreement any Bank
determines that the introduction of or any change (which introduction or change
shall have occurred after the date of this Agreement) in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank, the NAIC or comparable agency, will have the effect of increasing the
amount of capital required or expected to be maintained by such Bank or any
corporation controlling such Bank based on the existence of such Bank's
Commitments hereunder or its obligations hereunder, then the Borrower shall,
subject to the provisions of this Section 1.10(c) and Section 13.17 (to the
extent applicable), pay to such Bank, within ten Business Days after its written
demand therefor, such additional amounts as shall be required to compensate such
Bank or such other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital (but without duplication of
any amounts that may be payable to such Bank under Section 1.10(a) or 2.06). In
determining such additional amounts, each Bank will act reasonably and in good
faith and will use averaging and attribution methods which are reasonable,
provided that such Bank's determination of compensation owing under this Section
1.10(c) shall, absent manifest error, be final and conclusive and binding on all
the parties hereto. Each Bank, upon determining that any additional amounts will
be payable pursuant to this Section 1.10(c), will give prompt written notice
thereof to the Borrower, which notice shall describe in reasonable detail the
introduction of or change in applicable law or governmental rule, regulation,
order, guideline, directive or request or change in interpretation or
administration and the basis for calculation of such additional amounts.
1.11 Breakage. The Borrower shall compensate each Bank, within ten
Business Days after its written request (which request shall set forth in
reasonable detail the basis for requesting 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 Bank to fund its Eurodollar Loans
but excluding loss of anticipated profits) which such Bank may sustain: (i) if
for any
-12-
<PAGE>
reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into, 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 1.10(a)); (ii) if any repayment (including any repayment made pursuant
to Section 4.01, 4.02 or as a result of an acceleration of the Loans pursuant to
Section 10) or conversion of any of its Eurodollar Loans occurs on a date which
is not the last day of an Interest Period with respect 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 Loans when required by the terms of
this Agreement or any Note held by such Bank or (y) any election made pursuant
to Section 1.10(b). Each Bank agrees to use commercially reasonable efforts to
minimize its losses, expenses and liabilities described in this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that on the occurrence
of any event giving rise to the operation of Section 1.10(a)(ii) or (iii),
Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank, it will
(subject to overall policy considerations of such Bank), if requested by the
Borrower, designate another Lending Office for any Loans or Letters of Credit
affected by such event, provided that such designation is made on such terms
that such Bank and its Lending Office suffer no economic, legal or regulatory
disadvantage which such Bank determines, in its sole discretion, to be adverse
in any material respect, with the object of avoiding the consequence of the
event giving rise to the operation of such Section. Nothing in this Section 1.12
shall affect or postpone any of the obligations of the Borrower or the right of
any Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. (a) If any Bank becomes a Defaulting Bank
or otherwise defaults in its obligations to make Loans or fund Unpaid Drawings,
(b) upon the occurrence of an event giving rise to the operation of Section
1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect
to any Bank which results in such Bank charging to the Borrower increased costs
materially in excess of those being generally charged by the other Banks or (c)
in the case of a refusal by a Bank to consent to one or more proposed changes,
waivers, discharges or terminations with respect to this Agreement which have
been approved by the Required Banks as (and to the extent) provided in Section
13.12(b), the Borrower shall have the right, if no Default or Event of Default
then exists (or, in the case of preceding clause (c), no Default or Event of
Default will exist immediately after giving effect to such replacement), to
either (i) replace such Bank (the "Replaced Bank") with one or more other
Eligible Transferees (it being acknowledged that the Replaced Bank shall be
under no obligation to identify or secure the commitment of such Eligible
Transferee or assist in identifying or securing the commitment of such Eligible
Transferee), none of whom shall constitute a Defaulting Bank at the time of such
replacement and each of whom shall be reasonably acceptable to the
Administrative Agent (collectively, the "Replacement Bank") or (ii) at the
option of the Borrower, replace only (x) the Revolving Loan Commitment (and
outstandings pursuant thereto) of the Replaced Bank with an identical Revolving
Loan
-13-
<PAGE>
Commitment provided by the Replacement Bank or (y) in the case of a replacement
as provided in Section 13.12(b) where the consent of the respective Bank is
required with respect to less than all Tranches of its Loans or Commitments, the
Commitments and/or outstanding Term Loans of such Bank in respect of each
Tranche where the consent of such Bank would otherwise be individually required,
with identical Commitments and/or Term Loans of the respective Tranche provided
by the Replacement Bank, provided that (1) at the time of any replacement
pursuant to this Section 1.13, the Replacement Bank shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 13.04(b) (and with all
fees payable pursuant to said Section 13.04(b) to be paid by the Replacement
Bank) pursuant to which the Replacement Bank shall acquire all of the
Commitments and outstanding Loans (or, in the case of the replacement of only
(I) the Revolving Loan Commitment, the Revolving Loan Commitment and outstanding
Revolving Loans and participations in outstanding Letters of Credit and/or (II)
the outstanding Term Loans, the Term Loans) of, and in each case participations
in Letters of Credit by, the Replaced Bank and, in connection therewith, shall
pay to (a) the Replaced Bank in respect thereof an amount equal to the sum of
(i) an amount equal to the principal of, and all accrued interest on, all
outstanding Loans (or of the Loans of the respective Tranche being replaced) of
the Replaced Bank, (ii) an amount equal to all Unpaid Drawings that have been
funded by (and not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time and (iii) an amount equal to
all accrued, but theretofore unpaid, Fees owing to the Replaced Bank (but only
with respect to the relevant Tranche, in the case of the replacement of less
than all Tranches of Loans then held by the respective Replaced Bank) pursuant
to Section 3.01, (b) except in the case of the replacement of only the
outstanding Term Loans of a Replaced Bank, each Issuing Bank an amount equal to
such Replaced Bank's Adjusted RL Percentage (for this purpose, determined as if
the adjustment described in clause (i) of the immediately succeeding sentence
had been made with respect to such Replaced Bank) of any Unpaid Drawing (which
at such time remains an Unpaid Drawing) to the extent such amount was not
theretofore funded by such Replaced Bank to such Issuing Bank and (c) except in
the case of the replacement of only the outstanding Term Loans of a Replaced
Bank, the Swingline Bank an amount equal to such Replaced Bank's Adjusted RL
Percentage of any Mandatory Borrowing to the extent such amount was not
theretofore funded by such Replaced Bank, and (2) all obligations of the
Borrower due and owing to the Replaced Bank at such time (other than those
specifically described in clause (1) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Bank concurrently with such replacement. Upon the execution of
the respective Assignment and Assumption Agreement, the payment of amounts
referred to in clauses (1) and (2) above and, if so requested by the Replacement
Bank, delivery to the Replacement Bank of the appropriate Note or Notes executed
by the Borrower, (i) the Replacement Bank shall become a Bank hereunder and,
unless the respective Replaced Bank continues to have outstanding Term Loans or
a Commitment hereunder, the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.06
and 13.01), which shall survive as to such Replaced Bank
-14-
<PAGE>
and (ii) except in the case of the replacement of only outstanding Term Loans of
a Replaced Bank, the Adjusted RL Percentages of the Banks shall be automatically
adjusted at such time to give effect to such replacement (and to give effect to
the replacement of a Defaulting Bank with one or more Non-Defaulting Banks).
Replacements pursuant to this Section 1.13 shall only be effected by assignments
which otherwise meet the applicable requirements of Section 13.04(b).
SECTION 2. Letters of Credit
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that any Issuing Bank
issue, at any time and from time to time on and after the Initial Borrowing Date
and prior to the 30th day prior to the Revolving Loan Maturity Date, (x) for the
account of the Borrower and for the benefit of any holder (or any trustee, agent
or other similar representative for any such holders) of L/C Supportable
Obligations of the Borrower or any of its Subsidiaries, an irrevocable standby
letter of credit, in a form customarily used by such Issuing Bank or in such
other form as has been approved by such Issuing Bank (each such standby letter
of credit, a "Standby Letter of Credit") in support of such L/C Supportable
Obligations and (y) for the account of the Borrower and for the benefit of
sellers of goods and materials used in the ordinary course of business of the
Borrower or any of its Subsidiaries an irrevocable sight commercial letter of
credit in a form customarily used by such Issuing Bank or in such other form as
has been approved by such Issuing Bank (each such commercial letter of credit, a
"Trade Letter of Credit", and each such Trade Letter of Credit and each Standby
Letter of Credit, a "Letter of Credit") in support of commercial transactions of
the Borrower and its Subsidiaries. All Letters of Credit shall be denominated in
Dollars.
(b) Subject to and upon the terms and conditions set forth herein,
each Issuing Bank hereby agrees that it will, at any time and from time to time
on and after the Initial Borrowing Date and prior to the 30th day prior to the
Revolving Loan Maturity Date, following its receipt of the respective Letter of
Credit Request, issue for the account of the Borrower, one or more Letters of
Credit (x) in the case of Standby Letters of Credit, in support of such L/C
Supportable Obligations of the Borrower or any of its Subsidiaries as are
permitted to remain outstanding without giving rise to a Default or an Event of
Default and (y) in the case of Trade Letters of Credit, in support of sellers of
goods or materials used in the ordinary course of business of the Borrower or
any of its Subsidiaries as referenced in Section 2.01(a), provided that the
respective Issuing Bank shall be under no obligation to issue any Letter of
Credit of the types described above if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental
-16-
<PAGE>
authority with jurisdiction over such Issuing Bank shall prohibit, or
request that such Issuing Bank refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose
upon such Issuing Bank with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which such Issuing Bank
is not otherwise compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in effect or
known to such Issuing Bank as of the date hereof and which such Issuing
Bank reasonably and in good faith deems material to it; or
(ii) such Issuing Bank shall have received notice from the Required
Banks prior to the issuance of such Letter of Credit of the type described
in the penultimate sentence of Section 2.03(b) and the matters identified
in such notice have not previously been waived or cured.
2.02 Maximum Letter of Credit Outstandings; Final Maturities.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the respective Letter of Credit) at
such time would exceed either (x) $10,000,000 or (y) when added to the aggregate
principal amount of all Revolving Loans made by Non-Defaulting Banks then
outstanding and the aggregate principal amount of all Swingline Loans then
outstanding, an amount equal to the Adjusted Total Revolving Loan Commitment at
such time and (ii) each Letter of Credit shall by its terms terminate on or
before (x) in the case of Standby Letters of Credit, the earlier of (A) the date
which occurs one year after the date of the issuance thereof (although any such
Standby Letter of Credit may be extendable for successive periods of up to one
year, but not beyond the tenth Business Day prior to the Revolving Loan Maturity
Date, on terms acceptable to the Issuing Bank thereof) and (B) the tenth
Business Day prior to the Revolving Loan Maturity Date and (y) in the case of
Trade Letters of Credit, the earlier of (A) the date which occurs one year after
the date of issuance thereof and (B) 30 days prior to the Revolving Loan
Maturity Date.
2.03 Letter of Credit Requests. (a) Whenever the Borrower desires that
a Letter of Credit be issued for its account, the Borrower shall give the
Administrative Agent and the respective Issuing Bank at least five Business
Days' (or such shorter period as is acceptable to the respective Issuing Bank)
written notice thereof. Each notice shall be in the form of Exhibit C (each a
"Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.02. Unless the respective Issuing Bank has received notice from the Required
Banks before it issues a Letter of Credit that one or more of the conditions
specified in Section 5 are not satisfied on the Initial Borrow-
-16-
<PAGE>
ing Date or Section 6 are not then satisfied, or that the issuance of such
Letter of Credit would violate Section 2.02, then, subject to the terms and
conditions of this Agreement, such Issuing Bank shall issue the requested Letter
of Credit for the account of the Borrower in accordance with such Issuing Bank's
usual and customary practices. Upon the issuance of or amendment or modification
to a Standby Letter of Credit, the respective Issuing Bank shall promptly notify
the Borrower and the Administrative Agent of such issuance, amendment or
modification and such notification shall be accompanied by a copy of the issued
Standby Letter of Credit or amendment or modification.
2.04 Letter of Credit Participations. (a) Immediately upon the
issuance by the respective Issuing Bank of any Letter of Credit, such Issuing
Bank shall be deemed to have sold and transferred to each Bank with a Revolving
Loan Commitment, other than such Issuing Bank (each such Bank, in its capacity
under this Section 2.04, a "Participant"), and each such Participant shall be
deemed irrevocably and unconditionally to have purchased and received from such
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted RL Percentage, in
such Letter of Credit, each drawing or payment made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and any
security therefor or guaranty pertaining thereto. Upon any change in the
Revolving Loan Commitments or Adjusted RL Percentages of the Banks pursuant to
Section 1.13 or 13.04, 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 2.04 to reflect the new Adjusted RL
Percentages of the assignor and assignee Bank, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
respective Issuing Bank shall have no obligation relative to the other Banks
other than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank 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 Issuing Bank any
resulting liability to the Borrower, any other Credit Party, any Bank or any
other Person.
(c) In the event that any Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Issuing Bank pursuant to Section 2.05(a), such Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted RL Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (Eastern
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted RL Percentage of
-17-
<PAGE>
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 Adjusted RL Percentage of the
amount of such payment available to such Issuing Bank, such Participant agrees
to pay to such Issuing Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to such Issuing Bank at the overnight Federal Funds Rate for the first three
days and at the interest rate applicable to Revolving Loans maintained as Base
Rate Loans for each day thereafter. The failure of any Participant to make
available to such Issuing Bank its Adjusted RL Percentage of any payment under
any Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to such Issuing Bank its Adjusted RL Percentage of
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 such Issuing Bank such other Participant's Adjusted RL
Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, such Issuing Bank shall pay to each Participant
which has paid its Adjusted RL Percentage thereof, in Dollars and in same day
funds, an amount equal to such Participant's share (based upon the proportionate
aggregate amount originally funded by such Participant to the aggregate amount
funded by all Participants) of the principal amount of such reimbursement
obligation and interest thereon accruing after the purchase of the respective
participations.
(e) Upon the request of any Participant, each Issuing Bank shall
furnish to such Participant copies of any Letter of Credit issued by it and such
other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to each
Issuing Bank with respect to Letters of Credit issued by it shall be irrevocable
and not subject to any qualification or exception whatsoever (except as
otherwise expressly provided in the last sentence of Section 2.04(b)) 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, setoff, defense or other right which
the Borrower or any of its Subsidiaries 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 Participant, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
-18-
<PAGE>
underlying transaction between the Borrower or any Subsidiary of the
Borrower and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under any
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.
2.05 Agreement to Repay Letter of Credit Drawings . (a) The Borrower
hereby agrees to reimburse the respective Issuing Bank, by making payment to the
Administrative Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by such Issuing Bank under any Letter of Credit
issued by it (each such amount, so paid until reimbursed, an "Unpaid Drawing"),
immediately after, and in any event on the date of, such payment or
disbursement, with interest on the amount so paid or disbursed by such Issuing
Bank, to the extent not reimbursed prior to 12:00 Noon (Eastern time) on the
date of such payment or disbursement, from and including the date paid or
disbursed to but excluding the date such Issuing Bank was reimbursed by the
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Base Rate Margin; provided, however, to
the extent such amounts are not reimbursed prior to 12:00 Noon (Eastern time) on
the third Business Day following the receipt by the Borrower of notice of such
payment or disbursement or following the occurrence of a Default or an Event of
Default under Section 10.05, interest shall thereafter accrue on the amounts so
paid or disbursed by such Issuing Bank (and until reimbursed by the Borrower) at
a rate per annum which shall be the Base Rate in effect from time to time plus
the Applicable Base Rate Margin plus 2%, in each such case, with interest to be
payable on demand. The respective Issuing Bank shall give the Borrower prompt
written notice of each Drawing under any Letter of Credit, provided that the
failure to give any such notice shall in no way affect, impair or diminish the
Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank 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 any Bank
(including in its capacity as issuer of the Letter of Credit or as Participant),
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit (each a "Drawing") to conform to the terms of the
Letter of Credit or any nonapplication or misapplication by the beneficiary of
the proceeds of such Drawing; provided, however, that the Borrower shall not be
obligated to reimburse any Issuing Bank for any wrongful
-19-
<PAGE>
payment made by such Issuing Bank under a Letter of Credit as a result of acts
or omissions constituting willful misconduct or gross negligence on the part of
such Issuing Bank.
2.06 Increased Costs. If at any time after the date of this Agreement,
the introduction of or any change in any applicable law, rule, regulation,
order, guideline or request or in the interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof, or compliance by any Issuing Bank or any Participant with any request
or directive by any such authority (including the NAIC) (whether or not having
the force of law), shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against letters of
credit issued by any Issuing Bank or participated in by any Participant, or (ii)
impose on any Issuing Bank or any Participant any other conditions relating,
directly or indirectly, to this Agreement; and the result of any of the
foregoing is to increase the cost to any Issuing Bank or any Participant of
issuing, maintaining or participating in any Letter of Credit, or reduce the
amount of any sum received or receivable by any Issuing Bank or any Participant
hereunder or reduce the rate of return on its capital with respect to Letters of
Credit (except for changes in the rate of tax on, or determined by reference to,
the net income or profits of such Issuing Bank or such Participant or any change
in a tax imposed solely on deposits or net assets of the Issuing Bank or such
Participant, in each case pursuant to the laws of the jurisdiction in which it
is organized or in which its principal office or applicable lending office is
located or any subdivision thereof or therein), then, within ten Business Days
of the delivery of the certificate referred to below to the Borrower by such
Issuing Bank or any Participant (a copy of which certificate shall be sent by
such Issuing Bank or such Participant to the Agent), the Borrower shall, subject
to the provisions of this Section 2.06 and Section 13.17 (to the extent
applicable), pay to such Issuing Bank or such Participant such additional amount
or amounts as will compensate such Bank for such increased cost or reduction in
the amount receivable or reduction on the rate of return on its capital. Any
Issuing Bank or any Participant, upon determining that any additional amounts
will be payable pursuant to this Section 2.06, will give prompt written notice
thereof to the Borrower, which notice shall include a certificate submitted to
the Borrower by such Issuing Bank or such Participant (a copy of which
certificate shall be sent by such Issuing Bank or such Participant to the
Agent), setting forth in reasonable detail the introduction of or change in
applicable law, rule, regulation, order, guideline or request or in the
interpretation or administration thereof and the basis for the calculation of
such additional amount or amounts necessary to compensate such Issuing Bank or
such Participant. In determining such additional amounts, each Issuing Bank and
each Participant will act reasonably and in good faith, provided that the
certificate required to be delivered pursuant to this Section 2.06 shall, absent
manifest error, be final and conclusive and binding on the Borrower.
-20-
<PAGE>
SECTION 3. Commitment Commission; Fees; Reductions of Commitment.
3.01 Fees; (a) The Borrower agrees to pay to the Administrative Agent
for distribution to each Non-Defaulting Bank with a Revolving Loan Commitment a
commitment commission (the "Revolving Loan Commitment Commission") for the
period from and including the Effective Date to but excluding the Revolving Loan
Maturity Date (or such earlier date as the Total Revolving Loan Commitment shall
have been terminated), computed at a rate for each day equal to the Applicable
Commitment Commission Percentage on the daily average Unutilized Revolving Loan
Commitment of such Non-Defaulting Bank. Accrued Revolving Loan Commitment
Commission shall be due and payable quarterly in arrears on each Quarterly
Payment Date and on the Revolving Loan Maturity Date or such earlier date upon
which the Total Revolving Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment (based
on each such Non-Defaulting Bank's respective Adjusted RL Percentage) a fee in
respect of each Letter of Credit issued hereunder (the "Letter of Credit Fee"),
for the period from and including the date of issuance of such Letter of Credit
to and including the date of termination or expiration of such Letter of Credit,
computed at a rate per annum equal to the Applicable Eurodollar Margin on the
daily Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the first day after the termination of the Total Revolving Loan Commitment
upon which no Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to each Issuing Bank, for its own
account, a facing fee in respect of each Letter of Credit issued by such Issuing
Bank (the "Facing Fee"), for the period from and including the date of issuance
of such Letter of Credit to and including the date of the termination of such
Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of the daily
Stated Amount of such Letter of Credit. Accrued Facing Fees shall be due and
payable quarterly in arrears on each Quarterly Payment Date and upon the first
day after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(d) The Borrower agrees to pay, upon each drawing under, issuance of,
or amendment to, any Letter of Credit, such amount as shall at the time of such
event be the administrative charge which the applicable Issuing Bank is
generally imposing in connection with such occurrence with respect to letters of
credit.
(e) The Borrower agrees to pay to the Agents, for their own account,
such other fees as have been agreed to in writing by the Borrower and the
Agents.
-21-
<PAGE>
3.02 Voluntary Termination of Unutilized Commitments. (a) Upon at
least one Business Day's prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks), the Borrower shall have the right, at any time or from time
to time, without premium or penalty, to terminate the Total Unutilized Revolving
Loan Commitment, in whole or in part, in integral multiples of $1,000,000 in the
case of partial reductions to the Total Unutilized Revolving Loan Commitment,
provided that (i) each such reduction shall apply proportionately to permanently
reduce the Revolving Loan Commitment of each Bank with such a Commitment and
(ii) the reduction to the Total Unutilized Revolving Loan Commitment shall in no
case be in an amount which would cause the Revolving Loan Commitment of any Bank
to be reduced (as required by preceding clause (i)) by an amount which exceeds
the remainder of (x) the Unutilized Revolving Loan Commitment of such Bank as in
effect immediately before giving effect to such reduction minus (y) such Bank's
Adjusted RL Percentage of the aggregate principal amount of Swingline Loans then
outstanding.
(b) In the event of a refusal by a Bank to consent to one or more
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, subject to its compliance with
the requirements of Section 13.12(b), upon 5 Business Days' prior written notice
to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks) terminate all
of the Revolving Loan Commitment of such Bank and, so long as all Loans,
together with accrued and unpaid interest, Fees and all other amounts, owing to
such Bank (other than amounts owing in respect of any Tranche of Loans
maintained by such Bank which are not being repaid pursuant to Section 13.12(b))
are repaid concurrently with the effectiveness of such termination pursuant to
Section 4.01(b) (at which time Schedule I shall be deemed modified to reflect
such changed amounts), and at such time, unless the respective Bank continues to
have outstanding Loans of one or more Tranches hereunder, such Bank shall no
longer constitute a "Bank" for purposes of this Agreement, except with respect
to indemnifications under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01), which shall survive as to
such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total Commitments
(and the Term Loan Commitment and the Revolving Loan Commitment of each Bank)
shall terminate in their entirety on December 31, 1997 unless the Initial
Borrowing Date has occurred on or before such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Term Loan Commitment (and the Term Loan
Commitment of each Bank) shall (i) terminate in its entirety on the Initial
Borrowing Date (immediately after giving effect to the making of the Term Loans
on such date) and (ii) prior to the termination of the
-22-
<PAGE>
Total Term Loan Commitment, be reduced from time to time to the extent required
by Section 4.02.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the Revolving
Loan Maturity Date.
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date after the Effective Date upon which a
mandatory repayment of Term Loans or a mandatory reduction to the Total Term
Loan Commitment pursuant to any of Sections 4.02(c) through (f), inclusive, is
required (and exceeds in amount the sum of (i) the aggregate principal amount of
Term Loans then outstanding and (ii) the Total Term Loan Commitment as then in
effect or would be required if Term Loans were then outstanding or the Total
Term Loan Commitment was then in effect, the Total Revolving Loan Commitment
shall be permanently reduced by the amount, if any, by which the amount required
to be applied pursuant to said Sections (determined as if an unlimited amount of
Term Loans were actually outstanding) exceeds the sum of (x) the aggregate
principal amount of Term Loans then outstanding and (y) the Total Term Loan
Commitment as then in effect.
(e) Each reduction to the Total Term Loan Commitment and the Total
Revolving Loan Commitment pursuant to this Section 3.03 (or pursuant to Section
4.02) shall be applied proportionately to permanently reduce the Term Loan
Commitment or the Revolving Loan Commitment, as the case may be, of each Bank
with such a Commitment.
SECTION 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. (a) The Borrower shall have the right to
prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent prior to 12:00
Noon (Eastern time) at its Notice Office (x) at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing)
of its intent to prepay Base Rate Loans and (y) at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay Eurodollar Loans, whether Term Loans,
Revolving Loans or Swingline Loans shall be prepaid, the amount of such
prepayment and the Types of Loans to be prepaid and, in the case of
Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which
made, which notice the Administrative Agent shall promptly transmit to each
of the Banks;
(ii) each prepayment shall be in an aggregate principal amount of at
least (x) $1,000,000 in the case of Term Loans or Revolving Loans or (y)
$100,000 in the
-23-
<PAGE>
case of Swingline Loans, and, in each case, if greater, in integral
multiples of $100,000, provided that if any partial prepayment of
Eurodollar Loans made pursuant to any Borrowing shall reduce the
outstanding principal amount of Eurodollar Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto, then such Borrowing may not be continued as a Borrowing of
Eurodollar Loans and any election of an Interest Period with respect
thereto given by the Borrower shall have no force or effect;
(iii) prepayments of Eurodollar Loans made pursuant to this Section
4.01(a) may only be made on the last day of an Interest Period applicable
thereto unless such prepayment is accompanied by any breakage costs and any
other amounts due such Bank in accordance with Section 1.11;
(iv) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans, provided that, at the
Borrower's election, in connection with any prepayment of Revolving Loans
pursuant to this Section 4.01(a), such prepayment shall not be applied to
any Revolving Loans of a Defaulting Bank; and
(v) each voluntary prepayment of Term Loans pursuant to this Section
4.01(a) shall be applied to reduce the then remaining Scheduled Repayments
pro rata based upon the then remaining amount of each Scheduled Repayment
after giving effect to all prior reductions thereto.
(b) In the event of a refusal by a Bank to consent to one or more
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as (and to the extent)
provided in Section 13.12(b), the Borrower may, upon 5 Business Days' prior
written notice to the Administrative Agent at its Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks) repay all
Loans, together with accrued and unpaid interest, Fees, and other amounts owing
to such Bank (or owing to such Bank with respect to each Tranche which gave rise
to the need to obtain such Bank's individual consent) in accordance with, and
subject to the requirements of, said Section 13.12(b) so long as (i) in the case
of the repayment of Revolving Loans of any Bank pursuant to this clause (b) the
Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment pursuant to Section 3.02(b) (at which time Schedule I shall be deemed
modified to reflect the changed Revolving Loan Commitments), and (ii) the
consents, if any, required by Section 13.12(b) in connection with the repayment
pursuant to this clause (b) have been obtained.
-24-
<PAGE>
4.02 Mandatory Repayments and Commitment Reductions. (a)(i) On any day on
which the sum of the aggregate outstanding principal amount of the Revolving
Loans made by Non-Defaulting Banks, Swingline Loans and the Letter of Credit
Outstandings exceeds the Adjusted Total Revolving Loan Commitment as then in
effect, the Borrower shall prepay on such day principal of Swingline Loans in an
amount up to the amount of such excess and, after all Swingline Loans have been
repaid in full, Revolving Loans of Non-Defaulting Banks in an amount equal to
such excess minus the principal amount of Swingline Loans so prepaid. If, after
giving effect to the prepayment of all outstanding Swingline Loans and Revolving
Loans of Non-Defaulting Banks, the aggregate amount of the Letter of Credit
Outstandings exceeds the Adjusted Total Revolving Loan Commitment as then in
effect, the Borrower shall pay to the Administrative Agent at the Payment Office
on such day an amount of cash or Cash Equivalents equal to the amount of such
excess (up to a maximum amount equal to the Letter of Credit Outstandings at
such time), such cash or Cash Equivalents to be held as security for all
obligations of the Borrower to the Issuing Banks and the Non-Defaulting Banks
hereunder in a cash collateral account to be established by the Administrative
Agent.
(ii) On any day on which the aggregate outstanding principal amount of
the Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such Defaulting Bank, the Borrower shall prepay on such day
principal of Revolving Loans of such Defaulting Bank in an amount equal to such
excess.
(b) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
Borrower shall be required to repay that principal amount of Term Loans, to the
extent then outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01(a) and
4.02(h), a "Scheduled Repayment," and each such date, a "Scheduled Repayment
Date"):
Scheduled Repayment Date Amount
February 28, 1998 $2,500,000
May 31, 1998 $2,500,000
August 31, 1998 $2,500,000
November 30, 1998 $2,500,000
February 28, 1999 $3,750,000
-25-
<PAGE>
May 31, 1999 $3,750,000
August 31, 1999 $3,750,000
November 30, 1999 $3,750,000
February 28, 2000 $3,750,000
May 31, 2000 $3,750,000
August 31, 2000 $3,750,000
November 30, 2000 $3,750,000
February 28, 2001 $5,000,000
May 31, 2001 $5,000,000
August 31, 2001 $5,000,000
November 30, 2001 $5,000,000
February 28, 2002 $5,000,000
May 31, 2002 $5,000,000
August 31, 2002 $5,000,000
November 30, 2002 $5,000,000
February 28, 2003 $5,000,000
May 31, 2003 $5,000,000
August 31, 2003 $5,000,000
November 30, 2003 $5,000,000
February 28, 2004 $6,250,000
May 31, 2004 $6,250,000
August 31, 2004 $6,250,000
Term Loan Maturity Date $6,250,000
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Effective
Date upon which the Borrower or any of its Wholly-Owned Subsidiaries receives
any cash proceeds from any incurrence by the Borrower or any of its Wholly-Owned
Subsidiaries of Indebtedness for borrowed money (other than Indebtedness for
borrowed money permitted to be incurred pursuant to Section 9.04 (except for the
incurrence of New Subordinated Notes pursuant to Section 9.04(vi), the proceeds
of which are required to be applied as set forth in such Section) as such
Section is in effect on the Effective Date), an amount equal to 100% of the Net
Debt Proceeds of the respective incurrence of Indebtedness shall be applied as a
mandatory repayment of principal of outstanding Term Loans (and/or, if the Total
Term Loan Commitment has not yet been terminated, as a mandatory reduction to
the Total Term Loan Commitment) in accordance with the requirements of Sections
4.02(g) and (h).
-26-
<PAGE>
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date on or after the Effective
Date upon which the Borrower or any of its Wholly-Owned Subsidiaries receives
cash proceeds from any Asset Sale, an amount equal to 100% of the Net Sale
Proceeds from the respective Asset Sale shall be applied as a mandatory
repayment of principal of outstanding Term Loans (and/or, if the Total Term Loan
Commitment has not yet been terminated, as a mandatory reduction to the Total
Term Loan Commitment) in accordance with the requirements of Sections 4.02(g)
and (h), provided that, so long as no Default or Event of Default then exists,
up to $2,000,000 in the aggregate in any fiscal year of the Borrower of Net Sale
Proceeds from Asset Sales may be used or contractually committed to be used to
purchase like assets pursuant to Section 9.07(b) within 180 days following the
date of the respective Asset Sale (and the Net Sale Proceeds therefrom shall not
be required to be applied on the date of receipt of such Net Sale Proceeds
pursuant to this Section 4.02(d)) so long as the Borrower delivers a certificate
to the Administrative Agent on or prior to such date stating that such Net Sale
Proceeds shall be used or contractually committed to be used to purchase like
assets within 180 days following the date of such Asset Sale (which certificate
shall set forth the estimates of the proceeds to be so expended) and provided
further, that (1) if all or any portion of such Net Sale Proceeds are not so
reinvested in like assets within such 180 day period or contractually committed
to be so reinvested within such 180-day period, 100% of such remaining portion
shall be applied on the last day of such applicable period as a mandatory
repayment of principal of outstanding Term Loans as provided above in this
Section 4.02(d) without regard to the immediately preceding proviso and (2) if
all or any portion of such Net Sale Proceeds are not required to be applied on
the 180th day referred to in clause (1) above because such amount is
contractually committed to be used and subsequent to such date such contract is
terminated or expires without such portion being so used, then such remaining
portion shall be applied within ten days of the date of such termination or
expiration as a mandatory repayment of principal of outstanding Term Loans as
provided in this Section 4.02(d) without regard to the immediately preceding
proviso.
(e) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each Excess Cash Payment Date, an amount equal to 50% of the
Excess Cash Flow for the relevant Excess Cash Payment Period shall be applied as
a mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Sections 4.02(g) and (h).
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, within five days following each date
on or after the Effective Date upon which the Borrower or any of its
Wholly-Owned Subsidiaries receives any cash proceeds from any Recovery Event in
excess of $250,000 in the aggregate in any fiscal year of the Borrower from all
Recovery Events, an amount equal to 100% of the Net Insurance Proceeds of such
Recovery Event shall be applied as a mandatory repayment of principal of
outstanding Term Loans (and/or, if the Total Term Loan Commitment has not yet
been terminated, as a mandatory reduction to the Total Term Loan Commitment) in
accordance with the requirements of Sections 4.02(g) and (h), provided that, so
long as no Default or Event of
-27-
<PAGE>
Default then exists, such proceeds shall not be required to be so applied on
such date to the extent that the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such proceeds shall
be used or shall be contractually committed to be used to replace or restore any
properties or assets in respect of which such proceeds were paid within 180 days
following the date of the receipt of such proceeds (which certificate shall set
forth the estimates of the proceeds to be so expended), and provided further,
that (1) if all or any portion of such proceeds not required to be applied to
the repayment of outstanding Term Loans (and/or as a reduction to the Total Term
Loan Commitment) are not so used or contractually committed to be used within
180 days after the date of the receipt of such proceeds, then such remaining
portion not used or contractually committed to be used shall be applied on the
date which is the 180th day after the date of the receipt of such proceeds as a
mandatory repayment of principal of outstanding Term Loans as provided above in
this Section 4.02(f) without regard to the immediately preceding proviso and (2)
if all or any portion of such proceeds are not required to be applied on the
180th day referred to in clause (1) above because such amount is contractually
committed to be used and subsequent to such date such contract is terminated or
expires without such portion being so used, then such remaining portion shall be
applied within ten days of the date of such termination or expiration as a
mandatory repayment of principal of outstanding Term Loans as provided in this
Section 4.02(f) without regard to the immediately preceding proviso.
(g) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans of the respective Tranche
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings of the respective Tranche pursuant to which made,
provided that: (i) repayments of Eurodollar Loans pursuant to this Section 4.02
may only be made on the last day of an Interest Period applicable thereto unless
all Eurodollar Loans of the respective Tranche with Interest Periods ending on
such date of required repayment and all Base Rate Loans of the respective
Tranche have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount applicable thereto, such Borrowing shall be converted at the end of the
then current Interest Period into a Borrowing of Base Rate Loans; and (iii) each
repayment 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. Notwithstanding the foregoing
provisions of this Section 4.02(g), if at any time a mandatory repayment of
Loans pursuant to this Section 4.02(g) would result, after giving effect to the
procedures set forth above in this Section 4.02(g), in the Borrower incurring
breakage costs under Section 1.11 as a result of Eurodollar Loans being prepaid
other than on the last day of an Interest Period applicable thereto (the
"Affected Eurodollar Loans"), then the Borrower may in its sole discretion, and
upon notice to the Administrative Agent, initially deposit a portion (up to
100%) of the amount that otherwise would have been paid in respect of the
Affected Eurodollar Loans with the Administrative Agent (which deposit must be
equal in amount to the amount of the Affected Eurodollar Loans not immediately
repaid) to be held as security for the Obligations of the Borrower pursuant to a
cash collateral
-28-
<PAGE>
arrangement satisfactory to the Administrative Agent and the Borrower which
shall permit investments in Cash Equivalents reasonably satisfactory to the
Administrative Agent, with such cash collateral to be directly applied upon the
earlier of (x) the first occurrence (or occurrences) thereafter of the last day
of an Interest Period applicable to the relevant Affected Eurodollar Loans of
the respective Tranche or Tranches that were initially required to be repaid (or
such earlier date or dates as shall be requested by the Borrower) and (y) the
date which is 180 days after such initial deposit, to repay an aggregate
principal amount of such Loans equal to the Affected Eurodollar Loans not
initially repaid pursuant to this sentence. Notwithstanding anything to the
contrary contained in the immediately preceding sentence, all amounts deposited
as cash collateral pursuant to the immediately preceding sentence shall be held
first for the sole benefit of the Banks whose Loans would otherwise have been
immediately repaid with the amounts deposited and upon the taking of any action
by the Administrative Agent or the Banks pursuant to the remedial provisions of
Section 10, any amounts held as cash collateral pursuant to this Section 4.02(g)
shall first be immediately applied to such Loans and thereafter to the other
Obligations of the Borrower.
(h) Each amount required to be applied to repay Term Loans pursuant
to Sections 4.02(c) through (f), inclusive, shall be applied (i) first, to repay
the outstanding principal amount of the Term Loans with all such repayments to
be deemed to apply first to repay Term Loans evidenced by the A Term Notes
before any obligations of the Borrower evidenced by the B Term Notes are so
reduced and (ii) second, to the extent in excess thereof, to reduce the Total
Term Loan Commitment, with such reduction to be applied first to reduce the Term
Loan Commitment evidenced by the A Term Notes before any such amount is applied
to reduce the Term Loan Commitment evidenced by the B Term Notes. The amount of
each principal repayment of Term Loans (and the amount of each reduction to the
Term Loan Commitments) made as required by said Sections 4.02(c) through (f),
inclusive, shall be applied to reduce the then remaining Scheduled Repayments
pro rata based upon the then remaining amount of each Scheduled Repayment after
giving effect to all prior reductions thereto.
(i) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit Document, all then outstanding Loans of any
Tranche shall be repaid in full on the respective Maturity Date for such Tranche
of Loans.
4.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or under any Note shall be
made to the Administrative Agent for the account of the Bank or Banks entitled
thereto not later than 12:30 p.m. (Eastern time) on the date when due and shall
be made in Dollars in immediately available funds at the Payment Office of the
Administrative Agent. Whenever any payment to be made hereunder or under any
Note 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 immediately prior to such extension.
-29-
<PAGE>
4.04 Net Payments. (a) All payments made by the Borrower hereunder or
under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Bank and any taxes imposed
solely on deposits or net assets of a Bank, in each case pursuant to the laws of
the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect to such non-excluded taxes, levies, imposts, duties,
fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Non-Excluded Taxes"). Except as otherwise provided in Section
4.04(b), if any Non-Excluded Taxes are so levied or imposed, the Borrower agrees
to pay the full amount of such Non-Excluded Taxes, and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement or under any Note, after withholding or deduction for or on account of
any Non-Excluded Taxes, will not be less than the amount provided for herein or
in such Note. If any amounts are payable in respect of Non-Excluded Taxes
pursuant to the preceding sentence, the Borrower agrees to reimburse each Bank,
upon the written request of such Bank, for taxes imposed on or measured by the
net income or net profits of such Bank pursuant to the laws of the jurisdiction
in which such Bank is organized or in which the principal office or applicable
lending office of such Bank is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which such Bank is
organized or in which the principal office or applicable lending office of such
Bank is located and for any withholding of taxes as such Bank shall determine
are payable by, or withheld from, such Bank, in respect of such amounts so paid
to or on behalf of such Bank pursuant to the preceding sentence and in respect
of any amounts paid to or on behalf of such Bank pursuant to this sentence. The
Borrower will furnish to the Administrative Agent within 45 days after the date
the payment of any Non-Excluded Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Bank, and reimburse such
Bank upon its written request, for the amount of any Non-Excluded Taxes so
levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Administrative Agent on or prior to
the Effective Date, or in the case of a Bank that is an assignee or transferee
of an interest under this Agreement pursuant to Section 1.13 or 13.04 (unless
the respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Bank, (i) two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and
-30-
<PAGE>
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of 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 D (any such certificate, a "Section
4.04(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 Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank 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,
promptly upon request by the Borrower, 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
4.04(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 Bank to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate because a change in law or change in circumstance
eliminates the availability to the Bank of an exemption from United States
withholding tax with respect to payments to be made under this Agreement or any
Note, in which case such Bank shall not be required to deliver any such Form or
Certificate pursuant to this Section 4.04(b). Notwithstanding anything to the
contrary contained in Section 4.04(a), but subject to Section 13.04(b), (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or 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 Bank which is not
a United States person (as such term is defined in Section 7701(a)(30) of the
Code) for U.S. Federal income tax purposes to the extent that such Bank has not
provided to the Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) the Borrower shall
not be obligated pursuant to Section 4.04(a) hereof to gross-up payments to be
made to a Bank in respect of income or similar taxes imposed by the United
States if (I) such Bank has not provided to the Borrower the Internal Revenue
Service Forms required to be provided to the Borrower pursuant to this Section
4.04(b) or (II) in the case of a payment, other than interest, to a Bank
described in clause (ii) above, to the extent that such Forms do not establish a
complete exemption from withholding of such taxes.
SECTION 5. Conditions Precedent to Initial Credit Events. The
obligation of each Bank to make Loans, and the obligation of any Issuing Bank to
issue Letters of Credit, on the Initial Borrowing Date, is subject at the time
of the making of such Loans or the issuance of such Letters of Credit to the
satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Agents for the account of each of the Banks the
appropriate Term Note and/or Revolving Note exe-
-31-
<PAGE>
cuted by the Borrower and to the Swingline Bank, the Swingline Note executed by
the Borrower, in each case in the amount, maturity and otherwise as provided
herein.
5.02 Officer's Certificate. On the Initial Borrowing Date, the Agents
shall have received a certificate, dated the Initial Borrowing Date and signed
on behalf of the Borrower by the President or any Vice President of the
Borrower, stating that all of the conditions in Sections 5.05, 5.06, 5.07, 5.08,
5.09 and 6.01 have been satisfied on such date.
5.03 Opinions of Counsel. On the Initial Borrowing Date, the Agents
shall have received from (i) Dickstein, Shapiro, Morin & Oshinsky LLP, counsel
to the Credit Parties, an opinion addressed to the Agents and each of the Banks
and dated the Initial Borrowing Date, covering the matters set forth in Exhibit
E and such other matters incident to the transactions contemplated herein as any
Agent may reasonably request and (ii) local counsel (reasonably satisfactory to
the Agents), opinions each of which (x) shall be addressed to the Agents and
each of the Banks and dated the Initial Borrowing Date, (y) shall be in form and
substance reasonably satisfactory to the Agents and (z) shall cover the
perfection of the security interests granted pursuant to the Security Documents
and such other matters incident to the transactions contemplated herein as any
Agent may reasonably request.
5.04 Corporate Documents; Proceedings; etc. (a) On the Initial
Borrowing Date, the Agents shall have received a certificate from each Credit
Party, dated the Initial Borrowing Date, signed by the President or any Vice
President of such Credit Party, and attested to by the Secretary or any
Assistant Secretary of such Credit Party, in the form of Exhibit F with
appropriate insertions, together with copies of the certificate of incorporation
(or equivalent organizational document) and by-laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate, and each such
certificate of incorporation and by-laws shall be in the form provided to the
Agents prior to the Effective Date or in such other form as is reasonably
acceptable to the Agents, and the foregoing resolutions shall be in form and
substance reasonably acceptable to the Agents.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be reasonably satisfactory in form and substance
to the Agents, and the Agents shall have received all information and copies of
all documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down telegrams or
facsimiles, if any, which any Agent may have requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate
or governmental authorities.
-32-
<PAGE>
5.05 Employee Benefit Plans; Shareholders' Agreements; Management
Agreements; Employee Benefit Plans; Shareholders' Agreements; Management
Agreements; Collective Bargaining Agreements; Existing Indebtedness Agreements.
On or prior to the Initial Borrowing Date, there shall have been made
available for review by the Agents true and correct copies of the following
documents:
(i) all Plans (and for each Plan that is required to file an annual
report on Internal Revenue Service Form 5500-series, a copy of the most
recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans", as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of the Borrower or any of its
Subsidiaries or any ERISA Affiliate (collectively, the "Employee Benefit
Plans");
(ii) all material agreements entered into by the Borrower or any of
its Subsidiaries governing the terms and relative rights of its capital
stock and any agreements entered into by shareholders relating to any such
entity with respect to its capital stock (collectively, the "Shareholders'
Agreements");
(iii) all material agreements with members of, or with respect to, the
senior management and management of the Borrower or any of its Subsidiaries
(collectively, the "Management Agreements");
(iv) all collective bargaining agreements applying or relating to any
employee of the Borrower or any of its Subsidiaries (collectively, the
"Collective Bargaining Agreements");
(v) all agreements evidencing or relating to Indebtedness of the
Borrower or any of its Subsidiaries which is to remain outstanding after
giving effect to the incurrence of Loans on the Initial Borrowing Date to
the extent such Indebtedness exceeds (or upon the utilization of any unused
commitments may exceed) $250,000 (collectively, the "Existing Indebtedness
Agreements"); and
(vi) all tax sharing, tax allocation and other similar agreements
entered into by the Borrower or any of its Subsidiaries (collectively, the
"Tax Sharing Agreements").
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Collective Bargaining Agreements, Existing Indebtedness Agreements
and Tax Sharing Agreements shall be in full force and effect on the Initial
Borrowing Date.
-33-
<PAGE>
5.06 Consummation of Acquisition. On the Initial Borrowing Date, (i)
the Acquisition shall have been consummated in accordance with the Acquisition
Documents and all applicable laws and (ii) each of the conditions precedent set
forth in the Asset Purchase Agreement shall have been satisfied in all material
respects, and not waived by SKL except with the reasonable consent of the
Agents, to the reasonable satisfaction of the Agents, and (iii) the Agents shall
have received true and complete copies of all Acquisition Documents, with such
Acquisition Documents to be in the form delivered to the Agents on or before
July 23, 1997 and on November 11, 1997 with such changes thereto or waivers
therefrom by SKL to be reasonably satisfactory to the Agents.
5.07 Refinancing. On the Initial Borrowing Date and after giving
effect to the Acquisition and the Loans incurred on the Initial Borrowing Date,
neither the Borrower nor any of its Subsidiaries shall have any Indebtedness
outstanding except for (x) the Obligations and (y) the Existing Indebtedness.
Schedule IV sets forth a true and complete list of all Indebtedness to be
Refinanced, in each case showing the aggregate principal amount thereof and
accrued interest thereon (immediately before giving effect to the Initial
Borrowing Date) and the name of the respective borrower thereof. On the Initial
Borrowing Date, all Indebtedness to be Refinanced shall have been repaid in full
and all commitments in respect thereof shall have been terminated and all Liens
and guaranties in connection therewith shall have been terminated (and all
appropriate releases, termination statements or other instruments of assignment
with respect thereto shall have been obtained) to the reasonable satisfaction of
the Agents. The Agents shall have received evidence, in form and substance
reasonably satisfactory to them, that the matters set forth in the immediately
preceding sentence have been satisfied as of the Initial Borrowing Date.
5.08 Adverse Change, etc. (a) On or prior to the Initial Borrowing
Date, nothing shall have occurred (and the Agents shall have become aware of no
facts or conditions not previously known) which is reasonably likely to have a
material adverse effect on the rights or remedies of the Banks or the Agents, or
on the ability of the Borrower or its Subsidiaries to perform their obligations
to the Banks or which is reasonably likely to have a materially adverse effect
on the business, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole,
in each case after giving effect to the consummation of the Transaction.
(b) All necessary governmental approvals and/or consents, all
necessary shareholder and board of director approvals and/or consents, in each
case in connection with the Transaction and the other transactions contemplated
by the Documents and otherwise referred to herein or therein shall have been
obtained and remain in effect, and all applicable waiting periods with respect
thereto shall have expired without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon, the consummation of the Transaction or the other transactions contemplated
by the Credit Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive
-34-
<PAGE>
relief or other restraint pending or notified prohibiting or imposing materially
adverse conditions upon the Transaction or the other transactions contemplated
by the Credit Documents.
5.09 Litigation. On the Initial Borrowing Date, no litigation by any
entity (private or governmental) shall be pending or threatened (i) with respect
to the Transaction or any Document or (ii) which is reasonably likely to have a
material adverse effect on the rights or remedies of the Banks or the Agents, or
on the ability of the Borrower or its Subsidiaries to perform their obligations
to the Banks or which is reasonably likely to have a materially adverse effect
on the business, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole,
in each case after giving effect to the consummation of the Transaction.
5.10 Pledge Agreement. On the Initial Borrowing Date, each Credit
Party shall have duly authorized, executed and delivered the Pledge Agreement in
the form of Exhibit G (as amended, modified or supplemented from time to time,
the "Pledge Agreement") and shall have delivered to the Collateral Agent, as
Pledgee thereunder, all of the Pledged Securities, if any, referred to therein
then owned by such Credit Party, (x) endorsed in blank in the case of promissory
notes constituting Pledged Securities and (y) together with executed and undated
stock powers in the case of capital stock constituting Pledged Securities.
5.11 Security Agreement. On the Initial Borrowing Date, each Credit
Party shall have duly authorized, executed and delivered the Security Agreement
in the form of Exhibit H (as modified, supplemented or amended from time to
time, the "Security Agreement") covering all of such Credit Party's present and
future Security Agreement Collateral, together with:
(i) proper Financing Statements (Form UCC-1 or the equivalent) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Security Agreement;
(ii) copies of Requests for Information or Copies (Form UCC-11), or
equivalent reports, listing all effective financing statements that name
any Credit Party as debtor and that are filed in the jurisdictions referred
to in clause (i) above, together with copies of such other financing
statements that name any Credit Party as debtor (none of which shall cover
the Collateral except to the extent evidencing Permitted Liens or in
respect of which the Collateral Agent shall have received termination
statements (Form UCC-3) or such other termination statements as shall be
required by local law fully executed for filing); and
(iii) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the
security interests purported
-35-
<PAGE>
to be created by the Security Agreement have been (or within 10 days
following the Initial Borrowing Date will be) taken.
5.12 Subsidiaries Guaranty. On the Initial Borrowing Date, each
Subsidiary Guarantor shall have duly authorized, executed and delivered the
Subsidiaries Guaranty in the form of Exhibit I (as amended, modified or
supplemented from time to time, the "Subsidiaries Guaranty").
5.13 Mortgages; Title Insurance; Survey; etc. On the Initial
Borrowing Date, the Collateral Agent shall have received:
(i) fully executed counterparts of Mortgages, in form and substance
reasonably satisfactory to the Agents, which Mortgages shall cover the
Mortgaged Properties owned by the Credit Parties on the Initial Borrowing
Date as designated on Schedule III, together with evidence that
counterparts of such Mortgages have been delivered to the title insurance
company insuring the Lien of such Mortgages for recording in all places to
the extent necessary or, in the reasonable opinion of the Collateral Agent,
desirable, to effectively create a valid and enforceable first priority
mortgage lien on each such Mortgaged Property in favor of the Collateral
Agent (or such other trustee as may be required or desired under local law)
for the benefit of the Secured Creditors;
(ii) a mortgagee title insurance policy on each such Mortgaged
Property issued by a title insurer reasonably satisfactory to the Agents
(the "Mortgage Policies") in amounts satisfactory to the Agents assuring
the Collateral Agent that the Mortgages on such Mortgaged Properties are
valid and enforceable first priority mortgage liens on the respective
Mortgaged Properties, free and clear of all defects and encumbrances except
Permitted Encumbrances and such Mortgage Policies shall otherwise be in
form and substance reasonably satisfactory to the Agents and shall include,
as appropriate, an endorsement for future advances under this Agreement and
the Notes and for any other matter that any Agent in its reasonable
discretion may reasonably request, shall not include (to the extent
permissible under applicable state law) an exception for mechanics' liens,
and shall provide for affirmative insurance and such reinsurance as any
Agent in its discretion may reasonably request;
(iii) a survey, in form and substance reasonably satisfactory to the
Agents, of each such Mortgaged Property, certified by a licensed
professional surveyor reasonably satisfactory to the Agents; and
(iv) such landlord waivers and/or estoppel certificates as any Agent
may have reasonably required, which landlord waivers and/or estoppel
certificates shall be in form and substance reasonably satisfactory to the
Agents.
-36-
<PAGE>
5.14 Projections; Pro Forma Balance Sheet. On or prior to the Initial
Borrowing Date, the Agents shall have received copies of the financial
statements (including the pro forma financial statements) and Projections
referred to in Sections 7.05(a) and (d).
5.15 Solvency Certificate; Insurance Certificates. On the Initial
Borrowing Date, the Borrower shall have delivered to the Agents:
(i) a solvency certificate from the Chief Financial Officer of the
Borrower in the form of Exhibit J; and
(ii) certificates of insurance complying with the requirements of
Section 8.03 for the business and properties of the Borrower and its
Subsidiaries, in form and substance satisfactory to the Agents and naming
the Collateral Agent as an additional insured and as loss payee, and
stating that such insurance shall not be cancelled without at least 30 days
prior written notice by the insurer to the Collateral Agent (or such
shorter period of time as a particular insurance company generally
provides).
5.16 Fees, etc. On the Initial Borrowing Date, the Borrower shall have
paid to the Agents and each Bank all costs, fees and expenses (including,
without limitation, legal fees and expenses) payable to the Agents and such Bank
to the extent then due.
SECTION 6. Conditions Precedent to All Credit Events. The obligation
of each Bank to make Loans (including Loans made on the Initial Borrowing Date),
and the obligation of any Issuing Bank to issue any Letter of Credit (including
Letters of Credit issued on the Initial Borrowing Date), is subject, at the time
of each such Credit Event (except as hereinafter indicated), to the satisfaction
of the following conditions:
6.01 No Default; Representations and Warranties. At the time of each
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
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 the date of such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to the
making of each Loan (other than a Swingline Loan or a Revolving Loan made
pursuant to a Mandatory Borrowing), the Administrative Agent shall have received
a Notice of Borrowing meeting the requirements of Section 1.03(a). Prior to the
making of each Swingline Loan, the Swingline Bank shall have received the notice
referred to in Section 1.03(b)(i).
-37-
<PAGE>
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.
The acceptance of the proceeds of each Loan and the making of each
Letter of Credit Request shall constitute a representation and warranty by the
Borrower to the Agents and each of the Banks that all the conditions specified
in Section 5 (with respect to Credit Events on the Initial Borrowing Date) and
in this Section 6 (with respect to Credit Events on and after the Initial
Borrowing Date) and applicable to such Credit Event exist as of that time. All
of the Notes, certificates, legal opinions and other documents and papers
referred to in Section 5 and in this Section 6, unless otherwise specified,
shall be delivered to the Administrative Agent at the Notice Office for the
account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
reasonably satisfactory to the Agents and the Required Banks.
SECTION 7. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans, and issue
(or participate in) the Letters of Credit as provided herein, the Borrower makes
the following representations, warranties and agreements, in each case after
giving effect to the Transaction, all of which shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans and
issuance of the Letters of Credit, with the occurrence of each Credit Event on
or after the Initial Borrowing Date being deemed to constitute a representation
and warranty that the matters specified in this Section 7 are true and correct
in all material respects on and as of the Initial Borrowing Date and on the date
of each such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct only as of such specified date).
7.01 Corporate and Other Status. Each Credit Party and each of its
Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate or partnership power
and authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
and is authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of its
business requires such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.
7.02 Corporate and Other Power and Authority. Each Credit Party has
the corporate or partnership power and authority to execute, deliver and perform
the terms and provisions of each of the Documents to which it is party and has
taken all necessary corporate or partnership action to authorize the execution,
delivery and performance by it of each of such Documents. Each Credit Party has
duly executed and delivered each of the Documents to
-38-
<PAGE>
which it is party, and each of such Documents constitutes its legal, valid and
binding obligation enforceable in accordance with its terms, except to the
extent 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).
7.03 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
law, statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (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 (except pursuant to the Security
Documents) upon any of the property or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other material agreement, contract or
instrument, to which the Borrower or any of its Subsidiaries is a party or by
which it or any of its property or assets is bound or to which it may be subject
or (iii) will violate any provision of the certificate of incorporation, by-laws
or partnership agreement (or equivalent organizational documents) of the
Borrower or any of its Subsidiaries.
7.04 Approvals. (a) No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except for those that have otherwise been obtained or made on or prior to the
Initial Borrowing Date and which remain in full force and effect on the Initial
Borrowing Date, or to the extent not required to be obtained or made on or prior
to the Initial Borrowing Date, as will be obtained or made on or prior to the
required date therefor), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with, (i) the execution, delivery and performance of any Document
or (ii) the legality, validity, binding effect or enforceability of any such
Document.
(b) All necessary shareholder and board of director approvals and/or
consents and all material third party non-governmental approvals and/or consents
required to be obtained by the Borrower, SKL or any Credit Party, in each case
in connection with the Transaction and the execution, delivery and performance
of any Document have been obtained by the Borrower, SKL and each Credit Party
and remain in full force and effect on the Initial Borrowing Date.
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Financial Statements; Financial Condition; Undisclosed Liabilities;
Projections; etc. (a) The consolidated balance sheet of the Borrower and its
Subsidiaries at September 30, 1996 and September 30, 1997 and the related
consolidated statements of operations, cash flows and shareholders' equity of
the Borrower and its Subsidiaries for the fiscal years ended on such dates,
respectively, copies of which have been furnished to the Banks prior to the
Initial Borrowing Date, present fairly the financial position of the Borrower
and its Subsidiaries at the date of such balance sheets and the results of the
operations of the
-39-
<PAGE>
Borrower and its Subsidiaries for the periods covered thereby. Except as set
forth in Section 3.4(b) of the Seller Disclosure Schedules to the Asset Purchase
Agreement, the balance sheet of the Acquired Business at December 31, 1996 and
September 30, 1997 and the related statements of income, cash flows and
shareholders' equity of the Acquired Business for the fiscal year and nine-month
periods ended on such dates, respectively, copies of which have been furnished
to the Banks prior to the Initial Borrowing Date, present fairly the financial
position of the Acquired Business at the date of such balance sheets and the
results of the operations of the Acquired Business for the periods covered
thereby. Except as set forth in Section 3.4(b) of the Seller Disclosure
Schedules to the Asset Purchase Agreement insofar as it relates to the financial
statements of the Acquired Business, the Borrower, in good faith, believes that
all financial statements referred to in the two immediately preceding sentences
have been prepared in accordance with generally accepted accounting principles
consistently applied, subject to normal year-end audit adjustments in the case
of the September 30, 1997 Borrower financial statements and the September 30,
1997 Acquired Business financial statements referred to above. The Borrower has
delivered to the Banks a pro forma consolidated balance sheet of the Borrower
and its Subsidiaries (including the Acquired Business) at September 30, 1997 and
pro forma income statements of the Borrower and its Subsidiaries (including the
Acquired Business) for the fiscal year ended September 30, 1997, prepared on the
assumption that the Transaction had been consummated on October 1, 1996. After
giving effect to the Transaction (but for this purpose assuming that the
Transaction had occurred prior to September 30, 1996), since September 30, 1996,
there has been no material adverse change in the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole.
(b) (i) On and as of the Initial Borrowing Date and after giving
effect to the Transaction and to all Indebtedness (including the Loans) being
incurred or assumed and Liens created by the Credit Parties in connection
therewith, (a) the sum of the assets, at a fair valuation, of each of the
Borrower on a stand alone basis and of the Borrower and its Subsidiaries taken
as a whole will exceed its debts; (b) each of the Borrower on a stand alone
basis and the Borrower and its Subsidiaries taken as a whole has not incurred
and does not intend to incur, and does not believe that they will incur, debts
beyond their ability to pay such debts as such debts mature; and (c) each of the
Borrower on a stand alone basis and the Borrower and its Subsidiaries taken as a
whole will have sufficient capital with which to conduct its business. For
purposes of this Section 7.05(b), "debt" means any liability on a claim, and
"claim" means (i) 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 (ii) 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. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
-40-
<PAGE>
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 7.05(a) there were as of the Initial Borrowing Date no
liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
could reasonably be expected to have a material and adverse effect on the
Borrower and its Subsidiaries taken as a whole. As of the Initial Borrowing
Date, the Borrower does not know of any basis for the assertion against it or
any of its Subsidiaries of any liability or obligation of any nature whatsoever
that is not fully disclosed in the financial statements delivered pursuant to
Section 7.05(a) which, either individually or in the aggregate, could reasonably
be expected to be material to the Borrower or the Borrower and its Subsidiaries
taken as a whole.
(d) On and as of the Initial Borrowing Date, the Projections
delivered to the Agents and the Banks prior to the Initial Borrowing Date have
been prepared in good faith and are based on reasonable assumptions. On the
Initial Borrowing Date, the Borrower believes that the Projections are
reasonable, it being understood that the Projections include assumptions as to
future events that are not to be viewed as facts and that actual results may
differ from the projected results and such differences may be material.
7.06 Litigation. There are no actions, suits or proceedings pending
or, to the best knowledge of the Borrower, threatened (i) with respect to any
Document or (ii) that are reasonably likely to materially and adversely affect
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
7.07 True and Complete Disclosure. All factual information (taken as a
whole) furnished by any Credit Party in writing to any Agent or any Bank
(including, without limitation, all information contained in the Documents) for
purposes of or in connection with this Agreement, the other Credit Documents or
any transaction contemplated herein or therein is, and all other such factual
information hereafter furnished by or on behalf of any Credit Party in writing
to any Agent or any Bank 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 fact necessary to make such information not misleading
in any material respect at such time in light of the circumstances under which
such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the Term
Loans will be used by the Borrower (i) to effect the Acquisition and the
Refinancing and (ii) to pay fees and expenses related to the Transaction.
(b) The proceeds of all Revolving Loans and all Swingline Loans will
be used for the Borrower's and its Subsidiaries' general corporate and working
capital purposes.
(c) No part of any Credit Event (or the proceeds thereof) will be
used to purchase or carry any Margin Stock or to extend credit for the purpose
of purchasing or carrying any Margin Stock. Neither the making of any Loan nor
the use of the proceeds
-41-
<PAGE>
thereof nor the occurrence of any other Credit Event will violate or be
inconsistent with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
7.09 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, except for
those contested in good faith and adequately disclosed and fully provided for on
the financial statements of the Borrower and its Subsidiaries in accordance with
generally accepted accounting principles. The Borrower and each of its
Subsidiaries have at all times paid, or have provided adequate reserves (in the
good faith judgment of the management of the Borrower) for the payment of, all
federal, state and foreign income taxes applicable for all prior fiscal years
and for the current fiscal year to date. There is no material action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
the Borrower or any of its Subsidiaries, threatened by any authority regarding
any taxes relating to the Borrower or any of its Subsidiaries. Neither the
Borrower nor any of its Subsidiaries has entered into an agreement or waiver or
been requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of the Borrower or
any of its Subsidiaries, or is aware of any circumstances that would cause the
taxable years or other taxable periods of the Borrower or any of its
Subsidiaries not to be subject to the normally applicable statute of
limitations.
7.10 Compliance with ERISA. (i) Each Plan and to the knowledge of the
Borrower each Multiemployer Plan (and each related trust, insurance contract or
fund) is in substantial compliance with its terms and with all applicable laws,
including, without limitation, ERISA and the Code; each Plan and to the
knowledge of the Borrower each Multiemployer Plan (and each related trust, if
any) which is intended to be qualified under Section 401(a) of the Code has
received a determination letter from the Internal Revenue Service to the effect
that it meets the requirements of Sections 401(a) and 501(a) of the Code; no
Reportable Event has occurred with respect to a Plan; to the knowledge of the
Borrower, no Multiemployer Plan is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan and to the knowledge of the Borrower no
Multiemployer Plan which is subject to Section 412 of the Code or Section 302 of
ERISA has an accumulated funding deficiency, within the meaning of such sections
of the Code or ERISA, or has applied for or received a waiver of an accumulated
funding deficiency or an extension of any amortization period, within the
meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all material
contributions required to be made by the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate with respect to a Plan or a Multiemployer Plan
have been timely made; neither the Borrower nor any Subsidiary of the Borrower
nor any ERISA Affiliate has incurred any material liability (including any
indirect or secondary liability) to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 4062, 4063, 4064 or 4069 of ERISA or Section 401(a)(29),
4971 or 4975 of the Code or expects to incur any such material liability under
any of the foregoing sections with respect to any Plan; to the knowledge of the
Borrower and its Subsidiaries, no condition exists which presents a material
risk to the Borrower or any
-42-
<PAGE>
Subsidiary of the Borrower or any ERISA Affiliate of incurring a material
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; no proceedings have been instituted to terminate or appoint
a trustee to administer any Plan which is subject to Title IV of ERISA; no
action, suit, proceeding, hearing, audit or investigation with respect to the
administration, operation or the investment of assets of any Plan (other than
routine claims for benefits) is pending or, to the knowledge of the Borrower and
its Subsidiaries, threatened; using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrower and its Subsidiaries and its ERISA Affiliates to all
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan ended prior to the date
of this Agreement and with respect to fiscal years ended prior to the date of
each Credit Event would not be material; each group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has
covered employees or former employees of the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate has at all times been operated in substantial
compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and
Section 4980B of the Code; no lien imposed under the Code or ERISA on the assets
of the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate exists
or is likely to arise on account of any Plan; neither the Borrower nor any
Subsidiary of the Borrower nor any ERISA Affiliate has incurred any material
liability (including any indirect or secondary liability) under Sections 515,
4201, 4202 or 4212 of ERISA with respect to any Multiemployer Plan; to the
knowledge of the Borrower, no condition exists which presents a material risk to
the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate of
incurring a material liability to or on account of a Multiemployer Plan pursuant
to the foregoing provisions of ERISA; to the knowledge of the Borrower and its
Subsidiaries, no action, suit, proceeding, hearing, audit or investigation with
respect to the administration, operation or the investment of assets of any
Multiemployer Plan (other than routine claims for benefits) that could
reasonably be expected to be material to the Borrower or the Borrower and its
Subsidiaries taken as a whole is pending or threatened; and the Borrower and its
Subsidiaries do not maintain or contribute to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA), which provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any Plan or Multiemployer Plan, the obligations with respect to which
could reasonably be expected to have a material adverse effect on the ability of
the Borrower or any of its Subsidiaries to perform their respective obligations
under the Credit Documents.
(ii) To the knowledge of the Borrower and its Subsidiaries, each
Foreign Pension Plan has been maintained in substantial compliance with its
terms and with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory authorities. All material contributions required to
be made with respect to a Foreign Pension Plan have been timely made. Neither
the Borrower nor any of its Subsidiaries has incurred any material obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The Borrower and its Subsidiaries do not maintain or contribute to any Foreign
Pension Plan the obligations with respect to which could reasonably be expected
to have a material adverse
-43-
<PAGE>
effect on the ability of the Borrower or the Borrower and its Subsidiaries taken
as a whole to perform their obligations under the Credit Documents.
7.11 The Security Documents. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Credit Parties party thereto in
the Security Agreement Collateral described therein, and the Collateral Agent,
for the benefit of the Secured Creditors, has a fully perfected lien on, and
security interest in, all right, title and interest in all of the Security
Agreement Collateral described therein, subject to no other Liens other than
Permitted Liens. The recordation of the Assignment of Security Interest in U.S.
Patents and Trademarks in the form attached to the Security Agreement in the
United States Patent and Trademark Office together with filings on Form UCC-1
made pursuant to the Security Agreement will create, as may be perfected by such
filing and recordation, a perfected security interest granted to the Collateral
Agent in the trademarks and patents covered by the Security Agreement and the
recordation of the Assignment of Security Interest in U.S. Copyrights in the
form attached to the Security Agreement with the United States Copyright Office
together with filings on Form UCC-1 made pursuant to the Security Agreement will
create, as may be perfected by such filing and recordation, a perfected security
interest granted to the Collateral Agent in the copyrights covered by the
Security Agreement.
(b) The security interests created in favor of the Collateral Agent,
as Pledgee, for the benefit of the Secured Creditors, under the Pledge Agreement
constitute first priority perfected security interests in the Pledged Securities
described in the Pledge Agreement, subject to no security interests of any other
Person. No filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests created in the Pledged
Securities under the Pledge Agreement.
(c) The Mortgages create, for the obligations purported to be secured
thereby, a valid and enforceable perfected security interest in and mortgage
lien on all of the Mortgaged Properties in favor of the Collateral Agent (or
such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors, superior to and prior to the rights of all
third persons (except that the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances related
thereto) and subject to no other Liens (other than Liens permitted under Section
9.01). Schedule III contains a true and complete list of each parcel of Real
Property owned or leased by the Borrower and its Subsidiaries on the Initial
Borrowing Date, and the type of interest therein held by the Borrower or such
Subsidiary. The Borrower and each of its Subsidiaries have (i) good and
marketable title to all fee-owned Real Property free and clear of all Liens
except those described in the first sentence of this subsection (c) and (ii)
valid leasehold title to all Leaseholds.
-44-
<PAGE>
7.12 Representations and Warranties in Acquisition Documents. All
representations and warranties set forth in the Acquisition Documents were true
and correct at the time as of which such representations and warranties were (or
are) made (or deemed made), except for such inaccuracies which, either
individually or in the aggregate, are not reasonably likely to have a material
adverse effect on the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Acquired Business.
7.13 Properties. The Borrower and each of its Subsidiaries have good
and marketable title to all material properties owned by them, including all
material property reflected in the balance sheets referred to in Section 7.05(a)
and all material property acquired pursuant to the Acquisition (except as sold
or otherwise disposed of since the date of such balance sheets in the ordinary
course of business), free and clear of all Liens, other than Liens permitted by
Section 9.01.
7.14 Capitalization. On the Initial Borrowing Date, the authorized
capital stock of the Borrower shall consist of (i) 100,000,000 shares of common
stock, $.01 par value per share, of which 14,250,000 shares of such common stock
are issued and outstanding and (ii) 1,500,000 shares of preferred stock, $.01
par value per value, none of which shares of such preferred stock are issued or
outstanding. All outstanding shares of capital stock of the Borrower have been
duly and validly issued, are fully paid and nonassessable. Except for options or
warrants to purchase shares of common stock of the Borrower held by employees
and directors of the Borrower or any of its Subsidiaries, as of the Initial
Borrowing Date, the Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock.
7.15 Subsidiaries. As of the Initial Borrowing Date, the Borrower has
no Subsidiaries other than those Subsidiaries listed on Schedule V. Schedule V
correctly sets forth, as of the Initial Borrowing Date, the percentage ownership
(direct or indirect) of the Borrower in each class of capital stock or other
equity of each of its Subsidiaries and also identifies the direct owner thereof.
7.16 Compliance with Statutes, etc. Each of the Borrower and each of
its Subsidiaries is in compliance 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 (including applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls), except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a whole.
-45-
<PAGE>
7.17 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.18 Public Utility Holding Company Act. Neither the Borrower nor any
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
7.19 Environmental Matters. (a) The Borrower and each of its
Subsidiaries have complied with, and on the date of such Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no pending or, to the
best knowledge of the Borrower, threatened Environmental Claims against the
Borrower or any of its Subsidiaries (including any such claim arising out of the
ownership or operation by the Borrower or any of its Subsidiaries of any Real
Property no longer owned or operated by the Borrower or any of its Subsidiaries)
or any Real Property owned or operated by the Borrower or any of its
Subsidiaries. There are no facts, circumstances, conditions or occurrences with
respect to any Real Property owned or operated by the Borrower or any of its
Subsidiaries (including any Real Property formerly owned or operated by the
Borrower or any of its Subsidiaries but no longer owned or operated by the
Borrower or any of its Subsidiaries) or, to the best knowledge of the Borrower,
any property adjoining or adjacent to any such Real Property that 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 owned or operated
by the Borrower or any of its Subsidiaries, or (ii) to cause any Real Property
owned or operated by the Borrower or any of its Subsidiaries to be subject to
any restrictions on the ownership, occupancy or transferability of such Real
Property by the Borrower or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by the Borrower or any of its Subsidiaries where such generation, use,
treatment or storage has violated or could reasonably be expected to violate any
Environmental Law. Hazardous Materials have not at any time been Released on or
from any Real Property owned or operated by the Borrower or any of its
Subsidiaries where such Release has violated or could reasonably be expected to
violate any applicable Environmental Law.
(c) Notwithstanding anything to the contrary in this Section 7.19,
the representations made in this Section 7.19 shall not be untrue unless the
aggregate effect of all violations, claims, restrictions, failures and
noncompliances of the types described above could reasonably be expected to have
a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.
-46-
<PAGE>
7.20 Labor Relations. Neither the Borrower nor any of its Subsidiaries
is engaged in any unfair labor practice that could reasonably be expected to
have a material adverse effect on the Borrower or the Borrower and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower or any of its Subsidiaries, threatened against any of
them, before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower or any of its
Subsidiaries, threatened against the Borrower or any of its Subsidiaries and
(iii) no union representation question exists with respect to the employees of
the Borrower or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or any of its Subsidiaries
and its Subsidiaries taken as a whole.
7.21 Patents, Licenses, Franchises and Formulas. Each of the Borrower
and each of its Subsidiaries owns all the patents, trademarks, permits, service
marks, trade names, copyrights, licenses, franchises, proprietary information
(including but not limited to rights in computer programs and databases) and
formulas, or rights with respect to the foregoing, and has obtained assignments
of all leases and other rights of whatever nature, necessary for the present
conduct of its business, without any known conflict with the rights of others
which, or the failure to obtain which, as the case may be, could reasonably be
expected to result in a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a whole.
7.22 Indebtedness. Schedule VI sets forth a true and complete list of
all Indebtedness (including Contingent Obligations) of the Borrower and its
Subsidiaries as of the Initial Borrowing Date and which is to remain outstanding
after giving effect to the Transaction (excluding the Loans, the Letters of
Credit and Indebtedness permitted under Section 9.04(iii), the "Existing
Indebtedness"), in each case showing the aggregate principal amount thereof and
the name of the respective borrower and any Credit Party or any of its
Subsidiaries which directly or indirectly guaranteed such debt.
7.23 Transaction. At the time of consummation thereof, the Transaction
shall have been consummated in accordance with the terms of the respective
Documents and all applicable laws. At the time of consummation thereof, all
material consents and approvals of, and filings and registrations with, and all
other actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Transaction to the
extent then required have been obtained, given, filed or taken and are or will
be in full force and effect (or effective judicial relief with respect thereto
has been obtained). All applicable waiting periods with respect thereto have or,
prior to the time when required, will have,
-47-
<PAGE>
expired without, in all such cases, any action being taken by any competent
authority which restrains, prevents, or imposes material adverse conditions upon
the Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction, or the occurrence of any Credit Event or the performance by any
Credit Party of its obligations under the Documents to which it is party. All
actions taken by each Credit Party pursuant to or in furtherance of the
Transaction have been taken in compliance in all material respects with the
respective Documents and all applicable laws.
SECTION 8. Affirmative Covenants. The Borrower hereby covenants and
agrees that on and after the Effective Date and until the Total Commitments and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder and
thereunder, are paid in full:
8.01 Information Covenants. The Borrower will furnish to each Bank:
(a) Quarterly Financial Statements. Within 45 days after the close of
the first three quarterly accounting periods in each fiscal year of the
Borrower, (i) the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly accounting period and the related
consolidated statements of income and retained earnings and statement of cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly accounting period, in each
case setting forth comparative figures for the related periods in the prior
fiscal year, all of which shall be certified by the Chief Financial Officer of
the Borrower or another senior financial officer of the Borrower, subject to
normal year-end audit adjustments and (ii) management's discussion and analysis
of the important operational and financial developments during the quarterly and
year-to-date periods, it being understood that the delivery by the Borrower of
its Form 10-Q as filed with the SEC shall satisfy the requirements of this
Section 8.01(a).
(b) Annual Financial Statements. Within 90 days after the close of
each fiscal year of the Borrower, (i) the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
such fiscal year setting forth comparative figures for the preceding fiscal year
and certified by Price Waterhouse LLP, any other "Big Six" independent certified
public accountants or such other independent certified public accountants of
recognized national standing reasonably acceptable to the Agents, in each case
to the effect that such statements fairly present in all material respects the
financial condition of the Borrower and its Subsidiaries as of the dates
indicated and the results of their operations and changes in its financial
position for the periods indicated in conformity with generally accepted
accounting principles applied on a basis consistent with prior years, together
with a certificate of such accounting firm stating that in the course of its
regular audit of the business of the Borrower and its Subsidiaries, which audit
was conducted in accordance with generally accepted auditing standards, no
Default or Event of Default which has occurred and is continuing has come to
their attention or, if such a Default or an Event of Default has come to their
attention a statement as to the nature thereof.
-48-
<PAGE>
(c) Management Letters. Promptly after the Borrower's or any of its
Subsidiaries' receipt thereof, a copy of any "management letter" received from
its certified public accountants.
(d) Budgets. No later than the 60th day following the start of the
fiscal year beginning October 1, 1997 and the 30th day following the start of
each succeeding fiscal year of the Borrower, a budget in form satisfactory to
the Agents (including budgeted statements of income and sources and uses of cash
and balance sheets, with such information to be set forth on a quarterly basis)
prepared by the Borrower for such fiscal year prepared in detail, setting forth,
with appropriate discussion, the principal assumptions upon which such budget
was based.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 8.01(a) and (b), a certificate of
the Chief Financial Officer of the Borrower or another senior financial officer
of the Borrower acceptable to the Agents to the effect that, to the best of such
officer's knowledge, no Default or Event of Default has occurred and is
continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which certificate shall
(x) set forth in reasonable detail the calculations required to establish
whether the Borrower and its Subsidiaries were in compliance with the provisions
of Sections 9.08 through 9.10, inclusive, at the end of such fiscal quarter or
year, as the case may be and (y) if delivered with the financial statements
required by Section 8.01(b), set forth in reasonable detail the calculations
required to establish whether the Borrower and its Subsidiaries were in
compliance with the provisions of Sections 4.02(e) and 9.07 as at the end of
such fiscal year and the amount of (and the calculations required to establish
the amount of) Excess Cash Flow for the respective Excess Cash Payment Period.
(f) Notice of Default or Litigation. Promptly upon, and in any event
within three Business Days after, an officer of the Borrower obtains knowledge
thereof, notice of (i) the occurrence of any event which constitutes a Default
or an Event of Default and (ii) any litigation or governmental investigation or
proceeding pending (x) against the Borrower or any of its Subsidiaries which
could reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a whole
or (y) with respect to the Transaction or any Document.
(g) Other Reports and Filings. Promptly after the filing or delivery
thereof, copies of all financial information, proxy materials and reports, if
any, which the Borrower or any of its Subsidiaries shall publicly file with the
Securities and Exchange Commission or any successor thereto (the "SEC") or
deliver to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
-49-
<PAGE>
(h) Environmental Matters. Promptly upon, and in any event within
ten Business Days after, an officer of the Borrower obtains knowledge thereof,
notice of one or more of the following environmental matters, unless such
environmental matters could not, individually or when aggregated with all other
such environmental matters, be reasonably expected to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole:
(i) any pending or threatened 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 (a)
results in noncompliance by the Borrower or any of its Subsidiaries with
any applicable Environmental Law or (b) could reasonably be expected to
form the basis of an Environmental Claim against the Borrower or any of its
Subsidiaries or any such owned or operated Real Property;
(iii) any condition or occurrence on any Real Property owned 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 or operated by the Borrower or any of its Subsidiaries as required by
any Environmental Law or any governmental or other administrative agency;
provided, that in any event the Borrower shall deliver to each Bank all
notices received by the Borrower or any of its Subsidiaries from any
government or governmental agency under, or pursuant to, CERCLA which
identify the Borrower or any of its Subsidiaries as potentially responsible
parties for remediation costs which reasonably could be expected to exceed
$500,000 or which otherwise notify the Borrower or any of its Subsidiaries
of potential liability which reasonably could be expected to exceed
$500,000 under CERCLA.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and the Borrower's or such Subsidiary's response thereto.
(i) Other Information. From time to time, such other information or
documents (financial or otherwise) with respect to the Borrower or any of its
Subsidiaries as any Agent or any Bank may reasonably request.
-50-
<PAGE>
8.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and accounts in which
full, true and correct entries in conformity with generally accepted accounting
principles and all requirements of law shall be made of all dealings and
transactions in relation to its business and activities. Upon reasonable notice
to the Borrower, the Borrower will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of any Agent or any Bank to visit
and inspect, under guidance of officers of the Borrower or such Subsidiary, any
of the properties owned or leased by the Borrower or such Subsidiary, and to
examine the books of account of the Borrower or such Subsidiary and discuss the
affairs, finances and accounts of the Borrower or such Subsidiary with, and be
advised as to the same by, its and their officers and independent accountants,
all at such reasonable times and intervals and to such reasonable extent as such
Agent or such Bank may request.
8.03 Maintenance of Property; Insurance. (a) Schedule VII sets forth a
true and complete listing of all insurance maintained by the Borrower and its
Subsidiaries as of the Initial Borrowing Date. The Borrower will, and will cause
each of its Subsidiaries to, (i) keep all property owned or leased by the
Borrower and its Subsidiaries necessary to the business of the Borrower and its
Subsidiaries in reasonably good working order and condition, ordinary wear and
tear excepted, (ii) maintain, with financially sound and reputable insurers,
insurance on all such property (including, without limitation, flood insurance
to the extent applicable) in at least such amounts and against at least such
risks as is consistent and in accordance with industry practice for companies
similarly situated owning similar properties in the same general areas in which
the Borrower or any of its Subsidiaries operates, and (iii) furnish to any Agent
or any Bank, upon written request, full information as to the insurance carried.
(b) The Borrower will, and will cause each of the other Credit
Parties to, at all times keep its property insured, with the Collateral Agent
named as loss payee or additional insured, and all policies (including Mortgage
Policies) or certificates (or certified copies thereof) with respect to such
insurance (and any other insurance maintained by the Borrower and/or such other
Credit Parties) shall (i) name the Collateral Agent as loss payee and/or
additional insured) and (ii) state that such insurance policies shall not be
cancelled without at least 30 days' prior written notice thereof by the
respective insurer to the Collateral Agent (or such shorter period of time as a
particular insurance company policy generally provides).
(c) If the Borrower or any of its Subsidiaries shall fail to insure
its property in accordance with this Section 8.03, or if the Borrower or any of
its Subsidiaries shall fail to so name the Collateral Agent as a loss payee or
additional insured with respect thereto, the Collateral Agent shall have the
right (but shall be under no obligation), after giving the Borrower prior
written notice, to procure such insurance and the Borrower agrees to reimburse
the Collateral Agent for all costs and expenses of procuring such insurance or
naming the Collateral Agent as a loss payee or additional insured with respect
thereto.
8.04 Corporate Franchises. The Borrower will, and will cause each of
its Subsidiaries to, do or cause to be done, all things necessary to preserve
and keep in full force
-51-
<PAGE>
and effect its existence and its material rights, franchises, licenses and
patents; provided, however, that nothing in this Section 8.04 shall prevent (i)
sales of assets, mergers and other transactions by the Borrower or any of its
Subsidiaries in accordance with Section 9.02 or (ii) the withdrawal by the
Borrower or any of its Subsidiaries of its qualification as a foreign
corporation in any jurisdiction where such withdrawal could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. The Borrower will, and will cause
each of its Subsidiaries to, comply 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 (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls), except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) The Borrower will
comply, and will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the ownership or use of its Real Property now
or hereafter owned or operated by the Borrower or any of its Subsidiaries
(except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a
whole), will promptly pay or cause to be paid all costs and expenses incurred in
connection with such compliance, and will keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such Environmental
Laws. Neither the Borrower nor any of its Subsidiaries will 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 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, except to the extent that any such generation, use,
treatment, storage, release or disposal could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.
(b) At the written request of the Agents or the Required Banks, which
request shall specify in reasonable detail the basis therefor, at any time and
from time to time, the Borrower will provide, at the sole expense of the
Borrower, an environmental site assessment report concerning any Real Property
owned or operated by the Borrower or any of its Subsidiaries, prepared by an
environmental consulting firm reasonably approved by the Agents, indicating the
presence or absence of Hazardous Materials and the potential cost of
-52-
<PAGE>
any removal or remedial action in connection with such Hazardous Materials on
such Real Property, provided that in no event shall such request be made more
often than once every two years for any particular Real Property unless either
(i) the Obligations have been declared (or have become) due and payable pursuant
to Section 10 or (ii) the Banks receive notice under Section 8.01(h) of any
event for which notice is required to be delivered for any such Real Property.
If the Borrower fails to provide the same within 90 days after such request was
made, the Agents may order the same, the cost of which shall be borne by the
Borrower, and the Borrower shall grant and hereby grants to the Agents and the
Banks and their agents access to such Real Property and specifically grants the
Agents and the Banks an irrevocable non-exclusive license, subject to the rights
of tenants, to undertake such an assessment at any reasonable time upon
reasonable notice to the Borrower, all at the sole and reasonable expense of the
Borrower.
8.07 ERISA. As soon as possible and, in any event, within fifteen
Business 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
deliver to each of the Banks a certificate of the Chief Financial 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: that a
Reportable Event has occurred; that an accumulated funding deficiency, within
the meaning of Section 412 of the Code or Section 302 of ERISA, has been
incurred or an application may be or has been made for a waiver or modification
of the minimum funding standard (including any required installment payments) or
an extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA with respect to a Plan or a Multiemployer Plan; that a
contribution for a material amount required to be made with respect to a Plan, a
Multiemployer Plan or a Foreign Pension Plan has not been timely made; that a
Plan or a Multiemployer Plan has been or may be terminated under Section 4041(c)
or 4042 of ERISA, reorganized, partitioned or declared insolvent under Title IV
of ERISA; that a Plan has an Unfunded Current Liability; that proceedings may be
or have been instituted to terminate or appoint a trustee to administer a Plan
or a Multiemployer Plan which is subject to Title IV of ERISA; that a proceeding
has been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Multiemployer Plan; that the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate will or may incur any material liability
(including any indirect or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064 or 4069
of ERISA or with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980
of the Code or Section 409 or 502(i) or 502(l) of ERISA or under Section
4980B(a) of the Code with respect to a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code or with respect to a Multiemployer Plan under Sections 4201, 4204 or 4212
of ERISA; or that the Borrower or any Subsidiary of the Borrower may incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA)
-53-
<PAGE>
or any Plan which is subject to Title IV of ERISA, any Multiemployer Plan or any
Foreign Pension Plan. Upon written request of any Agent, the Borrower will
deliver to each of the Banks a complete copy of the annual report (on Internal
Revenue Service Form 5500-series) of each Plan (including, to the extent
required, the related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information) required to be
filed with the Internal Revenue Service or any other material financial
information the Borrower or any Subsidiary has with respect to any Plan. In
addition to any certificates or notices delivered to the Banks pursuant to the
first sentence hereof, copies of any material notices pertaining to the
foregoing events received by the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate with respect to any Plan, Multiemployer Plan or Foreign Pension
Plan shall be delivered to the Banks no later than ten Business Days after the
date such notice has been received by the Borrower, the Subsidiary or the ERISA
Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. The Borrower will cause (i)
each of its, and each of its Subsidiaries', fiscal years to end on September 30,
and (ii) each of its, and each of its Subsidiaries', fiscal quarters to end on
December 31, March 31, June 30 and September 30.
8.09 Performance of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, perform all of its obligations under the terms of
each mortgage, indenture, security agreement, loan agreement or credit agreement
and each other material agreement, contract or instrument by which it is bound,
except such non-performances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or the Borrower and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. 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 for sums that have become due and payable which,
if unpaid, might become a Lien not otherwise permitted under Section 9.01(i);
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 generally accepted accounting
principles.
8.11 Interest Rate Protection. Within 90 days following the
Initial Borrowing Date, the Borrower will enter into and thereafter maintain,
Interest Rate Protection Agreements acceptable to the Agents establishing a
fixed or maximum interest rate acceptable to the Agents for an aggregate amount
equal to at least 50% of the aggregate principal amount of all Term Loans then
outstanding.
-54-
<PAGE>
8.12 Additional Security; Further Assurances. (a) The Borrower will,
and will cause each of the Subsidiary Guarantors to, grant to the Collateral
Agent security interests and mortgages in such assets and properties (including
Real Property) of the Borrower and such Subsidiary Guarantors which are of the
type required to be pledged or assigned pursuant to the original Security
Documents and as are not covered by such original Security Documents, and as may
be requested from time to time by the Agents or the Required Banks
(collectively, the "Additional Security Documents"). All such security interests
and mortgages shall be granted pursuant to documentation reasonably satisfactory
in form and substance to the Agents and shall constitute valid and enforceable
perfected security interests and mortgages superior to and prior to the rights
of all third Persons and subject to no other Liens except for Permitted Liens.
The Additional Security Documents or instruments related thereto shall have been
duly recorded or filed in such manner and in such places as are required by law
to establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Security Documents and
all taxes, fees and other charges payable in connection therewith shall have
been paid in full.
(b) The Borrower will, and will cause each of the Subsidiary
Guarantors to, at the expense of the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports 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. Furthermore, the
Borrower will cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance and other related documents as may be reasonably
requested by the Agents to assure itself that this Section 8.12 has been
complied with.
(c) The Borrower agrees that each action required above by this
Section 8.12 shall be completed within 90 days after such action is either
requested to be taken by the Agents or the Required Banks or required to be
taken by the Borrower and the Subsidiary Guarantors pursuant to the terms of
this Section 8.12.
8.13 Foreign Subsidiaries Security. If following a change in the
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Agents does not within 30 days after a
request from the Agents or the Required Banks deliver evidence, in form and
substance mutually satisfactory to the Agents and the Borrower, with respect to
any Foreign Subsidiary of the Borrower which has not already had all of its
stock pledged pursuant to the Pledge Agreement that (i) a pledge of 66-2/3% or
more of the total combined voting power of all classes of capital stock of such
Foreign Subsidiary entitled to vote, (ii) the entering into by such Foreign
Subsidiary of a security agreement in substantially the form of the Security
Agreement and (iii) the entering into by such Foreign Subsidiary of a guaranty
in substantially the form of the Subsidiaries Guaranty, in any such case would
cause the undistributed earnings of such Foreign Subsidiary as determined for
Federal income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax
-55-
<PAGE>
purposes, then in the case of a failure to deliver the evidence described in
clause (i) above, unless the Borrower determines in good faith and notifies the
Agents that such action will result in material negative tax implications to the
Borrower or any of its Subsidiaries, that portion of such Foreign Subsidiary's
outstanding capital stock not theretofore pledged pursuant to the Pledge
Agreement shall be pledged to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement
in substantially similar form, if needed), and in the case of a failure to
deliver the evidence described in clause (ii) above unless the Borrower
determines in good faith and notifies the Agents that such action will result in
material negative tax implications to the Borrower or any of its Subsidiaries,
such Foreign Subsidiary (to the extent that same is a Wholly-Owned Foreign
Subsidiary and would otherwise constitute a Subsidiary Guarantor) will execute
and deliver the Security Agreement (or another security agreement in
substantially similar form, if needed), granting the Collateral Agent for the
benefit of the Secured Creditors a security interest in all of such Foreign
Subsidiary's assets and securing the Obligations of the Borrower under the
Credit Documents and under any Interest Rate Protection Agreement or Other
Hedging Agreement and, in the event the Subsidiaries Guaranty shall have been
executed by such Foreign Subsidiary, the obligations of such Foreign Subsidiary
thereunder, and in the case of a failure to deliver the evidence described in
clause (iii) above unless the Borrower determines in good faith and notifies the
Agents that such action will result in material negative tax implications to the
Borrower or any of its Subsidiaries, such Foreign Subsidiary (to the extent that
same is a Wholly-Owned Foreign Subsidiary and would otherwise constitute a
Subsidiary Guarantor) will execute and deliver the Subsidiaries Guaranty (or
another guaranty in substantially similar form, if needed), guaranteeing the
Obligations of the Borrower under the Credit Documents and under any Interest
Rate Protection Agreement or Other Hedging Agreement, in each case to the extent
that the entering into such Security Agreement or Subsidiaries Guaranty is
permitted by the laws of the respective foreign jurisdiction and with all
documents delivered pursuant to this Section 8.13 to be in form and substance
reasonably satisfactory to the Agents.
8.14 Change of Name. Within 7 days of the Initial Borrowing Date, the
Borrower shall cause SKL to change its name to "Snorkel International, Inc."
SECTION 9. Negative Covenants. The Borrower hereby covenants and
agrees that on and after the Effective Date and until the Total Commitments and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder and
thereunder, are paid in full:
9.01 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 (real or personal, tangible or intangible) of
the Borrower or any of its Subsidiaries, 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 with recourse to the Borrower or any of
its Subsidiaries),
-56-
<PAGE>
or assign any right to receive income 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; provided that the provisions of this Section 9.01
shall not prevent the creation, incurrence, assumption or existence of the
following (Liens described below are herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes, assessments or governmental charges
or levies being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and which (x) do
not in the aggregate materially detract from the value of the Borrower's or
such Subsidiary's property or assets or materially impair the use thereof
in the operation of the business of the Borrower or such Subsidiary or
(y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien;
(iii) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Schedule VIII,
without giving effect to any extensions or renewals thereof;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to this Agreement and the Security
Documents;
(vi) Liens upon assets of the Borrower or any of its Subsidiaries
subject to Capitalized Lease Obligations to the extent such Capitalized
Lease Obligations are permitted by Section 9.04(iii), provided that (x)
such Liens only serve to secure the payment of Indebtedness arising under
such Capitalized Lease Obligation and (y) the Lien encumbering the asset
giving rise to the Capitalized Lease Obligation does not encumber any other
asset of the Borrower or any Subsidiary of the Borrower;
(vii) Liens placed upon equipment or machinery used in the ordinary
course of business of the Borrower or any of its Subsidiaries at the time
of acquisition thereof by the Borrower or any such Subsidiary to secure
Indebtedness incurred to pay all or a portion of the purchase price thereof
or to secure Indebtedness incurred solely for the purpose of financing the
acquisition of any such equipment or machinery or extensions, renewals or
replacements of any of the foregoing for the same or a lesser amount,
provided that (x) the aggregate outstanding principal amount of all
-57-
<PAGE>
Indebtedness secured by Liens permitted by this clause (vii), when added to
the amount outstanding under clause 9.04(iii), shall not at any time exceed
$5,000,000 and (y) in all events, the Lien encumbering the equipment or
machinery so acquired does not encumber any other asset of the Borrower or
such Subsidiary;
(viii) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each case
not securing Indebtedness and not materially interfering with the conduct
of the business of the Borrower or any of its Subsidiaries;
(ix) Liens arising from precautionary UCC financing statement filings
regarding operating leases;
(x) Liens arising out of judgments, decrees or attachments not
constituting an Event of Default under Section 10.09, provided that no cash
or other property shall be pledged by the Borrower or any Subsidiary as
security therefor;
(xi) statutory and common law landlords' liens under leases to which
the Borrower or any of its Subsidiaries is a party;
(xii) Liens (other than Liens imposed under ERISA) incurred in the
ordinary course of business in connection with workers compensation claims,
unemployment insurance and social security benefits and Liens securing the
performance of bids, tenders, leases and contracts in the ordinary course
of business, statutory obligations, surety bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for borrowed
money), provided that the aggregate value of all cash and property
encumbered by consensual Liens permitted pursuant to this clause (xii)
shall not at any time exceed $500,000;
(xiii) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Borrower in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition, provided that (x) any Indebtedness that is secured by such
Liens is permitted to exist under Section 9.04(vii) and (y) such Liens are
not incurred in connection with, or in contemplation or anticipation of,
such Permitted Acquisition and do not attach to any other asset of the
Borrower or any of its Subsidiaries;
In connection with the granting of Liens of the type described in clauses (vi),
(vii) and (xiii) of this Section 9.01 by the Borrower or any of its
Subsidiaries, the Administrative Agent and the Collateral Agent shall be
authorized to take any actions deemed appropriate by it in connection therewith
(including, without limitation, by executing appropriate lien releases or lien
subordination agreements in favor of the holder or holders of such Liens, in
either case solely with respect to the item or items of equipment or other
assets subject to such Liens).
-58-
<PAGE>
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. The
Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part of
its property or assets, or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of any
Person (or agree to do any of the foregoing at any future time), except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries shall be
permitted to the extent permitted by Section 9.07;
(ii) each of the Borrower and its Subsidiaries may in the ordinary
course of business sell, lease or otherwise dispose of any equipment or
materials which, in the reasonable judgment of such Person, are obsolete,
unusable or worn out;
(iii) each of the Borrower and its Subsidiaries may sell assets (other
than the capital stock of any Subsidiary Guarantor), so long as (w) no
Default or Event of Default then exists or would result therefrom, (x) each
such sale is in an arms-length transaction and the Borrower or the
respective Subsidiary receives at least fair market value (as determined in
good faith by the Borrower or such Subsidiary, as the case may be), (y) at
least 80% of the total consideration received by the Borrower or such
Subsidiary is cash and paid at the time of the closing of such sale and (z)
the aggregate amount of the proceeds received from all assets sold pursuant
to this clause (iii) shall not exceed $250,000 in any fiscal year of the
Borrower;
(iv) each of the Borrower and its Subsidiaries may sell assets (other
than the capital stock of any Subsidiary Guarantor), so long as (v) no
Default or Event of Default then exists or would result therefrom, (w) each
such sale is in an arm's-length transaction and the Borrower or the
respective Subsidiary receives at least fair market value (as determined in
good faith by the Borrower or such Subsidiary, as the case may be), (x) at
least 80% of the total consideration received by the Borrower or such
Subsidiary is cash and is paid at the time of the closing of such sale, (y)
the Net Sale Proceeds therefrom are applied as (and to the extent) required
by Section 4.02(e) and (z) the aggregate amount of the proceeds received
from all assets sold pursuant to this clause (iv) shall not exceed
$10,000,000 in any fiscal year of the Borrower;
(v) Investments may be made to the extent permitted by Section 9.05;
(vi) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business (so long as
any such lease does not create a Capitalized Lease Obligation except to the
extent permitted by Section 9.04(iv));
-59-
<PAGE>
(vii) each of the Borrower and its Subsidiaries may make sales of
inventory in the ordinary course of business;
(viii) the Transaction (including the earn-out payment described in
Section 1.4(b) to the Asset Purchase Agreement) shall be permitted;
(ix) the Borrower and each of its Subsidiaries may acquire assets or
the capital stock of any Person, including by merger, so long as the
survivor of such merger is, or becomes at such time, a Subsidiary Guarantor
(any such acquisition, a "Permitted Acquisition" and the date of
consummation of any such acquisition, an "Acquisition Date"), provided that
(i) the sum of the aggregate cash and Cash Equivalents plus the aggregate
market value of all other consideration paid by the Borrower and its
Subsidiaries (including any Indebtedness assumed by the Borrower or any
Subsidiary) in connection with (x) any one such Permitted Acquisition shall
not exceed $40,000,000 and (y) all such Permitted Acquisitions shall not
exceed $60,000,000; (ii) no Default or Event of Default exists at the time
of such acquisition or will exist as a result thereof; (iii) in respect of
each Permitted Acquisition (or of all Permitted Acquisitions closing on the
same date), the Borrower shall have delivered to the Agents an officer's
certificate executed by an authorized officer of the Borrower demonstrating
that on a Pro Forma Basis determined as if such Permitted Acquisition (or
Acquisitions) had been consummated (and any Indebtedness to be incurred to
finance such Permitted Acquisition had been incurred) on the first day of
the last Test Period of the Borrower then last ended, the Borrower would
have been in compliance with Sections 9.08 through 9.10, inclusive, for
such Test Period; and (iv) the principal place of business of, and at least
80% of the assets of, each such Acquired Business shall be located in the
United States;
(x) the Borrower may transfer any assets to a Subsidiary Guarantor,
and any Subsidiary of the Borrower may merge or consolidate with and into,
or be liquidated into, or transfer any of its assets to, the Borrower or
any Subsidiary Guarantor, in each case, so long as (i) the Borrower or the
respective Subsidiary Guarantor is the surviving corporation of any such
transaction, (ii) in the case of any such transaction involving a
non-Wholly-Owned Subsidiary, the only consideration paid to third parties
in connection therewith are shares of common stock of the Borrower and
(iii) in the case of any transaction between or among the Borrower and the
Subsidiary Guarantors, all Liens granted pursuant to the Security Documents
on any property or assets involved shall remain in full force and effect
(with at least the same priority as such Lien would have had if such
transfer pursuant to this clause (x) had not occurred);
(xi) any Foreign Subsidiary of the Borrower may merge or consolidate
with and into, or be liquidated into, or transfer any of its assets to, the
Borrower or any Foreign Subsidiary so long as in the case of any such
merger or consolidation, the
-60-
<PAGE>
Borrower or any Foreign Subsidiary is the surviving corporation of any such
transaction; and
(xii) each of the Borrower and its Subsidiaries may sell Cash
Equivalents permitted to be held by them pursuant to Section 9.05(ii) so
long as each such sale is for cash and at fair market value (as determined
in good faith by the Borrower or such Subsidiary, as the case may be).
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 9.02 (other than to the Borrower or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Liens created by the Security
Documents, and the Administrative Agent and the Collateral Agent shall be
authorized to take any actions deemed appropriate in order to effect the
foregoing.
9.03 Dividends. The Borrower will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to the
Borrower or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay cash Dividends to the
Borrower or any Subsidiary Guarantor;
(ii) so long as there shall exist no Default or Event of Default (both
before and after giving effect to the payment thereof), the Borrower may
repurchase outstanding shares of its common stock (or options to purchase such
common stock) following the death, disability or termination of employment of
employees of the Borrower or any of its Subsidiaries, provided that the
aggregate amount of Dividends paid by the Borrower pursuant to this clause (ii)
shall not exceed $250,000 in any fiscal year of the Borrower; and
(iii) so long as there shall be no Default or Event of Default (both
before and after giving effect to the payment thereof), the Borrower may pay
cash Dividends to its shareholders in an amount not to exceed in the aggregate
for all such Dividends, the then applicable Cumulative Net Income Amount.
9.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Existing Indebtedness outstanding on the Initial Borrowing Date
and listed on Schedule VI, without giving effect to any subsequent
extension, renewal or refinancing thereof;
-61-
<PAGE>
(iii) Indebtedness of the Borrower and its Subsidiaries evidenced by
Capitalized Lease Obligations to the extent permitted pursuant to Section
9.07, provided that in no event shall the aggregate principal amount of
Capitalized Lease Obligations permitted by this clause (iii), when added to
the amount outstanding under clause 9.01(vii), exceed $5,000,000 at any
time outstanding;
(iv) Indebtedness subject to Liens permitted under Section 9.01(vii);
(v) intercompany Indebtedness to the extent permitted by
Sections 9.05;
(vi) a single issuance of one or more tranches of unsecured
subordinated Indebtedness of the Borrower (the "New Subordinated Notes"),
so long as (i) the aggregate outstanding principal amount thereof does not
exceed $100,000,000 (less any repayments of principal thereof), (ii) at
least 10 Business Days prior to the issuance thereof, the Borrower shall
have delivered to the Agents and each of the Banks substantially final
drafts of the documents pursuant to which the New Subordinated Notes are to
be issued and with any changes thereto made after the initial delivery of
such documents to be delivered to the Agents and with any significant
changes thereto made after such initial delivery to be delivered to each of
the Banks at least three days prior to the issuance of such New
Subordinated Notes, (iii) the final maturity date thereof is at least one
year beyond the Term Loan Maturity Date, (iv) there are no required
amortization, mandatory redemption or sinking fund or similar provisions
prior to the date which is one year after the Term Loan Maturity Date, (v)
all other terms and conditions thereof (including, without limitation,
interest rates, covenants, defaults, remedies and subordination provisions)
are reasonably satisfactory to the Agents, (vi) no Default or Event of
Default then exists or would result therefrom and (vii) the Net Debt
Proceeds from such New Subordinated Notes shall be applied to repay Term
Loans to the extent outstanding at the time of such issuance (or, if prior
to the termination of the Term Loan Commitment, to reduce the Total Term
Loan Commitment) with any remaining amount of such Net Debt Proceeds to be
applied to reduce any outstanding Revolving Loans (with no reduction in the
respective commitments thereunder); and
(vii) Indebtedness assumed by the Borrower or any Subsidiary in
connection with a Permitted Acquisition, provided that (x) such
Indebtedness was not incurred in connection with or in contemplation of
such Permitted Acquisition and (y) such Indebtedness does not exceed 20% of
the aggregate consideration paid by the Borrower and/or its Subsidiaries in
connection with such Permitted Acquisition;
(viii) Indebtedness of the Borrower and its Subsidiaries consisting of
guaranty and repurchase obligations entered into in the ordinary course of
business in connection with their dealer floor plan and rental fleet
financing arrangements; and
-62-
<PAGE>
(ix) additional unsecured Indebtedness of the Borrower and its
Subsidiaries not to exceed $7,500,000 in aggregate principal amount at any
time outstanding.
9.05 Advances, Investments and Loans. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents (each of the foregoing an "Investment" and,
collectively, "Investments"), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary terms, and the Borrower and its Subsidiaries may own Investments
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;
(ii) the Borrower and its Subsidiaries may acquire and hold or invest
in cash and Cash Equivalents;
(iii) the Borrower and its Subsidiaries may hold the Investments held
by them on the Initial Borrowing Date and described on Schedule IX,
provided that any additional Investments made with respect thereto shall be
permitted only if independently permitted under the other provisions of
this Section 9.05;
(iv) the Borrower and its Subsidiaries may make loans and advances in
the ordinary course of business to their respective employees so long as
the aggregate principal amount thereof at any time outstanding (determined
without regard to any write-downs or write-offs of such loans and advances)
shall not exceed $1,000,000;
(v) the Borrower may enter into Interest Protection Agreements in
respect of the Obligations;
(vi) the Borrower and the Subsidiary Guarantors may make intercompany
loans and advances between or among one another (collectively,
"Intercompany Loans"), so long as each Intercompany Loan shall be evidenced
by an Intercompany Note that is pledged to the Collateral Agent pursuant to
the Pledge Agreement;
(vii) the Borrower and its Subsidiaries may hold promissory notes
issued by a purchaser in connection with an asset sale permitted under
Section 9.02(iii) and (iv);
-63-
<PAGE>
(viii) the Borrower and the Subsidiary Guarantors may make Investments
in addition to the loans and advances described in Section 9.05(vi) between
or among one another;
(ix) the Borrower and its Subsidiaries may make Permitted Acquisitions
effected in accordance with the requirements of Section 9.02(ix); and
(x) the Borrower and its Subsidiaries may make Investments in addition
to the Investments described above in this Section 9.05 not to exceed
$2,000,000 in aggregate amount at any time outstanding.
9.06 Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that the following in
any event shall be permitted: (i) Dividends may be paid to the extent provided
in Section 9.03, (ii) loans may be made and other transactions may be entered
into by the Borrower and its Subsidiaries to the extent permitted by Sections
9.02, 9.04, 9.05 and 9.07, (iii) customary fees may be paid to non-officer
directors of the Borrower and (iv) the Borrower and its Subsidiaries may pay
management, advisory, consulting and similar fees to the Borrower, any
Wholly-Owned Subsidiary of the Borrower and Harbor Group Industries, Inc. and
its Affiliates.
9.07 Capital Expenditures. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
during any fiscal year of the Borrower beginning on or after October 1, 1997
(taken as one accounting period), the Borrower and its Subsidiaries may make
Capital Expenditures so long as the aggregate amount of such Capital
Expenditures does not exceed $15,000,000 for any such fiscal year, provided that
any such amount not utilized in any fiscal year may be applied to Capital
Expenditures in the next succeeding fiscal year, provided further that any
amounts so carried forward shall not be considered in the determination of
amounts available to be carried forward to any succeeding year.
(b) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make additional Capital Expenditures (which Capital Expenditures will not be
included in any determination under Section 9.07(a)) with the Net Sale Proceeds
of Asset Sales to the extent such proceeds are not required to be applied to
repay Term Loans (or reduce the Total Revolving Loan Commitment) pursuant to
Section 4.02(d) and such proceeds are reinvested as required by Section 4.02(d).
(c) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make additional Capital Expenditures (which Capital Expenditures will not be
included in any
-64-
<PAGE>
determination under Section 9.07(a)) with the insurance proceeds received by the
Borrower or any of its Subsidiaries from any Recovery Event so long as such
Capital Expenditures are to replace or restore any properties or assets in
respect of which such proceeds were paid or contractually committed to be paid
within 180 days following the date of the receipt of such insurance proceeds to
the extent such insurance proceeds are not required to be applied to repay Term
Loans (or reduce the Total Revolving Loan Commitment) pursuant to Section
4.02(f).
(d) Notwithstanding the foregoing, the Borrower may make additional
Capital Expenditures (which Capital Expenditures will not be included in any
determination under Section 9.07(a)) constituting Permitted Acquisitions
effected in accordance with the requirements of Section 9.02(viii).
9.08 Consolidated Fixed Charge Coverage Ratio. The Borrower will not
permit the Consolidated Fixed Charge Coverage Ratio for the Test Period ending
on December 31, 1997 and for each Test Period ending thereafter to be less than
1.20:1:00.
9.09 Consolidated Interest Coverage Ratio. The Borrower will not
permit the Consolidated Interest Coverage Ratio for any Test Period ending on
the last day of a fiscal quarter set forth below to be less than the ratio set
forth opposite such fiscal quarter below:
Fiscal Quarter Ratio
March 31, 1998 4.00:1.00
June 30, 1998 4.00:1.00
September 30, 1998 5.00:1.00
December 31, 1998 5.00:1.00
March 31, 1999 5.00:1.00
June 30, 1999 5.00:1.00
September 30, 1999 5.50:1.00
Thereafter 5.50:1.00
9.10 Maximum Leverage Ratio. The Borrower will not permit the Leverage
Ratio at any time during a period set forth below to be greater than the ratio
set forth opposite such period below:
Fiscal Quarter Ratio
March 31, 1998 2.75:1.00
June 30, 1998 2.75:1.00
September 30, 1998 2.50:1.00
December 31, 1998 2.50:1.00
March 31, 1999 2.50:1.00
June 30, 1999 2.50:1.00
-65-
<PAGE>
Fiscal Quarter Ratio
September 30, 1999 2.25:1.00
December 31, 1999 2.25:1.00
March 31, 2000 2.25:1.00
June 30, 2000 2.25:1.00
September 30, 2000 2.00:1.00
December 31, 2000 2.00:1.00
March 31, 2001 1.75:1.00
Thereafter 1.75:1.00
9.11 Limitation on Voluntary Payments and Modifications of
Subordinated Limitation on Voluntary Payments and Modifications of Subordinated
Indebtedness; Modifications of Certificate of Incorporation and Certain Other
Agreements; etc. The Borrower will not, and will not permit any of its
Subsidiaries to, (i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of, or
make any prepayment or redemption as a result of any asset sale, change of
control or similar event of (including, in each case, without limitation, by way
of depositing with the trustee with respect thereto or any other Person, money
or securities before due for the purpose of paying when due) any New
Subordinated Notes (after the issuance thereof), (ii) amend or modify, or permit
the amendment or modification of, any provision of the New Subordinated Notes or
any New Subordinated Note Documents, in each case after the issuance of the New
Subordinated Notes, (iii) amend, modify or change its certificate of
incorporation (including, without limitation, by the filing or modification of
any certificate of designation) (or the equivalent organizational documents) or
any agreement entered into by it with respect to its capital stock (including
any Shareholders' Agreement), or enter into any new agreement with respect to
its capital stock, unless such amendment, modification, change or other action
contemplated by this clause (iii) could not reasonably be expected to be adverse
to the interests of the Banks in any material respect, provided that SKL may in
any case amend its certificate of incorporation to the extent necessary to
comply with Section 8.14, and (iv) amend, modify or change any provision of any
Tax Sharing Agreement or enter into any new tax sharing agreement, tax
allocation agreement or similar agreement, unless such amendment, modification,
change or other action contemplated by this clause (iv) cannot reasonably be
expected to be adverse to the interests of the Banks in any material respect.
9.12 Limitation on Certain Restrictions on Subsidiaries. The Borrower
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) 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
the Borrower, or pay any Indebtedness owed to the Borrower or any Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary of the Borrower, except for
-66-
<PAGE>
such encumbrances or restrictions existing under or by reason of (i) applicable
law, (ii) this Agreement and the other Credit Documents and (iii) restrictions
on the transfer of any asset subject to a Lien permitted by this Agreement.
9.13 Limitation on Issuance of Capital Stock. (a) The Borrower will
not, and will not permit any of its Subsidiaries to, issue (i) any preferred
stock or (ii) any common stock redeemable at the option of the holder thereof.
(b) The Borrower will not permit any of its Subsidiaries to issue any
capital stock (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and issuances which do not decrease the
percentage ownership of the Borrower or any of its Subsidiaries in any class of
the capital stock of such Subsidiary, (iii) to qualify directors to the extent
required by applicable law and (iv) for issuances by newly created or acquired
Subsidiaries in accordance with the terms of this Agreement.
9.14 Business. The Borrower will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
businesses in which the Borrower and its Subsidiaries are engaged on the Initial
Borrowing Date (after giving effect to the Transaction) and reasonable
extensions thereof and those reasonably related or complementary thereto.
9.15 Limitation on Creation of Subsidiaries. Notwithstanding anything
to the contrary contained in this Agreement, the Borrower will not, and will not
permit any of its Subsidiaries to, establish, create or acquire after the
Effective Date any Subsidiary; provided that, the (A) Borrower and its
Wholly-Owned Subsidiaries shall be permitted to establish or create Wholly-Owned
Subsidiaries so long as, in each case, (i) at least 15 days' prior written
notice thereof is given to the Agents (or such shorter period of time as is
acceptable to the Agents), (ii) the capital stock of such new Subsidiary (or 65%
of the outstanding capital stock of a Foreign Subsidiary) is promptly pledged
pursuant to, and to the extent required by, this Agreement and the Pledge
Agreement and the certificates, if any, representing such stock, together with
stock powers duly executed in blank, are delivered to the Collateral Agent,
(iii) such new Subsidiary (other than a Foreign Subsidiary except to the extent
otherwise required pursuant to Section 8.13) promptly executes a counterpart of
the Subsidiaries Guaranty, the Pledge Agreement and the Security Agreement, and
(iv) to the extent requested by the Agents or the Required Banks, takes all
actions required pursuant to Section 8.12 and (B) Subsidiaries may be acquired
pursuant to Permitted Acquisitions so long as, in each such case the actions
specified in preceding clause (A) shall be taken. In addition, each new
Subsidiary that is required to execute any Credit Document shall execute and
deliver, or cause to be executed and delivered, all other relevant documentation
of the type described in Section 5 as such new Subsidiary would have had to
deliver if such new Subsidiary were a Credit Party on the Initial Borrowing
Date.
-67-
<PAGE>
SECTION 10. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment when due
of any principal of any Loan or any Note, or (ii) default, and such default
shall continue for more than two Business Days, in the payment when due of any
interest on any Loan or Note, any Unpaid Drawing or any Fees or any other
amounts owing hereunder or thereunder; or
10.02 Representations, etc. Any representation, warranty or statement
made by any Credit Party herein or in any other Credit Document or in any
certificate delivered to any Agent or any Bank pursuant hereto or thereto shall
prove to be untrue in any material respect on the date as of which made or
deemed made; or
10.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(f)(i), 8.08 or 8.11 or Section 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement or any other Credit Document (other than those set
forth in Sections 10.01 and 10.02) and such default shall continue unremedied
for a period of 30 days after written notice thereof to the defaulting party by
any Agent or the Required Banks; or
10.04 Default Under Other Agreements. (i) The Borrower or any of its
Subsidiaries shall (x) default in any payment of any Indebtedness (other than
the Notes) beyond the period of grace or cure, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y) default
in the observance or performance of any agreement or condition relating to any
Indebtedness (other than the Notes) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause (determined without regard
to whether any notice is required, but beyond the period of grace or cure, if
any, provided in the instrument or agreement under which such Indebtedness was
created), any such Indebtedness to become due prior to its stated maturity, or
(ii) any Indebtedness (other than the Notes) of the Borrower or any of its
Subsidiaries shall be declared to be (or shall become) due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof, provided that it shall not be a Default or
an Event of Default under this Section 10.04 unless the aggregate principal
amount of all Indebtedness as described in preceding clauses (i) and (ii) is at
least $2,000,000; or
10.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries 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 an involuntary case is commenced against the
Borrower or any of its Subsidiaries, and the
-68-
<PAGE>
petition is not controverted within 15 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any of its Subsidiaries, or the Borrower or any of
its Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or any of its Subsidiaries, or there is
commenced against the Borrower or any of its Subsidiaries any such proceeding
which remains undismissed for a period of 60 days, or the Borrower or any of its
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower or
any of its Subsidiaries suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or the Borrower or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or any corporate action is
taken by the Borrower or any of its Subsidiaries for the purpose of effecting
any of the foregoing; or
10.06 ERISA . (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan or
Multiemployer Plan which is subject to Title IV of ERISA shall have had or is
likely to have a trustee appointed to administer such Plan or Multiemployer
Plan, any Plan or Multiemployer Plan which is subject to Title IV of ERISA is,
shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan or Multiemployer Plan shall have
an Unfunded Current Liability, a contribution required to be made with respect
to a Plan, a Multiemployer Plan or a Foreign Pension Plan has not been timely
made, the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate has
incurred or is likely to incur any liability to or on account of a Plan or
Multiemployer Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code or on account of a group health plan (as defined in Section 607(1) of ERISA
or Section 4980B(g)(2) of the Code) under Section 4980B(a) of the Code, or the
Borrower or any Subsidiary of the Borrower has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) that provide benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or Plans or
Foreign Pension Plans; (b) 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 (c) such lien, security interest or
liability, individually, and/or in the aggregate, has had, or could reasonably
be expected to have, a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a whole; or
-69-
<PAGE>
10.07 Security Documents. At any time after the execution and delivery
thereof, any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral, in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except as permitted by
Section 9.01), and subject to no other Liens (except as permitted by Section
9.01); or
10.08 Subsidiaries Guaranty. At any time after the execution and
delivery thereof, the Subsidiaries Guaranty or any provision thereof shall cease
to be in full force or effect as to any Subsidiary Guarantor, or any Subsidiary
Guarantor or any Person acting by or on behalf of such Subsidiary Guarantor
shall deny or disaffirm such Subsidiary Guarantor's obligations under the
Subsidiaries Guaranty or any Subsidiary Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any Subsidiary of the Borrower involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by a reputable and solvent insurance company) and such judgments and
decrees either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 30 consecutive
days, and the aggregate amount of all such judgments exceeds $2,000,000; or
10.10 Change of Control. A Change of Control shall occur:
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of any Agent, any Bank or
the holder of any Note to enforce its claims against any Credit Party (provided,
that, if an Event of Default specified in Section 10.05 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 Commitments terminated, whereupon all Commitments of each Bank shall
forthwith terminate immediately and any Commitment Commission shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans and the Notes 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 each Credit Party; (iii)
terminate any Letter of Credit which may be terminated in accordance with its
terms; (iv) direct the Borrower to pay (and the Borrower agrees that upon
receipt of such notice, or upon the occurrence of an Event of Default specified
in Section 10.05 with respect to the Borrower, it will pay) to the Collateral
Agent at the Payment Office such additional amount of cash, to be held as
security by the Collateral
-70-
<PAGE>
Agent, as is equal to the aggregate Stated Amount of all Letters of Credit
issued for the account of the Borrower and then outstanding; (v) enforce, as
Collateral Agent, all of the Liens and security interests created pursuant to
the Security Documents; and (vi) apply any cash collateral held by the
Administrative Agent pursuant to Section 4.02 to the repayment of the
Obligations.
SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"A Term Note" shall have the meaning provided in Section 1.05(a).
"Acquired Business" shall mean the assets acquired pursuant to the
Acquisition Documents.
"Acquisition" shall mean the purchase by SKL, a Wholly-Owned
Subsidiary of the Borrower, of the Acquired Business pursuant to the Acquisition
Documents.
"Acquisition Date" shall have the meaning provided in Section
9.02(ix).
"Acquisition Documents" shall mean the Asset Purchase Agreement and
all other agreements and documents entered into in connection with the
Acquisition.
"Additional Security Documents" shall have the meaning provided in
Section 8.12.
"Adjusted Consolidated Cash Income" shall mean, for any period,
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense, non-cash interest expense) and
net non-cash losses which were included in arriving at Consolidated Net Income
for such period less the sum of the amount of all net non-cash gains which were
included in arriving at Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities at such time.
"Adjusted RL Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank, such Bank's RL Percentage and (y) at a time when a Bank
Default exists, (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Loan
-71-
<PAGE>
Commitment at such time by the Adjusted Total Revolving Loan Commitment at such
time, it being understood that all references herein to Revolving Loan
Commitments and the Adjusted Total Revolving Loan Commitment at a time when the
Total Revolving Loan Commitment or Adjusted Total Revolving Loan Commitment, as
the case may be, has been terminated shall be references to the Revolving Loan
Commitments or Adjusted Total Revolving Loan Commitment, as the case may be, in
effect immediately prior to such termination, provided that (A) a Bank's
Adjusted RL Percentage shall only change upon the occurrence of a Bank Default
from that in effect immediately prior to such Bank Default to the extent that
after giving effect to such Bank Default, and any repayment of Revolving Loans
and Swingline Loans at such time pursuant to Section 4.02(a) or otherwise, the
sum of (i) the aggregate outstanding principal amount of Revolving Loans of such
Bank plus (ii) such Bank's new Adjusted RL Percentage of the aggregate
outstanding principal amount of Swingline Loans and the Letter of Credit
Outstandings, would not exceed the Revolving Loan Commitment of such Bank at
such time; (B) the changes to the Adjusted RL Percentage that would have become
effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Banks, plus (ii) the aggregate outstanding principal amount of
Swingline Loans, plus (iii) the Letter of Credit Outstandings, is equal to or
less than the Adjusted Total Revolving Loan Commitment; and (C) if (i) a
Non-Defaulting Bank's Adjusted RL Percentage is changed pursuant to the
preceding clause (B) and (ii) any repayment of such Bank's Revolving Loans or of
Unpaid Drawings or of Swingline Loans that were made during the period
commencing after the date of the relevant Bank Default and ending on the date of
such change to its Adjusted RL Percentage must be returned to the Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted RL Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted RL Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted RL
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted RL Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equalling such Bank's Revolving Loan Commitment at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any time the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
all Defaulting Banks.
"Administrative Agent" shall mean First Union National Bank, in its
capacity as Administrative Agent for the Banks hereunder, and shall include any
successor to the Administrative Agent appointed pursuant to Section 12.09.
"Affected Eurodollar Loans" shall have the meaning provided in Section
4.02(g).
-72-
<PAGE>
"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 another
Person if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean and include the Administrative Agent and the
Syndication Agent.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
hereof), extended, renewed, refinanced or replaced from time to time.
"Applicable Base Rate Margin" (i) for any calculation of interest
payable in respect of the period from and including the Initial Borrowing Date
to but excluding the first Start Date (as defined below) to occur after the
Initial Borrowing Date, shall mean 0.00%, and (ii) from and after the first day
of any Applicable Pricing Period (the "Start Date") (commencing with the first
Start Date to occur after the Initial Borrowing Date) to and including the last
day of such Applicable Pricing Period (the "End Date"), shall mean the
respective percentage per annum set forth in clause (A) or (B) below if, but
only if, as of the last day of the most recent fiscal quarter of the Borrower
ended immediately prior to such Start Date (the "Test Date") the condition in
clause (A) or (B) below is met:
(A) 0.125% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be greater
than 2.50:1.0; or
(B) 0% if, but only if, as of the Test Date for such Start Date, the
Leverage Ratio for the Test Period ended on such Test Date shall be equal to or
less than 2.50:1.0.
Notwithstanding anything to the contrary contained above in this definition, (a)
the Applicable Base Rate Margin shall be 0.125% at all times when financial
statements have not been delivered when required pursuant to Section 8.01(a) or
(b), as the case may be, and (b) on and after the date on which the Borrower has
issued New Subordinated Notes in an aggregate principal amount of at least
$100,000,000, each of the percentage margins set forth above shall be reduced by
0.125% (but not below 0%).
"Applicable Commitment Commission Percentage" (i) for any calculation
of the Commitment Commission payable in respect of the period from and including
the Effective Date to but excluding the first Start Date to occur after the
Effective Date, shall mean 0.375%, and (ii) after any Start Date (commencing
with the first Start Date to occur after the Initial Borrowing Date) to and
including the corresponding End Date, shall mean the
-73-
<PAGE>
respective percentage per annum set forth in clause (A) or (B) below if, but
only if, as of the Test Date for such Start Date the condition set forth in
clause (A) or (B) below is met:
(A) 0.375% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
greater than 2.00:1.00; or
(B) 0.250% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
equal to or less than 2.00:1.00.
Notwithstanding anything to the contrary contained above in this definition, the
Applicable Commitment Commission Percentage shall be 0.375% at all times when
financial statements have not been delivered when required pursuant to Section
8.01(a) or (b), as the case may be.
"Applicable Eurodollar Margin" (i) for any calculation of interest
payable in respect of the period from and including the Initial Borrowing Date
to but excluding the first Start Date to occur after the Initial Borrowing Date,
shall mean 1.00%, and (ii) from and after any Start Date (commencing with the
first Start Date to occur after the Initial Borrowing Date) to and including the
corresponding End Date, shall mean the respective percentage per annum set forth
in clause (A)-(F) below if, but only if, as of the Test Date for such Start Date
the condition in clause (A)-(F) below is met:
(A) 1.125% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
greater than 2.5:1.0; or
(B) 1.000% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
equal to or less than 2.50:1.0 but greater than 2.25:1.0; or
(C) 0.875% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
equal to or less than 2.25:1.0 but greater than 2.00:1.0; or
(D) 0.750% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
equal to or less than 2.00:1.0 but greater than 1.75:1.0; or
(E) 0.625% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
equal to or less than 1.75:1.0 but greater than 1.50:1.0; or
(F) 0.500% if, but only if, as of the Test Date for such Start Date,
the Leverage Ratio for the Test Period ended on such Test Date shall be
equal to or less than 1.5:1.0.
-74-
<PAGE>
Notwithstanding anything to the contrary contained above in this definition, (a)
the Applicable Eurodollar Margin shall be 1.125% at all times when financial
statements have not been delivered when required pursuant to Section 8.01(a) or
(b), as the case may be, and (b) on and after the date on which the Borrower has
issued New Subordinated Notes in an aggregate principal amount of at least
$100,000,000, each of the percentage margins set forth above shall be reduced by
0.125%.
"Applicable Pricing Period" shall mean each period which shall
commence on a date five Business Days after the date on which the financial
statements are delivered pursuant to Section 8.01(a) or (b) and which shall end
on the earlier of (i) the date five Business Days after the date of actual
delivery of the next financial statements pursuant to Section 8.01(a) or (b) and
(ii) the latest date on which the next financial statements are required to be
delivered pursuant to Section 8.01(a) or (b) if such financial statements have
not been delivered on or prior to such date.
"Asset Purchase Agreement" shall mean the Asset Purchase Agreement
dated as of July 19, 1997, by and among Figgie, various Subsidiaries of Figgie
and SKL and the amendment thereto dated as of November 9, 1997.
"Asset Sale" shall mean any sale, transfer or other disposition by the
Borrower or any of its Subsidiaries to any Person (including by way of
redemption by such Person) other than to the Borrower or a Wholly-Owned
Subsidiary of the Borrower of any asset (including, without limitation, any
capital stock or other securities of, or equity interests in, another Person) of
the Borrower or any of its Subsidiaries, other than any sale, transfer or
disposition permitted by Sections 9.02(ii), (iii), (v), (vii), (xi) and (xii).
"Assignment and Assumption Agreement" shall mean an Assignment and
Assumption Agreement substantially in the form of Exhibit K (appropriately
completed).
"B Term Note" shall have the meaning provided in Section 1.05(a).
"Bank" shall mean each Person listed on Schedule I, as well as any
Person which becomes a "Bank" hereunder pursuant to Section 1.13 or 13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) or the failure of a Bank to make available its portion of any
Borrowing (including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) or (ii) a Bank having notified in
writing the Borrower and/or the Administrative Agent that such Bank does not
intend to comply with its obligations under Section 1.01(a), 1.01(b), 1.01(c),
1.04 or 2, in the case of either clause (i) or (ii) as a result of any takeover
or control (including, without limitation, as a result of the occurrence of any
event of the type described in Section 10.05 with respect to such Bank) of such
Bank by any regulatory authority or agency.
-75-
<PAGE>
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the higher of (i) 1/2 of 1% in
excess of the Federal Funds Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each
other Loan designated or deemed designated as such by the Borrower at the time
of the incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower's Account" shall mean a deposit account of the Borrower
maintained with the Payment Office of the Administrative Agent, which is
identified by the Borrower in the most recent Notice of Account Designation,
substantially in the form of Exhibit M hereto delivered by the Borrower to the
Administrative Agent as the Borrower's Account for receipt of proceeds of Loans
to the Borrower.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments of the respective Tranche (or from
the Swingline Bank in the case of Swingline Loans) on a given date (or resulting
from a conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, provided that Base Rate Loans incurred pursuant
to Section 1.10(b) shall be considered part of the related Borrowing of
Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City, New York or Charlotte, North Carolina a legal holiday or a day
on which banking institutions are authorized or required by law or other
government action 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) above
and which is also a day for trading by and between banks in the London interbank
Eurodollar market.
"Calculation Period" shall mean the period of four consecutive fiscal
quarters of the Borrower last ended before the date of the respective Permitted
Acquisition which requires calculations to be made on a Pro Forma Basis.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
-76-
<PAGE>
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under generally accepted accounting principles, are or will
be required to be capitalized on the books of such Person, in each case taken at
the amount thereof accounted for as indebtedness in accordance with such
principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one year from the date of acquisition, (ii) Dollar denominated time deposits and
certificates of deposit of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company having, a long-term unsecured debt
rating of at least "A" or the equivalent thereof from Standard & Poor's Ratings
Services or "A2" or the equivalent thereof from Moody's Investors Service, Inc.
with maturities of not more than one year from the date of acquisition by such
Person, (iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
commercial paper issued by any Person incorporated in the United States rated at
least A-1 or the equivalent thereof by Standard & Poor's Ratings Services or at
least P-1 or the equivalent thereof by Moody's Investors Service, Inc. and in
each case maturing not more than 270 days after the date of acquisition by such
Person, (v) asset-backed certificates of participation representing a fractional
undivided interest in the assets of a trust, which certificates are rated at
least A-1 or the equivalent thereof by Standard & Poor's Rating Services or at
least P-1 or the equivalent thereof by Moody's Investors Service, Inc., and (vi)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (v) above.
"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. Section 9601 et seq.
"Change of Control" shall mean (i) any Person or "group" (within the
meaning of Rules 13d-3 or 13d-5 under the Securities Exchange Act (as in effect
on the Effective Date)), other than the Permitted Holders, shall (A) have
acquired beneficial ownership of 25% or more on a fully diluted basis of the
voting and/or economic interest in the Borrower's capital stock or (B) have
obtained the power (whether or not exercised) to elect a majority of the
Borrower's directors or (ii) the Board of Directors of the Borrower shall cease
to consist of a majority of Continuing Directors.
"Co-Arranger" shall mean First Union National Bank in its capacity as
Co-Arranger. The Co-Arranger shall incur no liabilities and shall have no duties
or responsibilities under this Agreement or any other Credit Document in such
capacity.
-77-
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purport to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, the Mortgaged
Properties, and all cash and Cash Equivalents delivered as collateral pursuant
to Section 4.02 or 10.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.05.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
whether the Term Loan Commitment or the Revolving Loan Commitment. "Commitment
Commission" shall mean the Revolving Loan Commitment Commission.
"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of the Borrower and its Subsidiaries at such time.
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of the Borrower and its Subsidiaries at such
time, but excluding the current portion of and accrued but unpaid interest on
any Indebtedness under this Agreement and any other long-term Indebtedness which
would otherwise be included therein.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income before Consolidated Interest Expense and before provision for taxes for
such period and without giving effect (w) to any extraordinary gains or losses,
(x) to any gains or losses from sales of assets other than from sales of
inventory sold in the ordinary course of business and (y) to any expenses
related to or incurred by the Borrower in connection with the Transaction or any
Permitted Acquisition, provided, however, that with respect to any Permitted
Acquisition which is accounted for as a "purchase," for the Calculation Period
following such acquisition Consolidated EBIT shall include results of operations
of the company or assets so acquired which amounts shall be determined on a Pro
Forma Basis.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT
for such period, adjusted by adding thereto the amount of all amortization and
depreciation
-78-
<PAGE>
expense of the Borrower and its Subsidiaries that was deducted in arriving at
Consolidated EBIT for such period.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period
the ratio of (x) Consolidated EBITDA for such period less the amount of all
Capital Expenditures made by the Borrower and its Subsidiaries during such
period pursuant to Sections 9.07(a) to (y) Consolidated Fixed Charges for such
period.
"Consolidated Fixed Charges" for any period shall mean the sum,
without duplication, of (i) Consolidated Interest Expense for such period, (ii)
the amount of all cash payments made by the Borrower and its Subsidiaries in
respect of taxes or tax liabilities during such period (net of any cash refunds
actually received during such period), (iii) the scheduled principal amount
(after giving effect to any refinancing thereof other than with proceeds of
Loans) of all amortization payments made (or required to be made and not made)
on all Indebtedness (including, without limitation, the principal component of
all Capitalized Lease Obligations) of the Borrower and its Subsidiaries for such
period plus the amount of all voluntary repayments of such Indebtedness during
such period to the extent that any such repayment reduced the amount of any such
scheduled amortization payment and (iv) the amount of all cash Dividends paid by
the Borrower during such period. "Consolidated Indebtedness" shall mean, at any
time, the principal amount of all Indebtedness of the Borrower and its
Subsidiaries at such time determined on a consolidated basis to the extent that
such Indebtedness would be accounted for as debt in accordance with generally
accepted accounting principles plus, without duplication, (i) the maximum amount
available to be drawn under all letters of credit (including any Letters of
Credit) issued for the account of the Borrower and its Subsidiaries and all
unpaid drawings (including any Unpaid Drawings) in respect of such letters of
credit, (ii) the principal amount of all bonds issued by the Borrower and its
Subsidiaries in connection with workers' compensation obligations, lease
obligations and similar obligations, (iii) all Indebtedness set forth on
Schedule VI to the extent outstanding at such time and (iv) the amount of all
Contingent Obligations of the Borrower and its Subsidiaries determined on a
consolidated basis in respect of Indebtedness of other Persons of the type
described above in this definition.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (x) Consolidated EBITDA for such period to (y) Consolidated Interest
Expense for such Test Period.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
plus, without duplication, that portion of Capitalized Lease Obligations of the
Borrower and its Subsidiaries representing the interest factor for such period;
provided that the amortization of fees and expenses with respect to this
Agreement, the Indebtedness incurred hereunder and any Indebtedness incurred
under Section
-80-
<PAGE>
9.04(vi) or (vii) shall be excluded from Consolidated Interest Expense to the
extent same would otherwise have been included therein.
"Consolidated Net Income" shall mean, for any Person and period, the
net income (or loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis (after deduction for minority interests) in
accordance with generally accepted accounting principles, provided that (i) in
determining Consolidated Net Income of the Borrower, the net income (or loss) of
any other Person which is not a Subsidiary of the Borrower or is accounted for
by the Borrower by the equity method of accounting shall be included only to the
extent of the payment of dividends or distributions by such other Person to the
Borrower or a Subsidiary thereof during such period and (ii) the net income (or
loss) of any other Person acquired by such specified Person or a Subsidiary of
such Person in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner, and any obligation of such Person guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other obligations
("primary obligations") 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, (i) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent 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.
"Continuing Directors" shall mean the directors of the Borrower on the
Initial Borrowing Date and each other director, if such other director's
nomination for election to the Board of Directors of the Borrower is recommended
by a majority of the then Continuing Directors or is recommended by a committee
of the Board of Directors a majority of which is composed of the then Continuing
Directors.
-80-
<PAGE>
"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, the
Subsidiaries Guaranty and each Security Document.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Cumulative Net Income Amount" shall mean, on any date of
determination, an amount equal to (i) 50% of Consolidated Net Income (determined
on a cumulative basis) for all Cumulative Net Income Periods ending prior to
such date of determination for which Consolidated Net Income was a positive
number, minus (ii) 100% of Consolidated Net Income (determined on a cumulative
basis) for all Cumulative Net Income Periods ending prior to such date of
determination for which Consolidated Net Income was a negative number.
"Cumulative Net Income Period" shall mean each period consisting of a
fiscal quarter of the Borrower ending after October 1, 1997.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Determination Date" shall have the meaning provided in the definition
of "Pro Forma Basis."
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or partners or authorized or made any other distribution, payment or delivery of
property (other than common stock of such Person) or cash to its stockholders or
partners as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock or any partnership interests outstanding on or after the Initial
Borrowing Date (or any options or warrants issued by such Person with respect to
its capital stock), or set aside any funds for any of the foregoing purposes, or
shall have permitted any of its Subsidiaries to purchase or otherwise acquire
for a consideration any shares of any class of the capital stock or any
partnership interests of such Person outstanding on or after the Initial
Borrowing Date (or any options or warrants issued by such Person with respect to
its capital stock). Without limiting the foregoing, "Dividends" with respect to
any Person shall also include all payments made or required to be made by such
Person with respect to any stock appreciation rights, plans, equity incentive or
achievement plans or any similar plans or setting aside of any funds for the
foregoing purposes.
-81-
<PAGE>
"Documents" shall mean the Credit Documents, the Acquisition Documents
and the Refinancing Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
incorporated or organized in the United States or any State or territory
thereof.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Transferee" shall mean and include a commercial bank,
insurance company, financial institution, fund or other Person which regularly
purchases interests in loans or extensions of credit of the types made pursuant
to this Agreement, any other Person which would constitute a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act as
in effect on the Effective Date or other "accredited investor" (as defined in
Regulation D of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in Section
5.05.
"End Date" shall have the meaning provided in the definition of
Applicable Base Rate Margin.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) 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
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, 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.
Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq.; the Clean Air Act,
-82-
<PAGE>
42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section
3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C.
Section 11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.C.
Section 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; 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
date of this Agreement 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" within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean, with respect to each Interest Period for
a Eurodollar Loan, the London Interbank Offered Rate for borrowings (rounded
upward to the nearest 1/16 of one percent) for deposits of Dollars in minimum
amounts of at least the Minimum Borrowing Amount applicable to such Eurodollar
Loan for a period equivalent to such period at or about 11:00 A.M. (London time)
on the second Business Day before the first day of such period as is displayed
on Telerate page 3750 (British Bankers' Association Interest Settlement Rates)
(or such other page as may replace such page 3750 on such system, provided that
if on such date no such rate is so displayed, the Eurodollar Rate for such
period shall be the rate determined by the Administrative Agent to be the
arithmatic average (rounded upward, if necessary, to the nearest 1/16 of one
percent) of the rate per annum at which deposits of Dollars in an amount
approximately equal to the amount in relation to which the Eurodollar Rate is to
be determined for a period equivalent to such period are being offered by first
class banks in the London Interbank Market at or about 11:00 A.M. (London time)
on the second Business Day before the first day of such period, provided further
that in each case the rate obtained above shall be adjusted to take account of
reserve requirements by dividing such rate by the Eurodollar Reserve Percentage
(with such resulting rate to be rounded upward, if necessary, to the nearest
1/100 of one percent).
"Eurodollar Reserve Percentage" shall mean for any day, the remainder
of one minus the percentage (expressed as a decimal and rounded upwards, if
necessary, to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for determining the
maximum reserve requirement (including without limitation any basic,
supplemental or emergency reserves) in respect of Eurocurrency liabilities
-83-
<PAGE>
or any similar category of liabilities for a member bank of the Federal Reserve
System in New York City.
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (i)
the sum of (a) Adjusted Consolidated Cash Income for such period and (b) the
decrease, if any, in Adjusted Consolidated Working Capital from the first day of
such period to the last day of such period, minus (ii) the sum of (a) the amount
of all Capital Expenditures, made by the Borrower and its Subsidiaries pursuant
to Section 9.07(a) during such period, (b) the aggregate principal amount of
permanent principal payments of Indebtedness for borrowed money of the Borrower
and its Subsidiaries (other than repayments pursuant to which any other
Indebtedness is being refinanced with proceeds of Indebtedness, equity
issuances, asset sales or insurance proceeds, and repayments of Loans, provided
that repayments of Loans shall be deducted in determining Excess Cash Flow if
such repayments were (x) required as a result of a Scheduled Repayment under
Section 4.02(b) or (y) made as a voluntary prepayment (but in the case of a
voluntary prepayment of Revolving Loans or Swingline Loans, only to the extent
accompanied by a voluntary reduction to the Total Revolving Loan Commitment))
during such period and (c) the increase, if any, in Adjusted Consolidated
Working Capital from the first day of such period to the last day of such
period.
"Excess Cash Payment Date" shall mean the date occurring 90 days after
the last day of each fiscal year of the Borrower (beginning with its fiscal year
ending September 30, 1998).
"Excess Cash Payment Period" shall mean, with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of the Borrower.
"Existing Indebtedness" shall have the meaning provided in Section
7.22.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.05.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds 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
-84-
<PAGE>
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 3.01.
"Figgie" shall mean Figgie International Inc., a Delaware corporation.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by the Borrower or any one or
more of its Subsidiaries primarily for the benefit of employees of the Borrower
or such Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower other
than a Domestic Subsidiary.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the Release of which is prohibited, limited or
regulated by any governmental authority.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services, (ii) the maximum amount available to be drawn under all letters of
credit issued for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any
Lien on any property owned by such Person, whether or not such Indebtedness has
been assumed by such Person (provided, that, if the Person has not assumed or
otherwise become liable in respect of such Indebtedness, such Indebtedness shall
be deemed to be in an amount equal to the fair market value of the property to
which such Lien relates as determined in good faith by such Person), (iv) the
aggregate amount required to be capitalized under leases under which such Person
is the lessee, (v) 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, (vi) all Contingent Obligations of such
Person and (vii) all obligations under any Interest Rate
-85-
<PAGE>
Protection Agreement, any Other Hedging Agreement or under any similar type of
agreement. Notwithstanding the foregoing, Indebtedness shall not include (x)
trade payables and accrued expenses incurred by any Person in accordance with
customary practices and in the ordinary course of business of such Person and
(y) deferred compensation obligations of any Person.
"Indebtedness to be Refinanced" shall mean all Indebtedness set forth
on Schedule IV.
"Initial Borrowing Date" shall mean the date occurring on or after the
Effective Date on which the initial Borrowing of Loans or issuance of a Letter
of Credit occurs.
"Intercompany Loan" shall have the meaning provided in Section
9.05(vi).
"Intercompany Note" shall mean a promissory note, in the form of
Exhibit L, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
"Investments" shall have the meaning provided in Section 9.05.
"Issuing Bank" shall mean First Union National Bank and any other Bank
which at the request of the Borrower and with the consent of the Agents (which
consent shall not be unreasonably withheld) agrees, in such Bank's sole
discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2. The sole Issuing Bank on the Initial Borrowing
Date is First Union National Bank.
"Leaseholds" of any Person shall mean 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.
"L/C Supportable Obligations" shall mean (i) obligations of the
Borrower or any of its Subsidiaries with respect to workers compensation, surety
bonds and other similar statutory obligations and (ii) such other obligations of
the Borrower or any of its Subsidiaries as are otherwise permitted to exist
pursuant to (or otherwise not restricted by) the terms of this
-86-
<PAGE>
Agreement, other than any Indebtedness for borrowed money unless consented to by
the Agents and the Issuing Bank.
"Lending Office" shall mean, with respect to any Bank, any office,
branch, subsidiary or affiliate of such Bank.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section 3.01(c).
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Leverage Ratio" shall mean, at any time, the ratio of (x)
Consolidated Indebtedness at such time to (y) Consolidated EBITDA for the then
most recently ended Test Period; provided that for purposes of the definition of
Leverage Ratio only, (i) for the Test Period ending December 31, 1997,
Consolidated EBITDA shall be the actual Consolidated EBITDA for such Test Period
multiplied by 4; (ii) for the Test Period ending March 31, 1997, Consolidated
EBITDA shall be the actual Consolidated EBITDA for such Test Period multiplied
by 2; and (iii) for the Test Period ending June 30, 1997, Consolidated EBITDA
shall be the actual Consolidated EBITDA for such Test Period multiplied by 4/3.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
"Majority Banks" of any Tranche shall mean those Non-Defaulting Banks
which would constitute the Required Banks under, and as defined in, this
Agreement if all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
"Management Agreements" shall have the meaning provided in Section
5.05.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(d).
-87-
<PAGE>
"Margin Stock" shall have the meaning provided in Regulation U.
"Maturity Date" shall mean, with respect to any Tranche of Loans, the
Term Loan Maturity Date, the Revolving Loan Maturity Date or the Swingline
Expiry Date, as the case may be. "Maximum Swingline Amount" shall mean
$5,000,000.
"Minimum Borrowing Amount" shall mean (i) for Term Loans, $5,000,000,
(ii) for Revolving Loans, $1,000,000 and (iii) for Swingline Loans, $250,000.
"Minnesota Mortgage" shall mean the Mortgage granted by Lull
International, Inc. with respect to its real property and fixtures in the state
of Minnesota.
"Mortgage" shall mean each mortgage, deed to secure debt or deed of
trust pursuant to which any Credit Party shall have granted to the Collateral
Agent a mortgage lien on such Credit Party's Mortgaged Property.
"Mortgage Policy" shall have the meaning provided in Section 5.14.
"Mortgaged Property" shall mean (i) each Real Property owned by any
Credit Party and designated as a Mortgaged Property on Schedule III and (ii)
each Real Property owned or leased by any Credit Party and designated as a
Mortgaged Property pursuant to Section 8.12.
"MSSF" shall mean Morgan Stanley Senior Funding, Inc., in its
individual capacity.
"Multiemployer Plan" shall mean a plan as defined in Section
4001(a)(3) of ERISA with respect to which the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate has an obligation to contribute to or any
liability.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Net Debt Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions, commitment and other financing fees and other costs
associated therewith) received by the respective Person from the respective
incurrence of such Indebtedness for borrowed money.
"Net Insurance Proceeds" shall mean, with respect to any Recovery
Event, the cash proceeds (net of costs and taxes incurred in connection with
such Recovery Event) received by the respective Person in connection with the
respective Recovery Event.
-88-
<PAGE>
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the costs of such sale (including fees
and commissions, payments of unassumed liabilities relating to the assets sold
and required payments of any Indebtedness (other than Indebtedness secured
pursuant to the Security Documents or any Indebtedness owed to the Borrower or a
Subsidiary thereof) which is secured by the respective assets which were sold),
and the taxes paid or payable as a result of such Asset Sale.
"New Subordinated Note Documents" shall mean the New Subordinated
Notes, any indenture or purchase agreement related thereto and each of the other
documents entered into in connection therewith.
"New Subordinated Notes" shall have the meaning provided in Section
9.04(vi).
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Non-Excluded Taxes" shall have the meaning provided in Section
4.04(a).
"Note" shall mean each Term Note, each Revolving Note and the
Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at One First Union Center, 301 South College Street, TW-10, Charlotte,
NC 28288-0608, Attention: Syndication Services, with copies to 301 South College
Street, DC-5, Charlotte, NC 28288-0737, Attention: Leveraged Finance, or such
other office as the Administrative Agent may hereafter designate in writing as
such to the other parties hereto.
"Obligations" shall mean all amounts owing to any Agent, the
Collateral Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
"Other Creditor" shall have the meaning provided in the Security
Documents.
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
-89-
<PAGE>
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Administrative Agent
located at One First Union Center, 301 South College Street, TW-10, Charlotte,
NC 28288-0608, Attention: Syndication Services, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall have the meaning provided in Section
9.02(ix).
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto and accepted by the
Agents.
"Permitted Holders" shall mean Harbor Group Investments III, L.P.,
Uniquip-HGI Associates, L.P., P. Enoch Stiff, Curtis Laetz, James Hook, Philip
Franklin, Paul Roblee and Robert Melin.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, other than a multiemployer plan as defined in Section 4001(a)(3) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate or with respect to which any such entity has liability.
"Pledge Agreement" shall have the meaning provided in Section 5.11.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreement.
"Pledged Notes" shall have the meaning provided in the Pledge
Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as defined in
the Pledge Agreement.
-90-
<PAGE>
"Prime Lending Rate" shall mean the rate which the Administrative
Agent announces from time to time as its prime lending rate, the Prime Lending
Rate to change when and as such prime lending rate changes. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. The Administrative Agent may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"Pro Forma Basis" shall mean, with respect to any Permitted
Acquisition, the calculation of the consolidated results of the Borrower and its
Subsidiaries otherwise determined in accordance with this Agreement as if the
respective Permitted Acquisition (and all Indebtedness incurred to finance such
Permitted Acquisition, and all other Permitted Acquisitions, effected during the
respective Calculation Period or thereafter and on or prior to the date of
determination) (each such date, a "Determination Date") had been effected on the
first day of the respective Calculation Period; provided that all such
calculations shall be made on a basis consistent with the requirements of
Regulation S-X under the Securities Act and the Securities Exchange Act and
shall take into account the following assumptions:
(i) interest expense attributable to interest on any Indebtedness
(whether existing or being incurred) bearing a floating interest rate shall
be computed as if the rate in effect on the date of computation (taking
into account any Interest Rate Protection Agreement applicable to such
Indebtedness if such Interest Rate Protection Agreement has a remaining
term in excess of 12 months) had been the applicable rate for the entire
period; and
(ii) pro forma effect shall be given to all Permitted Acquisitions (by
excluding or including, as the case may be, the historical financial
results for the respective properties) that occur during such Calculation
Period or thereafter and on or prior to the Determination Date (including
any Indebtedness assumed or acquired in connection therewith) as if they
had occurred on the first day of such Calculation Period, in each case to
the extent that the occurrence of any such event required the financial
covenants contained in Sections 9.08 through 9.10, inclusive, to be
recalculated on a Pro Forma Basis.
"Projections" shall mean the projections prepared by the Borrower
relating to the Transaction and delivered to the Agents prior to the Effective
Date.
"Quarterly Payment Date" shall mean each March 31, June 30, September
30 and December 31 occurring after the Initial Borrowing Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section 6901 et seq.
-91-
<PAGE>
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation awards payable (i)
by reason of theft, loss, physical destruction, damage, taking or any other
similar event with respect to any property or assets of the Borrower or any of
its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 8.03.
"Refinancing" shall mean the repayment in full of, and the termination
of all commitments in respect of, the Indebtedness to be Refinanced.
"Refinancing Documents" shall mean all of the documents and agreements
entered into in connection with the Refinancing.
"Register" shall have the meaning provided in Section 13.15.
"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 G" shall mean Regulation G 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.
"Regulation T" shall mean Regulation T 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.
"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.
"Regulation X" shall mean Regulation X 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.
"Release" shall mean the disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring or
migrating, into or upon any land or water or air, or otherwise entering into the
environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
-92-
<PAGE>
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA 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 4043.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Term Loans (and, if prior to the termination thereof, Term Loan
Commitments), and Revolving Loan Commitments (or after the termination thereof,
outstanding Revolving Loans and Adjusted RL Percentage of Swingline Loans and
Letter of Credit Outstandings) represent an amount greater than 50% of the sum
of all outstanding Term Loans (and, if prior to the termination thereof, the
Term Loan Commitments) of Non-Defaulting Banks, and the Adjusted Total Revolving
Loan Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans of Non-Defaulting Banks, and the aggregate Adjusted
RL Percentages of all Non-Defaulting Banks of the total outstanding Swingline
Loans and Letter of Credit Outstandings at such time).
"Revolving Loan" shall have the meaning provided in Section 1.01(b).
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column entitled
"Revolving Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"Revolving Loan Commitment Commission" shall have the meaning provided
in Section 3.01(a).
"Revolving Loan Maturity Date" shall mean November 17, 2004.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RL Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that if the RL Percentage of
any Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the RL Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"Scheduled Repayments" shall have the meaning provided in Section
4.02(b).
"SEC" shall have the meaning provided in Section 8.01(g).
-93-
<PAGE>
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning assigned that term in the
respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section 5.11.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Document" shall mean and include each of the Security
Agreement, the Pledge Agreement and each Mortgage and, after the execution and
delivery thereof, each Additional Security Document.
"Shareholders' Agreements" shall have the meaning provided in Section
5.05.
"SKL" shall mean SKL Lift, Inc., a Delaware corporation, to be renamed
Snorkel International, Inc.
"Standby Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Start Date" shall have the meaning provided in the definition of
Applicable Base Rate Margin.
"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
"Subsidiary" shall mean, as to any Person, (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 and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
-94-
<PAGE>
"Subsidiary Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary of the Borrower and, to the extent required by Section 8.13, each
Wholly-Owned Foreign Subsidiary of the Borrower.
"Subsidiaries Guaranty" shall have the meaning provided in Section
5.12.
"Supermajority Banks" of any Tranche shall mean those Non-Defaulting
Banks which would constitute the Required Banks under, and as defined in, this
Agreement if (x) all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated and (y) the percentage "50%" contained therein were changed to
"66-2/3%."
"Swingline Bank" shall mean First Union National Bank.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(c).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Agent" shall mean MSSF, in its capacity as Syndication
Agent and Arranger for the Banks hereunder.
"Syndication Date" shall have the meaning provided in Section 1.01(a).
"Tax Sharing Agreements" shall have the meaning provided in Section
5.05.
"Term Loan" shall have the meaning provided in Section 1.01(a).
"Term Loan Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I directly below the column entitled "Term
Loan Commitment," as same may be (x) reduced from time to time pursuant to
Sections 3.02, 3.03, 4.02 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"Term Loan Maturity Date" shall mean November 17, 2004.
"Term Loan Percentage" shall mean, at any time, a fraction (expressed
as a percentage) the numerator of which is equal to the sum of the aggregate
principal amount of all Term Loans outstanding at such time plus the Total Term
Loan Commitment at such time and the denominator of which is equal to the sum of
the aggregate principal amount of all Term Loans outstanding at such time plus
the Total Term Loan Commitment at such time.
-95-
<PAGE>
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Period" shall mean (i) for any determination made on and prior
to September 30, 1998, the period from October 1, 1997 to the last day of the
fiscal quarter of the Borrower then last ended (in each case taken as one
accounting period) and (ii) for any determination made thereafter, the period of
four consecutive fiscal quarters of the Borrower then last ended (in each case
taken as one accounting period).
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Term Loan Commitments of each of the Banks.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the Total Revolving Loan Commitment then
in effect, less (y) the sum of the aggregate principal amount of Revolving Loans
and Swingline Loans then outstanding plus the then aggregate amount of Letter of
Credit Outstandings.
"Trade Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being three separate Tranches, i.e., Term
Loans, Revolving Loans and Swingline Loans.
"Transaction" shall mean, collectively, (i) the Acquisition, (ii) the
incurrence of Loans on the Initial Borrowing Date, (iii) the Refinancing and
(iv) the payment of fees and expenses owing in connection with the foregoing.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"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,
-96-
<PAGE>
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." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time less the
sum of (i) the aggregate outstanding principal amount of Revolving Loans made by
such Bank and (ii) such Bank's Adjusted RL Percentage of the Letter of Credit
Outstandings.
"U.S. Internal Revenue Service Forms" shall have the meaning provided
in Section 4.04(b).
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 12. The Administrative Agent and the Syndication Agent.
12.01. Appointment. The Banks hereby designate First Union National
Bank as Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" also shall include First Union National Bank in its
capacity as Co-Arranger hereunder and as Collateral Agent pursuant to the
Security Documents) to act as specified herein and in the other Credit
Documents. The Banks hereby designate MSSF as Syndication Agent (for purposes of
this Section 12, the term "Syndication Agent" also shall include MSSF in its
capacity as Arranger) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note
by the acceptance of such Note shall be deemed irrevocably to authorize, the
Administrative Agent and the Syndication Agent to take such action on its behalf
under the provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent and the Syndication Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Administrative Agent
-97-
<PAGE>
and the Syndication Agent may perform any of their duties hereunder by or
through its respective officers, directors, agents, employees or affiliates.
12.02 Nature of Duties. Neither the Administrative Agent nor the
Syndication Agent in their capacity as such shall have any duties or
responsibilities except those expressly set forth in this Agreement and in the
other Credit Documents. Neither the Administrative Agent, the Syndication Agent
in their capacity as such nor any of their respective officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by it or them hereunder or under any other Credit Document or in connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Administrative Agent and the Syndication Agent
shall be mechanical and administrative in nature; neither the Administrative
Agent nor the Syndication Agent shall have by reason of this Agreement or any
other Credit Document a fiduciary relationship in respect of any Bank or the
holder of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent or the Syndication Agent any obligations in respect of
this Agreement or any other Credit Document except as expressly set forth herein
or therein.
12.03 Lack of Reliance on the Administrative Agent and the Syndication
Agent. Independently and without reliance upon the Administrative Agent or the
Syndication Agent, each Bank and the holder of each Note, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries in connection with the making and the continuance of the Loans and
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of the Borrower and its Subsidiaries and,
except as expressly provided in this Agreement, neither the Administrative Agent
nor the Syndication Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Bank or the holder of any
Note with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter. Neither the Administrative Agent nor the Syndication Agent shall be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower or any of its Subsidiaries
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any other Credit Document, or the financial condition of the Borrower or any of
its Subsidiaries or the existence or possible existence of any Default or Event
of Default.
12.04 Certain Rights of the Agents. If any Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled
-98-
<PAGE>
to refrain from such act or taking such action unless and until such Agent shall
have received instructions from the Required Banks; and such Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Bank or the holder of any Note shall have any right of action
whatsoever against any Agent as a result of such Agent acting or refraining from
acting hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks.
12.05 Reliance. The Administrative Agent and the Syndication Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that the Administrative Agent or the
Syndication Agent believed to be the proper Person, and, with respect to all
legal matters pertaining to this Agreement and any other Credit Document and its
duties hereunder and thereunder, upon advice of counsel selected by the
Administrative Agent or the Syndication Agent, as the case may be.
12.06 Indemnification. To the extent the Administrative Agent or the
Syndication Agent is not reimbursed and indemnified by the Borrower or any of
its Subsidiaries, the Banks will reimburse and indemnify the Administrative
Agent and the Syndication Agent, in proportion to their respective "percentages"
as used in determining the Required Banks, 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 Administrative Agent or
the Syndication Agent in performing its respective duties hereunder or under any
other Credit Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or the Syndication Agent's gross negligence or willful
misconduct.
12.07 The Administrative Agent and the Syndication Agent in Their
Individual The Administrative Agent and the Syndication Agent in Their
Individual Capacity . With respect to its obligation to make Loans, or issue or
participate in Letters of Credit, under this Agreement, the Administrative Agent
and the Syndication Agent shall have the rights and powers specified herein for
a "Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required Banks,"
"Majority Banks," "Supermajority Banks," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the
Administrative Agent and the Syndication Agent in their individual capacity. The
Administrative Agent and the Syndication Agent and their affiliates may accept
deposits from, lend money to, and generally engage in any kind of banking,
investment banking, trust or other business with, or provide debt financing,
equity capital or other services (including financial advisory services) to, any
Credit Party or any Affiliate of any Credit Party (or any Person engaged in a
similar business with any Credit Party or any Affiliate thereof) as if they were
not performing the
-99-
<PAGE>
duties specified herein, and may accept fees and other consideration from any
Credit Party or any Affiliate of any Credit Party for services in connection
with this Agreement and otherwise without having to account for the same to the
Banks.
12.08 Holders. Any Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Administrative Agent. Any request, authority or consent of
any Person who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent and the Syndication
Agent. (a) The Administrative Agent and/or the Syndication Agent may resign from
the performance of all their respective functions and duties hereunder and/or
under the other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Banks and the Borrower (provided that no such notice shall
be required to be given to the Borrower if a Default or an Event of Default of
the type described in Section 10.05 exists with respect to the Borrower). Such
resignation, in the case of the Administrative Agent, shall take effect upon the
appointment of a successor Administrative Agent pursuant to clauses (b) and (c)
below or as otherwise provided below, and such resignation, in the case of the
Syndication Agent, shall take effect immediately.
(b) Upon any such notice of resignation by the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company reasonably acceptable
to the Borrower (it being understood and agreed that any Non-Defaulting Bank is
deemed to be acceptable to the Borrower).
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent with the
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed), shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder or thereunder until such time, if any, as the
Required Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 60th day after the date such notice of
resignation was given by the Administrative Agent, Administrative Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
-100-
<PAGE>
SECTION 13. Miscellaneous
13.01 Payment of Expenses, etc. The Borrower shall: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses (w) of the Agents (including, without
limitation, the reasonable fees and disbursements of White & Case (subject to
the limitations agreed to by the Agents and the Borrower) and of the Agents's
local counsel and consultants) in connection with the preparation, execution and
delivery of this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein, (x) of the Agents (including,
without limitation, the reasonable fees and expenses of White & Case or any
other single law firm retained by the Agents) with respect to any amendment,
waiver or consent relating to this Agreement and/or the other Credit Documents,
(y) of the Agents in connection with their syndication efforts with respect to
this Agreement and (z) of the Agents and, after the occurrence of an Event of
Default, each of the Banks in connection with the enforcement of this Agreement
and the other Credit Documents and the documents and instruments referred to
herein and therein (including, without limitation, the reasonable fees and
disbursements of counsel for the Agents and, after the occurrence of an Event of
Default, for each of the Banks); (ii) pay and hold each of the Banks harmless
from and against any and all present and future stamp, excise and other similar
documentary taxes with respect to the foregoing matters and save each of the
Banks 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 Bank) to pay such taxes; and (iii) indemnify each Agent and each Bank, and
each of their respective officers, directors, employees, representatives and
agents from and hold each of them harmless against any and all liabilities,
obligations (including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not any Agent or any Bank is a party thereto)
related to the entering into and/or performance of this Agreement or any other
Credit Document or the use of any Letter of Credit or the proceeds of any Loans
hereunder or the consummation of the Transaction or any other transactions
contemplated herein or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) 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
or at any time operated by the Borrower or any of its Subsidiaries, the
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, the non-compliance of any Real Property with foreign, federal,
state and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim asserted
against the Borrower, any of its Subsidiaries or any Real Property owned or at
any time operated by the Borrower or any of its Subsidiaries, including, in each
case, without limitation, the reasonable fees and disbursements of counsel and
other consultants incurred in connection with any such investigation, litigation
or other proceeding
-101-
<PAGE>
(but excluding any losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence, bad faith or willful
misconduct of the Person to be indemnified). To the extent that the undertaking
to indemnify, pay or hold harmless any Agent or any Bank 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.
13.02 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 Bank is hereby
authorized (to the extent not prohibited by applicable law) 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 Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of the Credit Parties to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by such Bank pursuant
to Section 13.06(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 Bank shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured. Notwithstanding anything to the contrary contained in
this Section 13.02, no Bank shall exercise any such right of set-off without the
prior consent of the Agents or the Required Banks so long as the Obligations
shall be secured by any Real Property located in the State of California, it
being understood and agreed, however, that this sentence is for the sole benefit
of the Banks and (notwithstanding anything to the contrary contained in Section
13.12) may be amended, modified or waived in any respect by the Required Banks
without the requirement of prior notice to or consent by any Credit Party and
does not constitute a waiver of any right against any Credit Party or against
any Collateral.
13.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents; if to any Bank, at its address specified on Schedule II; if to
the Syndication Agent, at the address specified on Schedule II; and if to the
Administrative Agent, at its Notice Office; or, as to any Credit Party or any
Agent, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to each Bank, at such other address
as shall be designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective
-102-
when deposited in the mails, delivered to the telegraph company, cable company
or overnight courier, as the case may be, or sent by telex or telecopier, except
that notices and communications to any Agent or any Credit Party shall not be
effective until received by such Agent or such Credit Party.
13.04 Benefit of Agreement; Assignments; Participations. (a) This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto; provided,
however, the Borrower may not assign or transfer any of its rights, obligations
or interest hereunder without the prior written consent of the Banks and,
provided further, that, although any Bank may transfer, assign or grant
participations in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of its
Commitments hereunder except as provided in Sections 1.13 and 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant 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 (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Loan Maturity Date) in which such participant
is participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount thereof,
or increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default or of a mandatory reduction in the Total Commitment, shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any participant
if the participant's participation is not increased as a result thereof), (ii)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or (iii) release all or substantially all of
the Collateral under all of the Security Documents (except as expressly provided
in the Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Commitments
and related outstanding Obligations hereunder to its parent company and/or any
affiliate of such Bank which is at least 50% owned by such Bank or its parent
company or to one or more Banks or (y) assign all, or if less than all, a
portion equal to at least $5,000,000 in the aggregate for the assigning Bank or
assigning Banks, of such Commitments and related outstanding Obligations
hereunder to one or more Eligible Transferees, each of which assignees shall
become a party
-103-
<PAGE>
to this Agreement as a Bank by execution of an Assignment and Assumption
Agreement, provided that, (i) at such time Schedule I shall be deemed modified
to reflect the Commitments (or outstanding Term Loans, as the case may be) of
such new Bank and of the existing Banks, (ii) upon the surrender of the relevant
Notes by the assigning Bank (or, upon such assigning Bank's indemnifying the
Borrower for any lost Note pursuant to a customary indemnification agreement)
new Notes will be issued, at the Borrower's expense, to such new Bank and to the
assigning Bank upon the request of such new Bank or assigning Bank, such new
Notes to be in conformity with the requirements of Section 1.05 (with
appropriate modifications) to the extent needed to reflect the revised
Commitments (or outstanding Term Loans, as the case may be), (iii) the consent
of the Agents shall be required in connection with any assignment to an Eligible
Transferee pursuant to clause (y) above (which consent shall not be unreasonably
withheld or delayed), (iv) so long as no Default or Event of Default exists, the
consent of the Borrower shall be required in connection with any assignment to
an Eligible Transferee pursuant to clause (y) above (which consent shall not be
unreasonably withheld or delayed, provided that the Borrower may withhold its
consent to a proposed assignment if such assignment would result in increased
costs to the Borrower under Section 1.10, 2.06 or 4.04), (v) the Administrative
Agent shall receive at the time of each such assignment, from the assigning or
assignee Bank, the payment of a non-refundable assignment fee of $3,500 and (vi)
no such transfer or assignment will be effective until recorded by the
Administrative Agent on the Register pursuant to Section 13.15. To the extent of
any assignment pursuant to this Section 13.04(b), the assigning Bank shall be
relieved of its obligations hereunder with respect to its assigned Commitments.
At the time of each assignment pursuant to this Section 13.04(b) to a Person
which is not already a Bank 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 Bank shall, to the extent legally entitled
to do so, provide to the Borrower the appropriate Internal Revenue Service Forms
(and, if applicable, a Section 4.04(b) (ii) Certificate) described in Section
4.04(b). To the extent that an assignment of all or any portion of a Bank's
Commitments and related outstanding Obligations pursuant to Section 1.13 or this
Section 13.04(b) would, at the time of such assignment, result in increased
costs under Section 1.10, 2.06 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall not
be obligated to pay such increased costs (although the Borrower, in accordance
with and pursuant to the other provisions of this Agreement, shall be obligated
to pay any other increased costs of the type described above resulting from
changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative . No failure or delay on the part
of the Administrative Agent or the Syndication Agent or any Bank in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Borrower or any other Credit Party and the
Administrative Agent, the Syndication Agent
-104-
<PAGE>
or any Bank 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, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent, the Syndication Agent or any Bank would otherwise have. No
notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of the Administrative Agent, the
Syndication Agent or any Bank to any other or further action in any
circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
pro rata based upon their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks 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, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, 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 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations; Accounting Terms. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except (i)
as set forth in the notes thereto, (ii) for year-end adjustments in the case of
interim financial statements and (iii) as otherwise disclosed in wri-
-105-
<PAGE>
ting by the Borrower to the Banks) and consistent with those used to prepare the
historical financial statements of the Borrower delivered to the Banks pursuant
to Section 7.05(a).
(b) All computations of interest, Commitment Commission and other
Fees hereunder, shall be made on the basis of a year of 360 days for the actual
number of days elapsed.
13.08 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, EXCEPT AS OTHERWISE
PROVIDED IN THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT,
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 WAIVES ANY CLAIM THAT ANY SUCH
COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER, AND AGREES NOT TO PLEAD OR
CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT SUCH
COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER. THE BORROWER 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
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, ANY BANK OR THE HOLDER OF ANY NOTE
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.
-106-
<PAGE>
(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 CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, 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.
13.09 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 instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the date
(the "Effective Date") on which the Borrower, the Administrative Agent, the
Syndication Agent and each of the Banks shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered the same
to the Administrative Agent at its Notice Office or, in the case of the Banks,
shall have given to the Administrative Agent telephonic (confirmed in writing),
written or telex notice (actually received) at such office that the same has
been signed and mailed to it. The Administrative Agent will give the Borrower
and each Bank prompt written notice of the occurrence of the Effective Date.
13.11 Headings Descriptive. The headings of the several sections and
subsections 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.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document 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 respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected in the case of following clause (i)), (i)
extend the final scheduled maturity of any Loan or Note or extend the stated
expiration date
-107-
<PAGE>
of any Letter of Credit beyond the Revolving Loan Maturity Date, or reduce the
rate of interest or Fees or extend the time of payment of interest or Fees, or
reduce the principal amount thereof (except to the extent repaid in cash) (it
being understood that any amendment or modification to the financial definitions
in this Agreement or to Section 13.07(a) shall not constitute a reduction in the
rate of interest or any Fees for purposes of this clause (i)), (ii) release all
or substantially all of the Collateral (except as expressly provided in the
Credit Documents) under all the Security Documents, (iii) release a Subsidiary
Guarantor from the Subsidiaries Guaranty (except as expressly provided in the
Subsidiaries Guaranty or in connection with the sale of such Subsidiary
Guarantor in accordance with the terms of this Agreement), (iv) amend, modify or
waive any provision of this Section 13.12, (v) reduce the percentage specified
in the definition of Required Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Term Loans and Revolving Loan
Commitments are included on the Effective Date) or (vi) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement; provided further, that no such change, waiver, discharge
or termination shall (u) increase the Commitments of any Bank over the amount
thereof then in effect without the consent of such Bank (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitments shall not
constitute an increase of the Commitment of any Bank, and that an increase in
the available portion of any Commitment of any Bank shall not constitute an
increase of the Commitment of such Bank), (v) without the consent of each
Issuing Bank, amend, modify or waive any provision of Section 2 or alter its
rights or obligations with respect to Letters of Credit, (w) without the consent
of each Agent, amend, modify or waive any provision of Section 12 or any other
provision as same relates to the rights or obligations of the Agents, (x)
without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent, (y)
without the consent of the Majority Banks of each Tranche which is being
allocated a lesser prepayment, repayment or commitment reduction as a result of
the actions described below (or without the consent of the Majority Banks of
each Tranche in the case of an amendment to the definition of Majority Banks),
amend the definition of Majority Banks (it being understood that, with the
consent of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Majority Banks on
substantially the same basis as the extensions of Term Loans and Revolving Loan
Commitments are included on the Effective Date) or alter the required
application of any prepayments or repayments (or commitment reductions), as
between the various Tranches, pursuant to Section 4.01(a) or 4.02 (excluding
Section 4.02(b)) (although the Required Banks may waive, in whole or in part,
any such prepayment, repayment or commitment reduction, so long as the
application, as amongst the various Tranches, of any such prepayment, repayment
or commitment reduction which is still required to be made is not altered) or
(z) without the consent of the Supermajority Banks of the respective Tranche,
reduce the amount of, or extend the date of, any Scheduled Repayment or without
the consent of the Supermajority Banks of each Tranche, amend the definition of
Supermajority Banks (it being understood that, with the consent of the Required
Banks,
-108-
<PAGE>
additional extensions of credit pursuant to this Agreement may be included in
the determination of the Supermajority Banks on substantially the same basis as
the extensions of Term Loans and Revolving Loan Commitments are included on the
Effective Date).
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (vi), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks (or, at the option
of the Borrower if the respective Bank's consent is required with respect to
less than all Tranches of Loans (or related Commitments), to replace only the
respective Tranche or Tranches of Commitments and/or Loans of the respective
non-consenting Bank which gave rise to the need to obtain such Bank's individual
consent) with one or more Replacement Banks pursuant to Section 1.13 so long as
at the time of such replacement, each such Replacement Bank consents to the
proposed change, waiver, discharge or termination or (B) terminate such
non-consenting Bank's Commitments (if such Bank's consent is required as a
result of its Commitments) and/or repay outstanding Term Loans of such Bank
which gave rise to the need to obtain such Bank's consent, in accordance with
Sections 3.02(b) and/or 4.01(b), provided that, unless the Commitments that are
terminated, and Loans repaid, pursuant to preceding clause (B) are immediately
replaced in full at such time through the addition of new Banks or the increase
of the Commitments and/or outstanding Loans of existing Banks (who in each case
must specifically consent thereto), then in the case of any action pursuant to
preceding clause (B) the Required Banks (determined after giving effect to the
proposed action) shall specifically consent thereto, provided further, that in
any event the Borrower shall not have the right to replace a Bank, terminate its
Commitments or repay its Loans solely as a result of the exercise of such Bank's
rights (and the withholding of any required consent by such Bank) pursuant to
the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01 shall survive
the execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Obligations.
13.14 Domicile of Loans. Each Bank may transfer and carry its Loans
at, to or for the account of any of its Lending Offices. Notwithstanding
anything to the contrary contained herein, to the extent that a transfer of
Loans pursuant to this Section 13.14 would, at the time of such transfer, result
in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from those being
charged by the respective Bank prior to such transfer, 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 transfer).
-109-
<PAGE>
13.15 Register. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.15, to maintain a register (the "Register") on which it will record the name
and address of each Bank, the Commitments from time to time of each of the
Banks, the Loans made by each of the Banks and each repayment in respect of the
principal amount of the Loans of each Bank. Failure to make any such
recordation, or any error in such recordation shall not affect the Borrower's
obligations in respect of such Loans. With respect to any Bank, the transfer of
the Commitments of such Bank and the rights to the principal of, and interest
on, any Loan made pursuant to such Commitments shall not be effective until such
transfer is recorded on the Register maintained by the Administrative Agent with
respect to ownership of such Commitments and Loans and prior to such recordation
all amounts owing to the transferor with respect to such Commitments 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 Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 13.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Administrative Agent for
acceptance and registration of assignment or transfer of all or part of a Loan,
or as soon thereafter as practicable, the assigning or transferor Bank shall
surrender the Note evidencing such Loan, and thereupon one or more new Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Bank and/or the new Bank. 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 Agent in performing its duties under this Section 13.15.
13.16 Confidentiality. (a) Subject to the provisions of clause (b) of
this Section 13.16, each Bank agrees that it will not disclose without the prior
consent of the Borrower (other than to its employees, auditors, advisors or
counsel or to another Bank if the Bank or such Bank's holding or parent company
in its sole discretion determines that any such party should have access to such
information, provided such Persons shall be subject to the provisions of this
Section 13.16 to the same extent as such Bank) any information with respect to
the Borrower or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Credit Document and which is designated
by the Borrower to the Banks in writing as confidential, provided that any Bank
may disclose any such information (a) as has become generally available to the
public other than by virtue of a breach of this Section 13.16(a) by the
respective Bank, (b) as may be required or reasonably appropriate in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over such Bank or to the Federal
Reserve Board, the Federal Deposit Insurance Corporation, the NAIC or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or reasonably appropriate in respect to any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Bank, (e) to the Agents and
(f) to any prospective or actual transferee or participant in connection with
any contemplated transfer or participation of any of the Notes or Commitments or
any interest therein by
-110-
<PAGE>
such Bank and to any direct or indirect contractual counterparties in Interest
Rate Protection Agreements or Other Hedging Agreements entered into by any Bank,
provided that such prospective transferee and each such contractual counterparty
agrees to be bound by the confidentiality provisions contained in this Section
13.16.
(b) The Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to the Borrower or any
of its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of the Borrower and its Subsidiaries,
provided such Persons shall be subject to the provisions of this Section 13.16
to the same extent as such Bank).
13.17 Limitation on Increased Costs. Notwithstanding anything to the
contrary contained in Section 1.10, 1.11, 2.06 or 4.04, unless a Bank gives
notice to the Borrower that it is obligated to pay an amount under any such
Section within 180 days after the later of (x) the date such Bank incurs the
respective increased costs, Taxes, loss, expense or liability, or reduction in
amounts received or receivable or reduction in return on capital or (y) the date
such Bank has actual knowledge of its incurrence of the respective increased
costs, Taxes, loss, expense or liability, or reductions in amounts received or
receivable or reduction in return on capital, then such Bank shall only be
entitled to be compensated for such amount by the Borrower pursuant to said
Section 1.10, 1.11, 2.06 or 4.04, as the case may be, to the extent the costs,
Taxes, loss, expense or liability, or reduction in amounts received or
receivable or reduction in return on capital are incurred or suffered on or
after the date which occurs 180 days prior to such Bank giving notice to the
Borrower that it is obligated to pay the respective amounts pursuant to said
Section 1.10, 1.11, 2.06 or 4.04, as the case may be. This Section 13.17 shall
have no applicability to any Section of this Agreement or any other Credit
Document other than said Sections 1.10, 1.11, 2.06 and 4.04.
-111-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
222 East Main Street OMNIQUIP INTERNATIONAL, INC.
Port Washington, Wisconsin 53074
Telephone No.: (414) 268-8965
Telecopier No.: (414) 268-3100 By /s/Philip G. Franklin
Attention: Vice President Finance and ---------------------------
Chief Financial Officer Title: Vice President, Finance and
Chief Financial Officer
MORGAN STANLEY SENIOR FUNDING,
INC., Individually and as Syndication
Agent and Arranger
By /s/Michael Hart
---------------------------
Title: Vice President
FIRST UNION NATIONAL BANK,
Individually and as Administrative
Agent and Co-Arranger
By /s/George Woolsey
---------------------------
Title: Vice President
